Protect Wealth, Lower Taxes and Build Legacy with Don Pendleton

In this masterclass-style episode of the Franklin Planner Podcast, George Wright III sits down with wealth strategist and Protect Wealth founder Don Pendleton to unpack the pillars of long-term financial leadership: tax strategy, asset protection, estate planning, and wealth creation. Don shares the personal story that launched his career in asset protection after being sued following a tragic incident, and how that experience led him to decades of educating business owners, families, and professionals on protecting what they build.

The conversation dives deep into the mindset shift between tax preparation and true tax planning, why having a business structure can unlock powerful legal deductions, and how proactive estate planning prevents costly family disputes and probate issues. If you want to keep more of what you earn, reduce risk, and create a lasting financial legacy, this episode delivers actionable insights you can start applying today.

Key Takeaways

Tax Planning vs. Tax Prep: Learn why filing taxes is not the same as building a year-round wealth strategy.

The Leadership Mindset Around Money: Discover how the way you think about expenses, structures, and planning changes financial outcomes.

Estate Planning Essentials: Understand the must-have documents and trust structures that protect your family and legacy.

Business Structures & Tax Advantages: Why having an LLC, corporation, or even a sole proprietorship can create strategic tax opportunities.

Winning the Tax Game: Focus on lowering your effective tax rate instead of chasing refunds.

---

Episode Timeline

02:03 – The Lawsuit That Changed Everything

06:36 – The Four Pillars of Wealth Protection

09:05 – Why Tax Strategy Starts with Mindset

10:30 – The “Free Roads vs Toll Roads” Tax Analogy

12:44 – Why Having a Business Changes Everything

14:45 – Real Estate Losses & Paper Write-Offs

20:15 – Medical Expenses, Premiums & Business Deductions

22:22 – Stop Asking “Can I?” Start Asking “How Can I?”

30:27 – What It Really Means to Win the Tax Game

33:22 – Estate Planning Essentials Everyone Needs

36:25 – Trusts, Probate & Protecting Family Wealth

42:35 – Where to Start: The Protect Wealth Summit

---

Episode Transcript

GeorgeWrightIII: Okay, welcome back to the Franklin Planner Podcast. My name is George Wright III. I am your host, and our co-host John Harding is not here with me today, but we’ve got a great guest. We’re gonna put on just a literal masterclass for you today. We have Don Pendleton in the studio. How are you?

Don Pendleton: It’s a great day.

George: Yeah.

Don: It’s a good day.

George: It’s good for us to finally coordinate.

Don: Yeah!

George:I mean, you are a world traveler, you have a ton of things going on. And for those of you that don’t know Don, I want to give you a little bit of introduction. So he is the president and founder of Protect Wealth. He’s also a nationally recognized speaker, author, one of the longest-running asset protection companies in the country when it comes to education to help you with taxes, estate planning, asset protection. And the reason we wanted to bring this topic in is we talk a lot about living your best life and leading [00:01:00] your life. And in order to do that, there’s a lot of different pitfalls you have to deal with in life. And, uh, you know, Don, you’ve written multiple books, you’ve trained thousands of people around the world, your events and your summits are put on virtually and live—

Introducing Don Pendleton

Don: Right.

George: And, uh, we’ve known each other, but you’ve been doing this for decades. And so I

appreciate you being here because you have a huge expertise for us.

Don:Always fun to— always fun to spend time with you, George. And we’ve known each other for over twenty-five years and worked together and in the same circles, met a lot of the same people, and it’s been a fun— it’s been a fun career, hasn’t it?

George:Yeah, it really has. And you really do meet a lot of people. And it’s interesting because the stuff that you teach, I always tell people we don’t get that education on finances as you grow up or go through school. But there really are secrets of the ultra-high net worth—

Don: There are.

George:—things that people use, strategies and tactics hopefully we’ll dig into really well today. But let’s start with your background, ’cause you have a very interesting story, and a lot of people might say, “Why did you get into asset protection [00:02:00] and tax strategies?

What pushed you into that?” And so I’d love for our listeners to kind of get some of the background, and then we can get into the strategies and tactics.

Don’s Start in Asset Protection

An unfortunate lawsuit

Don:Well, it’s real simple. I’m not a CPA and not an attorney. I got sued. I was running a recreation park down in Southern California. There was a drive-by shooting; it was right after the Rodney King riots. The gangs were moving out when the National Guard moved in, and gang members came into our park, and we asked them to leave, and they came back. As they’re getting on the freeway, fired three shots into the parking lot. Darla was eighteen years old. It was her eighteenth birthday that day. She had her two best friends in the back seat. She opened the door, stood up, took a bullet to the head, and I got sued because I was the manager on duty at the time and should have prevented that.

George: Wow.

Don:Well, I didn’t do anything wrong. And I got four little kids at home. I have no idea how lawsuits are going to happen. [00:03:00] You know, I don’t know how it’s going to work. And so it was the uncertainty of three years of depositions and interrogatories and requests for admissions and all of the… I think the uncertainty more than anything else. Again, people in America get sued all the time for things that they didn’t do wrong.

George: Right.

Don:They were… they were associated with the wrong people, or they were in the wrong place, or they owned an asset that got in trouble, and that led them into something. It just—it’s like divorce. We know the divorce is not fair. Well, divorce is a form of a lawsuit.

George: Yeah.

Don:And as fair as the judges want to believe it is, we all know people where this was not fair. And lawsuits, if you get the idea that lawsuits are fair, you’re playing the wrong game.

George: Yeah, you’re never going to win that game.

Jay Mitton, asset protection mentor

Don:And so when the opportunity came to work with Jay Mitton—Jay was the original, I mean, the pioneer, the father of asset protection. And I [00:04:00] gave a chance to work with him. Well, I jumped at that opportunity and— but I didn’t know that he was retiring. And he… You know, I came in as his customer service manager, I was kind of running the seminar company, and I had no idea that he was bowing out. And I got thrown into this role where he needed somebody to write his swan song, and so the opportunity to work with him and learn from him. And I spent more time with him than the attorneys in his office.

George: Yeah.

Don:And we would go through case studies, and “what about this” and “what about the”—“what about a single person,” “what about a married person,” “what if they live in this state or that state or—” and go through scenario after scenario. We created hundreds of case studies. And “What if this happens, and how do you protect this?” And it was fascinating to get into the mind of somebody who really created [00:05:00] the legal structures that’s used all over in America. Almost every attorney, whether they know it or not, are using his strategies that he developed. Well, now we have LLCs instead of family limited partnerships, but the concepts are— are—

George: Yeah.

Don:Those are the foundation on which we build. And for me to be there at the beginning of that and then be able to teach that and run an asset protection hotline for twenty-six years now and answer tens of thousands of questions for people. I learned as much from the students, “Why are you doing it this way?” And they teach me, it’s like, “Oh, well, that’s that.”

George: And people don’t know these things, right?

Don: No, they don’t.

How to Protect Your Wealth

George:But they’re dealing with them. In fact, it’s funny, you’ve said this many, many times, but you know, people will build and create wealth over a lifetime. And all it takes is one lawsuit. All it takes is— And what’s whittling away at your wealth? Taxes, lawsuits, things like this. And they’re things you don’t normally talk about. So here, you had a story [00:06:00] where something happened to you, it took you down this field, but now you’ve spent decades and worked with thousands of people who are dealing with the problems they’re not proactive about. They’re dealing with a lawsuit. They’re dealing with taxes. They’re dealing with capital gains. They’re dealing with all these things—

Don: Probate.

George:Probate—that are whittling things away. And you’ve learned all these strategies that, over time, most people don’t have access to. So what is it that Protect Wealth— What are the core topics that you help individuals to learn and apply in their wealth strategies?

Four basic strategies

Don: Well, picture four basic strategies.

George: Okay.

Don:Number one is taxes. Yeah, I mean— Well, yes, okay, lawsuit protection. We help you. How do you protect your home? How do you protect from retirement accounts? How do we protect from basic lawsuits, divorce, things that could happen. Sometimes they come out of the blue, we don’t see them coming, like [00:07:00] my [Laughter]— my little first lawsuit.

George: Yeah.

Don:Um, didn’t know, didn’t see that one. So lawsuits, but you can’t teach asset protection without tying it into an estate plan. So a lot of estate planning, and you can’t teach estate planning and lawsuits without teaching taxes, because that—

George: Right.

Don:—ties into everything. And if it’s all you’re doing is protecting and not growing— So it has to—the fourth topic is, there has to be wealth creation. So lawsuit protection, estate planning, capital gains protection, and— Oh, did I say that?

George: Yeah, taxes, and then also the—

Don: Then you gotta keep it growing.

George: Yeah. Don: Yeah.

George:Well, and I think that these are topics that a lot of people don’t realize that there are strategies that are proven, time tested strategies, that the ultra-high net worth are using today—

Don: Absolutely.

Tax Strategies

Tax planning versus tax prepping

George:And they know it, but you don’t understand it. And at the end of the day, sometimes your wealth strategies grow even more when you do [00:08:00] have proper tax planning.

But one of the things I wanted to point out—I’ve learned over the years, and I think you’ve agreed to this—is that most people don’t take a proactive approach. They’re dealing with taxes, they’re filing taxes, they’re not tax planning. They’re just tax prepping. They’re, you know, they’re trying to figure out what to do, but they’re not being proactive. So we’re hoping today we could kind of dig into some of these, but really with an emphasis on taxes. Now I want to make a note. You guys do a three-day summit, which for our listeners, we’re going to— we’re going to get ’em access to. And it’s extremely high, high-end training and strategies. You bring in one of the former prosecutors of the IRA—

Don: Right.

George:Like, one of the top tax attorneys in the country, one of the top asset protection, lawsuit protection, real estate, well, things like this. And so I’ll be putting some links in the show notes, but you have a summit coming up, uh, but you have others, and then the taxes are getting filed, so this is stuff that’s on people’s minds. So where do you think where do you think it would be the most appropriate for us to [00:09:00] take this discussion in order to help people learn some of what you do and what they can apply?

Don: Well, I’m not sure when everyone’s gonna hear this, but today is April fourteenth, and, I mean, we’re all thinking taxes, so—

George: Yeah.

Don:—I guess we start with that as a foundation, and we can add on estate planning, we can add on capital gains protection, we can add on everything. Wealth creation, we can add those later. But if it’s Tax Day and you’re listening to this at Tax Day—

George: Yeah.

Don: —oh, let’s talk taxes.

George: Well, and we could probably go down a rabbit hole of conversation for hours, and so we—

Don: Yes. [Laughter]

Taxes aren’t one-size-fits-all

George:—we don’t have that much time. But I do think, look, if you’re listening to this and you’re dealing with—whether you file taxes or not, whether you’re dealing with taxes, whether you’re dealing with ways to preserve your wealth, grow your wealth, protect your wealth, um, this is— taxes are going to affect it one way or the other. So where do you start with taxes? When you’re talking to individuals and you’re trying to help them to get a true strategy around their tax planning?

Don: Well, unfortunately we always start with the disclaimer.

George: Yeah. [00:10:00]

Don:[Laughter] Which is, we can teach tax strategies, but not everything we teach is gonna apply to you and your life, and so always do this in the terms of, meet with a professional and see whether what we’re teaching—it might sound good, but let’s make sure that that applies to you.

George: Got it.

Don:Okay. But— Okay, beyond that, we understand some basic rules of taxes, and that will apply across the board. And then we get into specific strategies. So can I just throw out a couple tax rules?

George: Yeah. Yeah, let’s do it.

You can choose your tax road

Don:Okay, so rule number one is… There are tax roads— There are toll roads and free roads all the way through the tax system. I used to live in the little state of New Jersey. This was back in the seventies. And they they wanted to build a toll road through our township, and they opened it up to vote. I’m not sure if they paid attention to the vote, but, you know—

George: Yeah.

Don:But— And the promise was that if [00:11:00] we vote in this toll road, all the people coming from Pennsylvania into New York City would be paying our property taxes and we don’t have to pay property taxes anymore. It didn’t work out that way, but that’s sort of the, you know, the promise. And so, and what we could do as locals is we could get a map and

get to New York just as fast. Um, we didn’t haveto pay the toll, but what we found is that the police officers didn’t care which road we took as long as we obeyed the laws on the road.

Okay, so—

George: Yeah.

Don:—so we can go a little bit slower or we can go a little faster, we can— we can take the toll road. Um, we can get off the freeway. You get off and do the free roads. “Just obey the laws on the road.” Well, there are so many hundreds and hundreds of free roads. You don’t have to pay the toll. But there’s no blinky signs—

George: Yeah.

Don: —neon signs on the free roads. Only on the toll roads that the government wants you to take.

George: Right. Yeah.

Don’t break the laws, don’t underreport income

Don:And so the— But [00:12:00] I guess my point is, you get to make the decision. Just don’t break the laws and don’t underreport income. If you know you made $100,000, let’s make sure that it’s reported and don’t—

George: But there are plenty of ways to expedite—

Don: Oh my gosh, there are so many. And sometimes we find people evading taxes when it’s so simple if we just learn the rules—

George: Right.

Don: —and find the free roads.

George: Yeah.

Don:’Cause they’re all the way through the— So, so basic rule number one is you have a choice. Basic rule number two is that there are two sets of tax rules. I used to think, “Okay, one for the rich, one for the poor,” but it doesn’t work that way. It’s for those who have a business and for those who don’t.

The Tax Advantages of Owning a Business

George: Having a business is one of the best tax strategies you could possibly have.

Don: Absolutely, because there’s thousands of tax deductions for businesses.

George: Yeah.

Don: Um, and not very many [00:13:00] for individuals.

George: Yeah.

Don: I mean, you can have more kids, but that— you know, there’s a— [Laughter]

George: Got it. Yeah. Yeah, yeah, yeah.

Don: —repercussions for that, I mean… [Laughter]

George: Yeah. Yeah.

Don: Yep, um, but there’s— Yes, you can have a home and you can deduct that, maybe, and— but there’s very few individual tax deductions.

George:But when you say a business, you mean a structure. Because a lot of people are thinking, “I don’t want to run a big business.” But, you know, obviously you can have a business, but also the structure of a business does bring you so many tax advantages.

Don: Well, and then sometimes it’s a sole proprietorship.

George: Yeah.

Don: Sometimes it’s organized, like a limited partnership or an LLC or a corporation.

George: Right.

Don:But sometimes just having an idea and “I have the intent to make a profit.” Okay. Well, as long as I’m doing it regularly, and then I’m keeping a set of books, I could have a sole proprietorship. My kids had a lawn-mowing business, but they had the intent to make a profit. Okay. My wife—

George: So [00:14:00] the reason you make that a rule is because that sets you up to be able to take advantage of all these benefits.

Don: That is, yeah. Now I have a business—

George: Okay.

“Almost unlimited tax deductions”

Don:—and now I’ve got— Now, if you want thistax deduction, we might have to be taxed as an S corp. If we want thisdeduction, I might have to organize as a C corp. But the basic rule is having a business opens me up to almost unlimited tax deductions.

George: Yeah. Makes sense.

Don: Whatever that business is. The more tax deductions you want, the str—

George: The more structure you put.

Don: Yeah, the more structured it will be. But at least, at least have a business. Okay. And then we look at… then we look at tax tips.

George: Okay.

Utilize real estate losses

Don:Okay. Let’s say I was in the real estate business or I’ve got passive income from investments. The number one tax tip is take advantage of real estate losses. And everyone goes, [00:15:00] “Oh, I don’t want to lose money!”

George: Yeah, “I don’t want losses.” Yeah. [Laughter]

Don:“I don’t want to lose money!” Oh, but there’s a difference, and the reason— It’s labeled wrong. Because it’s really a paper loss. Let’s say I have a rental property, and I’m claiming depreciation. So if it’s a rental property of commercial, that, um, that’s different, different rules than residential, “I own a home and I’m renting it out.” Well, I get to deduct depreciation whether I lose money or not. So let’s say the income comes in and I made $10,000, but with depreciation I’m really going to lose $20,000.

George: On paper.

Don:On paper. I take the cost of the building—um, let’s say I spent $600,000 on this house. We take off the land. The land is worth something. I can’t depreciate that, so that’s an investment. But I [00:16:00] take the rest of the building, and I get to depreciate that over twenty-seven and a half years. And that depreciation loss—and maybe I put some repairs into it, and maybe I, you know, maybe I did some improvements—we add all those together, and it shows on paper that I lost $20,000. I didn’t lose$20,000—

George: Yeah.

“Paper losses are different than actual losses”

Don: —I actually made money. But paper losses are different than actual losses.

George:Well, and I think people need to realize that the reason people that are wealthy and accumulate wealth utilize these strategies is because it’s going to help them to accelerate their wealth. And so if you don’t take advantage of these strategies, you’re not gonna be able to do that. So one of the tips you recommend is take advantage of these losses. These real estate losses.

Don: Yes. Real estate paper losses.

George: Got it.

Don:And so, let’s say I made really good money in the stock market, but— I don’t want to lose money in the stock market, but let’s say I flip a house. I use those real estate losses to offset the income that I made [00:17:00] in the stock market. We’ve got people that will flip a house once a year just to write off because they’re making so much money in the stock market.

George: Yeah.

Don: And they want to be able to write that off—

George: So does this just go straight to being strategic with your tax planning versus tax prep?

Don: Absolutely.

George: Right? So, all of these—I think what’s interesting, I wanted to kind of know for our listeners—each of these strategies, maybe, maybe one of these applies to you, maybe it doesn’t—

Don: Right.

George:—but it’s also the way you think about your taxes, your wealth creation, your protecting yourself. How you think about it is finding ways to create those strategies, so—Okay.

Tax incentives and oil

Don:Absolutely. Um, W-2 income—we’ve already paid the taxes ‘cause that’s taken out automatically, and there are a lot of tax deductions or ways to offset that; I’ve already paid

the taxes. But oil? Oh! If I were to invest in an oil—with a good company—and I could, I could invest… let’s say $200,000, and let’s say I just, more than I needed [00:18:00] to live on. So I invest $200,000. I could get, this year, a $200,000 write-off.

George: Wow.

Don:So it wipes out all my W-2 income—that $200,000. If I invest $300,000 or $50,000 or whatever, I could get, this year, a 100-percent tax deduction. And those came— those ability came back in the forties and fifties when oil companies were drilling dry, dry holes most of the time. And they incentivized you to drill, but, you know, you were going to lose your money.

George: Yeah. Regardless.

Don: So— Well, there’s— The oil companies are so sophisticated today, they don’t miss. Ninety-nine-point-I don’t know, something.

George: Yeah, right, they’ve got the—

Don:They know exactly where the oil reserves are, and they frack it, or they drill it, or whatever they do. But they hit these all the time. But the tax incentives are still there. Well, that’s really good, and then think who’s our president right now, and drill, [00:19:00] baby, drill. And those tax incentives aren’t gonna go away right now.

George: Yeah.

Don:Okay, so we take advantage of either writing off passive losses with real estate losses—passive income—or we write off active income with oil. And those are just a couple ways.

George:Well, and I’ll kind of note as well, these are just a couple of ways, and someone listening to this might be thinking, “Well, how does that apply to me?” Well, it’s very important— What I’ve learned over the years, especially being around you and a lot of the individuals that you brought in, is that the way you think about your wealth, the way you think about your taxes is so important. So these are practical examples. But at the end of the day—and by the way, if you’re listening to this, we’re going to put some links in the show notes so that you can get more info and learn and get studying—and so there are, like you said, thousands of ways that you can do these things. But we want you to start thinking differently about how you manage your taxes. So those are great tips. Keep going, let’s—

Deducting medical premiums

Don:Let me give you another example. A lot of people know that they can’t deduct their medical [00:20:00] expenses. Um, you know, they would have to itemize all of their deductions, and it doesn’t meet the standard deduction, and medical expenses, unless it

meets 7.5 percent of your adjusted gross income, it’s not worth even adding up. But, oh my gosh, you’re missing something: anyone who has a business can deduct premiums. I don’t care if you’re sole proprietorship, S corp, C corp: it doesn’t matter. If I have a business, most of the time you can deduct your medical premiums. Let’s say I’m a W-2 employee and— but the company doesn’t pay allof my premiums. Whatever I’m paying out of pocket, I could deduct ifI have a business.

George: Got it.

Don: Well, now, if I had, somewhere in my mix, I had a C corporation, now I could deduct 100 percent of medical. That is medical premiums—

George: Right.

Don:—andco-payments, that’s mileage to and from the doctor, the dentist for me and my dependents. [00:21:00] If I’ve got kids, okay, that’s all of the kids and their eyeglasses and their dentistry and their… or, I don’t know, whatever—anything medically prescribed. That’s chiropractic, that’s medical equipment, 100 percent of that. And it’s a medical reimbursement plan. It’s founded right in section 105 of the Internal Revenue Code. I would pay for it and then I invoice the corporation, the corporation counts that as an expense, I count that as income, I put it in my pocket, but I never pay taxes on it, because it’s a reimbursement.

Educate yourself

George:So Don, people— First of all, I’ve learned, especially in my own personal and business life, people go through phases. They’re at different points in time, so strategies will change. But as an overall, um, advice, where do people go to get this type of information? Because generally your accountant specializes in certain things, but whether you’re, um, you know, a median income or a high, ultra-high net worth, [00:22:00] what is the… what is the structure you need to have in place to really know that you are managing your taxes as we go through these tips and things? Are these specialists? Are they tax attorneys? Like, what are— what are you usually send people to to gather information and to know what to do, because you would never be able to sift through the tax code and—

Don: No.

George: —some of these, well, strategies. So where do you get access to it?

Don:Well, it becomes by educating yourself first. And I know that that’s a hard concept. A lot of people think, “Well, I just need a better accountant. I’ve got a really stupid accountant.” “They’re not—” “They’re not—”

George: Or “They’re not aggressive enough,” or “They’re not—”

Maximizing Business Deductions

Not “Can I deduct this” but “How can I deduct this”

Don:Right, or “They’re not tax planning.” Well, tax preparers are generally not tax planners. There’s a difference. Somebody that can sit down and strategize and stop asking the question, “Can I deduct this?” Start asking the question, “Howcan I deduct this?”

George: Yeah.

Don:How can I take this trip to Hawaii and make it a business expense? How do I make this cruise? How do I make my eyeglasses tax-deductible? [00:23:00] Currently, it’s probably nottax-deductible, but if I had a business or I took an LLC and chose to tax it as a C corp, now—and put the right language in—

George: Yeah.

Don:—start asking the questions, but a lot of it has to do with… um, how you see the expense. Okay, let me give you an example. My wife doesn’t own a single purse. That’s true. She doesn’t.

George: But I know she has some. [Laughter]

Don: Well, she has computer bags.

George: Right. [Laughter]

Don: Computer bags are tax-deductible. Cell phone cases are tax-deductible through her business. And, man, this lady can accessorize. We have a closet filled with computer bags—

George: Lots of computer bags. [Laughter]

Don: [Laughter] Computer bags are tax-deductible. It’s how you see the expense and the information you’re giving your accountant.

George:Well, and if you go a step further, ‘cause I wanted to tie some of these things together for people, this is the reason that it’s not just [00:24:00] tax planning and tax prep. It’s asset protection, lawsuit protection, it’s wealth creation, it’s estate planning and taxes. And when you look through the lens of trying to craft— This is back to Franklin Planner 101. Lead your life, you know, drive your life in the direction you want to create, but you have to look at it through that lens, not “How can I deduct this?” but—or not “Whatcan I deduct?” but “Howcan I deduct this?” “How do I structure this in a way that I can protect myself, grow my wealth, and still maximize what I’m doing?” So—

It’s all about perspective

Don:Absolutely. Are you buying a big monitor for the business, or are you buying a big screen TV to watch the Super Bowl? One is tax-deductible, one is not. Um, this vacation, is it a vacation, or is it a business trip? One is tax-deductible— A guard dog for the business is tax-deductible, a puppy for the family is not.

George: Right. [Laughter]

Don: It just— [Laughter]

George:It is, it’s in your perspective. It’s funny because in a lot of times we talk to people, in your world, [00:25:00] your mindset, your perception of things will change. The outcome. It’s no different with wealth strategies and tax planning. How you look at this scenario is how it will benefit you, right?

Don: Okay, your clothing: not tax-deductible. Advertising expense? If I got a logo on the shirt, it’s the same shirt, well, one is tax-deductible—

George: Yeah, yeah, you know, right?

Don: —one’s not.

George: Right.

Don’t just rely on your accountant

Don: It’s all how you see the expense. And you go to your accountant, and you’re asking him to put all the right information in the right little boxes. Well, that’s his job.

George: Right. And they usually play the part, right? Like, they’re just doing the job.

Don: They— And their—

George: Their job isn’t to help you find ways to go out of the box.

Don: And most of your accountants are going to be extremely conservative, and they’re gonna be interested in protecting their little butt.

George: Right.

Don: And they don’t want to face the IRS.

George:So actually, it’s probably not the best question to just say, “How can we be more aggressive? How do we do more?” And by the way, if you’re doing it when you’re planning your taxes, [00:26:00] you’re doing it too late. Right?

Don: That is absolutely right.

George:You gotta— you gotta— you gotta plan. In fact, right now might be the best time, even if someone, after this episode, they’ve already filed their taxes, because now is when you need to plan moving forward.

Don: Absolutely. And what do they say? Inch by inch? Um… Oh, “Yard by yard, taxes are hard. Inch by inch, they’re a cinch.”

George: Yeah.

Business expenses and kids

Don:If you’re developing the mindset “How can I deduct this?”— Like, paying your kids, okay. Don’t— If you’ve got kids, don’t buy them school clothes. Pay them out of your business. They can be making $15,650 a year, tax-free. Um, so pay them out of the business—

George: Yeah.

Don: —for something that they do. “Well, okay, they’re six months old. How— How do—”

George: Yeah.

Don: “They can’t do anything for the business.” Put ‘em on your lap, take a picture of them. That—

George: Right. There you go. Don: Pay him a royalty, or—George: Yeah.

Don: —modeling fee. [00:27:00] That Gerber baby probably made some money somewhere.

George: Right. Yeah.

Don:You know. So pay them, and then let thembuy the school clothes. School clothes are not tax deductible, but tax-free, isn’t that really sort of the same thing?

Don’t be afraid to think outside the box

George: And I think people, if they’re not using these strategies, it’s either out of lack of knowledge, obviously—

Don: Yeah.

George: —but fear as well, but I can tell you that people that use these strategies, this is not— There are roads, like you said, free roads designed to help you benefit.

Don: Yep.

George: You’re just not using them.

Don:Yep. Okay. Everybody knows that the education expense is not tax-deductible for your business. However, if it were a team-building activity, if it were a summer party or a holiday party where you do the same activity, we just— now it’s tax deductible. And meals. Most of you know, meals are only tax-deductible at 50 percent. However, if it’s a team-building activity or a holiday party or it’s a catered meal—

George: Wow.

Don: —now it’s 100-percent [00:28:00] tax-deductible. So it’s sometimes relabeling something.

George: Yeah.

Don: Is this vehicle that you just bought, is it for business? Is it not? Well, one’s

tax-deductible, and one’s not, so how do we deduct this? Those are the types of things that with a different lens, just to—

George: Yeah.

Don:—look at the same thing, but how do I move things from the left side of the screen where it’s not tax-deductible over to the right side of the screen where it’s a business. And don’t— Now, when I’m saying this, don’t get the idea that I’m trying to evade taxes. I love America, I love our history, I love the Founding Fathers.

George: I love my money more than I do taxes. [Laughter]

Don: Well— [Laughter] But— But—

George: Right, I see.

All tax deductions must customary, ordinary, reasonable, and necessary

Don:You gotta learn the game, and we’re not talking tax evasion. And if going to Hawaii, on a business trip doesn’t make sense for your business, don’t do it. All tax deductions have to fall [00:29:00] under the acronym of CORN. It has to be customaryfor your business, has to be ordinary, it has to be reasonable, it has to be necessary. If it’s not, don’t deduct it. But if it is, and you really need a new computer bag for your computer, well, let’s find a way to make it tax-deductible.

George:Yeah. Yeah, no, I agree. I agree. I— What’s interesting, I was going to ask you ‘cause I remember you having, for some of your high-end clients, you had a list of top tax deductions. I wonder if maybe we could even get some of those from you to put in the show notes of our episode.

Don:Sure, I could do that. We’ve got a list of over two hundred things. If we have a business, um, start thinking differently. And how do I deduct— I’m buying life insurance. How do I make this tax-deductible?

George:Well, the way you think—and this is why I wanted to point this out, because some people are saying, “Well, I go in TurboTax and I check all the boxes of all the deductions, everything I could possibly get my hands on.” We’re talking about thinking differently.

Don: It is. It is a mindset.

George:[00:30:00] And organizing and setting up differently. We’re not talking about just deductions. So because we don’t have a ton of time— And I do believe that taxes— I mean, I’ve told many, many people, you will compound your wealth more by keeping more of what you have than sometimes making more. And so both of those are strategies together. They’ll work really well. But let’s go from taxes now for a minute over to—

Don: Before we do that, let’s do one other thing.

George: Okay.

Winning the Tax Game

Don: And that is, a lot of people think that they’re winning the tax game if they got a refund.

George: Right, right. [Laughter] Okay.

Refunds are not winning

Don:Well, no! Let’s say you go in to, I don’t know, buy a loaf of bread, and you give somebody a twenty-dollar bill, okay, and they give you your change back. “Whoa! I got eighteen dollars back!” Well, no. No, you didn’t make eighteen dollars. When you get a refund, the IRS is giving you your refund. They held on to your money.

George: They held your money. Right.

Lower your effective tax rate

Don:You didn’t win the tax game. [00:31:00] And the only way to really change—maybe this should have been tax rule number three—is start looking at your effective tax rate. And your effective tax rate is, here’s the income we made divided by the taxes we paid. That’s really what we’re doing. And if your effective tax rate this year is, maybe, 20 percent, let’s get it down to 18 percent next year.

George: Yeah.

Don: And let’s add a business and maybe do something, and let’s get it down to 12 percent. And let’s get it down to… maybe 9 or 8 or 7 percent.

George: Maybe, then maybe you keep going, right?

Don: And if we’re tracking that effective tax rate and we’re lowering it every year—

George: That’s winning the game.

Don: Then you’re winning the game.

George: Yeah. That’s a great way to look at it.

Don: It is not that you got a refund. ‘Cause they gave you your change. That’s— that’s not winning.

“What you focus on grows”

George:Yeah. Well, ‘cause what you focus on is gonna get the result. So if you’re just getting the money back, that doesn’t make any sense. Plus you’ve lost all the time that they… that they had it, right? The IRS or whatever. So lowering that, [00:32:00] winning the tax game, I got it. I love that. I love that way of looking at things.

Don: George, one of our mentors, collectively, used to say “What you focus on grows.” Remember him?

George: Yeah. Oh, yeah, for sure.

Don:He was always— Mitch was always teaching “What you focus on grows.” And if you focus on learning the tax code—not pushing it off to, “I don’t think taxes, that’s my accountant’s job.” No, this is your money. This is your wealth. Um, this is your concern. It’s—yougive the accountant the right information, and then his job is put it in the right little boxes.

George: Yeah.

Be proactive

Don:But it requires that yoube proactive and learn some simple things. Take a tax course. Attend one of our summits. Start listening and start paying attention. Have a business of some kind. It it really is a mindset.

George: Well, and people are dealing with capital gains.

Don: Yep.

George:They’re dealing with, I mean, all kinds of new expenses [00:33:00] that they have to deal with. Um, you know, their disposable income is shrinking. So winning at the tax game, I think, is a really, really big point. Um, I did want to touch base on, a little bit—and we’re not going to be able to get into a lot—I want to do maybe a follow-up on lawsuit protection—

Don: Sure.

George: —and estate planning.

Don: Yeah.

George: But which of those topics do you think might be the most important for us to kind of add some additional context for our listeners?

The Essentials of Estate Planning

Don: Let’s talk about estate planning first.

George: Okay.

Don:And then… Asset protection, it becomes a little bit harder. How do I protect my home, how do I protect my retirement accounts, how to protect businesses. Let’s put that aside—

George: Yeah, okay. Okay.

Last will and testament

Don:—for a minute, and let’s talk estate planning, because most people that have acquired— Well, anybody over eighteen knows that they ought to have a will. There are three essential documents that every kid over eighteen— they need a last will and testament.

George: Yep.

Don: “Well, here’s what happens to my stuff so that people don’t fight over it.”

Power of attorney

Um, they need a medical power of attorney, and that [00:34:00] usually—usually combined with a living will, the living will says, “Here’s my expressed desires. I wanna be unplugged or don’t be unplugged, I want to be a donor, I don’t.” And then with— then, “I’ve given my wife medical power of attorney.” That’s where she says, “Thank you for your opinion, dear, but here’s what we’re going to do.”

George: Got it.

Don: Okay, so— [Laughter]

George: Yeah, yeah.

Advance health care directive

Don:And usually we combine that together in a state-specific form called an advance health care directive. Every state has a little bit different name. Those forms are free. You can get them usually on your Secretary of State website. Google it for heaven sakes. Every hospital has, you know, these advanced care, every nursing home. I mean, that’s available.

George: Things you should do. Yes.

Don:But— I don’t know if you remember the Terri Schiavo’s case back from Florida maybe fifteen years ago, and she went into a coma, lasted seven years. Her husband says, you know, [00:35:00] “Let’s quit the expense, let’s unplug her.” And her parents had a big deal, and it went all the way to Congress and the President of the United States and the press,

everybody got all over this. It would have been a simple thing to just do an advance health care directive. So everybody needs that. And then also a financial power of attorney. If I become incapacitated, here’s—you know, George, will you take care of my tax return? And wife, will you— you’ve got banking powers and you can sell the car if you need to. And those those three documents—a financial power of attorney, advance health care directive, living will and, uh… last will and testament.

George: Last will and testament.

Be aware of probate shortcuts

Don:Everybody needs that. But beyond that, once we start acquiring real estate, or we get over what the state has— Every state has a probate shortcut. Let’s say your state probate shortcut is $10,000. Anything under that…

George: [00:36:00] No issues.

Don: “Eh… We don’t want to deal with that probate.”

George: Yeah, no issues. Yeah.

Don:Unless there’s a big fight, just deal with it. Okay. Some of your states will be high, like 168,000 in California. As long as you don’t have a real estate. You have your real estate? Yeah, then we got to use other tools.

George: Right.

Revocable living trust

Don:Transfer on death, or a payable on death, but the most common tool is a revocable living trust. Most people know if you have a home it probably ought to be retitled in the trust, because the trust can only control that which it owns. You— if you didn’t put it in—

George: Right. Yeah, it’s got to come in there.

Don:We call funding the trust, we put the assets in. Yes, you have a bank account. You go down to the bank and change the— So yours… I don’t know what you— Mine— The bank account says “Don and Tam Pendleton,” comma, “trustees of the Pendleton Family Trust.”

George: Right.

Don:On the deed to the property. Okay, it says “Don and Tam Pendleton, trustees of the [00:37:00] Pendleton Family Trust.” It says that right on the deed. Says it right on the property tax notice. That’s how you know—

George: Right.

Don: —that it was really— Most people kind of get the idea that they have to set up a trust and then fund it, put things in.

George: Yes.

Don’t forget to include businesses

Don:Where most of ‘em fail is businesses. Let me walk you through a little story. I helped a lady a few years ago. Her husband had passed away, leaving her a thirty-eight-year-old widow with four little kids. They owned a water drilling company that they’d come in and drill a water well on your land down in Texas, and, oh, you got fresh water, okay. And the company was worth about $4 million. He dies in a rodeo accident. The bull won, sorry.

George: Yeah.

Don: But he’s dead. And, and, oh, wait a minute. They didn’t own a water drilling company.

Heowned it. It was a single-member LLC. Okay, so what happens to his interest of that? Well, it’s gonna go through Texas probate. [00:38:00] And that company may not be worth $4 million when it comes out of Texas probate. So we always take our ownership in businesses and we tie that down to a succession plan. If it’s a corporation, we retitle the stock certificates in the name of the trust. You’re the trustee, your wife’s the co-trustee, um, so you haven’t lost any control, but the second you die, all rights and interests are taken care of.

They go— mine would go to my wife. We take an LLC. A lot of you have LLCs. In the operating agreement, we have a little clause that says “I’m the member all the days of my life. Upon my death, I want all rights and interests transferred to…” somebody!

George: Yeah. Yeah.

Don: And then it avoids probate. And so we think about businesses. And that can be such a simple succession plan. And without that, you are creating such a mess.

George: [00:39:00] Yeah.

Don:For your kids. My wife’s family had an estate that today would be in the billions of dollars. They were the founding fathers of Redlands, California. You know, Smiley Heights, Smiley Elementary, Smiley… Library, all of these things are named after the Smiley  family—but they lost everything after a nineteen-year battle in probate and fighting amongst themselves and attorney costs and probate costs and trustee fees and everything. They lost.

And my wife grows up in abject poverty, parents divorced. Uh, they’ve got a couple little antiques, but the estate is gone.

George: Yeah. All because it went through probate. Don: All of that— well, yeah. And the kids fought—George: Yeah. Yeah.

Don: —over it, and everyone took a little piece out of it, and, yeah, I mean—

Do estate planning now to avoid messes

George:Well, it’s one of these things for individuals that when it comes to estate planning, it’s not something—again, it’s not something you do at end of life. It’s something you do proactively ahead of time, and it’s something that a lot of [00:40:00] people sort of understand a little bit of, but they don’t do all of the specifics needed to fund their trust, and—

Don: Well, it’s like taxes. We don’t want to think about it.

George: Yeah.

Don:And we don’t want to think about life planning. But I’ll tell you, it makes life so much easier. And you really are creating either a legacy, or you’re create—you’re making a mess.

George:Yeah. Legacy’s a great term, because I think if you’re trying to lead your life and you’re trying to create the life that you want—and for your family—legacy. You’re gonna wanna do the best you can to grow your wealth, to protect it, to pass it on, to avoid all of the challenges. And also, I think there’s a lot to be said for eliminating all that fighting or whatever it could be that happens. You don’t think it’s going to happen, but it happens with families—

Don: It does.

George: —when someone passes on.

Don: It does.

George: You can prevent a lot of that by having proper estate planning and basically making decisions ahead of time that just take a little bit of [00:41:00] work, right?

Don: My dad wasn’t a rich man. He owned a little country store and a little gas station, and, but, you know, five years before he got Alzheimer’s, he’d created his trust. All five of us kids

received a copy of the trust. We knew exactly what was gonna happen. Now we get together and he’s long gone, but we get together for weddings and funerals and birthday parties and stuff, not fighting over who got the watch and who got the, you know, who got the brokerage account and, okay, Grandma’s Indian Head penny—

George: Yeah, right, right. Yeah.

Don: —we still fight over those, ‘cause those did get lost, but, you know—

Asset Protection, Simplified

George:Well, so Don, you know, I wish we had more time, but one of the things I know you do really well, because I know there’s people listening to this or watching this and they’re saying, “Man, there’s just so much and it seems complicated,” and you have— the reason I think you guys have been around for so long and trained, you know, tens of thousands of people worldwide is you do a really simple job of really kinda trying to break it down for individuals like we tried to do [00:42:00] today. And before we go, I want to make sure that they know that we’re gonna make it, uh, possible for ‘em to go to one of your summits, and we’ll put some links in the show notes.

Don: Yeah.

George:But give us an idea, because I was gonna ask you two questions. One is, if someone has some of these things and not others, and they want to get more proactive about leading their life and finding a way to be proactive about their finances, their taxes, their wealth and everything, where do they start? And obviously, with your summit, what do you do in that summit? What do you cover that someone could maybe access to be able to help them with these topics?

Experience with the details

Don:Okay. Great questions. Well, first of all, I told you right up front I’m not an attorney. And one of the things that I— But I’ve written five textbooks now, and when you write an attorney—ghostwrite an attorney for a law firm, they tend to be a little particular that you get it right, you know?

George: Right. Right. [Laughter]

Don:And so when I was sitting with Jay Mitton [00:43:00] and he’d go, “You don’t transfer a property into an LLC, you convey the property.” Okay, sorry. And so I learned to be very technically correct. But how do they learn— Sometimes the attorneys that you’re dealing with… they’re talking in legal terms or tax terms—

George: Yeah.

Don: —that nobody in their right mind understands. It’s like talking to an insurance agent. I don’t get it. Or talk to a medical professional.

George: That’s why they don’t try to learn it, ‘cause they don’t understand.

Complicated subjects made easy

Don:And so one of the things that we bring to the table is being able to explain really complicated subjects—like estate planning, like asset protection, like taxes—in simple terms that most people can understand. So this whole three-day class that we teach… is structured to be really good trainers. Let’s start at the basics. Now, we’re not gonna stay at the basics long. We’re going to get— If [00:44:00] somebody comes aboard and they’re a CPA or they’re attorney, they’re gonna get a continuing education credit. It’s that good.

And— but even in law firm— law school, they don’t teach— I don’t know a law school that’s teaching asset protection the way we do.

George: Right.

Don:And we get so many attorneys that come. “Okay, well, I took a semester on taxation and a semester on estate planning and a semester on legal structures.” But in the end, nobody ever tied it together. We’re gonna tie it together by bringing the best people, and then usually I’ll take the last two or three hours and say, “Okay, remember when Scott talked about this? And we remember one client talked about this, and we’re going to try it together.” “Okay, class, should this be taxed?” “If they want these tax deductions, should they be a C or an S corporation?”

George: Right.

Don: “Okay, let’s tie this together. And should this be a member-managed LLC or a manager-managed?” “Well, clearly…” And the class—

George: Yeah.

Don: —we built the structure so that you go, “Oh, I get it. That’s how I protect my home.”

George: [00:45:00] Yeah.

Don: “Yep, that’s how I—” “Lawsuits, can’t touch it if I’ve done this.” That— so—

George: Well, and you bring in experts in tax, real estate, asset protection, stock, wealth, in the world.

Don: Some of the best CPAs in the world.

Participate in the Protect Wealth Summit

George:And so that is a great way to do this. And I appreciate you making that available, because I think this is something that normally would be, you know, thousands of dollars to attend, and some get continuing ed credits, but we’re gonna, we’ll make sure that people have access to that. So if you’re listening to this in the show notes, but—

Don: Something else worth mentioning, this was a forty-thousand-dollar class.

George: Yeah.

Don: Available to attorneys only.

George: Yeah.

Don: And now we’ve taken that same content and we said, “Well, let’s make it a three-thousand-dollar class.”

George: Yeah.

Don: And then, now we can put it online. We can say, “You know what, let’s make it available to your people.”

George: Yeah. Yeah. Yeah.

Don: You’re with Franklin? That’s good enough for us. Come to the class, and we’ll teach you this. And we’ve been teaching this for… since the late nineties.

George: Yeah.

Don: Different content, ‘cause it evolves.

George: [00:46:00] And it changes, but that’s the other thing is you stay up to date, and that’s amazing, so—

Don: Yes, absolutely.

George:Well, thank you for taking time to spend with us, and I think we’ll be hearing a lot more from you. We’ve got a brand-new membership program that we’re gonna be launching, and so, um, that will be available, and we’ll have some deep-dive, behind-the-scenes, you know, deep-dive topics for that. But I appreciate you being here with us. This has been great. And I know you have a lot going on—

Don: Absolutely.

George: You have a big summit going on tomorrow, and so to come into the studio was kinda nice, I appreciate you doing that, so.

Don: George, I appreciate your friendship over the years, and students, this guy, he’s top-notch.

George:Well, we try to bring the best, we try to bring the best. And so, listen, if you’re listening to this podcast episode, we just want to remind you that, um, you know, if you’re gonna live a life, you may as well live the life that you’re meant to live. And to do that, you’ve got to become leaders in your own life and your business, um, for your organizations, for your family. And so that’s why we have this content we bring to you. We want to be able to help you to excel in areas of your personal life, [00:47:00] your professional life. And so do us a favor, share the show. Do what you can to spend time—dedicate the time in your life to protect to what you’ve been growing your whole life. And so thank you for being with us. We look forward to talking with you more again next time. You’ve been here on The Franklin

Planner Podcast with Don Pendleton and George Wright. We’ll talk to you soon.

---

Thank you for joining us on this Journey to create your best life and to lead your Life and Teams. Please share this show, and we look forward to the journey we will take together.

The Franklin Planner Team

About the Guest:

Don Pendleton is an expert in the areas of lawsuit protection, tax reduction, and estate planning and has co-authored multiple textbooks and articles.Every year, he is a featured presenter during numerous seminars and workshops onasset protectionrelated subjects.His books and trainings have helped thousands of business owners, investors, and professionals save millions of dollars.He is one of the nation’s top asset protection advisors and has been helping professionals properly structure themselves for lawsuit protection and tax reduction.His knowledge, expertise, and straightforward teaching style have made him one of the top asset protection speakers in the nation

Guest Resource:

Website: https://protectwealth.com/our-team/don-pendleton/

LinkedIn: https://www.linkedin.com/in/donpendleton/

Facebook: https://www.facebook.com/ProtectWealthAcademy/