Modern Family Matters

Incorporating Legacy Investing as a Powerful Part of Your Estate Plan

May 26, 2022 with Blake Brogan Season 1 Episode 56
Modern Family Matters
Incorporating Legacy Investing as a Powerful Part of Your Estate Plan
Show Notes Transcript

Join us as we sit down with Senior Wealth Strategist, Blake Brogan, to talk through alternative investment ideas that can help you maximize your money in order to help create a family legacy in years to follow. In this interview, Blake discusses the following:

•    Strategies to maximize retirement income, while using the fewest dollars possible.
•    How insurance policies can be used to be an important part of your estate plan.
•    Understanding what leveraging your income is and how it works in retirement and estate planning.
•    What Indexed Universal Life Policies are and how they fit into an overall estate plan.
•    Using Tax-free growth and creditor protection to help build a legacy plan for retirement or passing on to your heirs.
•    Using insurance to balance your retirement income with the amounts you pass on to your heirs at your death.

If you would like to speak with one of our family law attorneys, please call our office at (503) 227-0200, or visit our website at

To speak with Blake further about alternative investment ideas, you can contact him via his website:

Disclaimer: Nothing in this communication is intended to provide legal advice nor does it constitute a client-attorney relationship, therefore you should not interpret the contents as such.

Welcome to Modern Family Matters, a podcast devoted to exploring family law topics that matter most to you. Covering a wide range of legal, personal, and family law matters, with expert analysis from skilled attorneys and professional guests, we hope that our podcast provides answers, clarity, and guidance towards a better tomorrow for you and your family. Here's your host, Steve Altishin.

Steve Altishin  0:32  
Hi, everyone. I'm Steve Altishin, Director of Client Partnerships here at Pacific Cascade Family Law, and today I'm here with Blake Brogan, a senior wealth strategist at money insights to talk about legacy investing and how it can be an important part of your estate plan. So how are you doing today, Blake?

Blake Brogan  0:54  
Hi Steve, I'm doing great. I've been looking forward to speaking with you and am excited to have this conversation.

Steve Altishin  1:00  
Oh, cool. Well, before we start, do you want to talk for a minute or two about who you are? 

Blake Brogan  1:06  
Sure, I'll start. Back in my college years, I actually went to a school in Pennsylvania to study entrepreneurship. So I've always loved business. I grew up Caddying at golf courses and worked for a lot of business owners and loved just having conversations with them. So I studied entrepreneurship in college, and it was actually some of my professors who had some businesses outside of the teaching that they were doing, they were implementing some unique wealth building strategies that they kind of let me in on on how they were building their businesses. And so when I got out of college, I actually started using some of those strategies in my own personal life. I loved what it could accomplish for me and learned that, you know, it would have some value for other people as well. So I've always loved business, and money, and entrepreneurship. So I've kind of married those all together, and now work with money insights, which is a very strategic wealth building firm. I'm sure we can get into some of the details, but we work with a lot of high income individuals or high net worth individuals who are looking for alternative wealth building and legacy planning. And so that's what brings us up to today.

Steve Altishin  2:18  
Well, you know, in the words of the greatest caddy movie ever, you've got that going for you.

Blake Brogan  2:27  
That's right!

Steve Altishin  2:29  
Before we start in talking about the hows, let's talk just a little bit about legacy investing and kind of what it is, what the term means, and the types of situations that it can cover. I know that at our firm, we've got folks who have divided their pension plans, pursuant to a divorce or a separation, and what was potentially a 250,000, or 500,000, or million dollar plan, and maybe half that. We also have people who have families, both divorced families, and just families who are now needing to invest to start their kids college, and that kind of stuff. And just general, you know, people now getting their wills done, doing their estate plan, just trying to figure out how to save for that. Can you talk a little bit about, you know, what kind of situations does this fit?

Blake Brogan  3:44  
Yeah, so a lot of the people that we tend to run into and work with, you know, at the end of the day, a lot of people are pursuing financial freedom in some way, right? So that can look differently in a lot of people's situations. So, you know, maybe Steve, to what you mentioned, of someone who's accumulating assets, they have a pension or 401K's IRAs, like market type of savings. What they're looking to do is just accumulate wealth, right, and then spend that down. Well, eventually, we got to turn those dollars into cash flow. And so maybe they run into a situation like you just mentioned, where there's a divorce. And you're not as far along as you may have thought, maybe you're 50 years old, or 40 years old, and you thought you would have a million dollars in the plan. Now you've got 500,000? Well, what we do is really teach some specialized strategies that can enhance or come alongside the investing that people are already doing. So maybe in that individual situation, you're 50 years old, per se, you have a divorce. Well, now you're looking to, how do we create more efficient retirement income? So some of the strategies that we teach are ways to do retirement investing, but in a little bit of a different way by using some just very simple financial strategies that will enhance or create more income than people were necessarily going to get off the investing that they were already going to do. So really, at the end of the day, what we try to do is look at what people are doing financially, their goals, and how can we improve or enhance what they're already trying to accomplish? And then we teach them strategies that maybe they've heard of, maybe they haven't heard of, but that can just partner along with what they're doing and get them to their financial goals faster. Now, you also mentioned college planning, right? That's me and my situation, right? I have two kids and a third on the way here. And some of the strategies out there, maybe the most common in America, would be using 529 type of accounts are really what you're doing there. It's kind of like a Roth IRA, but specifically for college funds. Now that strategy can work. However, one of the downsides is, those dollars are locked up in a way you can't use them other than for qualified expenses. And in my situation, you know, I don't know exactly what college is going to look like, I don't know the college's my children are going to go to, so we just provide maybe an alternative type of retirement college strategy, where you can use funds as you see fit. And using some strategies like leverage, you can just create more dollars that you can use for college than you might be able to generate in a 529 or something like that, where it's all your money.

Steve Altishin  6:37  
This is probably just a stupid question, but is there a better or worse time to start? Or is there a too late time to start?

Blake Brogan  6:48  
I mean at some point, it's probably too late. But the time to start is, you know, how does the saying go? The best time to plant a tree is 20 years ago, the second best time is today. Right? So we partner with people and work with them in whatever situation they are. So we have clients, you know, really as young as children, a lot of times, of course, it's their parents acting on behalf of them. But we have children essentially as clients, and then we work with people really up to until their mid 70s. So as long as you have maybe a 10 year time horizon that you're looking to achieve something financially, the strategies that we teach will work in those situations.

Steve Altishin  7:25  
And these, it sounds like, are sort of an alternative to some of I guess what you would call the traditional plans--this isn't an IRA or a 401K or, like you said, a 529 where you're taking money, and that money goes somewhere and stays in that somewhere. 

Blake Brogan  7:45  
Yeah, yeah, that's exactly right. So one of the strategies that we teach is what we call the investment optimizer. So what the investment optimizer does, is, let's say someone who is more in the alternative, or passive, investing space, maybe they like to invest in crypto or in real estate or in private lending or self storage, right? Things that may be outside of that traditional or typical way of investing, like 401Ks, and IRAs and things in the stock market. So if someone's in that position, and they're investing in, let's say real estate, what typically happens is they're building up money in a checking or a savings account. And then whenever a real estate opportunity that they're investing in appears, they just, you know, withdraw the funds from the checking savings account. And then as that kicks off cashflow, it's just being directed right back into a checking or savings account. Well, the natural inefficiency there is where the money is sitting in between deals, right? So that bank account, it gives you the safety and liquidity but beyond that, there's not really many benefits, right? So the investment optimizer is not replacing the investing that they're doing in the real estate or in business or, you know, wherever they're investing. It's really just replacing where money is flowing in and out of the deal. So we use these special type of what we refer to as max overfunded life insurance policies, and what they're doing is just replacing the savings account where people store up their money and then flow money in and out of deals. So the reason you would use that is you have the safety liquidity, but we can generate significant benefits beyond you know, just safety and liquidity. So there's more tax advantages, we can earn much higher rates of return. There's creditor protection, which I know is very important to many individuals, and then it is a life insurance policy. So there's some legacy wealth that's created through death benefits and various types of leverage that we can use to actually have your money working for you in multiple places at the same time as essentially the goal of that strategy.

Steve Altishin  9:46  
I take it this is not a plain Jane life insurance plan. Is it something that you can borrow on, or how do you get to use that money if you put money into the life insurance plan?

Blake Brogan  10:01  
Yeah, that's a great question. So certainly it is not your typical life insurance. But when we talk about insurance, you know, most people think of it as primarily for death benefit, right? Or primarily, you know, if you're buying car insurance, you only use it if your car gets wrecked, right. So it's the protection aspect. Well, there's some unique ways which you can design life insurance policies that are more focused on the living benefits or using the policy while you're alive. And when we structure we're actually trying to minimize death benefit, which again, sounds kind of funny, because it is a life insurance policy at the end of the day. But what we're doing with our clients is just trying to get their dollars to do more for them in their investing. So again, the life insurance policy is designed to build what's called cash value. So the cash value grows, and it's safe and liquid, you have access to it, just like you would a bank account. And then you talked about that leverage component? Well, again, the way that people are typically investing is they take the money out of the bank account, they put it into an investment, the money grows, and then it gets back into the bank account as cash flow gets kicked off. Well, with this strategy, what you can do is actually leverage or borrow against the cash value that you accumulated. So for instance, you put $100,000 into these life insurance policies. And then as opposed to taking the money out, you can borrow against it and use a bank or the insurance company's money to go do the investing that you were already going to do anyways. So the unique part of that is your money remains in the policy, you're earning, you know, four to 5%, tax free rate of return in the policy. And in addition, you can borrow against that to go do the investing that you are already planning to do anyway. So as opposed to just having your money work for you in one place, you actually have it working for you in two places at the same time. Now, I know that can be a little bit hard to wrap your mind around. So if you do want to know more, we have a page at money, and then you'll see our education center. The strategy I'm talking about right now is the investment optimizer, you can go watch videos, we provide a lot of free resources to anyone who's interested in checking those out. And that's a good place to just kind of get a high level overview of what's going on there.

Steve Altishin  12:10  
I get the leverage thing, and I should say, I did go and look at those and, you know, it took me like once or twice to go through one of them. But when the light comes on it comes on and I kind of went, this is actually much more simple than my brain was trying to make it out to be.

Blake Brogan  12:32  
Yeah, and we find that. I mean, if someone is totally new to some of the ideas that we're teaching, using leverage, using insurance as a wealth building tool, as opposed to a protection tool, yeah, it certainly can take a couple of iterations to kind of wrap your mind around what's going on. Once you kind of understand the nuts and bolts, while it's a different way of thinking, it really is very simple. So if you're in a community where people are using these strategies, oftentimes it's like oh, yeah, that makes total sense, why didn't I think of that before type of thing. So we actually have a podcast as well. The Money Insights podcast, and what we like to do a lot of times is interview our clients, so people who are active in using these strategies to enhance their investing, or get to retirement quicker, or create more retirement cash flow, using some of the other strategies that we have. We interview those those individuals, and they kind of share their stories about, you know, the things that we've been able to accomplish with them.

What about tax? You mentioned the term life insurance. so I'm wondering, a lot of life insurance stuff can be tax free. 


Steve Altishin  13:49  
How does the tax implication work or not have to work with these life insurance things?

Blake Brogan  13:56  
Yeah, that's a huge component of these policies. So very simply, from a taxation standpoint, it works a lot like a Roth IRA. Some of the strategies that we do, where you're earning $1, you're paying tax on that dollar, and then it goes into the strategy, right? Once it's into the end of the policy, the money grows tax deferred, technically, but then you can access it tax free as well. So as money is flowing in and out of these accounts, for investing purposes, we create a lot of tax benefits, being that really the dollars aren't taxed once they go into the policy. So we get some significant growth, and then we're able to access those dollars tax free. Then there's also the death benefit component. So a lot of the strategies that we're working with people on-- maybe the legacy isn't the primary thing that they're focused on, but that certainly is going to become a part of of the plan, right? Eventually, we're going to pass away and so what happens there? Well, we work with some creative strategies where these death benefits eventually get paid out to heirs tax free. So there's an income tax free portion to them. Depending on how you set it up, it can be part of your estate tax, you know, count against that. However, there's some other strategies with trusts, probably things that you work with, to help move assets outside of that estate planning. So when it comes to--you know, were throwing around this term legacy planning or estate planning-- these special type of insurance products can be very impactful with with how they move wealth to the next generation.

Steve Altishin  15:33  
So they can incorporate into a traditional estate plan, which, you know, some will have a trust, some will have  life insurance, and various other things. Because at the end of the day, I know estate plans, like you said, aren't just about passing it on, it's about using it when you retire.

Blake Brogan  15:53  
Yeah, absolutely. So let me give you an example. So just the other day, I was speaking with a lady, her name is Amy, she's down in Texas, and her father had essentially sold the business. So he had, you know, a pretty significant windfall, a couple million dollars that he passed on to his daughters through an irrevocable trust. So now she has access to this trust, and it's in her name. And she's wondering, okay, how do I use the funds in here, and then this trust, how do I set this up to benefit my husband, you know, who's living--she's probably about 55 years old right now--and then her her children as well? So she's got this large sum of money. So what we were working with her on is using the cash in there to fund some of these high cash value life insurance policy. So why would she do that? Well, the first is she has access to that money still. So it's safe, it's liquid, she wanted to start pursuing multifamily investing. So kind of passive investing into syndications, things like that. So all this money was liquid, so she could then borrow against those life insurance policies to go do the investing that she was planning to do. Anyways, there were, again, some of the benefits we talked about, there's some tax advantages. But then additionally, because she's using the strategy, as opposed to just having the money sitting in a bank account in the trust, earning nothing essentially, because she's using these policies, she's also creating, you know, eight figures of life insurance death benefit, that's eventually going to get passed on to her husband, her heirs, her children, you know, depending on when she passes away. So when she incorporates these life insurance strategies into what she's already doing, we were able to create a double, you know, an eight figure, essentially, death benefit, that's going to get passed on. That wealth is going to be multiplied upon her passing to her husband or to her heir. So, simply by using that strategy in conjunction with what she was already hoping to accomplish, it just really made it a lot more powerful.

Steve Altishin  17:59  
In this particular case, it sounds to me like one of the big benefits is that you aren't really taking the money away. And I'll maybe talk a little bit about this, because you know, for a lot of people it can be confusing: what's the difference between borrowing on it, and investing the money I get from the bank and just taking the money cash value and investing it in this plan? 

Blake Brogan  18:37  
That's a great question and yeah, they do, they certainly do. So in a way, it's very similar. So if you think about, like, for example, let's say you had a home with some equity; people are very familiar with Home Equity Line of credits, right? Or a HELOC is often what it is referred to as, where essentially your house is what's serving as collateral. And then the bank will give you a loan and now you have access to whatever-- 100 grand, 500 grand, however much you have access to--and then you can borrow that money to go do whatever you want to do. Maybe you're using it for investing. Well, the house was what was serving as collateral for that loan, and you're paying some interest and your house is going to appreciate or depreciate in value like it was going to anyways. Well these life insurance policies, they work very similar except for the fact of what is serving as collateral. So as opposed to your house serving as collateral in the HELOC, now we have these life insurance policies and they have guaranteed growth. They have tax advantages, right? They have a pretty significant rate of return, especially compared to bank accounts. Well, if we have access to cash value in there, we can take a loan so the life insurance company or a bank will allow you to take loans against that cash value to go do whatever you want to do with. Well, the unique part about that is now my money, because I never actually withdrew it from the account from the cash value, it continues to earn all those benefits. We have the insurance benefit, my money continues to earn, you know, four or 5%, tax free type of thing. And I have access to this essentially line of credit from the insurance company, or from a bank, to go to go do the investing that I was going to do anyway. So the whole idea there is that you're just making what you are going to invest in more profitable. So you have the entire bucket of money growing in your policy, essentially. And you can leverage that to go do the investing that you're going to do anyway. So as opposed to just having your money working for you in one place, at once, right now we have our dollars earning two rates of return at the same time. And then again, it goes back to just trying to get to this financial freedom, righ?. So people want to retire, they want to be financially free, they want to spend more time with their family, or do whatever they want to do. Maybe it's pursue, you know, serving at church or whatever they want to do. And the strategies that we teach them are simply just ways to get to that, to that time timeframe, a lot sooner.

Steve Altishin  20:56  
And I'm guessing that there's an end game to this which morphs into spending money, or, you know, having money inherited?

Blake Brogan  21:08  
Oh, certainly, yeah, that's, again, the end game. So if you're active investing, you can use this to enhance the investing that you're doing. And then we are very big fans of creating tax free retirement income streams. That's one of the ways that we're enhancing what people are doing. And so these insurance policies are very good ways at taking cash and turning it into to long term retirement income streams that are completely exempt from taxation. So there's really, I think of it in three phases: you have your time where you're actively building wealth, right, and that can be used in conjunction with that. There's times where you're going to be in what, let's call it retirement, what we think of as retirement, kind of the spend down our assets, where this can provide a significant cash flow stream. And then there's also the legacy play. So for those who are legacy minded, oftentimes, you know, if you're spending down your assets, well, what's gonna be leftover to the next generation? Well, with these strategies, there's always a permanent death benefit. So if someone is legacy minded, say, How can I multiply my wealth to the next generation, again, that's more important to some people than others, just putting some of these strategies into what you're already doing can just leave them a much more significant legacy than if you're just using your own dollars.

Steve Altishin  22:28  
So you don't forfeit the life insurance plan, let's say when you turn 65, that doesn't go away?

Blake Brogan  22:40  
Yeah, no, not at all. So the way that you often hear people talk about life insurance is they'll talk about buying term life insurance and investing the difference, you may have heard that term before. So what they're saying there is, hey, if you are only focused on building your wealth, let's say in the ways that people typically do it--IRAs, 401K's-- the cheapest way to buy insurance is to go ahead and just buy a big term policy and then eventually, that'll buy it till you're 65 or your kids are out of the house and then live off your retirement assets. And frankly, that strategy can work. But we're just using life insurance in a totally different way. It's not as a way to replace a term policy or anything like that. We're just using it as a way to enhance some of the retirement cash flows that we were able to create, had we not used the policy, if that makes sense.

Steve Altishin  23:31  
Oh yeah, it does. So let's say I come in, or someone calls you and they say, Well, you know, I kind of get this. Like you said a couple of times, it's got some aspects similar to a Roth IRA, which is where you, like you said, put the money in after tax, but then you get it out without being taxed. But then, why not just use a Roth IRA? 

Blake Brogan  23:59  
Yeah, that's a great question. So another good example, I actually spoke with someone last week, who his name's Zaid, he's in this exact situation. So he said, Hey, Blake, I like tax free retirement income. The problem is, I earn too much and I don't qualify for these types of retirement plans. So he's like, what other options are there--and he didn't exactly ask that, he knew of other strategies that we teach. So this one we call, we have funny names for all these, but we call the capital avalanche. Okay, so here's what happens with the capital avalanche: it's using leverage, just like we would use in a business, or maybe we would use in real estate, you know, if you go purchase real estate, you typically use leverage. People talk about business loans all the time. Well, we can use what we call conservative leverage in our retirement planning. Again, something that maybe not as many people are talking about are actually using leverage within their retirement planning. So what happens in Zaids situation is like, okay, he's 50 years old, he wanted to retire in about 10 years. So he's like, I want to be putting $100,000 a year away for retirement. Now this can work on any scale, it could be $10,000 a year, it could be a million dollars a year, but in his situation, he was a high income earner, he was really wanting to accelerate his retirement planning. And he said, Okay, how do I do this in a in a tax free way? So what we use is what we call the capital avalanche strategy. So with the capital avalanche strategy, he's depositing money into these life insurance policies. Now, as opposed to continuing to pay premiums each and every year, what we're doing is just depositing money into a policy one time, and then using bank leverage to enhance what we're already doing. So essentially, as opposed to just putting your money into an account, he was able to put in some of his money and some of the bank's money. Well, what was the result of that? Because of how we how we implement the strategy, and we actually use some outside financing to kind of boost up the policy, you could say, you know, we're able to create some very consistent double digit returns in his portfolio, but we're doing it in a way that also creates that tax free retirement income, like a Roth IRA would, but for a higher income earner. So there's also the legacy benefit on top of that, so for him, it was a multi-approach. He said, Okay, I really want to create retirement income, we use this capital avalanche strategy, where we're able to create some pretty consistent double digit returns. And we do that through leverage. So now he's gonna have this kind of cash flow stream starting at 65. Or he can really tap into it at any point; again, double digit returns on that, and there's a death benefit at the end of the strategy that he's going to use to kind of pass on to his wife and children.

Steve Altishin  26:51  
Am I wrong? This sounds like, again, in divorce cases and separation cases, often someone will get a chunk of money. And it may be because they don't want to split an asset, so someone takes an asset, but then the other person gets cash. And so for someone who, let's say, comes out of a divorce with $100,000, or $200,000, it feels like this thing is kind of bait for that.

Blake Brogan  27:24  
Yeah. And that an incredible case of someone who says, Okay, you know, I have a big lump sum right now. But maybe I might not have the cash flow coming in from that. so what do I do with a lump sum? How do I maximize what I can generate with these dollars? And that's where using your dollars as a one time contribution, one of the nice parts is you maintain some liquidity over the money. So think of it as like an emergency fund, or something like that, where you would have access to some of these dollars. But again, we're using conservative leverage, we're using bank money, we're able to grow our dollars, very predictably by more than what it's costing us to borrow. And so the net result to us is we can just create so much more income than if we were only using our own money. So if we're investing our own money in the stock market, maybe we can pretty consistently get 5, 6, 7, 8%, maybe higher, I don't know, over the long term. But when you use bank money on top of that, we can very quickly get into that double digit return. And it's just using some sound financial principles. If you are interested, you could check out another video on our website where we kind of break down exactly how that strategy works as well.

Steve Altishin  28:42  
Yeah. Oh, my gosh, well, wow, we've already run out of time. That's all I have to say. I like the way you describe leverage, because it's one of those words that strikes fear in everybody because they think hedge funds and people running off with their money to the Bahamas and just that whole kind of weird thing. But it's really not some sort of a shady way to do things. 

Blake Brogan  29:19  
Well, to be fair, to your point, Steve, it is a two edged sword. So it depends on, what are you leveraging against, right? In 2008, people were leveraging against homes that didn't necessarily have the value that they thought they did, and you can get underwater very quickly. There's no doubt about that. Well, what we're introducing is essentially the insurance world that has a lot of guarantees. So when we use insurance products, along with leverage, it truly is the safest ways to make your dollars do more jobs than they could do on their own. And that's why we love to call it conservative leverage. So once you kind of understand some of the basics of what you're leveraging against, it just is a more powerful way to do it.

Steve Altishin  29:55  
Wow. Wow. Well, thank you so much for being here today, Blake. Before we head out, one more time, how can people who might be interested in this get a hold of you?

Blake Brogan  30:07  
Yeah, great question. So I would check out We have a bunch of free resources there. The Education Center is really the the place you're going to want to click on if you want to learn more about the strategies. We also have community we're building as well. So you can check out our podcast, the money insights podcast, and we bring on a lot of people who are who are talking about different wealth building strategies. And so if you're in that camp of you want to learn how to get to retirement or that financial freedom number faster, that's a great place to start.

Steve Altishin  30:38  
Thank you. That's wonderful. Again, thanks, Blake for being here today. 

Thanks so much, Steve. 

And everyone else, thank you for coming. If anyone has further questions, you can post them here and we can also get you connected with Blake, or you can, like Blake said, go straight to him. So until next time, everyone stay safe, stay happy, be well.

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