E153: Learn The Best Way To Make Lasting Generational Wealth For Your Family

In this episode, we discuss the idea of leaving evergreen assets to your heirs and how it’s the best way to create lasting generational wealth for your family. And also how you can turn Infinite Banking into an evergreen asset by creating a family banking business.

Topics Discussed:

  • What are real evergreen assets and how they relate to building generational wealth for your family
  • How to use your banking business to buy evergreen assets
  • Why do the middle class and below have a hard time leaving anything of value financially to the next generation
  • How the wealthy are able to maintain generational wealth
  • Creating a legacy that doesn’t last just one generation but can last for much longer

Episode Resources:

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Podcast transcript for episode 153: Best way to build generational wealth

Nate: In this episode, we discuss the idea of leaving evergreen assets to your heirs and how it’s the best way to build generational wealth for your family. And also how you can turn Infinite Banking into an evergreen asset by creating a family banking business. She’s Holly and she helps people find financial freedom.

Holly: He is Nate, he makes sense out of money. This is Dollars and Nonsense. If you follow the herd, you will be slaughtered.

Nate: All right. Well, everyone, welcome back to the show. We’re so pleased to have you. Once again, we do hope this show is helping you grow in many ways, financially, especially as you learn and pursue the Infinite Banking Concept and all the value it has. And so this is benefiting you really the best way to get the word out for this show is to share it on social media, to like it, to review it, especially wherever you’re consuming the podcast, to leave at least a five star rating or a review so it can get the message out to more people.

But that being said, today we’re talking about legacy planning, inheritance planning, estate planning of sorts, and really some observations we’ve made recently about how the wealthy are able to maintain generational wealth. And honestly, why the middle class and below have such a hard time leaving anything of value financially to the next generation. Holly, I think a lot of it has to do with the types of assets that the lower class and middle class are taught to invest in, and then the types of assets that the wealthier are taught to invest in. And I think that’s really where it falls down is that the assets that the middle class and lower class are taught to invest in are not what we would call evergreen. They’re not the best assets to leave for generations to come.

Holly: Well, and Nate too, I think it also comes to a fact of, we think generationally to an extent, but we really only think it to pass our children maybe, and maybe grandchildren, but not understanding that actually we have the ability to leave something far past what our lives will live. We can leave it for generations, many generations to come, not just one, but it takes a different mindset of, let me just take my money and put it in this asset, like a pension program or an annuity versus what are the wealthy doing that’s different that leaves that generational wealth for years to come.

Nate: That’s right. So, I guess that brings us to this concept. I’ve used the term evergreen assets. And really what I mean is I really believe that this idea of evergreen assets are what the wealthy have been buying for a very long time. And it’s pretty known that the wealthy people are the ones who own these things that we’re going to call evergreen assets and that the middle class and below never really get a chance to own these and never really focus on them. And so what an evergreen asset is, is essentially an asset that will never go away. So an evergreen asset, the common examples of those is something that essentially can be passed down from generation to generation that can stay inside of a family. It never has to be sold and it can continue to produce value for as long as it’s in the family.

So a real evergreen asset or the most common ones would be things like raw land, farmland, real estate, whether it’s commercial or residential real estate, businesses, oil, commodities, these types of real assets, forestry, forest, for sure. And especially businesses, as I mentioned, these are the things are what we would call evergreen. These are things that can go on forever. A family business can go on forever from generation to generation. Forests can continue to be reused, oil and gas, commodities, different things like that, as well as obviously real estate, raw land, farmland. These are things that are evergreen, that if we invest money in now, they can stay in the family and continue to grow and produce value to the family for generations to come. And these are certainly just by mentioning those, I think we would all agree that those are the ones that are most often owned by the wealthier class of society. They’re the ones who own the majority of those.

The assets that the middle class and below are taught to use are actually the worst assets at being evergreen, like pension programs, IRAs, 401(k)s, 403(b)s, any retirement program annuities. These are the types of things that the middle class and below that we’re all taught to invest in. And they’re not evergreen. Some of these die with you like a pension program and annuity, something like that. They die with you. So they’re obviously not meant to be evergreen. And then even the retirement programs that are so heavily promoted for the middle class and below, those retirement programs are very poor instruments in creating any sort of generational wealth, because once you die with a retirement program, the government has very strict rules that require your beneficiaries to liquidate those programs. So they’re certainly not evergreen, they have to be liquidated over a period of time, typically 10 years. The heirs have to liquidate them in that period of time.

So there’s no way they can be evergreen. They’re meant for a purpose. They’re not really meant for generational wealth. So this is our problem is that we all grow up in this society, we all get jobs and we put money in retirement programs. We think that, that it’s in our best interest, rarely is it. But certainly if your ultimate goal is generational wealth, which I think is certainly very biblical, very important, evergreen assets are what we’re going to call the assets that can stay in a family for forever. Those are the ones that you should really be focusing your attention on.

Holly: And the reason you really wanted to be able to do that is so that you’re not forced to have to liquidate something, Nate. But what you’re able to actually do is to educate and train up that next generation to actually further those evergreen assets into something that lasts legacy like years. It’s like where you hear of farms that have been in a business or a cattle ranch or things like that, that have been in a family hundreds of years. This is something you can actually, if it’s an evergreen asset, can literally be that type of asset that lasts hundreds of years for future generations versus there’s an end in sight with any of the other pensions annuities, retirement programs that you and I have all been told those are where we should park our money. And one of the things is, is that because we don’t even control that money, Nate, the government tells you when and how you have to liquidate this and what that timeframe is.

Nate: Yeah. You nailed it.

Holly: And so I think that, that’s one of the keys too in this, is an evergreen asset typically doesn’t have the government telling you what you have to do and when you have to do it by.

Nate: That’s a huge point. I’m glad you made that. Absolutely. That any asset that your family is actually not in control of that the government writes the rules on and can determine what they can do and what they can’t do with that asset, you want to try to run for the hills.

Holly: Yeah.

Nate: Especially if your goal is, as we said, the goal is creating legacy that doesn’t last just one generation, but can last for much longer. And so that’s why we’ve always said too, that the idea of retirement is a very middle classy thing in a lot of ways these days, or at least the way it’s being pitched right now. And so if your whole goal is retirement, things like pensions and annuities and retirement programs, people think that those are great, but they’re only meant to fit this one goal. And that one goal is a lousy goal. The real goal should be to become financially independent, financially free to build wealth and hopefully wealth that will last for more than just your generation. And certainly more than just your kids too. And those are the types of things that we would hope to leave evergreen assets, things that can stay in the family for generations and still produce value for generations. Things like real assets, land, real estate, businesses, and so forth.

I guess that leads us to this point too, Holly, that you and I being big proponents of the Infinite Banking Concept and how to use whole life insurance policies to become your own banker and finance things of life, finance your investments, and personal items and business, and all sorts of things from this new mentality of banking that’s being all funded from your policies. So that’s the idea, the issue Holly, is that Infinite Banking itself, the policies by nature are technically not evergreen-.

Holly: No.

Nate: … by themselves. They’re technically not evergreen. Whenever you buy a policy on you and you are the insured and you die one day, the death benefit, which is going to be a huge amount of money hopefully, is going to pass to the next generation, but the policy itself is not exactly an evergreen asset. There’s a death benefit upon the insured passing away. And that policy ends at that point. So what I’d like to do is spend the rest of this time trying to figure out, or at least mentioning some of the ways that I feel it is that we should be turning the banking process into an evergreen asset. And I feel the best way to do that, the best way to turn IBC, Infinite Banking into an evergreen asset is by treating it like a business, that really your goal should be to become a family banking business, to truly be in the business of banking for the family.

As we said, businesses are evergreen. You can pass businesses down generation to generation. So we should really consider the idea that we’re going to essentially create a family banking business, consider Infinite Banking, not to just be a policy, but to be a business venture that you’re entering into and then passing the family banking business to future generations and having it be funded from one generation to the next, by the death benefit from the preceding generation. So essentially you can turn Infinite Banking into an evergreen asset, I feel, by treating it like a business and you’re passing on truly the banking business that you started and you can help fund it with death benefits. One last point to make Holly is that the process of banking for you and for every generation after you, the process of banking, regardless of Infinite Banking, just the idea of being in the world of banking, that process is evergreen.

Your kids will always… Banking is, it is a reality. Money has to move from place to place, banking is. It can’t get rid of it. You won’t get rid of it, whether it’s cryptocurrency or not in the future, the banking is going to exist. The movement of money will exist. So all I’m saying is the process of banking already is evergreen. We might as well pass on the banking business to the next generation and so forth down the line that it will get larger and larger with each passing generation, if it’s treated correctly. And if they teach their kids and their kids teach their kids and their kids teach their kids about what we’re doing here, you can pass on an evergreen banking business where in a few generations you could have a banking business worth 50 million, a hundred million dollars just within the family.

So that’s obviously with the Rothschild and the Rockefellers and those types of people, they think like this, they think about how to create evergreen assets and you can turn IBC into an evergreen asset. You got to treat it like a business and actually maybe even incorporate, actually start a real business for your family bank and help your kids understand what’s going on, help their kids understand what’s going on so that the process of banking can be evergreen.

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Holly: And Nate, I think that the reality is, is that you can’t just say, oh, I’ve got a bunch of these life insurance policies. Those policies actually are what create that bank, that process of banking. And then from there, those banks, the policies themselves are what you have to utilize to create a business. And I think like my dad and Ray, he’s done this very well. He created a loaning business using policies, but those will pass because what he’s created is assets from the policies. And so you have to think of it as a business, we have to treat it like a business and we have to follow the rules of a business.

So you can’t just say, oh, I’ve got a policy and that’s all you did with it, and then when I graduate from this earth, it’s going to pass to my heirs and they’re going to do something else with it. You actually have to create something from these policies, which is the bank. That’s really the process we’re talking about. And what is that bank do? And what is that business? And that’s how we are creating evergreen assets using life insurance.

Nate: Yeah, absolutely. I think that there’s some perfect marriage, you could say, between using your banking business that you’re starting. So the policies are simply where you’re building up the capital to fund your banking business. I hope people see that. You’re in the banking business, that’s the way we want to go into it, that you’re getting into the business of banking. The policies are simply the source of capital that you’re pulling together to operate as a bank, because it’s way better to do it that way than it is inside of a shoebox or a bank account or anything like that. You want to be in total control of it and profiting from it. So the policies are a means to an end. They’re the means to be in the banking business, that’s the whole goal.

So if you would use your banking business to buy evergreen assets, then now you can leave your family, both the banking business that was used to fund the evergreen assets and the assets themselves. So if you put your capital into policies, use those policies to open up new businesses, to buy land in real estate and commercial properties and oil and gas and forests and all these awesome things that the wealthy people are obviously the ones who own all of these. We’d like to get our hands on some of them and be able to create evergreen generational wealth that can continue on forever. If you would build a real banking business, that’s funded and capitalized from policy cash values, use that banking business to finance the investments in these other types of evergreen assets. And whenever you pass away, you can leave both the assets and the banking business that will then be totally replenished with a large death benefit lump sum of capital. And then if your children and your grandchildren, essentially your children which would be the next generation probably of decision makers, would choose to use the capital that you leave.

So, you’ve left these evergreen assets as well as a banking business. You’ve taught the next generation about how you operated as a banking business. And you’ve told them what to do when they received the death benefit, which would hopefully be use the death benefit to fund new policies, fund policies on them, fund policies on their kids. And whenever they have grandkids, to fund policies on their grandkids with this pool of capital that you’ve left, you’ve now left them essentially a banking business that has purchased evergreen assets in your generation, that your kids will then use to purchase more evergreen assets and their generation. But that this pool of capital will just keep on getting larger and larger and larger as generations go by.

So if you would finance the purchase of these, of businesses and other evergreen style assets with policies, you can not only leave the assets, but you can also leave the banking idea, the process of banking with capital seed money for them to fund to continue the banking business. And the ideal goal truly would also be that if possible, you would not only leave them with your death benefit dollars, but this is why we suggest opening policies on your kids and your grandkids in order to not only leave them with your death benefit, but also leave them actual policies to operate with.

Now, they would certainly need to utilize the death benefit proceeds to fund more policies. And there’s some complex strategies in there too, Holly, that we could mention, which is preparing places for that money in advance, using policy loans to fund new premiums that then the loans are paid back with the death benefit from the preceding generation. There’s some cool things to discuss in here too, of how you could prepare it even before you pass away. You could also gift money to your grandchildren to buy policies on their parents, which are your children, so that if you die and your children squander all of the money, whenever your children die, the death benefit that you funded for your grandkids to own policies on their parents, your kids, then a death benefit would automatically be passed down.

So there’s some cool strategies you can implement, but all I’m saying is evergreen assets are what you want to leave if your goal is generational wealth, Infinite Banking can become an evergreen asset by treating it like a business, by opening up a true banking business. You don’t exactly have to incorporate, but you very well could. You could actually create an entity to be the banking business, use that entity to fund your investments, pass not only the investments, but also the bank to the next generation, and then teach them how to fund policies with the death benefit that you have on your own life. And you can essentially create a very solid evergreen banking business.

Holly: Yeah. And you really, I just want to encourage you guys, it is not hard to create this and do this. There’s the simple, I say simple, but rules to follow and that, but Nate and I’s heart and desire is to help you guys create evergreen assets and to actually be able to build your own bank for your family and leave a legacy for them. And so it’s not as complicated as it sounds. It’s just something we basically, Nate, have never been taught. And it just takes following some simple steps and some rules in order to be able to create this and pass this on to your future generations. And one of it is talking to your family and your kids about this so that they understand exactly what you guys are doing in order to leave them something.

So I think the beauty of it is, it’s not just talking to your kids, maybe it’s you having to talk to your parents as well. I’ve been blessed that my dad basically passed it on to us and is imparting it into us. So I get to impart it into my kids. But many of you maybe you’ve started it, but maybe you need to share it with your parents, or maybe you need to start talking to your kids about what you’re leaving them and why you’re doing what you’re doing so that they feel involved in the process. But don’t be overwhelmed by thinking I can’t ever do this. It’s not as hard as it sounds. And I’m going to use a phrase, Nate, that my dad always says all the time, Ray Potit says, it’s third grade math.

And really in reality is it’s not as hard as everybody wants you to be. Don’t be afraid to go and venture outside the box. Like we said, don’t follow the herd because all you’re going to do is get exactly what they have when they retire or when they graduate from this earth, there’s not much left to pass on for future generations. It might only pass to the next generation and that’s it. And so you can create a lasting legacy. It’s just a matter of stepping out there in that faith and just trying something and seeing how it works.

Nate: Yeah. And the thing about Infinite Banking too, or just the idea of creating evergreen assets, I think is very important. I think that the world has, with these retirement programs, I don’t know if I would say intentions are bad, but if you see the effects of what’s going on, I think there’s so many people who are families who are stuck in the middle class that could actually be, after one, two generations could be quite wealthy, but we’re just all taught to use these tools that are just lousy at creating generational wealth. So they’re assets that die with you, that liquidate right after death that you can’t keep. And I think that those are not ideal, but if you were to, like Ray has done, finance huge amounts of investments all from his actual financing company, his banking business, and then plans to lead, not only the assets, but the business itself, the banking business to the next generation, where they will receive plenty of capital to open up new policies, to continue the business of banking, it’s a foolproof way to make sure that this process is evergreen.

If you don’t think your kids can handle it, they’re not interested in it, they’ll squander it, but you want them to keep the banking business going. Then obviously the solution would be to leave a trust as a beneficiary and to meet with an estate attorney and discuss with them your actual desires for what’s going to be done with these death benefit assets and other assets you want to leave. So the goal would be, trust, you could certainly use it as a trust. And I think you probably should, for the vast majority of people should have a family trust, but the goal would be that trust doesn’t have rules because you don’t trust the heirs. So you want to be able to trust your heirs. You can leave it in a trust anyway, but you would certainly want them to be on board. So education’s very important, but the process of banking is evergreen.

The banking business can be evergreen and you can fund it in an evergreen way by how you set it up. Evergreen assets, I believe are where true wealth is found, the regular assets for the middle class, unless just the 401(k)s, pension programs, retirement programs, and so forth are pretty lousy at creating any real significant impact for generations. They have to be liquidated. They die with you like annuities and pension programs. They’re not ideal for passing on wealth like a business would be, a family business, a family farm, farmland, raw land, real estate. And so the way to turn Infinite Banking into an evergreen asset that would fit in along all of those other things is to treat it like a business, possibly even incorporate, treat it like a real bank, a real banking business, and that your family owns a banking business. And to use the proceeds from your death benefits to expand the banking business and the future generations. And if everyone would commit to that and learn about that, you could have a very profitable banking business that will never go away.

So, that’s exciting, that’s what I’m working for, but Holly, we’ve been on for quite some time. I don’t know, any last words?

Holly: I just want to say, just make sure your assets aren’t dependent on somebody else’s control. That’s one of the biggest things here. And with an evergreen asset, you’re not dependent on somebody else. It’s you controlling your money, your future, your legacy. So as soon as you turn control over to somebody else, you lose the power and the decision making of what you want to do. And that’s really what Nate and I’s goal is here, is for you guys to actually be in control of your assets and what you want to leave your family now and in the future.

Nate: Exactly right. And you’re right, the biggest issue with those non-evergreen assets is twofold. They have to be liquidated or they die with you. So they’re not evergreen. And as you brought up, Holly, they’re essentially the rules about them. The government can actually force you to do certain things with those types of assets. So they’re at a poor place, they’re built for the middle class. They’re built for non-generational wealth. They’re not evergreen. So I would encourage evergreen assets. I would encourage you to treat Infinite Banking as if it was an evergreen asset. And the way to do that is to operate as if it’s a real bank. That’s been our goal the whole time.

Holly: Yep.

Nate: We’ve said it many times that banking is a business. The policies are a means to an end, to enter into the banking business. They are the capital for your banking business treated as if it’s a business, possibly even incorporate as a business and pass that both the knowledge and the business practices down to the next generation to use. And then while you’re alive buy those evergreen style assets, fund new businesses, build new businesses, all sorts of things. Use your policies as the capital source to do that. So then you can leave not only those assets, but then obviously the banking business that funded all of them. And hopefully it’ll expand and grow if your kids follow the rules and treat it wisely. Well, very good. Well, thank you guys so much for joining us. We hope you benefited from it. This has been Dollars and Nonsense. If you follow the herd, you will be slaughtered.

Holly: For free transcripts and resources, please visit livingwealth.com/e153.

Announcer: Listeners, one last thing before you go start your journey towards financial security and wealth today. Visit livingwealth.com/beatinflation. You’ll gain instant free access to the beginner’s course Ray, Nate and Holly made just for you. Again, that’s livingwealth.com/beatinflation.