Today, I want to dive into a topic that hits close to home for many of us: the costly consequences of thinking we “know better” than our trusted advisors. In my years of experience working with clients in the real estate and medical fields, I’ve seen firsthand how this misguided belief can result in millions of dollars in taxes lost. In the latest in my Bow Tie Tales series, aptly titled “When ‘Knowing Better’ Costs Millions in Taxes Lost,” I unravel a cautionary tale that underscores the importance of heeding professional advice and the detrimental effects of ignoring it. So grab your coffee, pull up a chair, and let’s delve into this crucial lesson together.
Video Transcript: When “knowing better” costs millions in taxes lost
In today’s Bow Tie Tale, I’m asking:
When can “knowing better” than your professional advisors get you into trouble?
I’m George Dube, saving the world from tax, one bow tie at a time®.
I have many people throw away tax dollars year after year because they “know better”, don’t need to spend money on advisors, and like to keep it simple. One of the more perplexing examples of this that I have seen, involved a successful real estate family who was throwing away over $750 thousand dollars a year in taxes.
Let me say that again.
The family continues to throw away three quarters of a million dollars plus a year because they knew better and thought keeping it simple was the way to go.
And, I mean, it saves them a few thousand a year in professional fees.
Think of all the retirement dreams, generational wealth, and community work that could be funded with that kind of money. Instead, they are funding our overspending governments.
Because of the enormous waste, each year I ask them to acknowledge how much they have let evaporate so when they’re gone, I can show their kids that I tried to help, should they ever ask.
I don’t pretend that the structure we were proposing to preserve wealth was simple, or cheap. But with additions of things like a family trust that could bring huge savings, they could have expanded their real estate portfolio, donated to charities, had an amazing retirement, or just about anything they wanted to do for themselves, families, or communities.
Let’s not kid ourselves. They’ll be fine financially because they are exceptionally good real estate investors. But, based solely on the after-tax basis, it’s a huge waste – and their legal advisors agree.
Often, I think clients who “know better” than their advisors actually fear “not knowing”. It’s a fear of managing a more complex structure, or more complex processes, as a business grows. But there are solutions for this, such as having a person or people focused on ensuring it is all managed – think of our virtual family office, let alone a more robust relationship with my accounting team.
Bow Tie Tale lesson to avoid taxes lost
The lesson in this Bow Tie Tale?
Listen to your trusted advisors, and then act on what they are telling you, or why bother having them?
You don’t need to agree on everything, but if you’re regularly ignoring their advice, reconsider the relationship. They can not only help you set up a plan that saves you money, and MAKES you money, but can also help you manage it so that any stress you feel about complexity, or “not knowing” can be alleviated.
I won’t pretend the stress is completely removed. But I’m going to suggest it can largely be mitigated and put you back in control.
Millions in taxes lost: Conclusion
Thanks for joining me!
In every Bow Tie Tale, I’ve tweaked the details to keep things confidential, but the lessons are pure gold when it comes to helping you save on taxes, grow your wealth, and craft your legacy.
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-End transcript-
Resources
For additional resources related to taxes lost, this bow tie tale, or other advice:
- Bow Tie Tales
- Family trusts: Ultimate FAQ for real estate investors
- Family trusts for medical professionals: Saving taxes
More questions?
Still have questions? I want to help you Do wonderful things®, so please contact me today.
Remember – circumstances are unique! This information is summary in nature. Seek out advice from your tax advisor about your specific situation.
