[00:00:00] Intro: Welcome to Private Banking Strategies Podcast with Vance Lowe and Seth Hicks, your secret weapon to protect your assets and never have to start over financially again Vance and Seth help high net worth individuals, families, business owners, and investors structure an asset protected tax-free fortress for their families.
[00:00:21] Intro: Learn how to keep what you earn and use the velocity of money to create your own private banking system. Join us on this journey as we explore the secret strategies of the rich and political elite, and help you take total control of your financial security. Now, onto the show.
[00:00:38] Seth Hicks Esq.: Hello, and welcome to Private Banking Strategies podcast with Vance Lowe and Seth Hicks.
[00:00:43] Seth Hicks Esq.: Vance, how are you today?
[00:00:45] Vance Lowe: I’m doing great. I think we’ve got a topic that everybody needs to know about today, and I’m anxious to get into it.
[00:00:50] Seth Hicks Esq.: Yeah, we’ve been talking about what the f- first processes look with, look like with private banking strategies, and how you jump in and [00:01:00] get an eight-year analysis and understand how it can work for you.
[00:01:03] Seth Hicks Esq.: And now we’re gonna segue into a little bit deeper dive on ownership alignment of policies, and are there advantages or reasons that you would structure or hold a policy in one entity or in a personal capacity as opposed to others? Are there reasons?
[00:01:25] Vance Lowe: Yeah, and I r- I really look forward to that. I think PBS, Private Banking Strategies, has such a unique approach in this area that no one’s been able to duplicate, and I’m just anxious to really get into this so people can start to think how protection, how is involved in what we do.
[00:01:45] Seth Hicks Esq.: The first place I think to start with understanding how life insurance contracts work is to understand that they are regulated by each state. They’re not regulated by [00:02:00] the federal government. They are regulated state by state according to where you live.
[00:02:06] Vance Lowe: So, that being said, that can complicate things because, gosh, what if I’m in one state, I live in one state, and I move to another state?
[00:02:15] Vance Lowe: All of that has to be taken into account, doesn’t it, Seth?
[00:02:17] Seth Hicks Esq.: Sure. The, a person holding a policy in their own name in one state, like Texas, can have a- and enjoy 100% protection by state law, and that’s a function of anti-carpet bagging laws after the Civil War where many southern states set up laws where their insurance contracts, which was the way that people banked, were completely protected so that the northern states could not confiscate southern assets.
[00:02:49] Seth Hicks Esq.: And so many m- many southern states have 100% protection and exemption for their life insurance contracts from creditors, [00:03:00] litigation, attack, and that is a huge difference in the way that other assets are held. Many of those same states have homestead exemptions, so your real estate- For example, in Texas is 100% protected by homestead laws.
[00:03:14] Seth Hicks Esq.: It cannot be taken in the event of a liability or a creditor issue, and that allows for some very specific planning, and especially in conjunction with your life insurance policies.
[00:03:26] Vance Lowe: Exactly. The legal aspect of things, it’s the difference of having a target on your back versus camouflage. It’s set up right, they can’t get to you, but set up wrong, they can target you
[00:03:38] Seth Hicks Esq.: And it’s not something that is super cumbersome or tricky.
[00:03:42] Seth Hicks Esq.: It’s simply the state laws that already apply. So if you’re an individual in a state that has very little or no protection, let’s just say California is one of those states. You’ve got many other states that have very little or no protection. Georgia, [00:04:00] Hawaii, Illinois, Indiana, those are all states that I just mentioned that have very little protection.
[00:04:07] Seth Hicks Esq.: So you would wanna consider other legal structures for ownership. One potential way is to own policies through your entities, your businesses, and corporate-owned policies, and that has a different mechanism, different structures, different leverage. You can also hold them in irrevocable life insurance trusts, which are a separate entity and also avoid probate.
[00:04:32] Seth Hicks Esq.: But with the current exemption of twenty-four million dollars for married people, there’s fewer people that have– that run into those exemption issues. But if you’re a high net wealth person, it, it’s proper to consider the various legal ownership so that you mitigate your tax burdens. Another thing to, to consider is in those successor policies, successor alignment, how they’re held, and that will be [00:05:00] tremendously important on what state protections you have or don’t have.
[00:05:03] Seth Hicks Esq.: If, for example, Vance, you were living in a protected state, and there’s really no reason to use an irrevocable life insurance trust unless you have estate tax issues. Would that be accurate?
[00:05:16] Vance Lowe: Normally, yes. If you have certain family conditions or considerations and you want a structured bank moving forward, then maybe you could– you would consider the ownership into a trust or something.
[00:05:31] Vance Lowe: But typically, simplistically, you’re right. In protected states, you don’t need to bother.
[00:05:36] Seth Hicks Esq.: Because the state law is already such that it protects the cash value and the death benefits and the various beneficial interests. Now, succession planning would dictate if you’ve got multi-generational policies that you have common aligned ownership such that your family committee, your children, whoever takes over the operation, [00:06:00] has a roadmap, has family structure and consistency in ownership and beneficiaries.
[00:06:06] Seth Hicks Esq.: Correct?
[00:06:07] Vance Lowe: Yeah. Let me give you a good example. Let’s say you’ve been in the, uh, strategy for some time. You have several contracts. Family members now have contracts, and the family bank is large enough that you’re self-financing car loans, education, and even mortgages. These are going to probably outlive the original owners, and systems need to be set up so that the longevity remains, the structure And the strategy and the benefits continue to run as a bank multi-generationally.
[00:06:39] Vance Lowe: So we won’t get into that setup today, but it’s just a structure that you want to take a look at. As you proceed, as you become successful, then you’re gonna be lending money out to all extended family members, personal friends, and opportunities. So once that starts happening, then maybe we look at [00:07:00] something.
[00:07:00] Seth Hicks Esq.: And one of the things that will happen is when there’s multiple policies and folks begin to increase the size of their bank and operate as a banker, begin to lend out to various family endeavors, businesses, whatever the case may be, that it’s important to have an entity that owns those policies, makes the loans, and is actually secured as a lender within the collateralized loan structures.
[00:07:27] Seth Hicks Esq.: If you’re loaning money out on real estate, for example, your lending entity, your private bank obviously needs to have a deed of trust or mortgage to secure payment, even with family members. Same thing with automobile financing or business financing. You need to structure those loans in a appropriate way, just as a- any other lender would do, which includes liens.
[00:07:49] Vance Lowe: A thought comes to mind, Seth, and I think maybe we could bounce on this just a little bit. Ownership is everything. How you structure ownership in different things that you own in throughout [00:08:00] your life, I think is absolutely critical. We’ve talked to somebody a few days ago who put their mortgages in a irrevocable trust, for instance.
[00:08:08] Vance Lowe: Now they find they can’t get access to the equity, and the equity is just sitting there, million dollars plus, but they don’t and can’t get access to it for emergencies and/or opportunity because of the way that it’s owned. So all throughout life, I have learned in not only in investments, in ownership, in real estate, family matters or whatever else, having good thought going into the ownership is paramount.
[00:08:40] Vance Lowe: If we’re in the beginnings and the way we set it up, like we’re mentioning right now, you can put it in your own name. A- as long as you can move it and have the option later to change the ownership structure, you probably can’t go wrong. Irrevocable, that’s pretty permanent.
[00:08:57] Seth Hicks Esq.: The considerations for structure need [00:09:00] to be carefully weighed at the beginning, and if your wealth position is not such that you’re gonna pay a lot of estate planning taxes and you’re in a favorable state, no need for complex structure.
[00:09:13] Seth Hicks Esq.: But when you begin to have the multi- Generational policies that flow to children and grandchildren, and you have a committee that will govern those death benefits coming in. There need to be rules and there need to be, uh, structure where that it’s, i- i- it’s all f- flows for people to see in your family.
[00:09:33] Vance Lowe: What I get positive comments on all the time is our no-nonsense approach to the ownership legal issues. Our clients, I’m talking about clients that are with us, when they have questions, Seth, a great guy to go to, he’ll with no bias or anything else, he would be the first guy to say, “No, you don’t need the trust.
[00:09:57] Vance Lowe: You don’t need this,” because [00:10:00] he either knows your situation or where we’re headed. A lot of times we hear it’s the grass is greener on the other side. Everybody thinks we need to have a trust, and I wanna be as important, so I think I need a trust. Do you come across that quite a bit, Seth?
[00:10:15] Seth Hicks Esq.: It just depends.
[00:10:16] Seth Hicks Esq.: Yeah, I think that the first litmus test is what state law applies, and we can run through those details and get a pretty clear roadmap of how that works. Yeah, but it is disappointing, like you mentioned, when folks come and they’ve spent a lot of time and money and have some complex legal structure that was completely unnecessary for their wealth strata and for their purposes.
[00:10:41] Seth Hicks Esq.: It was a total waste of time and energy, and it, it happens.
[00:10:46] Midroll: Did that story feel like it was about you? Do you feel like you are generating a lot of revenue, but are not moving forward as fast as you would like? Do you feel you should be making more progress toward [00:11:00] your financial goals? Do you feel stuck?
[00:11:03] Midroll: Let us help you get unstuck. Are you ready to take action and get your own private bank? Please visit us at www.privatebankingstrategies.com.
[00:11:17] Vance Lowe: You know, and I’ve made this analysis quite a lot, but this is so true. You think you’re going down the right path and everything’s fine, and you– so you set your ladder on the wall, and these are the things I’ve got to do.
[00:11:28] Vance Lowe: And so you’re climbing this ladder, and you get to the, all of a sudden, the top of the ladder, and all of a sudden you look around and you discover you’re on the wrong wall. There’s a tear down and a restructure. So always keep yourself updated. You know, we’ve got a lot of advantages for people looking at the strategy, coming in, finding out about it, and seeing if it’s right for them.
[00:11:50] Vance Lowe: But then we have ongoing wonderful strategies for existing clients in a manner that they can’t get anywhere else when it comes to the legal side [00:12:00] and the structure side.
[00:12:01] Seth Hicks Esq.: It’s a great, it’s a great t-tool that is far superior to complex legal structures simply because state law prevails. And so if you happen to be in, in a great state like Texas or Florida or a dozen other states, you are rock solid, hundred percent protected.
[00:12:24] Seth Hicks Esq.: And that, that– those protections don’t exist at Wells Fargo with cash there or at Bank of America. They don’t exist in your brokerage portfolio at Merrill Lynch. They don’t exist in your LLC or your corporation. They don’t exist anywhere else with the simple stroke of a pen on an insurance contract like they do in whole life insurance.
[00:12:51] Vance Lowe: And the reason goes back to the beginning of our country. The life insurance Business was the banking arm of America. They [00:13:00] performed that function. Banking, the pure sense of banking is protection, is safety, is surety that while my money here, my money is safe. Now, that’s not the case in fiat banking now, the branch banking that we-
[00:13:17] Seth Hicks Esq.: What?
[00:13:18] Seth Hicks Esq.: Do what? Your money’s not safe in branch banking?
[00:13:21] Vance Lowe: Not at all, Seth. Why-
[00:13:24] Seth Hicks Esq.: What are you, what are you talking about?
[00:13:25] Vance Lowe: Everybody’s grown up, es- especially when I was a kid, you wanna put your money in the bank because it’s FDIC insured and we’re gonna protect it. We’re gonna protect … We’ve got all this money in the federal FDIC insurance to protect assets up to whatever.
[00:13:41] Vance Lowe: Seth, that asset is almost, if not completely drained. And on the amount we have on deposit now compared with what’s in that fund, it’s a sorry cry, maybe protection up to 100 bucks, 200 bucks.
[00:13:57] Seth Hicks Esq.: It- it’s a penny, and I’m kind of being [00:14:00] facetious. We’ve talked about this a lot. No. Money in centralized banks and fiat currency is not protected.
[00:14:06] Vance Lowe: It’s
[00:14:06] Seth Hicks Esq.: not. And there’s something called the Dodd-Frank Act that gives custody, custodial control to the bank. It’s really not your money. If you don’t believe that, then research some of the Dodd-Frank episodes that we’ve talked about and articles and research that. And even if you do believe in FDIC solvency, it’s only good up to $250,000 per account.
[00:14:28] Seth Hicks Esq.: But here’s some math for thought. There’s between 20 and $30 trillion of cash deposits on hand in American banks, and the FDIC on its best day, l- giving it incredible latitude for asset wealth might be 100 billion. 100 billion cannot insure 20 trillion. That’s about a penny or less per dollar. That math doesn’t work, and so the only way the FDIC would actually [00:15:00] be able to pay those is if the treasury just printed money.
[00:15:03] Vance Lowe: Which they have to do, in essence. One party shuts the federal government down so that they can’t pay X amount. The public has no idea the critical nature that places on banks, and how you could get down to less than an hour- Before banks, our typical banks would shut their doors within hours before the Fed would come in and recertify something or whatever else.
[00:15:29] Vance Lowe: So they play on such a fine margin. It is so scary, folks, because when one bank goes down, another bank. I think you had a experience not too long ago where you went to a bank and there were police around it, and the bank was closed, right?
[00:15:45] Seth Hicks Esq.: Yeah. It was a while back. It was IndyMac Bank in Southern California that failed, and police and riot gear, and people were upset and coming for their money in the banks, and it was out of a third world country type of event.[00:16:00]
[00:16:00] Seth Hicks Esq.: And fortunately, that didn’t domino into other mid-tier banks and top five banks. But given that the national debt is $40 trillion now, and you and I started tracking this seven, eight years ago, and we were less than 20. Right. So it’s doubled in just the short amount of time. And then you look back another 30 years prior to that, and then another 30 years prior to that, and the debt was in the billions.
[00:16:26] Vance Lowe: I remember. I was alive, and it was a travesty when it hit one billion. The deficit all of a sudden got to a billion dollars, and then it was two, and then it was five. It just, it keeps multiplying. It just never slows down.
[00:16:39] Seth Hicks Esq.: That is a reason that Keynesian economics and Austrian economics are 180 degrees apart from one another.
[00:16:47] Vance Lowe: It is. If we could fix this, it would be a little bit of a pain if they would switch back to Austrian economics. Finite everything. Go back to a gold standard. A lot of people and states have thought [00:17:00] about that. Texas is one of them. They have gold now. They’re stockpiling their own precious metals to try to go back maybe on a standard.
[00:17:09] Seth Hicks Esq.: It’s another reason that the insurance companies have solvent banking, because there’s a one-to-one ratio of money coming in is what’s held on hand in reserves. There’s no funny banking, there’s no derivative banking or fractionalized banking, which means you, you take $100,000 into a Wells Fargo or Bank of America and they take 90,000 or more out the back door and start to make loans.
[00:17:33] Seth Hicks Esq.: And if you come back in for some portion of that money, they only have a certain amount of reserves. If everybody came in and wanted all of their money to be cashed out, the banks don’t have it there. The reserves aren’t there.
[00:17:46] Vance Lowe: Where the difference with a life insurance carrier, every single policy holder, if they decide that company was going down or they wanted to have access to their money, they could apply, get either for a surrender or borrow the money, [00:18:00] and that money’s there Every single one of them will get it.
[00:18:03] Vance Lowe: Regular banking right now doesn’t even have to give you cash. They can postpone it up to six months.
[00:18:09] Seth Hicks Esq.: This is the ownership alignment and structure that we’re talking about, not keeping cash in places that are not safe for it, and keeping it in places where you’ve got the best wealth curve of growth. So the difference is quite staggering over time.
[00:18:26] Seth Hicks Esq.: In the short term, it’s– you may not see it, it may look like paint drying on the wall. But over the long term, it pays significant difference in value.
[00:18:38] Vance Lowe: Banking is not the sexy rage of today. It is the plain Jane everyday safe way to go. The benefit is, folks, you don’t understand, in order to try to get money away from life insurance companies, they have to poo-poo, [00:19:00] downplay, to try to get more money out of them.
[00:19:02] Vance Lowe: They still have on deposit so much liquid cash, more than the banks ever thought of having. But it’s an, it’s such a important understanding that everything you do when it comes to your assets is, number one, what’s the access to it? How am I going to get my money back? This is a first principle of Warren Buffett.
[00:19:26] Vance Lowe: First thing he wants to do on all of his investments, “I want my money back.” Second, make a profit. Okay? That’s first two principles going in. That’s the same thing we all should be. Do I have access to my money? Can you have access to your 401Ks, your IRAs, your Roths, your SEPs? No. Okay? Not without severe penalty, not without severe taxes.
[00:19:49] Vance Lowe: And ownership issues, since they’re government-owned trusts, owned by the government, they’re not owned by you. So that’s an issue. [00:20:00] Equity in your homes, do you have access to it? If you don’t have a home equity line of credit already set up, no, you don’t, and it will take months for you to try to access that.
[00:20:10] Vance Lowe: And if you need it, banks aren’t gonna give it to you. The banks only lend you money when you don’t need it, and that’s the best time to set those up. So ownership, structure on policies, all of this is critical. H- how it’s owned, who owns it, and with a goal in mind from a plan. If you’ve got an eight-year analysis and you know where you’re heading, you’re gonna know right up front how to own things.
[00:20:35] Seth Hicks Esq.: Well, folks, if this content is resonating with you, check out our website, privatebankingstrategies.com. It’s privatebankingstrategies.com, and you can find a ton of resources. Podcasts, blog articles, and we’re working on an AI tool that will allow you to search questions on our website that are narrowly tailored to what you’re looking for.
[00:20:58] Seth Hicks Esq.: We’ve got seven pillars, [00:21:00] and if one of the pillars is more important to you than other pillars, you’ll be able to look at just that content on the website. But more importantly, put your name and your email in and you’ll have access to a book that Vance and I authored, Secrets the Banks Don’t Want You to Know.
[00:21:16] Seth Hicks Esq.: And more important than that, you’ll even get an access to Vance’s calendar so that you can put your numbers in and get a eight-year analysis or roadmap that tells you how this will work for you. Vance, any other closing remarks today?
[00:21:31] Vance Lowe: No, folks. Just challenge yourself. Take the next step. Do something to better yourself.
[00:21:36] Vance Lowe: Learn more about how money works. Take the challenge. Give us a chance to let you take this stuff for a test drive. Now, with that, I think we’re all better off if we keep our education going.
[00:21:48] Seth Hicks Esq.: Thanks for joining us today, folks. We look forward to seeing you on the next one. Bye for now.
[00:21:53] Vance Lowe: Bye-bye.
[00:21:53] Outro: Did that story feel like it was about you?
[00:21:57] Outro: Do you feel you should be making more [00:22:00] progress toward your financial goals? Do you feel stuck? Let us help you get unstuck. Are you ready to take action and get your own private bank? Please visit us at www.privatebankingstrategies.com.
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