Money is a HUGE part of our life, yet schools don’t spend time teaching us how to manage it and most families don’t share their experiences with one another. Without guidance and learning best practices to achieve success, we are set up for FAILURE before we even begin our relationship with money. It seems reasonable to believe that it would be a good idea to acquire some training on how to effectively think about and handle money BEFORE we get started. These are a few basic points about handling and thinking about money that I believe are the FOUNDATION for all other decisions you will ever need to make with money. Everything is about cash flow Work to control the outcome Average rates of return are misleading The government is not your friend Unicorns aren’t real Banks are not your friends Projections are made up Don’t be a consumer Know the difference between leverage and debt

What should you know, consider, and do when it comes to your social security benefits? And what about Medicare? Join Social Security and Medicare expert Rich Grawer and Brian to learn about how to determine your retirement age, whether or not a non-working spouse can qualify for their spouse’s benefit, understanding potential taxes on your social security benefits, and in which scenarios one can qualify for Medicare. Social security and Medicare expert Rich Grawer addresses some of the most frequently asked questions Brian gets asked by his clients. In order to qualify for a social security benefit, you need the so-called 40 credits. You can gain a maximum of four credits a year, and in 2017 you had to have earned and paid social security taxes on at least $5,200. The full retirement age is determined by the year you were born: if you were born between 1943 and 1954, your retirement age is 66. If you were born it would be 66 and 2 months – and it keeps going up. After that, they take your 35 highest years of earnings (if you don’t have them, you’ll get a zero), they index them to inflation, and divide them up by 420. That’s how they come up with an average monthly benefit. Social security then reduces that benefit further by applying a formula that’s heavily weighted toward lower- and middle-wage earners. The general principle is this: if you take your benefit before your full retirement age, it’s going to get reduced. If you take your benefit after your full retirement age, it will automatically get increased by about 8% a year until you reach age 70. In the case of a spouse that has never worked, that spouse qualifies for the partner’s own benefit – they can get a maximum that’s 50% of the working spouse’s benefit. This benefit gets cut if one of them claims it before having reached retirement age. There are exceptions but, generally, if a partner dies, there’s a possibility for the surviving partner to either claim their own benefit if it’s greater than the other spouse’s benefit. A primary benefit is one that you claim off your own work record. A secondary benefit is when you claim off someone else’s record. The Government Pension Offset is a rule that wipes out any attempt by someone who’s getting a government pension to file for a spouse or widow benefit off their husband or wife. There are three ways to file for benefits: over the phone, in person through an appointment, or online. Because of the bureaucracy of the situation, Rich always advises clients to file two months in advance. To determine whether your social security benefits are going to be taxable, it depends on the so-called Provisional Income. It’s your adjusted gross income plus 50% of your social security benefits. If you’re single, that’s higher than $25,000. If you’re a couple, then that number is greater than $32,000. The social security tax is proportionally dependent on how much over those thresholds you are. As Rich explains, in the worst-case scenario, only 85% of your social security benefit will be taxed. The easiest way to qualify for Medicare is to reach age 65. The month you turn 65, the first of that particular month, is when you become immediately eligible for Medicare. You can also automatically qualify for Medicare if you have never worked and earned any social security quarters or credits but your spouse has or if you have been on social security disability for 24 months. If you are working past 65, then you become eligible the moment you quit your job and stop being on your work health plan. When it was set up in 1965, Medicare had two parts: one focused on hospital, home health, hospice, while the other part covered pretty much everything that was left – doctor’s visits, x-rays, blood tests, etc. There are a few mistakes you should avoid making when it comes to Medicare: not signing when you’re supposed to, putting your Medicare plans on autopilot, and not tapping into the network.

What should you think about when positioning your 401k and pension assets? How can you avoid the pension trap many people fall into? Find out about the two main purposes of your money, the role your cash flow plays, and how to make the most out of your pension choices in this podcast episode. When you’re accumulating money – when you’re working and accumulating – you’re not needing the money that you’re saving. You’re putting it away for retirement. You’re living on the income that you’re receiving. In this phase, everything is about watching your account value grow. On the other hand, when you reach retirement and shift over to utilization, it’s no longer about rate of return. The focus here is on having money available when you need it. When it boils down to your money, there are two main purposes. Money can be used as a resource to produce income (the proverbial “golden goose” that produces income each month or each year for whatever duration of time needed). However, money can also be the money that’s set aside and that you use for big ticket items, college expenses, vacations, and similar expenses – this is the consistent flow of capital coming in and that you can live off of. The way in which you can determine how much money you need for income is understanding your cash flow. By understanding the chronological cash needs that you have, you’re going to learn just how much money you’re going to need to spend. Your cash flow design becomes the blueprint for how to arrange the assets you have. Once you know the purpose of the money, you can focus on arranging your assets to fulfill its purpose – and the purpose can either be using the money for income or using that money to ultimately spend it on big-ticket items. For Brian, understanding your cash flow before making any decisions regarding the distribution of your 401k or pension is key. In some instances, you may find yourself in the position of having to choose between a monthly amount or a lump sum option. If your main focus is maximizing the amount of the monthly income today, oftentimes opting for the monthly pension benefit makes more sense. However, if you don’t necessarily need the income right away – or would like to have some flexibility or control over that money – then, it’s advisable to take the lump sum option instead. Beware of what Brian refers to as a “pension trap”. In some cases, taking the reduced benefit leads to your spouse getting the reduced benefit if you pass away but to your children not inheriting anything in the case of the passing of both you and your spouse. Many pensions have the so-called Cost of Living Adjustments (or COLA) built in. COLA is based upon parameters such as the consumer price index, and it’s really there to protect the person receiving the pension from the erosion of inflation going forward. When purchasing your insurance through the pension department, you may be put in a situation where, basically, the cost of your life insurance policy increases every single year, while the benefits decrease. That’s because, with such a policy, every year you live is one less year of benefits your spouse is going to receive. As a potential solution to the problem, Brian suggests looking for alternative planning options by using a personal life insurance policy that’s outside of your pension. This would give you more control on how much life insurance you purchase, as well ashow long you maintain that policy. According to Brian, retirement planning is about having access to money when you need it, and about having as much control as possible over the purpose of that money. The handling of your money is always about knowing how you plan to use the money you have.

The truth is that we all, as human beings, carry around this proverbial backpack of beliefs and emotions, and we carry it everywhere we go. And when we show up somewhere that's in a relationship and a conversation having to make a decision, we unpack the backpack. There's no hiding the backpack. It's with us all the time. It is full of of a lot of good things, but mixed in with it our limited beliefs that can wreak havoc with our decision making. These beliefs are just an accumulation of information that you either hear you read, you experience that can have you instantly forming an opinion that then drives your behavior and decision making. It's what drives your thoughts, your opinions, your attitudes and your propensity. Think about it. You eat bad sushi and then you get sick. That belief forms that sushi is bad and you throw that belief into the backpack. You go into a store and have a bad experience. You belief into the backpack. You meet someone for the first time and within ten seconds a belief is cemented in your head and into the backpack it goes. You hear a financial opinion into the backpack. You do it constantly. And at times you may find your beliefs challenged the way you think, your relationships, your attitude, your finances, and begin to question why you believe what you believe. But this isn't always a bad thing. Cleaning out the backpack of beliefs occasionally can prove to be a good thing when you can get rid of beliefs that are preventing you from making important decisions in your life. The psychology of why we do what we do is the topic of today's show. And here to discuss this with us is Chez Barbosa. Chez is going to help break all this down for us and offers some strategies and techniques that could possibly help you make some life altering improvements. I've known Chez and his wife charity for many years and at one time even had him consulting with my company before he made the jump to where he is now. He's been married for 16 years and has three children. He's the CEO and co-founder of True Vine Christian Services, which is a final one C three organization that offers professional mental health, mediation and coaching services. He's a licensed counselor specializing in marriage and family dynamics, along with communication and conflict resolution training. He's also very active in his community, serving as a board member and has leadership roles and other nonprofit organizations. And he earned a bachelor's degree in psychology from Southwest Baptist University and his master's in counseling from Missouri Baptist University.

What’s the #1 thing successful investors are doing that average investors aren’t? What are some of the traps people typically fall into when it comes to investing that prevent them from achieving growth and freedom? Find out about what you can learn from Yale endowments, and what you should do to become a successful investor. ‘Nothing changes if nothing changes’ is one of the mantras around Brian’s house. It’s a reminder to not complain about an outcome or circumstance, but rather to try to find a solution. Typically, a simple mindset, behavioral or attitude shift, is all that’s needed to make the difference and get to a more favorable outcome. According to Brian, the truth is that the wealthiest investors in the world keep getting wealthier. This happens not because they're lucky or privileged, but because they're playing a different game than the average investor. They do not rely on 401k's average rates of return and stock performance to find security for themselves. The attitude wealthiest investors have toward money is completely different. The average investor is spinning their wheels, following the herd in their search for financial freedom and ultimately being discouraged with the results. These investors follow advice – such as funding their retirement accounts, accelerating the payoff on their home and storing money in the bank which will lead to security – that has proven to fall short of producing the results they were promised. A commitment of resources toward rapidly paying down debt often leads to tunnel vision for the fact that the need for money never stops: home repairs, college tuitions, etc., putting pressure on your retirement and future goals. And while storing money in the bank does promise security by giving you easy access to cash, it only ends up proving to be a burden for the fact that nothing is being done to grow your money for the future. Yet, this is how the majority of people handle their money – an approach that leads them to a place of frustration, disappointment, and disillusion. Another phenomenon that can be seen when it comes to investing is how average investors find themselves relying on and hoping for things outside of their control to bring them happiness and success. This is most evident when there are extremes happening in the market: when markets are good, greed sets in and there’s euphoria that spurs a belief in eagerness that more growth is coming. This is the equivalent of a gambler’s rush. On the other hand, when markets are bad, fear sets in and there’s anxiety, which spurs a belief that more losses will come. This is what Brian refers to as a ‘spectator’s approach to money’ – people are passively watching to see what happens next and are simply along for the ride with no control over the outcome. What creates wealth isn’t luck but the information and what you do with it. The wealthiest investors follow a system for creating income and achieve financial freedom. A look at Yale’s endowments shows you that the goal top investors pursue is to consistently produce income that is used to fund their school of operation. They strive for consistent growth with a focus on avoiding losses by using proven strategies to control the outcome. Despite this, the average investor typically allocates nearly 100% of their money to the stock market with no strategy, only hope. The average investor tends to focus on average rates of return, while wealthy investors focus on real rates of return. The wealthiest investors focus on consistency, over peaks and valleys. One of the key differences is that they focus on minimizing losses and controlling the outcome – this is a differentiating factor that prevents the average investor from experiencing the growth and freedom they’re seeking. Most successful investors have a broader range of products they use. They don’t use averages of past performances to dictate their choices per portfolio, rather they go for a portfolio diversification that goes beyond the stock market and includes alternative investments, annuities, life insurance, and so forth. It’s important to remember that security and success aren’t determined solely by how much money you have, but it’s a measurement of how much income is generated from the assets you have. The key here is consistent income. For the average investor, the mindset revolves around the growth of their money. The problem with this approach is that the idea of taking from your stack of money requires you to continuously replenish your stack in order to prevent it from running out. This approach leaves you needing to either work to earn money or live in the hope that the stock market will produce positive returns. Instead of spending a stack of $100 bills, you should focus on having those $100 bills create income to spend. Brian and his team have developed the Build Wealth System framework designed to help you build and protect your wealth. It can be broken down into 5 steps: clarity, identifying roadblocks, building a solid foundation, mirroring success, and mapping the progress. As an investor, you shouldn’t be greedy with unreasonable expectations (like the belief that markets produce real returns of 10% or more, while that figure is actually closer to 5%) but focus on what can be controlled. Strive to increase the income from your assets over rate of return. Brian and his team have found that 60% or more of the average person’s cash flow and assets are outside of their control. In your quest for financial independence, it’s essential to reduce dependency on banks and keep your money allocated in a way that enables you to control the outcome.   Mentioned in this Episode: The Build Wealth System at brianskrobonja.com/consultation

Sorting out matters related to your retirement isn’t something you should wait until the last minute to take care of. What can you do to make sure you’re ready for retirement when time arrives? Learn about 6 things you can do right now to ensure that you’re indeed ready for retirement. If you are within six months away from retiring, there are certain things you need to do now to help prepare yourself for the transition into retirement throughout this retirement preparation process. While, at times, the retirement preparation process feels as if you’re making a series of rapid-fire micro decisions (Social Security benefits, Medicare options, pension elections, etc.), it’s important to understand that the decisions to be made are many and they have serious long-term ramifications. People often underestimate the complexities that exist when preparing for retirement and find themselves in over their head when making important financial decisions. Without understanding the long-term effects of one decision over another, a retiree may be well into the retirement years before the problem begins to surface. Retirement planning shouldn't be viewed as a rapid-fire micro decision-making process. Rather, it should be viewed as a time to design a master plan that's focused on what you can control. Then, protecting yourself from what you can't control and considering very little as being in your control. You should develop an income plan, detailing exactly how much income you need to fund your retirement lifestyle. It may be tempting to skip this part, but you should keep in mind that your lifestyle will change along with your tax situation, which means that what you need now will not necessarily be the same when you retire. Another step is identifying your income sources and showing exactly how much income will be generated from each source to satisfy your annual income need. You should seek to know an exact amount from each resource you have. Most people begin to struggle because of a disconnect between their mindset around their assets and the need they have for them. There are generally two camps with this, those who focus on protecting the principal by holding onto cash, while others hold onto public markets and hopes for long-term growth, making it difficult to abruptly change how that money is handled and effort to generate income. Most people have money sitting in bank accounts, large amounts of equity in their home, and money combined together in public markets. This isn’t a good strategy as cash in the bank is not earning anything, equity in a home is not earning anything, and money in the stock market has varying levels of risk. None of which translates to having consistent income in retirement, to get a handle on this. You have to realize that the system or mindset used to accumulate assets is not the same system or mindset used to utilize those assets. Designing an income replacement plan to have in place for your spouse to cover the loss of Social Security or pension income is another crucial step. You should ensure that your legal documents designating the financial power of attorneys, medical directors, wills, trusts, etc., are updated. Most people kick this part down the road thinking they’ll have time to get this done later, and later means when they need it.     Mentioned in this Episode: Successful Retirement Checklist

How can a mindset shift help you avoid one of the most common retirement planning mistakes? And how can you know assets you should set aside to generate the income needed to retire? Learn about the Five Minute Retirement Plan and why it’s an invaluable resource to leverage as you’re planning your retirement. The most common mistake people make when planning their retirement is assuming that the way wealth was created is the same way they should hold wealth in retirement, with the added twist of being a little bit more conservative. Popular belief suggests that, as you age, the level of risk an investor should take declines in an effort to preserve assets and protect them from market loss. Most people face a dilemma: by taking on too much risk they run the risk of losing money, while by not taking on enough risk they run the risk of running out of money. One approach often used is to simply keep the risk moderately high with the belief that profits can be skimmed from the portfolio while remaining below the total earnings for the year in an effort to protect principal and continue to grow the portfolio long-term. A variation of this approach is to use a dividend portfolio where you can receive dividends for income. With both strategies you face uncertainty when it comes to the income you’ll receive one month to the next, and you’re forced to accept the possibility of having no earnings in a given year due to market volatility or poor company earnings. Thinking of bonds as the answer? Think again. With interest rates on the rise, there’s a high probability of losing principal. The 4% rule for taking distribution: based on past performance, if you withdraw 4% from your account, then you should statistically carry those assets for 30 years. There’s an assumption that the way wealth was created (typically using a portfolio of growth stocks and ETFs) is the same way wealth should be held in retirement but leaning more conservatively. The biggest hurdle when it comes to retirement planning is the mindset you have about it. The primary goal of building wealth is to ultimately generate income. Most of Brian’s clients find themselves transitioning from having to work for a living to worrying about their money for a living – neither is a picture of freedom. The solution to this issue is understanding that growing money is done one way, and distributing income is done another way. Financial freedom is only achieved if the income is sustainable and you don’t wake up every day wondering if that freedom is going to be washed away with the next pandemic, political decision, leadership decision and other things outside of your control. Here’s how to calculate the assets you should set aside to generate the income needed to retire. Take your annual income total and divide it by 6% (this is the average using the Assets2Income Method). The result you’ll get is the amount needed to set aside to generate the income you need, right now, to retire. The remaining assets will be separated and invested long-term as a flushing inflation hedge.     Mentioned in this Episode: brianskrobonja.com/training-video brianskrobonja.com/consultation

Most people think about what investments they should be making or what stocks they should have in their portfolio when they approach retirement age, but they are going about it backwards. Brian Skrobonja breaks down the calculations you need to make in order to understand how ready you are for retirement and what your retirement plan needs to factor in to be truly financially free. How do you know when it's safe to retire? The answer depends on your plan and understanding the most important numbers in retirement. Success is the result of following a plan to fruition. The more specific the plan is, the higher the probability of reaching the goal. If you’re on the cusp of retirement, you may have a number of new questions and concerns starting to enter your mind. Are you invested in the right assets for retirement? How much should you be withdrawing from your accounts? Do you have enough saved up to last your whole retirement? If you search the internet, you’ll end up finding a lot of often contradictory advice. If you want to get a good sense of direction, take our complimentary Retirement Readiness Quiz. The quiz will ask you a series of questions to help you gauge how ready you are for retirement and give you an idea for what you still need to work on. One of the most important numbers you can know when it comes to retirement is your income needs. When you understand what level of income you need to afford everything in retirement, it’s much easier to work backwards from there to figure out what you need to create that flow of income. Total up all your bank payments, insurance, tax, and monthly living expenses. Include your regular expenses throughout the year as well because the total you’re looking for is how much money you will spend over a year. Keep in mind that your income needs in retirement will not be the same as they are when you’re working. Be sure to think about how you'll be spending your time in retirement because you will have a lot of time to fill. Once you have your income needs for the year calculated, subtract your Social Security and/or pension benefits, and any other fixed income. What’s left over is your income gap. With the income gap number you can calculate how much of your invested retirement money is required for retirement income. This will also tell you the yield you need to achieve to fund your lifestyle from the assets you have. This figure shouldn’t be more than 4% or 5%. Any higher and you considerably increase the risk of running out of money before you run out of life. You also have to factor in inflation on top of market volatility and healthcare expenses. If you stretch your resources too far right off the bat, you are setting yourself up to run out of money much sooner than you would otherwise. When making these calculations it’s best to err on the side of caution. Inflation will continue to be a major factor going forward. Using a historical figure of 3.5% inflation each year, we can estimate that over the course of 15 years, your income will depreciate by 68%. This is why you need two pools of income for retirement, one for income now and another for income later. The key is in finding income-producing assets, particularly ones that are pegged or indexed for inflation. This can be done either actively (getting a part time job, buying a business, owning a rental property) or more passively (annuities and other similar investments). Formulate a plan that articulates where you are, where you're going and what needs to be done to start receiving the income you need.     Mentioned in this Episode: Retirement Readiness Scorecard - brianskrobonja.com/retirementreadinessscorecard/ 6 Things You Can Do Right Now to Ensure Your Money Will Last in Retirement - kiplinger.com/retirement/retirement-planning/603596/6-things-you-can-do-right-now-to-ensure-your-money-will-last

What can you do right now to make this year the best year financially that you've ever had? And what is the one thing that makes some people achieve financial freedom faster than others? Learn about the simple mindset shift that will change the way you think about financial freedom and a quick mental exercise you can do to make that shift right now. There is a hidden danger that most people don’t even realize is a risk to their wealth and it’s the status quo. The slow slide of entropy limits your potential for growth. Brian made a commitment to himself a few years ago to get into better shape, and as much as the actual exercise and nutrition helped him lose weight, it was breaking his routine and changing things up that really unlocked things for him. The mindset shift from being someone “who doesn’t work out” to someone “who does work out” was a monumental change. Even a small mindset shift can make a difference when followed up with action. Many people dream but most never execute. For the majority of the things in life, the only true way to fail is to give up. The problem is not usually the action, it’s in the commitment to taking action. It’s easier to do something 100% than it is to do it 95%. When you’re not committed you will always use the remaining 5% to make excuses. Shifting your mindset is the first step to financial freedom. A simple exercise of imagining what your life would be like if you had an extra $100 a month, $1000 a month, $10,000 a month will help you visualize a more secure life. The key to the exercise is in thinking at what dollar amount do you stop thinking about yourself and start thinking about helping other people. What limits your ability to retire, to give, and to help others is the absence of financial security. In the absence of financial security, there's no confidence. For the average retiree/investor, they are usually focused on rates of return, paying off debts, and other peripheral things. What really matters is income. There are two stages of life: when you work to earn a paycheck to support your lifestyle, and when you have income from your assets to support your lifestyle. The sooner you get to the second stage, the closer you are to financial freedom. The mindset shift has to be a renewed focus on creating income sources. By focusing on how much income your assets are generating, you have a true measurement of how close you are to achieving financial freedom status and the ability to give and contribute to those around you. For most people, when they begin this process the amount they get from assets is zero. Their portfolios are usually designed to grow, not to generate an income. One of the biggest mistakes people make in retirement is spending down their assets and resources instead of finding an income-generating asset to support their spending needs. The entire goal of all financial planning is to use assets to generate income. The more assets you keep and grow, the more income you'll have coming in. Make adjustments to your portfolio to have income-generating assets, because the sooner you build your passive income sources, the sooner you will have financial freedom.     Mentioned in this Episode: brianskrobonja.com/newyearshift

The Chinese proverb “rags to rags in three generations” says that family wealth does not last for three generations. The first generation makes the money, the second spends it and the third sees none of the wealth.   The Chinese aren’t the only ones who acknowledge this as a problem. In the U.S. it is referenced as “shirtsleeves to shirtsleeves in three generations,” and in Japan it’s “rice paddies to rice paddies in three generations.”   These sayings contradict what I hear clients tell me they want their money doing for them after death. After nearly three decades of assisting families with estate planning, what I have found is that the majority have a deep desire to leave a legacy for their family. The idea of leaving a thumbprint on future generations seems to give meaning to what people spend a lifetime accumulating. So the question is, if people have an inherent desire to leave a legacy for their families, why is there such a high failure rate among generational wealth? I believe the answer lies in how estate planning is defined and how it is approached. A common definition goes like this: Estate planning is the process of designating who will receive your assets and handle your responsibilities after your death or incapacitation. The very definition of estate planning omits any mention of generational intent. That’s a problem. Once the first generation passes away, the estate plan has essentially fulfilled its purpose once the second generation has access to the estate. The idea for generational wealth is not new. Two of the most referenced figures related to generational wealth are Cornelius Vanderbilt — whose famous last words to his family were, ''Keep the money together” —  and John D. Rockefeller. The Vanderbilt’s didn’t follow their patriarch’s advice, and the family fortune dwindled away, but the Rockefellers heeded the advice and are now in their seventh generation of wealth with billions in assets.    The Making of a Generational Plan Leaving a legacy necessitates a written strategy designed to equip future generations with the information they need to carry out the plans set before them. This written strategy is in addition to traditional estate planning documents. The legal documents are needed to hold the assets, but a written generational plan is what actually keeps the money together. There are three foundational components needed for you to begin a conversation with your professional team of advisers to create and implement a generational plan.  Once you have these worked out, you can begin to build the framework for what could be one of the most meaningful things you ever do for your family.   First: You Need the Right Mindset When you are thinking about your legacy, it’s helpful for you to “blur the faces” of your heirs. The reason for this is that your goal is to reach as far into the future as possible to include generations you will never meet. At this stage of planning you’re thinking big picture about your legacy, and this is difficult if you have your kids and grandkids front of mind. It doesn’t mean you can’t have as part of your estate plan specific gifts to living family members, but that is a separate part of this process.   Second: You Need to Be Open with Your Family You need to be open with your family about your assets and your intentions. In general, people tend to live as if their money, their beliefs, their values and their wishes are a secret and miss the opportunity to communicate knowledge and wisdom to their children or grandchildren. To have a generational plan, you cannot have a mindset that assumes everyone in the family knows what you know and that they will learn what to do through osmosis.  Your children may have a good education or a successful career, but that does not mean they understand financial or generational planning. It is the giver’s responsibility to offer guidance and leadership to the family for them to know what to do when you pass away. I have had clients in my office in tears many times over the fact their parents will not communicate anything with them. In some cases, no guidance is being offered for managing the inheritance coming, and the heirs have to wait until their parents’ death to learn what is going on. There could be a number of reasons for this situation. Some holders of wealth either don’t care what happens after they pass away or simply do not want to deal with having the conversation. If this is you, then the idea of generational planning may not be for you, and that is OK. It’s your money, and you can do with it what you wish. But for those who do have generational aspirations, this is an opportunity for you to bring your family together to cast a vision for the wealth you have and outline your vision of a family legacy.  This can spark meaningful discussions about what your family stands for, what values you share, what wealth strategies are in place, and outline what to expect as one generation dies and a new one is born. This has the potential to pave the way for each family member to understand his or her role and responsibility to perpetuate the legacy.   Third: You Need to Put Your Intentions in Writing Legal documents can be a guide for administering the plan, but the truth is that the heirs of the estate will be the ones instituting the plan after your gone.  So it is critical not only that they know and understand your intentions, but that they are put down in writing so that they are transferrable to future generations. To maintain generational wealth, the goal should be to set specific provisions for how money is to be used, placing restrictions on how money is accessed and how money is to be replenished. For instance, many of my clients are not interested in helping their kids get out of debt or drive fancy cars. What they really want is to see their family investing in themselves (i.e., a higher education, business startup or expansion and charitable donations that support the family values) while growing the assets in the plan. Most successful people will tell you that experiencing what it took to create the wealth is also what helps them keep and grow the wealth. What it takes to create wealth is not transferrable to those who have never created wealth for themselves. So, the idea is to offer your heirs the means to be able to get a higher education, to earn more money or to start a business to generate wealth for themselves and experience what it takes to not only create the wealth but to keep it. Put your plan down in writing, possibly as part of a family constitution or set of bylaws that can be passed down. Each generation has a fiduciary responsibility to carry forward the intentions of the previous generation with the sole purpose to leave the estate better off than it was when they received it for the benefit of the next generation.   How to Keep Your Estate’s Assets Growing for Generations When you think of money and growing wealth, the tendency is to assume that investments are the primary driver behind the strategy.  However, when it comes to a generational plan, a specially designed whole life insurance policy, I believe, is the primary catalyst for growing and protecting the assets while also providing access to cash. The reason these contract designs are so effective within generational planning is due to their risk-mitigation characteristics. The inherent features of these contracts (if designed properly) guarantee the results and have everything needed to give a generational plan predictable results one generation at a time:   Guaranteed Death Benefit. A life insurance death benefit is guaranteed to pay a large tax-free lump sum at the insured’s death without the need for taking on market risk.  This death benefit has a multiplying effect, because it is purchased using discounted dollars (the total death benefit is greater than the total premiums paid). Once a policy owner passes away within one generation, the death benefit proceeds can be used to purchase new life insurance policies on select people in the next generation; thus creating new wealth for the next generation.   Guaranteed Access to Cash.  Through the special design of a whole life policy, the high early cash values offer access to cash through policy loans. This loan privilege allows the beneficiaries of the generational plan to have access to cash while the cash values of the contract continue to grow uninterrupted. Policy loans allow a private banking system to form within the generational plan and allow for unique repayment capabilities, because the insurance company does not require payment on loans until the death of the insured. By keeping money continuously flowing into these policies, new death benefits are established that create new future wealth while simultaneously driving cash values higher, allowing more access to cash.   Guaranteed Cash Values.  There are two parts that make up the cash accumulation within these policy designs: the guaranteed cash and dividends.  Benefits and guarantees are backed by the claims-paying ability of the insurance company, and dividends are the result of low mortality along with profit sharing of the performance from the insurance companies underlining assets.  The total cash value accumulates at a consistent and predictable growth rate that is tax-free and without market risk or volatility concerns.  This allows for easy cash flow planning due to having consistent and predictable growth.   Of course, life insurance is not a unicorn and could potentially have unintended consequences if the contracts were mismanaged.  For instance, Income and growth on accumulated cash values are generally taxable upon withdrawal. Adverse tax consequences may result if withdrawals exceed premiums paid into the policy. Withdrawals or surrenders made during a surrender charge period may be subject to surrender charges and may reduce the ultimate death benefit and cash value. Surrender charges vary by product, issue age, sex, underwriting class and policy year. A MEC or Modified Endowment classification can trigger adverse tax consequences by violating IRS funding rules. Policy loans and withdrawals will reduce available cash values and death benefits and may cause the policy to lapse, or affect guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax.   The Bottom Line on Generational Wealth To wrap up, the success or failure of a generational plan rests on three things:   Articulating your vision for the future and getting buy-in from your family for the vision.   Communicating your vision through a written document that details your vision and equips future generations to carry the plan forward.   Having proper legal work and life insurance designs in place as the catalyst for bringing your vision to fruition. Finding competent professionals who have a full understanding of generational strategies will be important.   You can visit visit BUILDBanking.com and brianskrobonja.com for more on this topic.     This is an encore presentation of one of our most popular episodes.