When your wealth is in property: plan for the cash your family may need

Source transcript, with paragraph breaks added for readability. Speaker identities have not been inferred. Verify quotations against the recording.

My dad was stabbed in the heart. I watched him lay there and I swear I saw the soul leave his body that day. Tomorrow is not promised. You never have any idea when it will be your last day. [music] So, it's extremely important to prepare for the unknown. He had about $8 million worth of capital gains in his company. And of course, [music] there's some postmortem planning which he did none of it. Like if he were to pass away tomorrow, 8 million of capital gains. I think after paying capital gains tax, then dividing it out and his family having to pay the tax, out of that 8 million, there would be, I think, less than $2 million left. He just worked 40 years to build up 8 million and overnight 3/4 of that's gone. We didn't miss time with our family, miss time with my daughter.

We didn't miss the ballet classes, the soccer game for the benefit of the CRA. Who am I to decide, you know, what your future should look like? Who's the CRA to decide what your spouse or your kids' future should looks like? Rather than going from 8 million to 2 million, we can go from 8 million to 10 million without doing much extra. What's the biggest misconception that you get when you get on calls with those business owners? Is this legal? And the other one is why isn't everyone doing this? He put 3.6 million. He was able to take out not $360,000 for 10 years, but he was able to take out $360,000 for the next 20 years completely tax-free. And at the end of this, he had about $6.8 million that would go to his family.

We just essentially saved that business owner 10 years of time by purchasing a policy today. Talk about buying back your time. If you pray for strength, God will send you something heavy to carry. You pray for patience, you'll get delays. You pray for courage, you get fear. If you pray for stability, God will send you uncertainty. Your wealth or your legacy is typically dawn or disappeared within three generations. And the Rockefellers are now on their seventh generation. All right. So, [music] welcome to Beyond the Bottom Line. I'm your host, Joey Lon, and this show is about pulling back the curtain. How the ultra wealthy actually protect and grow their money without the gatekeeping or the complexity. Today's episode is for every Canadian who's built their wealth through real estate. Whether you're a developer, an investor, a realtor, or a business owner who owns commercial property, because here's the uncomfortable truth.

Real estate is Canad Canada's number one wealth builder, but it's also one of the most taxexposed asset class in the country, right? And most people don't realize how much they're losing until it's too late. So my guest today is Connor McGoan. He and his brother co-founded Gold, a financial and real estate firm out of Vancouver, BC that works almost exclusively with people whose wealth is tied to real estate. What makes Connor different is that he's not just another adviser. He's also a licensed realtor in the top 10% of greater Vancouver. He's lived volatility, the pressure, and the tax reality of this industry firsthand. And also his brother grew up, him and his brother grew up in welfare. Uh so no one in their family ever owned real estate. They built everything from scratch. So when Connor talks about protecting what they built, uh well it's personal and we're going to get uh personal today.

So if you own real estate in Canada in any form, you're a business owner in Canada, uh you're not going to want to miss this. And you don't have a structure protecting it, this episode's going to change the way you think about your wealth. So without further ado, welcome to the show, Connor. Joey, thanks for having me. This is my first podcast. I'm excited. Let's go. Amazing. We're going to break the ice strong. Connor, we're talking a bit before the before the podcast, before recording. You and your brother built gold together, which is your firm today. Uh but again, you didn't start from money. You grew up on welfare. Nobody in your family owned real estate. Uh no blueprint. How do you go from that starting point to building a financial firm that protects wealth of some of the most successful real estate professionals in Vancouver?

Yeah. You know, that's that's a great question. And to back up, I'd like to share a little bit about ourselves and who we are as this will kind of set the pace for the rest of the conversation. And like you mentioned, yes, my brother and I, we are business partners. Unfortunately, he was not able to make it on this call today. He's with his son, so I'll I'll do my my best to answer on his behalf. Now, I'm 32 years old, my brother's 36. So, people often ask us, you know, how long have you guys been in business together, and I guess my answer is 32 years. Now, everyone in this world has had their own difficulties. Okay? Everyone in this world has their own story. And I I find it very fascinating listening to others and hearing their stories, how it shaped them to who they are today.

Now, I could spend a lot of time here talking about our story and whatnot, but obviously that's not necessarily the goal of today's conversation. So, I'll try and condense this as fast as I can um 32 years, you know, into a few minutes and then we can kind of move on to to how we help business owners. But my brother and I, we we are very much different. We have different skills, personality traits, but of course we lived a similar upbringing. Although we do have different fathers, so there is some difference there as well. But our mom was 16 years old when she had my brother and she had me at 20. So she had two kids by 20 years old. Now Joey, I'm not sure about you, but I could not imagine being a father at 16 years old.

[laughter] At 16 years old, you know, I was probably, not even kidding, probably standing by a liquor store or something like that trying to get a boot from someone so I could go drink, you know, in a park with a bunch of my buddies. [snorts] Um, as you mentioned, yes, our family, we didn't come from money. our our our parents, they did their best with what they knew at the time, and I love them a lot. My mom and I are extremely close, but like you mentioned, yes, we we did grow up with a lot of instability as children. We did grow up on welfare. We were constantly, you know, moving houses, moving schools. Our parents weren't together, so we never really had a strong foundation to be built on. and we never owned anything.

We didn't own houses. So, and you know, I'm not going to get into it, but there's also a lot of other horrible events that occurred in the family, lots of addiction. But, you know, when you're surrounded by this chaos your entire life, there are also a lot of lessons to be learned. You know there there's a quote that they say if you pray for strength, God will send you something heavy to carry. You you you pray for patience, you'll get delays. You pray for courage, you get you get fear. So you if you pray for stability, God will send you uncertainty. And you know uncertainty he did. Um, I know I'm talking a lot here, but it kind of, um, I want to kind of share a little story about how we got into this business.

You know, fast forward to when I was this, this is a interesting story, but fast forward to when I was uh, 15 years old. I was walking with a walking with a friend of mine. and we were going to meet a girlfriend of mine at the time and two kids came up to my friend and I and with a knife they said give me your headphones to which obviously my friend he did of course give the headphones I don't think Apple headphones are worth fighting for but shortly after giving them we ran away and we passed my cousin we told them what happened and immediately After letting him know, we all started chasing out the direction of these these two kids. And as we were running after them, we we coincidentally we passed by my dad's house to which I ran inside.

I told him what happened. He he he jumped out of his seat. He went out the front door and [snorts] as we went out that front door, I saw one of the kids jumping the fence across the street. So we ran in that direction. I went one way, my dad went the other. Now, as I continued circling the block, I I did not run into the kid. He wasn't the direction that I went. When I came full circle to the direction that my dad went, I saw him laying on the grass in someone's front lawn. Now, my dad was stabbed in the heart. Okay? So I I watched him lay there and I swear I saw the soul leave his body that day. And I share this for a few reasons. The first is tomorrow is not promised.

You never have any idea when it will be your last day. So it's extremely important to prepare for the unknown. Two, as crazy as this sounds, the world, in my opinion, works in some mysterious ways. When horrific events occurred occur, sorry, we're presented with a few options. The first option is you can become a victim to your circumstances. You can say, "Woe is me. Why do all these bad things happen to me? The world's unfair." Even if it is, but you never let go of these things. They become who you are and you get caught in a very negative spiral and your outlook on life becomes extremely negative. I mean if you look at life through a negative lens that's exactly what you're going to find. And the second is if you can believe that everything happens for a reason and is up to you to find the silver lining.

I mean I believe I was going down a different path at that stage in my life. My life could have ended up somewhere completely different and we will we'll never know what that would have been. It could have been me that day. But I believe that, you know, my dad, he he sacrificed his life so I can live a better one. Which ties me back to if you pray for strength, God will send you something heavy to carry. Um, this is this is what I call delusional optimism. And the reason I say it's delusional is because even if that's not true, even if my dad didn't sacrifice his life so I could live a better one, I would rather tell myself that's what happened and live in this, you know, lie, but have a positive outlook on life than tell myself it is not true and become a victim of my circumstances.

And you, the reason I'm sharing this, the third reason is because my dad had a life insurance policy. When I was 15 years old, I received $150,000. And I mean, $150,000 is a lot of money when you grow up coming from nothing. And this especially 20 years ago. Yeah. Exactly. And and this is why I believe, you know, it could have been me that day, but it wasn't. And that that 150,000 gave me the opportunity to live a better life. And I'll I'll say living a better life doesn't necessarily revolve around money. Um, everyone has a different meaning. But with that with that insurance policy, I was able to purchase my first condo at 19 or 20 years old. Being the first person in my immediate family to ever own a home, I then purchased a second property, a third property, and there's been a lot of uh learning lessons since that day.

I don't like to call them mistakes, but I cuz I took something away from it, but the path has been far from linear. I mean, I've had money, I've lost it. I've had money again. I've lost it all for many different reasons, each of which I I try to learn my best from. You know, I I would like to say I've learned enough now, but I know that's not how how this game of game of life works. I believe personally, this the second you decide to stop learning is the is the second your life stops, but your physical body hasn't necessarily caught up. Um, yeah, I know I'm talking a lot here and I'm almost done with this back. No, that's great. But fast forward about six or seven years from that date, 2016, my brother and I got our life insurance licenses.

I don't think anyone grows up saying, "I I want to be a life insurance agent when I'm older." Um, but we understood the value of the life insurance and how it could impact people's lives from all walks of life. You know, no matter where you come from, no matter how bad the circumstances you are in, everyone has access to life insurance. You don't need a degree to buy life insurance. You don't need a scholarship or certificates. you you you don't even need that much money as long as you're somewhat healthy. And I mean, even if you aren't, everyone has the opportunity to get insurance or, you know, almost everyone and and change the direction of their of their family's future. Now, life insurance isn't for everyone, but it is for people who believe in something bigger than themselves.

So when people say, you know, life insurance is too expensive or I pay for enough for insurance already or even if they ask me, you know, how much life insurance should I get, I put it back on them. It's not it's not for me to to decide how you would like to impact your family or your children's life. Only only only these guys know the answer. So, you know, our job is actually pretty simple. you know, we show the numbers, we tell you how much it is and do the application, but it's really, you know, up to you decide the impact you'd like to to make. Now, I want to move on to the rest of this podcast. And in fact, you know what? I do have a lot more to to say, but I've been talking a lot, so I'll kind of let you let you ask the next question from there.

That was a powerful intro and I appreciate you uh being vulnerable in sharing that story because uh there's so many different ways that we can go on from there. But uh I really resonated with the the delusional optimism, right? And I think every every single entrepreneur, every single business owner, everybody watching this right now as a business owner, us included, you need to have that delusional optimism in the first place to get started in business. Even if again it's not it's it's it's it might not be necessarily true what you're saying to yourself but it's it's definitely serving you and uh you cannot it's it's risky to start a business. It's everything in life is a risk. So if you're not betting on yourself right and and having that higher power whatever you want to call it to serve you um that is that is extremely powerful and I think everybody has that sort of of dark story that got them to all right I need to change.

I need to do something. I'm I'm going to use that horrific situation and make something better out of it, right? And and use that strength to help you. So, yeah, when you ask for strength, you got some hard stuff that happens sometimes, not what you expected, but I guess that's what God had had in mind and had planned and you wouldn't be where you are today, I imagine, without that uh that event. Of course, I I fully believe that the circumstances, you know, every circumstance, everyone has their fair share of and it doesn't matter, you know, whether it's uh whether it's as severe as a murder or something even different. All these different circumstances impact people differently. And it's really up to you to decide how you're how that's going to impact your future and how you're going to learn and grow from that.

You know, um like I said previously, we all have a few options. We can become a victim to our circumstances or we can use it to our benefit. And I choose to use it to my benefit even if it's a lie or that comes back to the delusional optimism. No, I get that like again on my end if I can share a bit of a personal story. Uh when I was 16, I got diagnosed of a uh stage two cancer that went for two years of chemotherapy, right? Where I had a good percentage of not not making it. And that was before I got into any business stuff or anything like that. And um I guess that that was my event that that gave me that that strength that I got. I wouldn't be the person that I am today without that going through this terrible 3 years that me and my family went through.

And I think everybody has that kind of story or I think in my opinion the best entrepreneurs are the one that went through some sort of horrific story like that that gave them the strength so that when some little thing happened in the day-to-day life or uh with clients you're able to connect way better because you actually went through that stuff. What do you think is the biggest strength that this created inside of you? That's that's a good question. I mean, I think one of the biggest strengths that it it taught me is is patience. I think through business as we all know it, it can be a it can be a grind. You know, we we sacrifice a lot to go through business. You know, people have families, we miss, let's say, soccer games, we miss ballet classes, whatever it may be.

Um, but there's a there's a deeper meaning behind it. And I think going through what I did and understanding the circumstances that can happen in life, it provided me with the patience to to be able to handle these little day-to-day tasks much much better or more efficiently. I think I think you know we take life a little too serious but when you really think about it um can be gone in an instant. So I think after going through these things you understand and appreciate the value of life and you learn to you know obviously be grateful for what you have now but never at the same time not necessarily satisfied. I think we we we uh yeah we patience I' I'd say is definitely one of the biggest biggest things that I've learned and stability.

M you you said that for you wealth isn't about flash or status right it's about you just said it's stability options and protecting the people that that you care about like your mom your family and everyone close to you when did that shift happen for you and because I think a lot of business owners start out chasing the money eventually realize that it's about something much deeper than this um and not to say I I mean, [laughter] I've gone through many stages, you know. I've I've done I've I've had money and I did the flash thing. So, not I think I think we all have to go through these Yeah. circumstances in life, but um and that's why I think that, you know, when I had money, I wasn't necessarily ready for it. I was being I was doing these things.

So, whoever whoever it is, they they said, "Okay, you weren't ready. Let's take that money away. I'll show you." And when that happens after enough times, you you tend to learn that this flash and this status is mostly for other people. It's ego driven, right? And then and then when that when you're looking for money to pay for your food that day, how you're going to support I have a 2-year-old daughter. How you going to support your daughter? You really start to see the value and of of money. And it's a lot more than driving a nice car or having a nice watch and a lot more to do with the stability and the peace of mind. I think peace of mind and the freedom that money provides is is extremely valuable in the world that we live in.

So, um through through lessons and I mean I'm still learning. I'm not going to say I'm an expert by any means. Yep. 100%. And how how how did does that tie back to the uh the current work that you do today? Right. So, you're saying on the real estate side and the financial services, um, what what makes what makes you different in your in in that approach and what what value can a business owner watching this right now in Canada take away from from from those lessons? Yeah. I mean, every every business owner that we sit with has a different reason as to why they do what they do, but that's the the beautiful thing about business owners is most business owners don't get into business, to live a mediocre life. They they get into business to make something for themselves and their fa family.

Like I mentioned, business requires risk. It's volatile. It's instable. The the business is a grind. Um, like I said, many times money comes in and I've seen it go out faster yet we we we keep pushing and if we didn't want something more for ourselves, we would stick to a basic job, you know, clock in, clock out after every day. But that that's why I love working with business owners. We're we we work extremely hard our entire lives. We take risks that most people aren't willing to take. We come from all walks of life. There's sleepless nights. There's been times like I mentioned where I haven't been able or I wondered how I was going to buy food for my family that day. But we you can continue to push through. And you know, some people call us crazy.

You know, you should go get a stable job. Doubt can kind of come into our minds, but we continue pushing. And this leads me to why or your question. And I really mean this is why after all of that that grind that sacrifice are we simply not going to plan for the next generation? Why are we going to let the CRA decide what happens to what we have built? We didn't miss time with our family, miss time with my daughter. We didn't miss the ballet classes, the soccer game for the benefit of the CRA. That's why I think when thinking about insurance plan planning, we can start with that. You know, saving tax is whatever. No, no business owner just wants to save tax for fun. There's obviously a deeper meaning behind it. [snorts] And in order to truly help a business owner, you have to find out why.

Why do they want to save tax? I cannot truly help someone if they don't have a reason to be helped. When in when when we meet with clients, we know we do a data collect, we we gather details about their financial situation, how much revenue they did, the corporate tax they paid, the personal tax they paid, their expenses, shareholders, assets they have. We collect all of that information. Now, someone could go build a plan just based off of that information. Sure. Um, you could see how much passive income tax they're paying, what their salary or dividend taxes are. I mean, you could build a strategy off that, but in order to truly understand and to truly be a financial advisor, you need to understand why they do what they do. You can have the CFP designations, the best accountants and lawyer, but if none of them understand why you are doing what you do, and they're all just recommending products or strategies based off of what they do and not why, what what's the value in that?

Is that really a financial plan? Do they really have your best interest in mind? You just spent, you know, 20, 30, 40 years taking all of these risks, missing these events, building all of this up. Who who am I to decide, you know, what your future should look like? Who's the who's the CRA to decide what your your spouse or your kids' future should looks like? True planning is not what we do or how we do it. True planning is understanding why they do what they do. Once we understand why they are doing it, only then can we show them how we can help and what we use to do so. Um, and if I if I'm being completely honest, life insurance has a very negative stigma around it. I mean, I've cold called people for 10 years.

If I was to call someone right now and say, "Hey, my name's Connor. I sell life insurance. Do you need some?" I'm You could probably guess what the response would be. But if I were to understand why they're playing this game of life, only then could I understand if they even need life insurance. You know, life insurance is a tool for people who believe in something bigger than themselves. The life insurance industry wouldn't exist if everyone on this earth only cared about themselves. So understanding that how would you sell to life how would you sell life insurance to someone if you don't understand you know the reason as to why they want it in the first place and the final thing I say here I know I'm talking a lot is again I want to reiterate this this podcast isn't a conversation about saving taxes because [snorts] if the CRA spent money aligned with the business owner's why then the business owners would gladly pay more taxes.

The conversation would be, "How can I pay more tax if the if the CRA was allowing me to spend more time with my daughter, paying my bills, um allowing her to get into the best schools, the best medical treatment by having the infrastructure for her to grow and develop and and by giving her the freedom to do what she wants to do and not what she has to do, I think all business owners would gladly pay more taxes and it's going kind of lead me into the next thing is when we're paying these absor exorbitant amount of taxes and not seeing the benefit. In fact, you know, these days I would say it's the complete opposite. We seem to be paying more and more taxes and in my opinion um Canada seems to be getting declining, right?

You know, unemployment is up, division in the country is at an all-time high. trust in the in the government is extremely low. People we have people literally dying just to wait to get medical attention. You know people people don't trust or see the value in the education systems and you know what they're teaching kids. So business owners are frustrated and in fact many are many are even leaving this country. So, you know, I believe um I want, you know, I want everyone listening to this podcast understanding why we do what we do first. So we personally believe, you know, if you're the type of person who likes to have control over the direction of your life, if you want to be the one in charge of who makes the decisions for your family, if you want to be the one who decides what happens for your kids and their future, that's good.

I love everything you said. And I think the the biggest thing there it's like if you don't have a better plan than the CRA to spend your tax dollars then you shouldn't worry about not paying taxes, right? So I think that that's where it comes the first step is understanding what is your plan, right? And obviously if you think a little bit through it, spend a couple hours just thinking through it. It's not going to be that hard to find a better way to spend those tax dollars uh for for your benefit, for your family's benefit, for your community's benefit. But the first step is making that that uh that why super clear. And the second thing is a lot of people like a lot of those plans anybody can really build them, right? Like and a lot of people say that well I can just call my my neighbor who's also a financial planner.

I think what's not a commodity is the way you just describe it. It's like a real advisor is is is an adviser. It says it in the world in the word, right? like it needs to understand deeply what you're what you're doing so that you can build something super specific to what to that is aligned with your own why right so that's the first step the why and then finding that that advisor that that actually cares right that actually cares about the business owners and has a a personal story to tie it back to it and that's where it doesn't that's that's far from being a commodity right that's that's a rare that's a rare thing to find these days and I think that's that's why like people like you like your firm and what you're doing is is extremely valuable right now for for business owners with where this country is going and and and the direction and and the the challenges we're all living through in Canada right now.

So, um that is that is extremely valuable. Yes. Yeah. And I appreciate that. I think there's a saying somewhere. It's like people don't know how much you care until until you show it or something like that. Yeah. remember the saying but yeah it's yeah I think I think in this you know you can have all the designations you can have all the the statistics you can have all of that but people do business with who they like and they trust and in order to really become an advisor I think um you really have to resonate and understand why they're doing it in the first place 100% and uh and Connor you you said that you again you work exclusively with people whose wealth is tied to real estate, realtors, developers, investors. What's the number one thing that you see that puts their wealth at risk?

Uh cuz I'm guessing it's not just the market, right? No. And it's actually astonishing to me, especially, you know, people who own and I think the majority of Canada's wealth is somehow related to the real estate industry. Whether you're a builder, developer, architect, you're somehow related to the real estate industry. But, you know, developers and or investors, people who own a ton of properties and the don't have planning in place. I mean, a lot of people say they'll do it later and stuff like this, but especially if you own a bunch of assets and you have capital gains within your company, god forbid you were to pass away tomorrow, some of these business owners don't realize that their estate value, how significantly it's going to be impacted. I mean, I was just talking to someone yesterday and I he had he had about $8 million worth of, you know, capital gains in his his company and to pay the capital g of course there's some postmortem planning you can do but to pay the cap if there's which he did none of it like if he were to pass away tomorrow 8 million of capital gains I think after paying capital gains tax then dividing it out and pay and his family having to pay the tax out of that 8 million there would be I think less than $2 million left.

That's insane. So, you just worked 40 years to build up 8 million and in in overnight, you know, 3/4 of that's gone. Yeah, that's crazy. That's crazy. And again, like it goes back to what we said that I think Canadian business owners are are fed up right now about like again, not dramatically, but they're just tired, right? More tax, uh, more red tape, the goalpost keep moving, right? You hear this this every day. Um, what does that actually look like on the ground for like a real estate professional or business owner making strong income like in the top 1 10% in 2026? Yeah. I mean, when it comes to the thing about the real estate related industry is it can be volatile, right? The market changes. Um, we don't have control over a lot of those things.

So, not only um can we just do some estate planning, but we have to make sure that there's flexibility throughout that process as well. Um you can't it's not like you can just lock in a GIC for 20 years because real estate agents I know personally, you know, you can make a lot of money one year and then the next year make significantly less. So, when working with real estate professionals, you have to be um flexible. You know, you have to be you have to have the opportunity for liquidity if needed. You can't just lock something up um necessarily uh for 10 20 years. So, not only are we helping them design their estate planning, but we're giving them the f flexibility, sorry, along the way. How do how do they stop the bleeding of taxes?

Well, there's there's a few ways. And we can get into the specifics a little bit more here, but for example, um a lot of real estate owners, they they want liquidity. So, they don't want to deploy all their cash because they know the market's vi volatile. So, often times what they'll do is they'll put it into uh an investment inside their corporation. Now, un you got to understand that anytime you invest in your corporation, you're going to get hit with a 50% passive income tax, right? Um so, you know, you invest a million bucks, you get 5% return, 25,000 is to the CRA. So this is the beauty of of life insurance held within the within the corporation is those retained earnings rather than putting them into a vehicle that's going to be taxed at 50%.

We just move them. A lot of people think of buying insurancees they're purchasing something and they're going to get the benefit when they die, but that's not the case. You can kind of think of it like a a tax-free savings account within your company. you move money that's sitting from retained earnings into an insurance policy. It's still there just like your TFSA would be. Um but insurance grows taxfree. So you're not going to be hit with that 50.67 passive income tax. You're also going to have the liquidity liquidity of it. If you need money um in your company and you dividend it out, it's 36 to 48% tax. But through collateral loans, we're able to access this money taxfree. It's a loan. There's no tax on loans. Similar to a heliloc. The the different differentiator between a heliloc and an insurance policy is helocs give you up to 80% of the equity.

Insurance is guaranteed, right? We're all going to buy. So, we're able to get up to 100% of the equity in the policy. So, not only are we bypassing the passive income tax, potentially bypassing the the salary or the dividend tax, but then, God forbid when when something happens and you do pass away, the money typically would be taxed to come out of your company. Um, insurance again is the death benefits taxree. So, the money is going to flow through through your company to your family taxree. It's going to increase the the CDA account of your company. So, we're going to bypassing that as well. That's a capital dividend account, right? That's correct. Yeah. So, you you talk a lot about real estate life insurance and again your firm your firm takes care of of both, right?

Why? Again, there's a huge stigma in Canada and in the US about life insurance because I think a lot of people see it through the lens of like employee or regular like mom and pops that that use this just okay in case I die, right? At least I get something. Uh but a lot of a lot of people or business owners don't look at it the way the ultra wealthy is using it, right? which is I imagine the tax benefits that come through that come that comes with it that I guess needs more education. business owners need to be more educated on that because if you see it through the lens of a tax savings vehicle then that's where that's where for example I'm a business owner and I see the benefit of that through that lens right um why is it so important to think about these two real estate and life insurance simultaneously and not just focusing everything all in on real estate well I mean I think it's it's very important to diversify your portfolio.

So, you're obviously they real estate has its own benefits. Um um you know, insurance similar to building a house, right? You're going to have to start with the foundation and build upwards. Insurance is no get-rich quick scheme by any means. Um insurance is just a foundation that the that the house is built on. So, if you were to build a house or if you were to make a money bunch of money through the real estate industry, you're obviously going to want to make sure that it's done on a proper foundation. So, that's kind of how the two are aligned. Um, I hope that answered your answered your question, but feel free to ask. No, that's good. That makes sense. That I think that's that's what that's just what we need, right? It's just more more education on on that aspect and a lot of people don't see uh and it's funny because a lot of if you talk to a lot of the rich people uh and really wealthy like n eight n figure uh 10 figure people like they all they all have some sort of brisket real estate and life insurance in their portfolio.

So, it's how can you bridge that gap of knowledge and education or team, right? Finding the right team, find the right people that can surround you and give you that advice. Um, so that's very powerful and and I know you said something as well that I want to touch on, which is that most real estate wealth isn't lost in in bad markets a bit like we talked about, but it's lost quietly through poor structure, default tax outcomes, and just no long-term plan. just break that down a bit uh in in simple language. What does poor structure actually look like for a successful real estate professional or just general business owner? Yeah. So, I mean and and it's honestly very crazy to me as you know, like I mentioned previously, a lot of business owners are really good at business.

They're good at identifying deals in the real estate market. They're good at looking at the, you know, the the numbers. They're good at acquiring real estate and disposing of it, but when it comes to the the corporate planning, this this is honestly where, you know, they're they're they're doing their job. I think I think, you know, death is a morbid subject. It's not something that people like to necessarily think about, but without the proper planning steps in place, you know, the these business owners, like I mentioned in my previous uh what I mentioned previously is this this one business owner that I was just speaking to, he he's acquired real estate with his partners. They've they're continuously acquiring it of the goal of building more wealth for their family, of more estate value for their family.

And there's no planning in place at all. I mean, if you were to die, he's going to be hit. All of his assets are going to be deemed disposed at fair market value. There's going to be a massive capital gains bill that's going to need to be paid. His his partners in this case aren't able to buy him out. So, they would have to sell the assets. [snorts] Um, after and like I said, after paying all the capital gains, the deemed dispositions, and then divoting the money out to the family, an $8 million portfolio turns to $2 million really quick. And it it surprises me that, you know, well, it doesn't surprise me at all, actually. I mean it there's just not a lot of it's not life insurance or estate planning is not in the business owners that's not what he does for a living.

So it's hard to think about that for some people I guess. So that's why our job here is just to kind of ed educate people you know paint the picture for them. say, "Hey, listen. If something were to happen to you tomorrow, which it very well could, this is what it looks like." And then if you have this planning in place, this is what it looks like. Does that make sense for you? And typically, rather than going from 8 million to 2 million, we can go from 8 million to 10 million without doing much extra. Yeah. What's what's the biggest like most common questions you get or biggest misconception that you get when you get on calls with those business owners? Is this legal? Yeah. Why do you think they asked that? And the other one is why isn't everyone doing this?

Um yeah, why do I think they ask that? Because and it seems too good to be true is what a lot of people say. Um because there's not enough for one, there's a lot of restrictions in the insurance industry on who can talk about it and whatnot. Accounting professionals are accountants, right? They're not life insurance licensed. they can't necessarily talk about it. Um, so it's kind of up to you to go out there and look for these answers because they're not necessarily going to come to you. Business owners are are busy. So, you know, not often do they go out necessarily looking for these answers or in time at least. You know, a lot of business owners and everyone I think it's natural to expect that you're going to live a pretty long time. Um, yeah.

So, so I think uh you know once they see the benefits beside what their current estate plan is versus how life insurance can help it's significant. So a lot of people are question the legitimacy of it but it it I mean it's written in the income tax how and it has been forever. I mean these companies have been around 175 plus years. So and um why isn't everybody doing it again that goes back not everyone is licensed to do it so they're unfamiliar with the concepts even existing. I mean I think I think once and the you know back to what I was previously saying is if people start with all the features and benefits of it um they just talk about hey this is life insurance this is how it works etc and it doesn't necessarily fit in with the plan you know they don't move forward but if you can really draw it out on you know do you want your C the CRA getting this much money or would you rather your family if you can really paint the picture for them then they really understand the true benefit and I think you know a lot of people are in this industry not everyone there's but is you know they're maybe not looking out for the best interests of others they're not sharing the the true value of it and they're just kind of speaking about the the features and benefits versus you know the vision yeah we talk a lot about that in our stuff as well I think a lot of it comes down to two things, two gaps.

The the knowledge gap, right, of just you not knowing that it's there and the licensing gap. Because everybody, every business owner has an account. I don't know one business owner that doesn't have an accountant, right? But how many of them has an actual financial planner, a tax strategist, a lawyer, right? Like that all comes that all seems to come secondary to the to the account. And again, both everybody's super important. The account is as important as as you and as important as a lawyer, as important as a tax strategist. But for some reason, I don't know, there's a stigma that you you trust everything your accountant said. And since he doesn't have that license to tell you about those strategies, then you never hear of them. And once you hear of them, you're skeptical because your accountant never told you.

It's kind of like that vicious cycle. Um, and as long as you understand it, the knowledge gap and the licensing gap, just open your eyes to it. Talk to different people, right? Don't don't just do whatever the first person you meet tell you, but talk to different people. go out there, find your own team, and then fix that gap. Make them communicate with each other, make them talk to each other. And that's where you get the real magic of having every single world of specialties combined together and work just like a hospital, right? Like there there's different specialties just like a sports team. Like you're not going to get the kicker at the Super Bowl, start throwing uh those hailaries, right? And be the QB. It's like it it seems super logical when you look at it on a sports uh analogy or hospital analogy, but for some reason on the financial analogy, it's it's crazy, right?

And oh, why why doesn't everybody do that? Yeah. And it's interesting. You know, I will say that um you know, not all accountants are created equally. I mean, an accountant accountant a lot of accountants, you know, their job is looking yeartoear. They file your annual taxes and typically, you know, they'll look backwards and they'll look at that year. Then there's some accountants who are also advisers who not only look at saving you taxes this year, but they're looking at the next 5, 10, 15, 20 years as well. So, you want to make sure that you have an accountant that's that's more of an adviser looking out for your future best interests. And like you mentioned, Joey, the the team that you have around you, I never really understood this. You know, people have accountants and people have lawyers, but none of them seem to talk to each other.

Everyone's just in their individual jobs. So, you know, as an advisor, our goal is, you know, to bring to build a team to work with their team or help build a team where, you know, all of the people are acting for the best interests of this client. And once that becomes the case, putting together a a financial plan for the next, you know, for the next rest of their life becomes very easy. But it becomes very difficult to try and get or it can be very difficult to try and get all of these people together aligned working for the vision of the client's best interests. I'm not Yeah, there there's a bit of a roadblock there sometimes it seems. H yeah, it's like imagine your heart surgeon not talking to your general practitioner or your family doctor.

That would never happen, right? Because you need to have the whole case, your whole file and everybody talks to each other. Um, and I think you got to treat your your finances the same way. Um, I want us to get a bit more tactical now on on what you just talked about, which is again for Canadian business owners watching this in the most simplest terms, right? Someone that know doesn't know nothing about financial terms and even insurance and stuff like walk us through how corporateowned insurance strategies work to protect um, real estate wealth or just your your business owner as a business your wealth in general. like what's happening inside the corp that changes the tax outcome and why don't more people again we talk about that but know about this or implement that. Yeah, that that's a good question and I'll give you a few examples because you know not I can give general examples not there's no not every case will be the same every business owner is a unique scenario but to give an example of the first example there was a real estate agent that I was working with um he was working at a brokerage that provided him a passive income through recruitment he had team he was making about 30K per month from this team and he didn't necessarily need the money right now.

So he was like, "What should I do with this?" And you know, as a business owner, it's not like you're getting these same pension benefits and you know, your retirement plan built up to you. You have to build that yourself. That's one of the benefits of being a business owner. So $30,000 a month, um, 360 grand a year, he's like, "How could I utilize this?" So what we did is rather than um you know investing necessarily in the traditional way, he took that $360,000 per year and he invested into a insurance policy. Now he did this for 10 years. So he put, you know, $3.6 million into this policy. He was about 42 at the time. And then when he goes to retire at at 65, this business owner, he put 3.6 million. He was able to take out not $360,000 for 10 years, but he was able to take out $360,000 for the next 20 years completely tax-free.

And at the end of this, he had about $6.8 million that would go to his family. So, if you were to go a traditional route, he put $3.6 $6 million um you know into a investment or what what what have you you know he were to pull that out like say $3.6 million to make math easy. He were to pull that out. Of course there would be some postmortem planning and stuff he could have done but he'd be left with about half of that if you pulled all that money out for his retirement. Um but we were able to take that same 3.6 and turn it to 7.2 to tax-free while he was alive and his family still got seven extra million to his estate. Um, that's crazy. And I find it I find it quite uh fascinating because for math's sake, let's just say you put five $500,000 into an investment for 10 years.

You increased your estate value by $5 million. Um, or you could just buy an insurance policy that increases your estate value by $5 million. I mean, at that point, I don't think you're going to spend every single penny that you have you're building for the future. Um, so he buys an an insurance policy and it's got a $5 million benefit to it. We just essentially saved that business owner 10 years of time by purchasing a policy today. Talk about buying back your time. You just work 10 years to make 5 million and you can just buy a policy and be worth 5 million today. That's insane. How does that like okay I get the outcome? That makes sense. Now like what creates that? Like what does that what does that do in the corporation itself?

Why how does that work? Yeah. So the obviously when we when we take our retained earnings and we purchase a insurance policy the insurance company invests these funds a lot of Canada's debts bonds real estate um and then they kick out a dividend to the business owners at the end of each year that dividend is about 6 and a half or 6.35% roughly you know over the last 40 years I think there's been a deviation about 1 to one and a half% um so it compounds just like a traditional investment and then at age 65 when they when they go to retire what they do is they go to a lender let's say Scotia Bank or BM or who um whoever their financial institution is or who we set them up with and they do a a collateral loan.

So they say, "Hey, listen. I have I have uh $5 million of cash value in this life insurance policy. can I get a can I get a loan against this value? And because it's a loan, there's obviously there's no taxes. Um, so that's how we was able to get that $360,000 per year. Now, a common question people ask is, well, it's a loan. Isn't there interest? And that's the beauty. There is interest, of course. Um, but since it's a life insurance policy, it's guaranteed to pay out when you pass away. um that interest is just uh paid off from the death benefit of the life insurance policy. Is is that the the adjusted cost basis, the ACB? Yes. And the capital dividend is Yes, exactly. Obviously, um there's going to be an ACB throughout the policy.

Uh depending on when you were to pass, obviously that's going to be different. Essentially, the ACB is, you know, how much money you've personally paid. And as you go to take out this take out this when you pass away you've taken let's just say $360,000 per year for the last 20 years and you were to pass away not your CDA account is increased. And essentially what a CDA account is I I just like to say it's kind of like an invisible bank account. You know if you had a million bucks in your company and you were to pass away and your CDA was zero well then you'd pay tax on a million bucks. But if your CDA account balance is a million bucks and you were to pass away, you're now able to extract a million out of your company.

So insurance obvious increases the CDA amount. So when you pass away, not only do you pay back all those loans, the interest, but there's also going to be a CDA account balance. So other assets within your company are able to flow out taxfree as well until that CDA limit. Interesting. Interesting. And I know that there's also um financing available, right? There's uh there's IFA. Yeah. Um and I know you recently uh got a a developer with 10 commercial buildings that you were talking that got approved for a uh for a decent amount, right, of of annual premium uh IFA, which is immediate financing arrangement. So, for someone who's never heard about IFA before, explain a bit more about what that is, how does it work, and why a developer with 10 commercial buildings would want this.

Yeah, and this was a this was a very complex situation, and I'm going to go back to this quickly. So, my brother and I are business partners, as I mentioned, we share two different traits. I'm a lot more of the front end. My brother is a lot more with the technical data and the back end of things. So when it comes to these technical questions and the structuring of these policies, he is really the guy and that's why I wanted him on here to be the one that really discusses this. But this business owner, this developer, it was a unique situation. You know, he had 10 companies and you know in Canada, we have a we get taxed on our active income. Now there's a small business deduction. So, we get taxed at 27%, but under the if you're under $500,000, there's a small business deduction, essentially a 16% bonus.

So, you only get taxed at 11% for your first 100,000. Now, he had 10 different companies that owned a building in each of them, and they were all making different amounts of money off of the rental income and things like that. Now, to keep stay underneath that $500,000 threshold, he had a management company that was charging management fees to each individual individual operating company to keep to keep him under that $500,000 threshold. Now all now since the management company is making a bunch of money charging them fees for managing the buildings, we needed to find a way to deduct the interest on that money so we could reduce the expenses of the of the management fees. So, what this business owner did is by getting doing an IFA, immediate financing arrangement, he was able to purchase a policy of, let's for example, just say $400,000.

He was able to purchase a policy for $400,000 and then immediately go to the bank for and get a loan for that same amount, $400,000. So, it cost him nothing. um he still had the liquidity. So he essentially just moved his money. But what it did is it created an interest deduction because since it is a loan, of course there's interest and he was able to deduct the interest of the of the the loan to help mitigate some of his taxes on these management companies. And then obviously when he passed away, it significantly and this is the reason he he purchased it. it significantly increased the CDA value or account balance um in his company. So when something does happen to him, you know, these assets are going to be able to flow through to his family, mitigating the tax liability for them as well.

Interesting. And um like who's the ideal person for for these strategies, right? like is this just for developers with then commercial buildings or is there a threshold where a real estate professional or business owner should start thinking about this? Yeah, I mean uh that's a great question and of course every business owner situation is different and this this strategy is for business owners like I mentioned previously who want to control what happens to their estate after they pass. It's for business owners who don't want the CRA to decide what happens to their families after they pass. I mean, if you if you are a business owner and cash flow is your issue, you need to make more money, then I mean taxes isn't necessarily an issue for you if cash flow is an issue. So, you know, there's other things that we can do for business owners who are cash flow tight and we'd typically do some sort of term policy for them.

So, you know, with insurance, of course, you do have to qualify medically. So, we lock in their health today and then as their business continues to grow, we can convert it. But typically this is for business owners who who are who are you know want to who think more about it than just themselves who want to provide an estate to their family who want to decide how they set their family up and it can be all very there is no one set number on you know how much money you necessarily have to make. I mean, the the main concern is if you're not happy with the amount you're paying in taxes and you're building up retained earnings, then there's a conversation to be had in terms of answering like the main the main question, the main topic of this episode, right, which is a lot of real estate developers build a lot of wealth and they they bleed a lot in taxes.

We talked about um some real estate structure, some some insurance policies. Is there any other like strategies that you would recommend or that you would think that we need to get educated a lot more on or these are really the two main one? And again, I want to profess that this is educational content and you're just speaking from experience. This is not financial advice. You got to meet with someone for your every situation super different. So, make sure you do that. From your experience, is it it just insurance and real estate that we should focus on to stop the bleeding or is there any other tactical advice to bring in here? Yeah. And a lot of the conversations that we discussed today, you know, this is an insurance conversation similar to how an accountant wouldn't talk about necessarily talk about insurance planning.

Um, I mean, I understand the accounting situation enough that there's obviously post-mortem planning and stuff like that that accountants use. There's a lot of strategies that accountants are great at. Um, I'm not saying by any means that life insurance is a one-sizefits-all, this is all you do type situation. But with postmortem planning, accountants, there's there's a lot of plannings that planning that they can do. Um and it's very important that you have an adviser that um no matter what industry you're in, real estate development, any industry, um you have an accountant that that's doing some proper postmortem planning, you know, with the pipeline, the pipeline and bump strategies. There's different strategies that accountants use, but I but we have the numbers and the goal isn't to replace these strategies with insurance. The goal is to do a hybrid approach and work alongside the strategies.

And I've had the numbers I have the numbers of, you know, postmodern planning, pipeline and bump strategies with a hybrid insurance planning strategy. And typically in a lot of the cases, a hybrid approach is going to be more beneficial than just doing the accounting planning or just doing the insurance planning. So there is steps for other steps that you can do and it's important that you speak to an accountant and you know make the make your adviserss all communicate together. No that's good. And I think the biggest takeaway from that is like first it's understanding your why. That's number one what we spoke about right understanding your why. Why you want to save taxes in the beginning and do you have a better plan than the CRA? Right? If you're not able to do that, then uh go back to the drawing board and and do some workshops and think through that.

And then after that, it's assemble your team and and find out um get some real professionals and different financial expertise to to get the right advice and not just be siloed into one. Make sure they speak all together and then exploring what are all the tax benefits of that real estate and life insurance can bring you and looking at it more than just surface level, right? really getting educated on that or finding someone that can educate you on that. Um I think that's how we stop the bleeding right in Canada with with the current system that we have. It's use it use it the way it was intended for business owners. Of course. Yeah. And you know over a podcast typically when speaking just face to face it it it gets very convoluted to go deep into the details of everything.

You know often times we like to share a screen and really break it down how these structures work. There's a lot of things that, you know, um I can only say when we're having a conversation like this. So, I think it's very important to educate yourself. Speak to an adviser even if it's just to learn and to see what this see what it looks like because they're going to be able to go deeper into the details than we did on this call. And there and then from there with all the information that you have at hand then you can really decide whether insurance planning is beneficial to your situation or not. You you and your brother Connor uh again started with nothing. Now you're building a firm that helps people protect generational wealth. When you think about your own situation, your your own kids, what does legacy mean to you?

And and what do you want the families you work with, business owners you work with to understand about building something that actually lasts? You know this is a this is a very good question and there's an interesting [snorts] stat is that your wealth or your legacy is typically gone or disappeared within three generations and the Rockefellers are now on their seventh generation and the way that they use insurance planning is extremely interesting. thing. Um, I would recommend looking into it, but essentially, you know, they're living off the cash value of their life insurance policies throughout their lives. And then when they go to pass away, it pays back all of this money that they've just lived on and then some. So each generation is getting wealthier and wealthier and wealthier as time goes on whereas most generations are losing their wealth within within three.

So when I think about my legacy and my estate and and the trust in the future and things like that, I think, you know, having if you can have your great great great grandchildren still thinking about you and what you've done for that family, I think that would be extremely extremely, you know, valuable and at the same time, you know, helping others realize the same 100%. And so it's passing on your lessons that you've learned and and all the knowledge and all the people you've met with and pass it on to your your generation and and make sure you beat that three year and help other people along the way. Right. Yeah. From all from all uh walks of life. Hopefully, you know, the lessons that we learn we can pass on to our kids and maybe they don't have to go through those same lessons, but yeah, I find we learned things the hard way.

[laughter] That's good. Connor, do you think is there any any other other information or or things you want to you want to touch on or that we we haven't uh we haven't touched on yet? Yes. Like I mentioned, the last final thing is I do a lot more of the front-end work. My brother is a lot more analytical in the backend t technical data. So if you if you do want to learn more a lot more about the technical and how this works, I recommend obviously whether it's us reaching out to a professional who can break down the numbers for you or another firm, you know, just get yourself educated, see what it looks like for you and your family and and then you can really decide on on whether it's a a good fit or not.

That's good. That's good, Connor. Well, look, I think we've uh we we we've had a really good conversation. It was really eye opening and I appreciate again you being vulnerable and sharing your story. I think it's going to open up hopefully it opened up the eye the eyes as much as it did for me. Um and I think it's going to be a very great very great episode that people should go back to. Um so I want to thank you for that and super grateful to to to have met you and learn more about your story. I think it was very powerful. So I appreciate your time and appreciate your uh your inputs. Thanks Joey. I appreciate being on here. It's my first uh podcast. I hope I didn't talk too much, but I I'm always, you know, glad to share share my story.

That was amazing. And uh if you're a viewer watching this again, you know, if uh if the only thing we're asking in return is to subscribe to the channel if you liked it, uh send a question in the comments so that me and Connor can answer it. Uh what you're looking for in future episodes. We're always open and open to hear your thoughts. and uh share it to a friend, share it to a fellow business owner that could uh hear that advice and and make something from it. So that's the only thing we're asking. Uh other than that, every episode dropping every Monday. So, we'll see you guys on the next