We are heading into the last leg of our lives, and we should already be rich. Yes, if we have been taking all the proper steps in our personal time, we should have well over $2-4 million in our accounts.
We will have helped our children (now in their 40s and 50s) stand up on their feet. Potentially we can meet our grandchildren by now as well. Things are good, so what are our goals?
Our main goal at this age is to preserve generational wealth. We don’t want anyone in our family line to worry about money again, so it’s time to put major money moves in motion.
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Welcome back to the Real Estate Investing at Any Age Series (20s, 30s, 40s, 50s, 60s). Today, we will discuss making our final moves to ensure our bloodline is free from bondage. Sometimes to help others, we must set permanent things in motion.
Estate planning. Yes, this is where estate planning comes into play. In the article “Estate Planning vs. Retirement Planning,” I discuss the difference between focusing on ourselves versus our family.
The book “Get Your Ducks in a Row” goes in-depth into the basics of estate planning. The main goal of estate planning is to ensure our wealth transfers to our family and not the government.
Control the money. Sometimes, our family can make a mistake with money. If we give each of our children $1 million upon our death, how will they spend it?
We want our children to be happy (content, satisfied), but money has a way of creating more issues than it solves.
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We can ensure the longevity of our money by using tools such as irrevocable trusts. Putting $1 million in a trust can be a great way to give our children $40,000-$60,000 of annual dividend income while preserving the principal.
Real Estate for the Win. But we are here to talk about real estate. Luckily, there are fantastic ways to transfer family wealth via real estate.
The book “The Perfect Investment” talks about one of the best ways to ensure generational wealth—large commercial multi-family housing. I believe the book quotes “large” as a building having over 250 units.
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To enter into this massive investment, you’ll need a team. There is usually a leader who then finds partners to fund the acquisition.
We want to be a sponsor at this point in our lives. However, we have to do our due diligence on each deal. We probably have to be accredited investors to partake in these ventures.
Advantages of multi-family housing. The ultra-rich and ultra-elite have used commercial multi-family housing to transfer wealth for a long time.
You can write off depreciation and capital expenditures using accountants and tax people and conduct tax-free transfers into larger properties. Again, you want to have plenty of professionals assisting you through this because it is hyper-complex.
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One of the main advantages of multi-family housing is the “step-up cost basis.” Now, these tax rules could change at any minute, so consult a professional before making any decisions. Each time there is a new president, taxes seem to be a massive topic.
A “step-up cost basis” means that the initial cost of purchasing an asset resets with the transfer. In layman’s terms, it resets the capital gains.
For example, say I buy a large commercial apartment building for $1 million. Over 20 years, it grew in value to $5 million. If I were to sell the building, I would owe taxes on $4 million.
Now, with the “step-up cost basis,” their new cost basis would be $5 million upon my death and transfer to my children. So the property is worth $5 million, and they “bought” it for $5 million. If they sold it right away, they would owe no capital gains.
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How the rich stay rich. You can see how the rich stay rich. Of course, there is a federal estate tax (currently around $11 million) and potentially a state estate tax. In our 70s, we will need to research and plan these transfers as a hobby.
The more seriously we take estate planning, the more wealth we transfer to our children and grandchildren. Of course, we also want to teach our family members how to leverage their wealth for the long term.
Overseas Living. Besides focusing on commercial multi-family real estate and estate planning, we may want to diversify into housing overseas.
Giving our family options on where to live and vacation is a great idea. I wrote an entire series on living overseas on passive income. Our 70s are a great time to experience life overseas and buy real estate for the long term.
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We never know what the future holds in the US or any other country. Having multiple houses in various states and countries can ensure we have somewhere to go in an emergency.
If we take life seriously, by our 70s, the world should be our oyster. Some of our businesses should be entirely online, and we should be location-independent.
A house for everyone. As a grandparent, I want to buy a home for each grandkid. That gesture is probably the single most significant guarantee of success for a human.
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Housing is our number one expense, so if you had a paid-off house at age 30, you would effectively be rich instantly. Buying or transferring a home for each grandchild won’t be as difficult as it seems.
It just takes understanding real estate principles and forming the right mindset to be successful. We are not trying to buy their “dream house” but to give them a hard asset that they can leverage for the rest of their lives.
Even buying a small multi-family house, like a fourplex, can give each grandchild significant rental income with little fuss. We can even install a manager in charge of this “estate” and just leave the grandkids the dividends.
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Kids need to build their own wealth. Yes, conventional wisdom says we need our kids to branch out on their own and suffer in the world for them to “appreciate” what we leave them.
Sure, that’s one way to look at the situation. What is the point of starting from zero and working our way up if our children have to do the same?
Seriously, do you think wealthy people think this way? It’s a poor mindset that poor people gave us. We want to transfer our success to our children and grandchildren. It is then their responsibility to find happiness in the world.
I always talk about creativity and how we can earn a living being creative. Don’t we want our kids to have the option to make a living as writers, YouTubers, or artists?
Do we need our kids to suffer for 30-40 years in a corporation? No, let’s drop this poor mindset and give them what we didn’t have—options.
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Conclusion. From our 70s and on, we dedicate our lives to our future generations. This is what we have worked all our lives to obtain—generational wealth.
We continue to grind, work, and learn to ensure our kids don’t have to start from zero like us. Now, let’s lock in our wealth by taking the last precautions such as estate planning, trusts, estate taxes, and real estate.
Let’s ensure we set the next 200+ years of our family up for success. Yes, we want to travel the world with our spouses, looking for new real estate. Business and pleasure can co-mingle in our 70s.
Have a good time, enjoy your family, teach them about your experiences, and we will ensure a great life for all. Good Luck!
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