Chasing Financial Freedom

How to Build a Lasting Legacy for Generations to Come with Rebecca Jensen

February 22, 2023 Ryan DeMent Season 5 Episode 8
How to Build a Lasting Legacy for Generations to Come with Rebecca Jensen
Chasing Financial Freedom
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Chasing Financial Freedom
How to Build a Lasting Legacy for Generations to Come with Rebecca Jensen
Feb 22, 2023 Season 5 Episode 8
Ryan DeMent

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Hey everyone, it's time for another episode of the Chasing Financial Freedom podcast, and we have a fantastic guest lined up for you today! Joining us is Rebecca Jensen, Principal Partner at MaxQTC and an expert helping families create a lasting legacy for generations.

Rebecca shares her insights on how families can improve communication and get everyone on board with the plan to ensure that future generations manage the legacy you've worked so hard to create responsibly. She discusses the importance of training and educating heirs and the benefits of implementing proven systems to increase trust and reduce conflict.

Whether you're a parent looking to secure your family's financial future or an heir wondering how to manage a legacy, this episode is a must-listen. Rebecca provides practical advice and tips on approaching legacy planning and managing your family assets like a business. So please sit back, relax, and join us for an engaging and informative conversation with Rebecca Jensen on the Chasing Financial Freedom podcast!

Support the Show.

Thanks for Listening! Follow us on Tik Tok Facebook and Instagram

Show Notes Transcript

Send us a Text Message.

Hey everyone, it's time for another episode of the Chasing Financial Freedom podcast, and we have a fantastic guest lined up for you today! Joining us is Rebecca Jensen, Principal Partner at MaxQTC and an expert helping families create a lasting legacy for generations.

Rebecca shares her insights on how families can improve communication and get everyone on board with the plan to ensure that future generations manage the legacy you've worked so hard to create responsibly. She discusses the importance of training and educating heirs and the benefits of implementing proven systems to increase trust and reduce conflict.

Whether you're a parent looking to secure your family's financial future or an heir wondering how to manage a legacy, this episode is a must-listen. Rebecca provides practical advice and tips on approaching legacy planning and managing your family assets like a business. So please sit back, relax, and join us for an engaging and informative conversation with Rebecca Jensen on the Chasing Financial Freedom podcast!

Support the Show.

Thanks for Listening! Follow us on Tik Tok Facebook and Instagram

How to Build a Lasting Legacy for Generations to Come with Rebecca Jensen

[00:00:00] Ryan: Hey guys, Ryan DeMent from Chasing Financial Freedom Podcast. I hope you guys are having a great day today. On the show we have Rebecca Jensen. She is the owner of Max Q tc and you can see in her label if you guys are watching the video, she is a C P A, but she's on to talk about financial planning and also tax planning and be able to get us in the right place, setting up that LLC for you guys out there, doing your side hustle, making sure you're protected.

Rebecca, welcome to the show. 

[00:00:31] Rebecca: Nice to be here. 

[00:00:34] Ryan: You're more than welcome. So before we get into everything, can we get a little background on you and then we'll go get into some conversations. 

[00:00:43] Rebecca: Yep. So my background is primarily in tax. I've worked in as both the C P A in public accounting under the tax arena for probably.

I don't wanna say it, but over 30 years, and . And I also spent some time as a CFO with the company for about 10. I'm one of those weird people that actually likes taxes. I find it interesting. It's like a puzzle we put together and my job is helping. Basically maximize those tax deductions and legally get pay, legally pay as the least amount of taxes they can.

[00:01:20] Ryan: So don't we all wanna not pay any taxes, but that's just life in general. So you're in the state of Washington, so tell us a little bit about your client base in what you're trying to help people with. 

[00:01:31] Rebecca: We work with business owners and I also have a fair amount of retired clients that we work with on helping 'em Plan Legacy.

So what we've seen is now that people have 401ks and our housing prices have gone through the roof of the last couple years, we have a lot more people that have estate tax problems. They rather than pay a portion of their estate, Our state here in Washington we're actively helping them kind of transfer assets before they pass.

One of the ways we do that is with family LLCs and not just, it's really helping them communicate with their family and create a legacy that lasts beyond just that first generation. 97% of legacy is lost. the third generation. So we're here to help stem that tide. 

[00:02:21] Ryan: So how would we start going about that?

Let's just talk about, houses, housing, I'm here in Arizona. Housing market went crazy and houses went up almost 48% here in the valley, and now we're on the downward side. There's a correction in the market. It is what it is, but how do we protect that and be able to pass that along to our.

[00:02:39] Rebecca: A lot of it is starts with communication. That's really the biggest factor in being able to keep those assets within the family. And I see a trend. A lot of people, they just by default, here's my kids split everything up. I have three, everybody gets a third. But one of the things you really need to pay attention to is when you're passing on your assets, who wants what and what makes sense, especially when you're dealing with real estate and vacation.

And if you've had a cabin on the lake for for 50 years, maybe you've got it from your parents. Sometimes you have to keep in mind that real estate, if not passed correctly, can be actually be an expense. Because if they're not bringing in income, then you've got property taxes and maintenance and some of those things.

And if you pass those assets, Kids who don't really wanna use them, it's just gonna be sold. So really think about that transition. I love real estate in general as a a way to re keep and retain wealth, because what I find is people tend to keep it, even when times get tough, life happens to everyone.

But real estate, isn't, you can't just dump it and sell it and, get the money in two days. Because of that timeframe, what I see is a lot of people that have accumulated wealth have accumulated within real estate assets because they keep them. If they figure other ways to solve this problem.

[00:04:01] Ryan: So then if we're accumulating all this real estate over our lifetime and we're passing on to generations, what are some steps that we need to do to start working through that process? One and two. You brought up a great scenario. Three kids. And one kid wants no, nothing to do with the real estate.

The other kid wants nothing to do with the real estate, and then one kid does. . How do we work through that whole process? . 

[00:04:22] Rebecca: There's depending on the size of your state and your other assets, the obvious thing is how you can split it up and give it to the kid who's actually interested in the real estate.

But the other thing that I find is, can be very helpful, and this goes back to the whole Rockefeller cont concept, is the goal is to keep the wealth together. So you. Still give your children who aren't necessarily interested in managing or dealing with the real estate, an interest in that real estate by creating a family l C.

And if you have it managed by managers, you can have the person that actually wants. Wants to take care of that property and manage it, be the one that makes the financial decisions and the other ones, it turns into a passive income stream. And this is something people don't really think about, you can do that not just with real estate, but with businesses.

I know Walmart is a perfect example. Where, when the whole Walton Dynasty was put together, Walmart was set up Was a partnership. They didn't have LLCs back then, but because his kids got an interest in that partnership from day one when he passed, they estimate that he saved somewhere around I think it's 80% of the income taxes or no.

I think it was 60% of income taxes during, as the business grew because he is spreading it out over multi-family members, and it isn't all in the highest tax brackets. . And then when they passed, they estimated that he saved 80% on his estate taxes because it was already owned. A big chunk of the, his dynasty was already owned by his kids and grandkids.

So they were able to pass on interest in that business during their lifetimes and avoided a lot of that estate. . 

[00:06:07] Ryan: So back to the original example of the three kids. The one kid wants to do the real estate, the other two not how. How does that family, l c get set up and how does it become passive income to those two other 

[00:06:20] Rebecca: kids?

If you set it up again, you can have ownership in an asset and not actively manage it. It's the same thing as buying stock in a company. We don't go all, all by Apple stock and then get to say what happens to Apple. You have a passive ownership percent. in that asset. And then the people that are qualified and actually want to manage the mon the asset are the ones that can make sure it continues to generate income and be responsible for managing and building and growing the real estate assets.

And the Family L LLC is a, a. Really good vehicle to do that because the actual management can be held by just a portion of the owners. And then it's like kind of a when you re invest in a, a. Real estate venture, you don't go in and make decisions. If you have managers and then you have the other member owners.

And so the people that are not interested in having anything to do with managing the real estate can still get a split of the profits. 

[00:07:22] Ryan: Okay. So is there a difference, and I'm asking these questions cuz I, I've been down this road before. So difference between members and managers when it comes to family LLCs.

[00:07:33] Rebecca: If you set it up as being member managed and not managed Or manager managed and not member managed. So part of the process in setting up an llc, you select the type of entity you want. So if you set it up as manager managed, then the managers become like the the board of directors in managing that.

Those properties. And then the members are passive owners The remainder members. So that's just, it's a setup option. And they're, it's, it isn't, you don't do this with every property. It's it's a. How you set up your legacy. And sometimes we have people that set up family LLCs and then within that family LLC it may own a hundred percent of different LLCs that don't own a piece of property.

So it's basically oftentimes treated more like a holding company when you've got multiple assets, but it's a way to help transfer and spread the wealth around. And this isn't new, it's, maybe the L C structure. Family partnerships. I know when I started my tax career, one of my first tax clients was a family partnership or one of the first clients that I worked on that had over a hundred family members.

Wow. And every, yeah, I know. And every year, grandma and grandpa would gift, up to the maximum gift tax limit a portion of their estate to each one of those family members. Time is your friend when you're dealing with these. These assets because the more time you have to transfer that wealth you can, you do it within your gift tax limit and avoid having any kind of tax impacts.

[00:09:09] Ryan: That's great. Yeah. So when it comes to businesses, because I read this, I think it was two or three weeks ago and I couldn't believe this cuz this is something I'm passionate about is there's 12 and a half million baby boomers that own businesses that do not have succession plans. Their kids want nothing to do with the business.

 And. I couldn't believe it. I had read it twice, ask questions, and went through this whole process. When it comes to small businesses or businesses between 1,000,005 million, how can they set up a family l C to their benefit and help them through that process? 

[00:09:42] Rebecca: If you've done your job.

So basically when I, if you're the c e o president of one of those businesses, your job is to transfer that business, basically get it to the point where it doesn't need you. . So what you want, you need to do is basically put systems in and of course, people in place to run that operation.

And it's really funny because a lot of people, it's, it. . Oftentimes they've built this from nothing and it's it's their baby. And giving up that control is very difficult. But it's certainly a lot better to do it during your lifetime than to wait and, basically not have a plan.

And then what happens? It's basically equivalent of you're gonna pass your business on to the mail clerk that started two weeks ago because , you're sending it over to your kids or other. people you're sharing your state with who have zero experience running or managing that company. And most often with when that happens, it ends up being sold as a fire sale and something that's, a really going concern and income producing asset just goes away.

It happens all the time. And there's. It's I don't know. My, my sister has this little book she called the Swedish Death Cleaning . Like we laugh about it, but really it's from the time your children leave the nest your role is to make sure that they don't have to pick up after you.

And so part of not picking up after you is putting, getting your assets either taken care of. Sell them and move on because if they don't want it, then the plan could be to sell it, but you need to do it while you're still around and can create value. Because lots of times there's that transition.

If the owner is gone, it usually re the business, usually re. Gets a fraction of what it could receive. then, when you're present. But even the, if you're, active and not even close to retirement, it's always good to have that backup plan in place. Who's gonna take over? What's gonna happen because life happens.

And as many of us found very well over the last couple years, people die unexpectedly. and, it's part of just being a parent and or, and taking care of your kids is you don't wanna leave 'em at big mass. So su succession planning is critical. But yeah, ideally over that same lifetime, it's the same thing.

Time is your friend and the more time you have to transfer. Daily roles to somebody else. So that your role as the president or the c e o is to create the vision make sure there's money in the bank and, and essentially Put systems in place so that the business can operate without you.

And then you, the great part about that is as a business owner, then you get to be the person that you can do only the fun parts, the fun part, the parts you really like, . So there's benefits for that. Above and beyond just being a good steward of your assets and 

[00:12:50] Ryan: That's always the best part.

You get to do all the fun stuff, not all the stuff that you dislike. And I'm with you on that. When should we, if we're business owners let's say we're looking at businesses to take over or buy when should we start looking at that family l C, and should we be doing it since from day 

[00:13:06] Rebecca: one?

Yes, definitely from day one, because ownership, you can put your business in a family llc. And this is the great part because typically when you pass on assets to your children you have to do it. part of an irrevocable trust, and essentially whatever you pass to them, you no longer control. Where the family L C is this really unique entity in that if it's managed by managers, the family l C can own your business. And you can, as the manager, have a hundred percent control over that, what happens with that? But still have the freedom to transfer assets to other members during your lifetime.

So you can start it and set it up with that ownership structure from day one. And the other thing you wanna keep in mind is when you set up a business, that's the time where you really wanna be talking. S. Putting that plan in place because especially if you've got partners, because the worst time to try to figure that out is when you're mad at each other and you wanna separate.

, part of setting up a business if you've got more than one owner is making sure that you have things really clearly spelled out. And how do we buy out and how do we value. Company, you can build that into your operating agreement from the beginning. And put it by sell agreement in place while you're still friends.

[00:14:28] Ryan: I like that. I didn't know we that could be done. That's one of the things I definitely need to look into for myself cuz we're in the process of looking. Probably four or five different types of businesses. , we're trying to nail that down. Okay. But the difference is, like I said earlier, there's 12 and a half million baby boomers that don't have succession plans.

And as we dig more into the services or the industry we want to be in, we find more. And I was literally talking to a gentleman a couple weeks ago a couple weeks ago, but I think we initially started speaking about three or four months ago and I had to walk away from the deal cuz his SD or seller discretionary income was like nothing.

It was like a. Hundred and $50,000 on a business that's generating almost $6 million a year. And I'm like, where's it all going? . And he didn't want to tell me. I said, okay, I have to walk away if I don't know where that's going. I need to see the waterfall. I need to see where the money's going.

And I guess his business sat on the market and they did a price reduction in his business. Broker reached out to me again and said, Hey, he's ready to talk to you. And I'm like, okay, is he gonna tell me where the SD is going? And he said, ended up being he has four kids want nothing to do with the business.

Guess who's sucking all the money outta the business? , it's four kids, right? His four kids were making $80,000 a year to do nothing. It just, I couldn't believe it. And I'm like, my gosh. So I said, so where are you at in a succession plan with your kids? And his response was, we don't have one.

They want nothing to do with the business. So I said, when you sell, , you're not gonna get the multiples that you're looking for because your s d e is, $150,000 or whatever it was. I can't remember exact dollar amount. I said you're talking, three or $400,000, maybe half a million dollars for your business.

That's way under your multiple, right? And he says, I know that, but I don't have a way to put the money back in and show it. I'm like, how can you. That's the one thing, and maybe that we can go down that route, rabbit hole, is it just seems there, there seems to be a lot of p and I don't wanna say a lot, there's business owners that are doing things.

I'm not saying it's shady, but man, if you're gonna sell the business, you gotta show your cards. So they understand where it's going, but. They also didn't think about the end result and how that was gonna impact their sale on their business. Cuz it's been on the market for at least nine months and he's reduced it twice.

. And I don't know if anybody's gonna buy it because he is not willing to show his cards. 

[00:16:51] Rebecca: And then you talk about, there's a perfect example where he's not doing his kids any favors either. So probably what happened is someone had this great idea that's put your kids on the payroll, which is not necessarily a bad idea.

That's one way to divert taxes. But you're also now paying payroll taxes on money that could have been passive income for them. And you're basically, not giving them an incentive to figure out how to pull their own way. And this is, they don't appreciate it. And unless they've had to go through that hard part themselves of figuring out how to generate and create their own income, it's really difficult for them to appreciate what their parents or grandparents did to build a business. And that, . I'm not saying that every child doesn't, appreciate or take it in or takes advantage of this. They just am missed an, a life opportunity that may be difficult and challenging, but that's what makes us great people.

 Is to go through and come out the other side. Correct. And it gives them a great sense of accomplishment to be able to, make earn their own. 

[00:17:56] Ryan: And yeah we could go down a rabbit hole and that, 

[00:17:58] Rebecca: that, yeah, 

[00:17:59] Ryan: I know. We don't wanna go there, . That, that just has a whole nother issue.

What other things can we do to protect ourselves, our assets, our legacy when it comes to business life? Everything. Let's put it all on the 

[00:18:10] Rebecca: table. You were talking about that figuring out what you're gonna do and if you have partners, especially. Yes. So one thing you can do is always put in place.

It's not, that there's a reason that, you know. Companies buy life insurance for their officers is you can actually have a plan to fund those buyouts if you have a partner, especially if you're both active and something happens to one of you. If you do not have anything in place to have a that with a, you don't have a buyout agreement already.

Figured out before something happens to you, you end up with partners you didn't expect, which could be spouses or children that have no interest in managing or running the business. And then because if, especially if it's a 50 50 partnership, they could end up forcing a sale on you that you don't even want because you don't have.

You don't have the capital right now to buy them out. They want buy bought out yesterday. And so you end up having to fire, sell your business. That's another reason where we really wanna start having that plan in place from day one when you start a business. So that's a another way to handle it.

And there's, there's many ways you can. Save taxes with the business. But my favorite one is of course really paying attention to what you're spending money on and anything that we can turn into a legitimate tax deduction that we would be spending anyway is a great place to start.

So you look through your expenses and this is why. Home offices and some of these other things are, tend to be very popular with business crowds. Especially now we've got such a highest gender deduction. You can't about, one of the only ways you can get some tax breaks is through rentals or businesses.

It gives you an avenue to deduct some of the things that you would be spending anyway. Things like, your internet, if you need internet to run your business, you don't get. Less of a lower bill. Use it for personal af after hours. You still have the same bill, . Yes. Same thing. And it's the same philosophy as if you travel for work and you pay for a hotel and it's a, if it's the same cost for you, you can take your spouse and still deduct the whole expense, and they can just stay in your room . So in tax, But how it's not bad to hire you kids, but I wouldn't put 'em on the payroll unless they're actually working and earning that money.

[00:20:35] Ryan: Yes. Totally agree. How would a family l c, and this is maybe I'm just going outta cra craziness cause I just thought of this. some businesses or some let's just go with some, , some businesses actually have debt, they have some type of loan against the business, or they've taken out some type of debt.

How does that play into the family L C and what does that look 

[00:20:56] Rebecca: like? This is where, if you've, you can have the business be its own entity and the family LLC own the share. Or that's a S corp or C corp. And structurally, that's that whole tax decision on how you wanna be taxed.

You have to look at the big picture because there's no one right answer. What we oftentimes see is that people. Tend to start out as sole proprietorships, moving to sole corp s corporations. And then when the business gets big enough, that's when we wanna be a C Corp. If, it's gonna be big from day one, many times people just start C corp from the beginning.

It's as far as that LLC structure, again, I like to see it more like a. A holding company structure. You don't want the l C to necessarily directly own and run the business because it's a lot easier to sell and make decisions if it's a separate entity and the family l c just has ownership.

So it's very similar just buying stock in any of any company you can, that the family LLC can own this stock of your business. . Okay. And then I got, and then as far as debt, that, that's, that has to be, should be paid off by the earnings of the company. 

[00:22:07] Ryan: Of course. And then I had somebody talking about this, and I don't know enough, but I'm dangerous.

An SBA seven A loan, where you're buying a business and people are utilizing that. How does that play into. The family, L C and then the setup, because I know the S B A is looking for specific personal guarantees based upon yourself, the assets and so forth. How does that play into this?

[00:22:32] Rebecca: You a lot of it depends on. The bank and who is, because the s sp s B A guarantees loan, but it's really the bank is the one that kind makes the decisions. One really strong word of caution I actually just recently ran into a business where he Bought the building as part of the business and and and then they set it up as a C corporation.

And I'm just cringing back here because that's one of, tax 1 0 1 no-nos. You don't put appreciating assets in a C corporation because they can't take advantage of capital gains. But so be really careful when you do set those up. You wanna have the building and the real estate be a separate entity than the business operations and.

and typically this isn't an issue. Because it, they usually, they have a certain percentage of that building that should be, it's owner operator building. They will guarantee those. But it needs to be separate from the actual business operations and for a number of reasons. But, obviously appreciating assets is a, that's, Accountants freak out.

But the other reason is that the needs of that business will grow and change. You may outgrow that building and you don't wanna be hide up as part in, because you could still keep the original building as an asset and turn it into a rental property down the road. But typically what?

as far as the SBA lending, they usually have a percentage of the building that you have to be in and owner operated. And I don't know the specific I'm thinking it's just a little under 50. But you can, it's another way if you have the opportunity, if you're not using your entire building, you can supplement and help pay for some of that cost by renting out a portion of it to somebody else.

Do you just really. Want to make sure you're getting good advice, but if someone tells you to just roll it all into, your C corporation, you're probably not getting good advice, . So be, just be careful of that because I saw it, just a month ago. And then we have to figure out how to get the building out of that SEA Corporation, which is not fun.

It's a just a mini year. Problem or you just sell it and pay ordinary income tax rates, which, if you've been growing your business can be, really high. So it's just can be a very expensive mistake on that business setup. But, For as far as the sba, we love the fact that SBA A provides these guarantees and they love it when you have real estate to back their note, but just make sure you're setting up more than one entity and within, in, if they won't let the family l c be the owner.

Just defer it and tell, can pay the loan down, you can get into the business, you can get into the building, and then maybe you set up the LLC later and transfer it in. And so if you give your stock and your shares, and you're a hundred percent owners of the family llc, that's not.

Necessarily, a taxable event. It's only, when you then have the llc, then you can start gifting percentages down the road. So it just means you may defer the family LLC plan till after you've paid your SBA loan. That'll be a good 

[00:25:37] Ryan: financing. That'll be a good question, cuz I, I do have, I bet you there's people that are gonna ask how can they do that?

Because there's people out there acquiring businesses and they're just setting up LLCs. They are separating out the real estate with the operations, which they're doing well. But I didn't think about that until now, what you just said. The family llc, and I don't know if the SBA likes that or not.

I, I. , I'm not that well versed. So that's one of those things I'll have to ask about and see what happens. 

[00:26:02] Rebecca: Right? And again, I think it's probably your bank would be the one to make that final decision, but because if you have a family L C that's owned by you and your spouse, A hundred percent then especially if it's a disregarded entity for at the beginning, it's really no different than you owning the stock directly.

, they may be fine with it. Depending on your bank and your situation, it never hurts to ask. Especially, it's, and I'm not an attorney. The attorneys are the ones that do the magic and drafting all the agreements. But, it's in having another level of separation from your other assets is usually not, never a bad thing legally.

[00:26:46] Ryan: Of course. And then what about the physical assets? So let's say we own a car wash. And all the assets that come along with that. Would those assets then want to be attached to the real estate? Are you keeping the real estate separate and keeping the assets with the business? 

[00:27:02] Rebecca: Typically we keep the assets with the business.

It's Are they appreciating or depreciating assets? Is it something you're gonna use up and replaced? Yeah, they're depreciating. . Yeah. So assets you use up in D and replace. We usually keep those within the business itself. Okay. Take advantage of those, the accelerated depreciation and things like that.


[00:27:23] Ryan: cool. So we've covered business. What about personally, let's talk that aspect and what that looks like. , 

[00:27:31] Rebecca: you mean as far as tax planning? . It's really interesting because one of the things I run into a lot with clients is, we're still in these same habits of we, we think we can write off all those itemized deductions, but unless people , even your taxes now are capped at 10,000.

So even if you know you have these, all these expenses, it oftentimes isn't enough to hitch your standard deduction. So then we look at, how can we maximize that? And there is, Most of us take advantage of this until we're older, until we get to the point where we have to take those recurred minimum distributions.

But I've had a lot of my older clients really love taking advantage of what we call qualified charitable distributions. So if you regularly get, regularly give money to charity you can have your broker, whoever holds your assets or your, your ira. Write checks directly to your charity on your behalf.

And the great thing about this is it's an above the line deduction. So you can know up to a hundred thousand dollars and you don't have to pay taxes on it and reduces your taxable income, reduces your adjusted gross income. But make sure if you do this, that your tax preparer knows about it.

Because I've also had people that have done qualified charitable distributions and. , it was missed on the tax return and they paid extra taxes anyway. But you essentially can give money to charity pre-tax while you're living, which is it's a great little tool and it can save quite a bit of taxes.

And then you still get your standard deduction. So it's, you, we. Reduced our taxable income, potentially kept more of our income in a lower tax bracket, and then, move some of our charity out of our itemized deduction bracket into an above the line deduction. And you still get to take the standard deduction.

So it's a potential win-win on both sides of that equation. So that's 

[00:29:28] Ryan: I didn't know that. So that's really cool. It's a hot button. I'm going off topic, but people being, unfortunately w basically strapped down with debt. They're taking 401K loans or they're withdraw, I don't wanna say loans cuz that's not a penalty as loans as you pay it back.

But they're taking early withdrawals from their 401ks, your expertise at all on, on taxes on that piece. And then some suggestions tips, trick. 

[00:29:54] Rebecca: I will, we all know that's probably your last place you wanna go for paying, taking paying off debt. And I know life happens sometimes. And you end up with no other option and we understand that.

But you really wanna explore every other option before you dig into your retirement account because. You basically end up paying, early withdrawal penalties even on the Roth. Some of those earnings you can end up paying a penalty on if you have only had it open for less than five years.

There's just a lot of you, you wanna avoid taking money out of your retirement account and the other. thing about that is you're also tapping into your future income. . It's like we don't think about it. And when you've got somebody pounding on the door for money we go everywhere we can, but it you have things like medical bills or things like that.

The first place that you go is the lender, cuz it's very frequently they'll be able to set up a payment plan with you. . And oftentimes they won't even charge interest. Sometimes they don't. It's, there's usually another option first. I would just be really careful about going there.

 And even though interest rates are higher than they were, if you do have a home, I would, I would be more likely to go toward the home equity line lower interest rate, no penalties, and to dip into our 401k or retirement savings. 

[00:31:18] Ryan: There's possible of course. And then there's some companies out there, they call 'em, they're calling them equity share companies.

They're not lenders to where they have an AI model that basical. over this period of time, your house is gonna go X to Y. , we'll give you x amount of dollars of that equity. But we're also gonna share in the upside, but they also share in the downside. It's a pretty cool industry I've been reading about to where you don't have to make monthly payments like a HELOC or any type of line of credit.

And they're due between 15 and 30. And then if you decide to pay it off early, you can do a home appraisal or a B P O, something to that extent. And then that's the value of your home and if it actually lost money or loses money in the actual equity side. , they lose their share too.

So it's a, it's a, it's a different route to look at it. Most people have not even heard about it when I'm talking to people about, Hey, I need help type of thing. , I say, take a look at that. If you own a house, I mean at least call 'em and see what they have to say.

Cuz there's six or seven of 'em out there. . They all offer different ways to, slice it, but very interesting concept. 

[00:32:20] Rebecca: Yep. And actually my, I had this conversation last Friday with another client, . But it was, it's a really interesting concept. I remember, when I I think I, when I was in college hearing about Japan where they would have a hundred year loans because their real estates Yeah.

Was so expensive. And, Honestly, I this concept better than putting your kids and grandkids in debt. And it may be the wave of the future in these higher, especially in these higher real estate markets. I'm just. This last summer, I remember looking at the numbers and I think in Seattle, the Seattle area, the median home price was over $900,000.

And here in Spokane we were, four 50. So we, they've been typically about half of where the Seattle area is. If you're a young couple starting out, trying to get into a house in an area like Seattle or down in California or another one of these, High value real estate markets.

Buying a equity, a piece of a house starts to get to be really interesting. And I hear that's one of the things that is The companies are talking about, if you can basically turn a house into buy a fractional share and then lease the remainder from the other owners, essentially what you're doing, they own part of your house.

And so they basically earn on the appreciation. . Yeah, it's a, I think it's something to look at and it's at least gets you into an ownership mode, and I would rather own 10% of something than none of something and be paying into it. 

[00:33:54] Ryan: Yeah. And then there's a, there's one that's similar to that, but it can go either way and I can't remember the name of it.

Basically what you do is you go find a house. , it's gotta be in one of these hotter markets. And what they actually do is they try to build the house out. So if you go look at a three bedroom, two and a half bath, they find a way to add two to three bedrooms to the house. And what they're now doing is they're leasing each of those bedrooms out and then you as an owner get a fractioned share of it to buy it.

and you're leasing it, you're leasing it to people, or you can live in it with other roommates that offset it, which is a little different way to go about it. Some of them, you're talking li I, I saw one for like roughly about 1600 square feet and they turned it from a three bedroom, two bath home to a five or six bedroom with a three, three bath.

And I'm like, That's a little tight and that's too many people on APL in that's that size of a house. But when you broke down the economics , each room was, it was in Las Vegas. Each room was renting for a thousand dollars a month. 

[00:34:58] Rebecca: . And think about your average New York apartment. So yeah.

[00:35:01] Ryan: Yeah, no, I get it. I'm just that's $5,000 of income, and I see that, but I just don't know if I wanna share that a house that size without many people, that there could be 10 people, in that house potentially. That's such a lot of people. 

[00:35:14] Rebecca: But it is, but this is another alternative to get you.

Started on the road to home ownership. That doesn't say mean, that's your forever home, but it would be, it's an a way to start, I, my husband and I, we ended up we didn't have that option, so we ended up buying a manufactured home and leased the lot because we were over in Seattle and, had little kids and limited assets and resources.

So we bootstrapped our way into the house, but that didn't help us long term because there was an equity. We didn't own the land. So I would much rather be in a position where, can take, have a partial ownership in something that's appreciating. Then the manufactured home option where essentially your home value depreciates and the land isn't yours.

. Yeah. I don't know. We'll see because it's you gotta do something because we gotta help our young people kinda move into it. And I don't know whether it's true, but there's this real estate ad that's on the radio in the morning that said that homeowners. Have an average of 40% more in assets when they retire, or 40 times more net worth than people that are not homeowners.

So I don't have the numbers behind it, but I do know that. When I see people come in and we're looking at retirement plans and cash flows in my office, the ones that have house and especially the ones that have paid off their house when they're retire, are in a substantially different financial position.

Most of them, only need a couple thousand, 2,500 maybe to retry or very comfortably when they own their. outright, and they didn't get there by, renting their entire lifetimes. They bought a house when they were young and put the time in to pay it off. 

[00:36:59] Ryan: That's a good thing.

That's what we need to work towards, but there, there's, we go into a whole renter's culture and everything. It's just it is what it is. We're getting to the top of that hour. Do you work with clients nationwide or only in the state of Washington? 

[00:37:11] Rebecca: We do. And I actually have a team that I work with, so I may not always work with you personally on the tax side.

We pretty much work across the country, but as far as the financial advising and we can always do tax planning, but I always ha I also have this great team that. Basically, we work to automate as much of your accounting as possible so that we can do it very affordably and on the business accounting side.

As a business owner, it's really important that you have those numbers. You can't make good decisions without it. And I know in the kind of the f. There's always other things that sometimes take priority, but , having a fractional, c f o team or accounting team that can give you those numbers to, so you can make good decisions is really, makes a lot of sense.

Now, it's, you can bring on an accounting team to do what, a. Whole group of people would do on a larger business for just a fraction. And it's a great opportunity. So I love having that. I didn't haven't, we, it's a newer partnership to me right now. We're dating, I'm hoping to merge my practice within theirs after tax season.

But having these, they've just been great to work with and I What that for me on the tax side, it's really good too, because then when you get to tax time, , they've already got all the numbers together. There's no stress in the taxes. It's just oh, I'm ready to do my taxes. Here's my forms. And that's all done instead of hours adding up numbers and trying to get things together.

So as a business owner, you do not wanna be doing that every tax season. You need the numbers and June and the thing that I've found that's can be really scary about it is if you're not keeping on top of it, oftentimes happens is your business kind of creeps and grows on you and maybe you only owed a couple thousand dollars last year and you could have a $20,000 bill.

Bill very easily, especially if you're in a single member l o c disregarded entity because you now you're making 50, 75, a hundred thousand dollars and that you maybe you only made 30 or 40 your first year, and then you have this huge tax bill and you haven't. Planned on it. And that can be, really a big setback and really pr, slow your business growth.

So the sooner you plan on it and get those numbers during the course of the year, the better. 

[00:39:28] Ryan: Cool. How can everybody get ahold of you? 

[00:39:31] Rebecca: You can actually, you can go to max and. And you can also find me on LinkedIn. I actually have my email phone number there, , I'm one of those word people that I don't always answer my phone, but, you leave me a message, we'll get back to you and we can help you get in front of the right people.

But max m a x is our accounting firm website. And and then again, find me on Linked. And I'm in Spokane. I don't know if there's an, any other Rebecca's, Rebecca Jenssen's in Spokane. 

[00:40:05] Ryan: I will link your website in the show notes so everyone has that. And then if you want me to put your LinkedIn profile in there, I can do that also.


[00:40:13] Rebecca: sounds great. I'll get that over to you. 

[00:40:14] Ryan: Thank you Rebecca for coming on. It was a great conversation. You made taxes a little bit better than we all dread about, cuz at least you gave us the highlights, but also shared some great tips and. 

[00:40:25] Rebecca: Again, you gotta find somebody weird like me that actually thinks taxes are interesting.

If I can find you a way to save taxes, that makes my day . That's what I do. So thank you for coming on. Thank you. You have a great week. You too.