Transcription
So you're a billionaire and you've run into a problem. You've amassed all this wealth, all this power, but you're getting old. And your kids, your nieces, your nephews, they're all lining up to kiss your butt to make sure they get listed on the will. But your family doesn't know anything about money. They didn't have to grind it out like you did. Everything was given to them. So if you leave any money to them, they are gonna squander it.
No, seriously. A staggering 70% of wealthy families lose their wealth by the next generation, with 90% losing it by the generation after that. Two generations, that is all it takes for all your wealth, all your hard work, the empire you've built, to go circling down the drain. You cannot let that happen.
But lucky for you, ultra-wealthy dynasties have already figured out how to solve this problem. And at the center of it all are the Rockefellers. Who, after 80 years since his death, seven generations later, John D. Rockefeller's family is still standing as one of the wealthiest families on Earth. How wealthy? Well, no one knows because they're just that good at hiding it. And in this video, we are gonna expose it all. Trusts, family foundations, family offices, and a super clever tactic that not many people know about. Stay dangerous. This is how the rich get richer, and this is definitely not financial advice.
Here's what you have to understand about the ultra-wealthy versus the masses. The masses want to get rich so they can own the Lambo, so they can own the yacht, the mansion, the private jets. They want to show it off. They want to flaunt their wealth. But owning stuff is for the peasants. When you legally own something, leeches want to sue you every chance they get. Thieves want to steal from you. The government wants to tax you into oblivion. Ambitious prosecutors want to take you down. And the plebs want to pillage you. That is why the ultra-wealthy do not want to own stuff. Because owning stuff sucks.
Instead, what you want to do is have control over your assets as if you owned it, without actually owning it. You want to live in the penthouse on Billionaires' Row without it being tied to your name. You want to sell your mega-yacht without it being under your name. Just ask the Russian oligarchs if they agree. The key is control, not ownership. You want to be able to do everything you can with the thing as if you owned it, without having your name on the papers. Because when you have ownership, taxes follow you, and liability follows you. And also, sometimes fame follows you. And so those three things can be problematic. And the people that are really wealthy want control, but they don't necessarily want the liability that comes with ownership, and they don't necessarily want the taxation that follows title and ownership. And so many, many of the wealthiest people in the world, we don't even know their names because they have a ton of control, but they're not names, they're not personally on a lot of assets and wealth. And that's really the name of the game.
This is my friend Caleb, by the way, with Better Wealth. And he's dedicated his life to learning how the ultra-wealthy do things, to bring down that knowledge to everyday people like us. Do you think there's richer people out there than, you know, the people that we see on the Forbes list like Bezos? Yeah, 100%. There's there's people that are way, way wealthier than the people on the Forbes list because of entities and structures and other things that they control that they're not giving credit for. And they do it intentionally.
But how do you control something without owning it? Simple. The elite have created certain entities. They've created certain tools that give you all the control you want, while technically on paper, you're as broke as the beggar on the streets. And the first tool that families like the Rockefellers use is called a trust.
In 1934, John D. Rockefeller Jr. established trusts for his daughter and five sons that consisted of oil company stocks and real estate holdings. These trusts still hold the bulk of the fortune. Another set of trusts were set up in 1952 for his grandchildren, the fourth generation of the family.
But why? Why trust? Think of a trust like a corporation, but for your family. You put your money and real estate and businesses into this trust. And once the money is in the trust, you can invest that money however you want. You get to set the rules for what happens to your money when you die. But most importantly, just like a corporation, once you put money in the trust, you do not own it anymore. The trust owns that money. You win. The trusts are completely separate legal entities. You give up all the ownership of that money, but none of the control. So on paper, maybe you're worth a measly $10 million, but in reality, you might be worth over $100 billion with all that money safely stashed in hundreds of different trusts. And because these trusts don't directly belong to you, your money is protected if you get sued or something. They can't come after the money you have in your trust, just like how if you sued a corporation, and they don't have any money, you're not going to get a cent out of the founder's personal bank accounts.
Also, in America, we have a death tax, which means when you die and you pass on your money to your kids, they're gonna get hit with a death tax of up to 40%, one of the highest in the world. And trusts help your kids avoid that pesky death tax. That way, when you die, your kids just take your place on the Board of Trustees and all the control that comes with it. But trusts are just one part of the succession plan. What really ties everything all together is this next tool that is very, very sneaky.
When you hear the word life insurance, it conjures up images like this. And for the average pleb, life insurance is exactly that. But for the ultra-wealthy, life insurance is this insanely powerful tool that they keep on their reps. There's a reason why the Rockefeller family has their own life insurance company, the Rockefeller Insurance Company. That's because for the ultra-wealthy, they use life insurance as kind of like a bank account, but not just any ordinary bank account. They use life insurance as kind of like a super bank account that can be used to invest tax-free.
It sounds weird, but this is because all life insurance is is a contract, a contract that has some very nice tax benefits. Because politicians don't want to tax the poor widow that just lost her husband. The problem is, the traditional life insurance policies that are sold to the masses absolutely suck. They're made to enrich the insurance companies, and not you. You buy a life insurance plan, you pay some money every month to your insurance company, and in exchange, when you die, the company gives your family a couple million dollars. Nothing more, nothing less.
So what the ultra-wealthy do is they take this basic contract and they just negotiate better terms. And this allows the ultra-wealthy to do something very, very special. They put as much money as they want into their life insurance policy where it grows tax-free. And then they use that money that they put into the life insurance policy to invest in whatever they want. So their investments grow tax-free. Your money's safe, it will grow the rest of your life, it will grow tax-deferred. You can use your money tax-free. It will get passed on tax-free. It has a lot of other benefits. And so what the wealthy use it is, they don't use it as an investment. They use it as like a safe asset. I call it the "and" asset because they're able to give their dollars more than one job. And so they're able to do that while it's protected, while it's off the radar screen of the IRS because it's not considered income. That's how a lot of wealthy people use it.
And then step number three is usually what they do to take the money or to utilize the money. You're not withdrawing your money. What a lot of people do, because that would be in a lot of cases taxable upon gain, they're borrowing against it or using a third-party bank to borrow against their asset. And as a result, if you borrow against it, it's not considered income. So a lot of wealthy people like Elon Musk and all these people, they're borrowing against the equity in their businesses, insurance. And when you max fund insurance, that's why a bunch of banks do this. There are over 3,000 banks today that have what's called bank-owned life insurance. Some of their safest assets in the bank is in bank-owned life insurance. Why do they do that? It's an asset that they can borrow against. And key team members and employees and so many institutions use life insurance not as a death benefit, but as an and as a place to store and use their money.
But not only that, just like a trust, the money that the rich put in their life insurance policies are also protected from creditors and legal penalties. But where things get really crazy is when the rich start borrowing money against their own life insurance policy, and then they use that money to invest in more assets. So basically, what rich people do is they put, let's say, a million bucks into their insurance policy. And that money in their insurance policy, they invest it into like the stock market or something, and it returns 7%. And the whole game is borrowing like $100k from that million at like a lower interest rate on your loan at like 3%. So yes, that's exactly it. So in just very conservative numbers, if you borrowed at 5% and you earned 7%, your money in your insurance is continuing to grow, and you're getting all the benefits of insurance. But on that borrowed at 5%, earning 7%, that's a 40% rate of return in the first year. So you're getting a 40% rate of return on that side. And people might say that doesn't make sense. You're becoming the bank. You're using arbitrage. Your investment is the 5% not the full money because your money is in your policy continuing to compound. So the same thing goes with making a greater rate of return. Is you, the benefit of this is having a dollar doing more than one thing. And the people that borrow against it, they have to make sure that their activities get a greater return than what the cost of borrowing. And if you can do that, you can really have a dollar doing more than one job.
But how does taking a loan out on your own life insurance policy even work? Like, where do you even go to do that? You could go right to the insurance company, and they give you an unstructured loan, no questions asked. And you could say, "Hey, I want a $200,000 loan." It's almost like a HELOC, but it's unstructured. So when you go to a bank and get a loan, you have to pay that money back. An insurance company, you don't have to pay that money back because they know that you're gonna die someday, and they have that unilateral contract, and they're paying upon your debt. So the cool thing is, Jake, you have this outstanding loan, a $200,000 loan, you're doing things with it, and you never pay that money back. When you die, the insurance company is going to pay out your beneficiary, your family, minus what you owe them. So insurance is one of the only institutions that doesn't require you to have to pay back that loan because they're hedging both sides. They're hedging your mortality, and they're also hedging interest rate. And because they're a lifelong contract commitment, they're going to last a lot longer than we live. They can play the ultimate long game. And so we call these loans, but they're just a more efficient way to use money. And you can decide if you want to pay them back because it's either going to come out of your legacy, yeah, it's either going to come out of your legacy or out of your pocket while you're alive. Makes sense.
So when you say unstructured, that means that there's no like repayment terms? Like I don't know how you decide? Yeah, unstructured means you decide when you pay them, if you pay them, how much interest you pay them. And you're really in control because you are the owner of that contract.
But where it really ties everything back together is that when your kids die, you set enough so that the money that gets paid from their life insurance policy goes right back into the family trust. When kids are born into the Rockefeller family, they buy a bunch of life insurance on them. And obviously, the kids are able to buy things and continue to spend. But at the end of the day, when they die, they have a massive death benefit that goes back to the trust, replenishing the trust on what they spend during their life. So the way that a lot of people can incorporate something like this in their own life is each generation has life insurance, and they have what's called max-funded life insurance. And so they're using it for like a bank, and they're using it to buy other things. And maybe some of them have outstanding loans. Well, what happens when the next generation dies? And the death benefit gets paid? Those that death benefit could ultimately pay back your outstanding loan, and you're getting all the benefits of compounding. So we call this the waterfall effect because if every generation had life insurance, you're almost guaranteeing every generation is going to be better off, no matter what decisions they make during their life, because they're ultimately upon their death will reset the trust or the family fund, all while giving you control and access to use and invest all while you're alive.
And when Caleb realized that the ultra-wealthy were doing all this, he knew that he had to share with the rest of us. So you can think about this from a standpoint of, from day one, you have safety, it's easily accessible, you have great growth rate, you're able to use it, there's built-in guarantees, and you're compounding your money tax-free. That gives you options for the future. And you have protections whether you die or you get really sick. Before all that time, you have an asset that's continuing to compound for you. No other asset, no other paper asset gives you anywhere near those benefits, all while giving you control to do what you want with your money. That's that. For me, that was like, oh, from day one, I can control my money and invest it and use it for whatever I want, and I get all the benefits. That's that. For me, that was like, okay, they're neat. More people need to hear about this because we haven't been told the truth as it relates to the power of this asset. Which is why Caleb created Better Wealth to take the strategies that the ultra-wealthy use and make them available to smaller fish like you and I. And if you think that this overfunded life insurance strategy is something that you would want to do, pause the video and go to betterwealth.com/jake with the link below to learn more. That's betterwealth.com/jake with the link below to learn more. More information on this later, but Better Wealth is the paid sponsor of this video, and I am not a registered financial advisor. So check with professionals before making any financial decisions. And make sure you don't go anywhere yet, because no family dynasty is complete without the good old family foundation.
At some point in building your empire, you're going to realize that you have literally too much money to spend. At a certain point, buying another mansion, supercar, private jet, even another decent investment is not going to change anything for you. And that is where the family foundation comes in. Ah, yes, good old charity. You can create a foundation, put some of your money there, not get taxed on any of that money, and you'll still have control over it. Wink wink.
And there are many benefits to having a foundation. On one hand, your foundation will make you look all noble and generous. It makes your wealth a little bit more palpable to the masses. He is a billionaire, but at least he's also a philanthropist. It's a good PR move. On the other hand, legally, you're only required to spend 5% of your foundation's money on charity every year. Only 5%. The rest you can use to hire family members and pay them a generous full-time salary. You can use it to get your name plastered on your university building. The big thing is, there are a lot of wealthy people in the news that are praised for giving most their wealth away. Okay, and it's amazing, and I think it's awesome that they're doing that. But they understand that if you donate or give your money away, it's, you know, you get a deduction, you don't have to pay taxes on that. So what the wealthy families do, instead of giving money to charities that they don't have control of, they create their own private family foundation, which is their own non-profit giving, essentially. And they're able to donate to that organization. Again, they're not donating to themselves because it's the foundation, it's its own entity. But I wonder who controls that entity. Jake, they do. Their families do. And so they control these massive amounts of wealth, and they can ultimately decide where that money goes, what they do with that money, who the cost of running that foundation, and on and on and on. And so I'm not saying that wealthy families aren't charitable. That's not true at all. I'm just saying that they give strategically. They get a bunch of deductions today, and they maintain control of that money, and they only have to give away a fraction. And part of the fraction of what they need to give away can ultimately get paid for operating the foundation. And so there's stories across the board of people that are being super, super generous with their foundations, people that are setting up private family foundations and barely giving anything away, but they're using it as another wrapper to look charitable, but to ultimately just control money. And so a lot of families have a foundation at the bottom of their structure because at the end of the day, all the money eventually will flow down to the foundation. And the foundation is another example of control entities. And it's another example, when set up and used properly, is an amazing legacy tool to pass on money to the next generation.
In Rockefeller's case, he didn't use foundations as just a way to control his money. No, he started the Rockefeller Foundation to mold society into his vision. He used the Rockefeller Foundation to create the modern-day education system as we know it. Click the card on the top right corner to watch that video. Super good. He used this foundation to push modern Western medicine and vaccines and to suppress other alternative forms of medicine. Video coming soon. Make sure you subscribe. But what can you say when you're a man that has it all? What is there left to do other than to change the world into whatever you believe it should be? And in terms of where your foundation is in your web of trusts, insurance, corporations, etc., your family foundation is going to be at the very bottom of everything. Well, it's at the bottom because a lot of times foundations are not a for-profit. It's not creating wealth. And so a lot of times the money is created. It's either created through ownership and investments. And so it usually, when it talks about flowing down, at the end of the day, a lot of time the way that money gets into a private family foundation, it's either donated or flows from a trust. And so by default, foundations don't necessarily create a ton of income. They usually are an entity that you would flow or donate. An example of this is when Mark Zuckerberg donated a bunch of his wealth to his foundation. It's like that's an example of he made all of his money by being an entrepreneur, and then he donated. And you have a ton of examples of this of people donating to private family foundations.
And there you have it. At the top, the patriarch makes all the money. He then puts the money into trusts. The family members are a part of the trust, and they each get their own life insurance policies. Any extra money can be put into the family foundation for other strategic goals. And when the family members die, their death benefit from the life insurance goes right back into the trust to keep the family pot growing. And to manage all of this, you have what's called a family office, basically a group of the best of the best wealth management advisors to deal with this giant mess.
And there's a reason you probably haven't heard about most of this. The wealthy have tried to keep trusts, foundations, insurance, all of this on the down low, mainly because again, they don't want to create a spotlight to how they're controlling and passing on money. And so it's the same people that will create confusion in the education system. These are the same people that are saying life insurance is a horrible place to put your money. They know it's not an investment, but they love financial pundits saying that it is. And as a result, many people are just buying term, investing in the stock market, doing their thing, putting their head down, and are getting broker and broker every generation because they're not controlling and using their money like the wealthy.
So one of the biggest reasons most people are not talking about this life insurance, even in our industry, is majority of people are not incentivized to do the right thing. So the reason why a majority of life insurance policies are not set up like what I've been sharing with you is it comes down to compensation and commission. We get paid about one-tenth of what a typical life insurance person would get paid for setting up a policy. The reason for that is we're trying to keep the policy as flexible and as overfunded as possible, and we get paid on what's called the base premium. And really, the secret behind this is getting the base as small as possible and using other ways to front-load and finance the policy. And so number one, the ultra-wealthy don't want you to know this because they've been using these strategies for years upon years. But then a lot of the people in our space don't necessarily want you to know about this because they're making a lot of money selling typical life insurance policies for estate planning. And so the reason we're able to do this is we play the long game, and we essentially are saying, hey, we're gonna play the volume game. We're gonna do the right thing, we're gonna make money helping people set this up, but we know that we're just gonna serve a lot more people. And in the end, it's a great business for us to be in. But everyone that works with us gets an incredible policy that's super flexible, that is almost feels illegal to have.
So again, if you're interested in using life insurance in this manner, scroll down and click the link below to go to betterwealth.com/jake to learn more. His team will get clear about where you're at and where you want to be to see if you would actually benefit from the strategy. And if this strategy would help you, they'll walk you through all the steps and help you get set up with everything. And keep in mind, Caleb was telling me how this strategy really only makes sense if you're able to save at least $10,000 a year because there are some fixed costs that wouldn't make it make sense if you're only able to put in a few hundred dollars a month. But if that is you, scroll down and click the link below to go to betterwealth.com/jake to learn more. Better Wealth is the paid sponsor of this video, and of course, I am not a registered financial advisor. You should always check with your professional financial, tax, and legal advisors before making any financial decisions. This video is for informational purposes only. And as always, stay dangerous.