Mark Perlberg:
All right. I guys, I am joined by Lou Brown. He has lots of expertise and experience in a variety of areas of real estate, and also in trust and trust tax strategies. He coaches on real estate and advises on topics relating to real estate and trust and entity, structure and opportunities that will not only help you build a port, successful real estate business, but also some strategies to reduce your taxes and create asset protection with trust.
So we have a whole lot of stuff that Lou and I can riff on today we could probably have multiple episodes. But i’ll respect your time, Lou. I really really appreciate your time today and let’s start off. Lou. Give this. Get a quick introduction to you to start off. Tell us a little bit about yourself in 60 s or less.
Lou Brown:
Well, Mark, thank you for the opportunity. You know I love real estate. I love trust. You know. It’s something that you and I hold a lot of close kinship kinship on, and I’ve been buying, holding and selling real estate now for over 40 years, bought my first house. When I was 18 years old I was able to buy that house by taking over the existing financing on the property. I’ve done that ever since. I’ve never been to the bank. I’ve never qualified for a loan on a single family or small multi family property.
I discovered that the seller could be the bank when you structure it correctly, and so, as a result, I’ve continued to do that way. Also, I’ve developed hotels, land divided by land divided into lots, condominiums. I’ve done a lot of things and I love love love single family homes. I think there’s so much wealth and so much protection and safety and single family homes, and there’s so much we can do with them that I created a program called the Path to Home Ownership where we help deserving families, regardless of credit or financial background, to end up with home ownership.
So in the evolution of that I actually created a brand called certified, affordable housing provider, where I show real estate entrepreneurs how they can get in the business, do the business. And now I have licenses all across America, and, in fact, in other parts of the world that are doing exactly that they’re helping, deserving families end up with home ownership and actually becoming the bank for them as well. So there’s a lot of financial side to what we do, and tax strategies for sure, because we’re taking all the elements that are available in real estate and putting it together under one brand and offering the path to home Ownership also is an amazing path to tax savings and passed to 0 taxes as well.
Mark Perlberg:
Amazing. So you know what’s interesting, what you told me about right here. Well, first, I want to share just some of the things that I’ve found for some of our clients. So we do have a lot of early professionals, and there’s something called a professional mortgage. For your first time you buy a home, and so, if you are a Cpa, a pilot or nurse practitioner, a lawyer or a doctor. They say you have the credentials in education to show that you are capable, or will be capable to hold a mortgage while you may not qualify or have the down payment. You can get a home with 0 money down and 0 Pmi doing not to go through the Va loan or anything like that. So that’s a good opportunity there’s. And then for there’s Naca doc there’s Naca and Aca. But that takes a lot of work and commitment from what I hear and cost. Yeah, I I hear it. It takes a lot of energy. If you could go through it you’d be all right, but it is I. From what I hear from a handful of people, it is a lot a lot of work to go through. Naca, right?
Lou Brown:
Yeah, ours is a lot easier, and and Naka is very expensive as well in terms of there’s a burden put upon the seller to have to eat a lot of those costs, so we do it a different way. We’re actually helping deserving families to get into home ownership. Then, while they’re living with us, we’re helping them build their credit, build their down payment, and eventually, when they get good enough credit or down payment, they can get a new loan from the bank if they choose to. or they can remain in our in house financing program, and we’ll finance them for the next 40 years.
Mark Perlberg:
That’s so. That’s really cool, like. The what I found is for so many people just getting that first mortgage is so hard. and especially in New York City, where a lot of my family is that you have to come up with 20 down in New York. You can’t get anything decent. for you know, under a 1 million dollars. and if you have a. D. A normal salary, it’s really hard to come up with $50,000 living in that city. So you know, when there are opportunity. You know it’s great to see that there there are opportunities out there, and just getting that first home creates a whole world of opportunities. As you build your equity. It’s just amazing what other doors that’s that’s gonna open.
Lou Brown:
Well, you know they’ve done this studies, and they say that people who are renters their net worth is around $5,000, and people who are buyers or owners. Their net worth is $250,000. So there’s a great divide between those that rent and those that buy. So we really encourage that. You know I was raised in apartments. I was raised by a single mom immigrant to this country who came over on the Queen Mary. She was a war bride and everything was gonna be great and ended up just being the 2 of us against the world, and I was raised in apartments until about my first house, when I was 18 years old, and I can tell you. It was one of the best decisions I have ever made in my life. because that really got me on the trajectory to be able to build wealth, and it is a truly amazing vehicle. I don’t know anything that comes close to real estate and truly building safe, secure wealth.
Mark Perlberg: Now.
Lou Brown:
so are you to help for families purchase properties with 0 money down low money down what was what? No, we don’t do no money down. However, we do have a vip, or might call it a house on layaway program, where people can join us with little funds, and then every pay period give us more build up on our vip program until they earn or build up enough for their option to purchase a property. So an option to purchase costs about 3.7 of the value of the property we give them up to 3 years to buy while they’re living there. We also credit them every month a $100 towards the purchase of the home every month that they pay on time. So we’re helping them build up their down payment. And then, when they do exercise their option to buy. We’ll take that original option the at amount and credit it to the purchase of the home as well. So we’re really giving them an ability to build up that money while they’re living with us. And then when they get to 10, we convert them to our in-house financing program, 10% of the value of the property based upon the option that they signed with us, and that number becomes the value of the property at that time and then we require 10, which we deduct their original option fee and their rent credits from
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Mark Perlberg:
Nice. Well, that I mean, that sounds really helpful for someone just starting off now and then. I think about this from your perspective here, right when you compare this to just selling a home outright. That’s ordinary income. When you’re flipping a property but if you make them your tenant first, you have a fixed asset and the disposition is now capital gains asset, and once we convert ordinary income into capital gains income. You’re gonna be have so many more opportunities to defer or eliminate the tax liabilities and that we’ll talk about how you can do that within a trust in a little bit. But there’s also obviously the obviously answers, or are the 1031 exchange is is a not is another option. But we’ll talk about some things that’ll maybe the 1031 the same.
Lou Brown: That’s it. That’s called also known as pain and suffering. Is it 31 tax to per exchange, though we actually have developed a tax strategy that I think you’ll appreciate as a tax advisor, because our so we have 4 levels to our program. It’s rent rent to own in house financing and cash sale. So in the tax code arena well rent and rent to own. That gives you depreciation. Write offs well a lot of tax advisors say you ought to do straight line method which is 27 and a half years. I don’t say that I say a house is made up of component parts, and the irs let you write off those component parts over 5, 7 and 15 years. So we componentize the house also known as cost segregation, and we we take those component parts and write them off a lot faster, so that creates a loss that creates big losses. Now let’s go into the next arena, which is the in-house, financing, and as you know that now can be spread over many, many years, so your capital gain is spread over many years and in that arena you’re only taking your gain as you receive it. So it’s spread out over a long time. You can use those losses in your rent rent to own portfolio, to offset the gains which is now ordinary income in your long term portfolio and long term note acquisition, portfolio. And then, finally, when those folks get good enough credit good enough down payment and pay you off now you have cashed out when you cash out. Of course that’s ordinary income, and all of the of the capital gain, and everything would be due. Then, however, you’ve got this big pot of money losses from your rent rent on that you can offset that ordinary income, gain and 0 out your taxes, and then any any other money as it’s coming in. Imagine that going into a vehicle that defers the gain forever and literally forever. Not only your lifetime, your children’s lifetime, your grandchildren’s lifetime, and even plus 21 years before it becomes taxable.
Mark Perlberg:
Yeah. So I mean, those are all really awesome opportunities, and you know what else is awesome is you? Don’t need real estate professional tax status to use depreciation to offset capital gains from your rental portfolio. So these are some tag strategies, even if you have a W 2, and this is your side hustle. You could still use the the losses from your cost sag, and to offset capital gains from your rental portfolio. And now, let’s say you are using. You have rep status, and you use your depreciation to bring you in a 0 to tax bracket. Married filing joint roughly. Your first $80,000 of capital gains is untaxed at the Federal level. So if you get some cap gains and you spread it out, I said, recognizing that gain on year one you break it out into 5 year installment sale. Now you have the opportunity to have that. It’s kind of like a capital gains standard deduction that eats it up year after year after year, and can potentially eliminate a a good chunk of capital gains tax, drive it into the Lord Capital gains or $0, cat games, bracket, and here’s a little extra bonus that I learned from Dominique Molina. The Ct. You see, called the reverse wash sale. You find yourself in a $0 cap bracket with all these strategies, and with cost sag, and you have some stock that’s at a higher value than you bought it at. Why not sell it and buy it back at a higher higher basis. So let’s say you do that a few years every year you could potentially add $80,000 to basis and eliminate $80,000 of taxable capital gains in the future lots of cool things when we combine different elements of strategies. And look at all your sources of income and assets.
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Lou Brown:
Yes, it’s like throwing everything in the basket, and seeing, you know kind of sifting and sorting, and seeing what falls out the bottom, and with proper planning, and that’s one of the reasons we created the path to home ownership the way we did, because we’re helping people, and that’s a wonderful thing, and we do that on purpose with purpose. In fact, our mission is to transform lives through affordable housing, to empower families and individuals to enjoy the American dream of home ownership. Now, with that mission. Imagine that as your business model, and you’re helping people. Meanwhile, you’re attracting a whole lot of different folks that are deserving families, and they would love to have home ownership, however, due to circumstances. Maybe they had a setback. A medical setback break ups breakdowns, you know. All kinds of things happen to human beings during their lifetime. I say that we’re beings and bodies on a journey and we’re here to learn whatever it is. We’re here to learn, and so based upon that experience that a lot of people had, we’re able to step in and help them. And so different people come to us at different stages in their life and their spectrum. Given that we’re able to serve them. And it’s an amazing tax model because of the fact that we’re taking different parts of the tax code, and we’re putting it all together. So the the rental depreciation, the cost segregation, the installment sale, and then the cash sale, using these offsets puts us in that 0 or hopefully lower tax world.
Mark Perlberg:
Yeah. So you know. And I, you know, this may be the point. Our conversation, where allow the casual people may have dropped off when I was talking about taxes for a little long there in the last point. But what I really find interesting here is that you said Your favorite type of asset is short is single family, Reynolds, because what I’ve found a lot of investors in my network say is that they’re not a fan of single family, Reynolds, because it takes a while to close on the asset in the same amount of time you could close on a multi family, or you could do a short term rental vacation home. They’ll cash, flow twice as much. But my guess here. Why it works for you is, if you’re doing this with least to own you’re going to get tenants who really respect the property. If they intend to turn to their homes. But I you know I’ve I’ve heard, you know. So horror stories on on 10, and it’s abusing single family homes. Can you enlighten me in the audience on why you love single family home so much.
Lou Brown:
Well think about it when that person is moving in they’re giving me a big hunk of money right? And from a tax from an income standpoint as a landlord. And I certainly have been a landlord, and we certainly have done multi family properties and all that sort of thing. So it’s not a foreign matter to me, but all those people. When they moved in they gave me something called a security deposit that I had to put in the bank and tell them what bank it was in, and what account number it was in, and in some states you even have to pay interest on that money and you can’t spend it. You can’t do anything with it as opposed to an option when I get an option fee in or down payment in that money is mine to spend, so I can recycle that money. I can reinvest that money, put it into more assets, making more money so definitely. It’s the attraction of getting that big fat down payment when they move in and get that monthly payment, month after month after month after month after month, that they’re living. It’s like getting a monthly dividend instead of a quarterly or an annual dividend. We get monthly dividends on our assets, and then I’ve got a caretaker exactly as you pointed out. I’ve got a caretaker living in that property, improving that property. Mark, it would shock you. What a lot of our residents have done. Brand new flooring. new lightings, new ceiling, fans, counter tops, sinks, faucets, you know they’re fixing it up for themselves. They’re fixing it up as their own property. You never find renters doing that, or extremely rarely do you find them putting any of their own money into a property. No, we’re doing something different. We’re getting these people into the properties, and then we’re keeping them there. We’re giving them an opportunity. We’re working with them while they’re there. In fact, if they have less than perfect credit, we’re putting them into credit restoration. We’re educating them. We have a twice a month meeting with our clients. We form education standpoint to help them so definitely. There’s a big commitment on our part to see them win at this game, and when they win we win.
Mark Perlberg:
So you know it’s always great when we have models like that, and it’s, you know we even grout. So look up for this because he’s so excited my cat and to my understanding also, when you get these down payments, these options, it’s not taxable income until you it’s treated as a credit of the purchaser. When you close on the sale. so it it also has tax advantages as well, and that you’re getting access to additional cash before you’re actually paying taxes on it, as because it’s going to count as a credit towards the purchase of that property. When that takes place.
Lou Brown:
Well, mark you put your finger on another tax benefit. That’s a great one, and it is exactly correct. When you get an option fee in well, that option fee is not taxable until they either exercise their option to buy, or they don’t exercise their option to buy. So, as a result. You’ve got that money, and you’re using that money, and it’s not even taxable to a later day.
Mark Perlberg:
Yeah, that is so. Just another awesome advantage. There. Have you ever done anything with this model in? I’m. Wondering if if qualified opportunity you’ve taken advantage of qualified opportunity zones with this as well?
Lou Brown:
That’s another whole level that absolutely could be done. You know there’s there’s there’s 8 800 opportunity zones around the country. They came in during the trump administration. They did some amazing things in communities all over to really give them an opportunity to have a better life in those kind of communities, and that was under Dr. Ben Carson. And oh, my gosh! What what great opportunities that presented for investors as well, because we can come into those areas. It’s a 10 year span and basically you invest in that area for 10 years, and you have no capital gains.
Mark Perlberg:
Yeah, it’s so. And it’s like a supercharged Roth. I race, I will say, because you keep it for 10 years, and then any gain after that is on tax, and you have a lot more control and flexibility, and you don’t have to wait until you’re 59 and a half like with a raw and you can invest in businesses and qos, and even oil and gas Mining Wells as a strategy in Q. O’s. A. Which can be part of your elimination Reduction of the deferred captains. We talked about that in our last webinar titled tax advantage investments to chase rafts, and which was a lot of fun. But you know we can rip on this forever, and may we go back to some of these these strategies. But what I what i’m most excited to talk to you about now is having to do with trust and trust tax strategies and asset protection strategies with trust. So there’s there’s so many ways when you understand how the the tax code works with trust that almost anyone who pays a decent amount in taxes. So let’s say, let’s say you are paying more than $0 in taxes after all these strategies. So let’s say you have a high paying billing 2 job, and you’re like a normal person paying more than $20,000 in taxes. Now we we’re with our clients to implement some trust. And one of the reasons why our practice is diving into this strategy is because, with bonus depreciation phasing out by 20% a year. It’s going to get harder and harder to use costs to bring you that down to a $0 tax bracket. and our clients are getting more successful. They’ve already front loaded the appreciation on the Reynolds with the cost sags, and they’re maybe running out of time to manage more. So we have some potential tax liabilities, and we’re looking to to use trust. And then we’re gonna even we’re gonna integrate that with college financial playing with our clients. And, by the way, Ron Carruthers, I was talking to him last night. He says, Hi! He’s he’s an awesome duty. He’s coming on in 2 weeks on the fifteenth to talk about college planning, and we can use, trust and integrate that with a college financial planning to take assets out of the names of the clients, and help them qualify for more aid and finance, financing from universities, but by putting the assets out of their name. and therefore having more advantages, results when they apply for college tuition and financing. So to so many cool things to do here.
Lou Brown:
So i’m. I’m glad you brought up the subject of trucks trusts Mark, because I date back to 1982 learning about trust. and it was the Government that forced me to learn about trust. They passed a law called the Garn Saint Germane, Federal Depository Institutions Act of 1,982 Now back story is, I was able to buy my first property at 18 years old by taking over the existing financing on the property. It’s called an inn. Q. Loan non escalating, non-qualifying loan, and for $45 you could step in and take over someone else’s financing. It was perfect. It was wonderful, and we know that the banking industry is the banking industry and all that Congress is bought and paid for by the banking industry. So what did they do? They passed a law that put an end to that. They put it that they were allowed legally to put the do upon sale clause in the mortgage. So everybody, when they read paragraph 17, or wherever it is in your mortgage do upon sale. When you sell your home you have to pay off the loan. So I got to reading that law. And what did I find 1701 J. 3, D. 6, c. Way way down. In the law I found exceptions. and one of the exceptions is when someone places their own property into their own trust for a State planning purposes. The lender is prohibited from calling the loan do now here, fast forward over 40 years later. That’s still an effect. Isn’t that interesting. So, in other words, there was a reason they put that loophole in there. Why? Because Congress people, of course, when they adopt trust, and they might buy their property, and then later want to put it in trust. They don’t want the lender to have the power to call to do upon the this loan do upon sale. So, sure enough, here we are. We’re in this learning phase, and I realized that when a seller places their property and trust for State planning purposes when they use a particular type of trust. So I teach a thing called Land Trust and Land trust, convert real estate into personal property interest. In other words, in a land trust, you have an interest in the avails and proceeds which may flow from the trust. So so what happens is your interest in a property held in a Land Trust is only personal property. So imagine that a personal property trust comes along and purchases that beneficial interest. So I figured all that out years ago. I’ve been teaching people that for over 40 years now, and it’s it’s the funnest thing ever, because when you learned that number one, you can do that yourself when you’ve got the right paperwork, and I’ve got a whole system that I teach around what to do and how to do it. Provide the paperwork on digitized so people can do their own. And then what happens is You’ve now got this wonderful asset that you did not have to go to the bank. You did not have to qualify for loans. and you’ve got the benefit of the income off of it, the down pavement money, and eventually, when people pay you off it’s a beautiful thing. So that’s really where I started with, with a very low cost, easy to use trust. That really made a whole lot of sense. However, the Land Trust and personal Property Trust have no tax benefits. So then, when people find themselves with W 2 income 1099 income, they’ve got these big hunks of money coming in on them on an annual basis. and they want to offset that. I had to find another vehicle. And, mark.
Mark Perlberg:
we certainly did. Didn’t we? Yes, we did. You want me to talk about that. Yeah. Oh, absolutely. And we’re going to be this year. We’re going to be doing a lot of it with our clients. We’re super excited, but take it away. Let’s let’s let’s get into it.
Lou Brown:
So what I found was that a lot of my people were becoming very, very successful with real real estate, you know I’ve been teaching since 1,986, and so, sure enough, I found that that when that was occurring, then, sure enough they would use up their depreciation. They would use up their other tax vehicles, and they would end up making money there. Then I had other people joining me. They were professionals. They were dentists, physicians. I I’ve got Cpas. I’ve got every tax professional attorneys. I’ve got all kinds of folks that joined us and they’ve got this ordinary income coming their way like our freight train that they gotta pay for every year. And so I was looking at that, and I’ve looked at different kinds of trust, and everybody needs to understand. There’s about 30 different kinds of trust. So when you hear the word trust that doesn’t necessarily mean. You know what you’re talking about, and the same is true with professionals that say the word trust. Well, there’s other vehicles out there that they are not familiar with. So when you take this information back to your tax, professional or others in your world, they may never have heard of this before, and they may even question it to say, Well, if if it’s that good, why, haven’t I heard about it before? Well there’s things that are suppressed, and if you’re like me, a conspiracy, theorist 101 I know. I know, for a fact that things are suppressed and information is not allowed to be out there for the general public. However, it’s available for all of us if we find out about it. Well, sure enough, I found about this amazing vehicle, which is, I call it, a dissing trust. I really call it the Elite Trust, because it’s what the elites use. and what the what this type of trust allows you to do? Is it’s discretionary meaning that the trustee of the Trust can declare any money that comes into the Trust as corpus to the trust, and that means that all of that money, whether it’s the sale of a property or income from a property, all of that money can come in and be claimed as corpus to the trust. What that means is no taxes, baby. The taxes are deferred. Not that they’re for free. They’re deferred until 21 years past the death of the final beneficiary, whenever that might be so literally generations to come can avoid the taxation on the capital gain. Corpus. So surely when I recognized and realized that I I realized that we had an amazing vehicle here to work with. And you know, seeing is believing there’s actually a place on a 1041. So everybody else files a 1040, but trust file a 1041 tax with regard Well, sure enough right there in the document is the place that you can put this deferral. So I love that. And as I’ve gotten deeper and deeper into this mark, it’s been an amazing journey. and I’ve been using now. I’m into my fifth year, and I’ve been teaching others how to use these. So remember I’ve been doing the the Land Trust and personal Property Trust since 1983. But now to to tie in with this new entity that was very hidden that’s actually been around since before the Irs was invented and and created as a tax collection agency. What happened before then is the Jp. Morgans, the Kennedys, the Rockefellers, all of them created this vehicle. So this vehicle actually has this carve out in the tax code to support it, because it’s been here before the Irs got here.
Mark Perlberg:
So couple of questions now, because we do have, there is a a tax rate for trust. So how do? How do we take a trust and a complex trust that has his own tax brackets. How do we make it? A tax deferred vehicle?
Lou Brown:
What! It’s simply to declare the income as corpus to the trust. So that’s where the deferral occurs. So you’re exactly right. There’s taxation. However, there’s deferral of that taxation. That’s that’s the that’s the short. Story.
Mark Perlberg:
And now another question I have here. So what’s interesting here is that if you’re thinking about putting real estate into a trust, real estate typically operates at a loss. Obviously, when you have gains and potential capital gains, not so much. But have you ever had an instance where you’re evaluating the You know you have a have real estate here that will let’s say you know you. You’ve front a little depreciation with the cost sa, and it’s generating taxable profits. At this point you could put it into this trust in this deferred tags vehicle. But what is there any recapt? Do you know there’s any recapture? So let’s say we’ve written off through depreciation. A good chunk. Is there any recapture in that transaction?
Lou Brown:
Well, that’s where the cost sag is so good because there’s no recapture of the cost sa, except the part that you haven’t used yet. But other than that, there’s no recapture of that. So that’s one way that you lower the overall gain on the property. Now, the rest of the story, though, is that you’re not You’re not gifting or giving this property. You’re actually selling it to the trust. So when you sell it to the trust, the trust doesn’t have any money today, it just got started right. So what can the trust give you. It can give you financing tool, so it can give you a note back. So you personally let’s say you personally were selling your property to the trust. Then you receive back from the Trust a note. and it’s a it’s a note with interest accruing so that in any time that you might need some money from the trust. You go to the trust and say, give me some money. And now you’ve got the money if you needed any, and you’re gonna be shocked that I can’t. I can’t really come up with a good reason why I would need money out of the Trust when the Trust pretty much is gonna own everything. Imagine that the Trust owns your personal residence. It owns vehicles. It owns everything. And I to describe it to people. I I say, Have you ever heard of the Kennedy compound, where all the Kennedy clan all have homes up in High Edinburgh, Massachusetts, and and what what they do is. All of those homes are owned by the Trust. and those vehicles are on by the Trust, and they were smart enough. Joseph Kennedy. He was smart enough to say, Look, I don’t know who my kids are gonna marry, who they’re not gonna marry, Who’s gonna Sue? Who what’s gonna happen? Who they’re gonna intermarry. There’s gonna be other families and all that sort of thing involved. I don’t want to put my work at risk, so therefore i’m gonna make these kids beneficiaries, but they cannot touch the money. They cannot touch the money. So, in other words, the money continues. It continues to make money and we make the kids beneficiaries where the kids are going to benefit from that for years to come. So just imagine that that opportunity just continues and continues and continues for generations to come, and the money is protected.
Mark Perlberg:
No. What I’m wondering is, do trust sometimes serve for some folks as an alternative to a pre nuptial agreement.
Lou Brown:
absolutely 100%. Imagine that the assets are already in the trust. And now you get married. Well, that has nothing to do with this. What happened before the marriage has nothing to do with marital assets. So what we actually created inside the Elite Trust is what we call a subtr. So the kids when they get married, and they start creating their own assets in their own life. Well, they can, and inside their subtr they can protect their assets. So they got the benefit of whatever comes down from the primary trust or the the mother trust, so to speak. It comes down, and then the beneficiaries also can have their own trusts for their own world.
Mark Perlberg:
And and then another cool thing that I mean, and then there, there’s also ability to create terrible deductions with the private family foundation, right where we’re donating our access to a trust that’s dedicated for for charity, and you know there’s the opportunity to reduce your taxes by 60% of agi.
Lou Brown:
So you you’re just gonna do it all at once, Aren’t. You mark we’re just gonna get into the whole Mary out of things. So now, people really do not. You wouldn’t do that, would you? Truly wealthy in this country They have a tax dodge extraordinaire, and we always think of them as really good do goodters, because oh, my gosh! They’ve got these foundations. and these foundations are building wings on hospitals, and they’re they’re building buildings at colleges and universities, and they’re donating this, that the other thing. Oh, my gosh! What a tax dodge! Because what really happens in the real world is any money that’s declared as Agi adjusted gross income. Well, they can donate 30% of that agi to their own foundation, and that that this is a it’s called a private family foundation, and that private family foundation. Oh, my goodness! They’ve got to travel the world over, and the whole family’s got to go to select the next project, and of course the foundation has to pay for all of that travel and pay to bring people in from all over the country and around the world to participate in that journey. And then there’s another 30 that could be donated to a public charity. Well guess what you can become your own public charity as well. So there’s just many ways that the the wealthy and we’ve heard this said for so many years, the wealthy. Just don’t pay taxes. but we really didn’t know how or why. Well, yeah, now, you know how and why they’ve got the the combination of the elite trust plus they’ve got the foundation, and there’s just no good reason for them to pay taxes. And, by the way, when you look up some of these foundations, like the Gates Foundation, for example, in the Buffett Foundation and the Pew Foundation and the Ford Foundation and the Clinton Foundation. And what do you do you actually look at their tax returns? And what do you find? 0 point 0 taxes on those foundations?
Mark Perlberg: Yeah, you know. And what’s cool is Now it. So there’s amazing things, and obviously you will work with your advisor. And you know some of our clients. We’re working on this with after tax season. Some of our clients we brought to a $0 agi with other strategies, so they’re not quite ready for the trust strategy yet, but it’s on the the foundation strategy. You or yeah, I mean, so trust for other reasons, maybe for asset protection and things like that which is. And and so you know, you have your your reverse corporate veil, even though your assets are in your Lc. What if you get in a car accident? You know what, if you have whatever or like a. You know, some sort of fictitious lawsuit against you, against you, and you are the owner of those assets. So in the reverse, the the trust can can help you protect your
Lou Brown:
your Llc. From being a your Lc’s assets from being C so there’s this whole other world of asset protection where the trust comes in as well. Exactly. So. That’s another reason why you want to do this. I say that there’s about 30 reasons to do trust over any other entity. Corporations, Llc’s limited partnerships. because trust can deliver things that other entities cannot. So we delve into things like probate probate is the thing that every dead person that’s the result of every dead person right, the opportunity for probate.
Mark Perlberg:
and if they left the will, that’s a guarantee for probate, if they left assets in an Llc. Or corporation as a guarantee for probate. By the way, this will return when it’s in probate. But sorry go on. I’m sorry
Lou Brown:
to do the additional state return when it’s in Prob. It is paying the neck. Yeah, there you go. And another another thing done which can be avoided when you own property, and trust any of your properties. Hopefully, all of your property and your money too. When that’s in trust, it avoids probate. and of course probate is the process by which we take the assets of a dead person and give it to the rightful living heirs whomever that might be, but that’s got to be sorted out with a by a court attorneys, filings, judgments, pleadings, all kinds of stuff. and you got the expense of that. The delay of that, the upsets, the breakdowns, the family responsibilities. Somebody’s gonna be burdened with having to deal with this. Everybody else thinks they’re stealing, and all they’re doing is just tearing their hair out, trying to deal with the assets and trying to deal with it. All of that can be avoided 100 by putting your assets into trust. So what happens is at death. The trust already says, who the beneficiary is going to be. So. If you’re the primary beneficiary, it immediately. instantly at the deaf. goes to the rightful living heirs. and so that is done through the probate Pro Excuse me through the trustee process. No probate is necessary. No filings with the court is necessary, no refiling of deeds and titles to vehicles, all of that is eliminated when you’ve already done it by placing it into trust, and then saying, who you want to get it. That’s exactly what the judge does, so there’s no need for a judge. Courts, delays, expenses, attorneys, or anything. So there’s yet another reason for trust. And then, mark, as you pointed out, asset protection it is. It is a big thing we know that our at least my belief is that our legal system is flawed, and there’s winners and losers, and sometimes the winners shouldn’t have been the winners, and the losers should not have been the losers. And that’s because of our flawed legal system. So what I’ve found is the smarter thing to do is. Get your assets into a tank. Just think about a tank. If a mortar shell goes off next to a tank, the tank might rock a little bit, but it does not blow up, and we’ve got other vehicles out here in the world. Lcs. Corporations, limited partnerships, weak trust that people can easily blow up using the court system. This trust is another whole thing. So it has spendthrift provisions in there which think about Teddy Kennedy. Think about Mary Joe Capckney. Think about. There was a murder death, whatever you want to call it. And what happened was they didn’t go after him criminally. But the Kopeckni family went after him civilly. What did they get? They got a big, fat judgment against Teddy Kennedy. Were they able to collect? No at all? Why? Because all the assets where this trust, this type of trust. And so they went after him personally. He didn’t own anything, so they weren’t able to collect on their big, fat multi 1 million dollar judgment. So and and by the way O. J. Same deal. So we start to remember stories from our past and start to realize. Oh, my gosh! This has been around for a long time. I just didn’t know about it.
Mark Perlberg:
Yes, so and what else is cool and correct me if i’m wrong with my understanding, even with the trust and and going through and avoid. Not only do you get to avoid probate, but you still see the tax advantages of the step of basis in the property, and as an additional advantage here, let’s say you were on the offense, on whether or not to do a cost sa this year next year, and let’s for your clients as a. And so we’ve done this actually where the client passed away. even though after the data to death we were still able to run a cost sag on the clients tax return. So we saw the benefits of the accelerated appreciation on that clients 1,040, and then it went to be right away to be inherited by the years, and that basis went right back up to to fair market value in in the put in the in the on to the 10 fortys and income statements of the the heirs who inherited the property.
Lou Brown:
Yes, correct. So you know, that’s the the cool thing about having assets in this type of vehicle, because what happens is it passes from generation to generation and
Mark Perlberg:
the kids. They just have their own personal tax returns. That might not show a lot. If you know what I mean. It’s just seeing how, when you talk about general generational wealth with real estate, I don’t know if anything that’s so much more powerful, because, even you know, if you have a I mean, there’s tons of strategies out there, but when you have a portfolio of stocks or other types of vehicles, you’re not, You know the Ccorp stock isn’t going to get that step up to fair market value. No, nor is that for stock but your ownership, that real estate that you’ve been using depreciation to offset the profits year after year. And then right when your your air is inherited, the depreciation starts all all over again from step one again.
Lou Brown:
It’s a beautiful thing. And so you know you think about what you’re trying to accomplish in life. You wanna you’ve worked hard. You want to keep what you’ve got. You don’t want frivolous lawsuits to be able to take everything that you’ve already earned, and you know I I equate it to. You know there’s somebody that’s completely broke. and they run into you, and you’ve got a claim against them. What can you get? Absolutely nothing right? So this to me levels the playing field, because nobody ought to be able to get nothing out of anybody if they didn’t work for it right. And so I I think, work for it and protect yourself. And I don’t mean to teach this in any form or fashion is a way to get away with something. I’m just saying that when frivolous people are out there definitely using the system in order to collect. I want to be very cautious, and think in advance that they could be out to get me sooner or later, and therefore I want to make sure that i’m out of the line of fire. You look up and you don’t find anything. That’s the way you ought to look on public record. You can’t find anything in your name worth having. So so if if everything has been sold to the trust, and you don’t own it anymore to me that’s the perfect place to be
Mark Perlberg:
awesome. So so I and so you have so many projects with the real estate, with with the stuff that you’re helping out with with the trust. And you know. So you know I and I look through your site, and there’s just so many resources for people either looking for affordable housing, looking to get into the real estate looking for tax strategies. Where can people go to to learn more about the stuff that you’re working on
Lou Brown:
Definitely Street Smart investor.com Street smart investor.com. You want to know more about becoming a certified, affordable housing provider. You can go to certified affordable housing provider.com, and also you can get my book doing good while doing Well, it’s get doing good book.com. You can get a free copy of my International Amazon bestseller right there at Get doing good book.com, and that tells you more stories from our licenses from all over the country, many of which have adopted this type of trust in their world because they’ve evolved right. They started with me with no properties, and now they’re not only millionaires, but multi millionaires, and they needed a vehicle like this. So i’m very pleased that I was able to learn it and bring it to them. and pleased that I was able to be an expert and and trust because the Government forced me to. So it’s it’s kind of a a pay it forward thing where I can share it with other folks. And by the way, those folks that are not ready for the Elite trust. We still have the Land Trust and the Personal Property Trust, and certainly I started all my folks with the Land Trust and Personal Property Trust. But i’ll leave you with these words. Do not own anything in your own name in this country period. That is the worst place you can be from a liability, from an asset. Protection from a probate standpoint, is to own things in your own name, and encourage your parents and your grandparents to also get their assets into trust. Because who’s that? Gonna help that’s gonna help you, because you’re the one that’s gonna have to deal with that probate pain and suffering, expenses, delay, and costs that could be avoided just because you paid attention to this podcast today that Mark is providing to you so very smart on your part to be here. I have a full blown Webinar that teaches land, trust, and personal property. Trust, as well as the elite trust. and Mark is going to put those links here as well. So definitely love to have you explore and educate yourself. Learn more, and I would love to see you at one of my upcoming events.
Mark Perlberg:
awesome. So tell us what your tell. Tell us what you do outside of work, where we’re some of the other things that in the world of Lou Brown.
Lou Brown:
So I have a a son and a daughter and a foster daughter, and I love spending time with them, and I have a granddaughter now, and a new one on the way, very, very happy from my son. So you know life is good. I spend time with them. I I honestly my work is my hobby. I love what I do, and so I spend a lot of time with my licenses. We have weekly meetings together, and I’m. Supporting and helping them grow their businesses. I do coaching and training and consulting, so as a result of that. It keeps me very busy. It’s something that I absolutely love
Mark Perlberg:
awesome. And do you have, maybe an ask of the audience, or is there a big goal. You’re working on that
Lou Brown:
Well, absolutely, you know. I’m. I’m just one single person, and I believe that we can transform housing in America. I know for a fact that we have transformed many lives. Harvard has done the studies on people that grow up in apartments versus in homes and kids that grow up in homes, go on to a better life. They go on to higher education. They go on to more income, and they go on to more stable relationships, and that’s a Harvard study. That proves that. So it just goes on to show that you are making a difference in other People’s lives when you help them to obtain home ownership. So it is a vision, dream, desire, and goal of what I do, and definitely I love teaching others how to build businesses doing exactly the same thing. So my ask is just to explore. We have a one day training called Wealth builder, workshop, wealth, builder, workshop, dot online where you can join me for a whole dollar for a whole day. and there you can learn more about what we do and how we do it. We do teach trust there as well as finding the buyer before you even buy the property. So we’re looking for these type of folks that want to be served by us, and then we go about finding a property that will match their situation. making a nice equity in between arbitrage, where you’re making some income on an ongoing basis. From that asset the big, fat down payment monthly income, and then a big fat payment when they pay you off and give you an opportunity to defer the taxes on that forever. So love just teaching that whole process, and would love to have you come join us. Our 800 number is 1, 800, 5, 7, 8, 8, 5, 8, 0. That’s 805-78-8580. Look forward to seeing you in the future
Mark Perlberg:
awesome. And so lots of great information there, Lou, I really really appreciate this conversation, getting your perspective on this stuff in a unique perspective and a thoughtful perspective in hearing about your mission and you know success is not a 0 sum game. So when you could be successful by helping other people. It is always just a a wonderful and gratifying experience. So, hopefully, you’ve inspired some of our listeners to do some wonderful things, and we, you know we’re. We’re really excited to share this to everyone. and thanks again for for showing everything you got.
Lou Brown:
All right, brother. Well, thank you for the opportunity as well, and I always say good luck, good health, and may God bless, have a great day.