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When the Title Changes but the Authority Doesn’t: Family Business Succession with Paul EdelmanMost family business succession plans fail not because the legal structure is wrong, but because authority never actually moves. In this episode of Wealth Actually, Frazer Rice talks with Paul Edelman, PhD of Edelman & Associates about how to tell the difference between a real handoff and a cosmetic one. Edelman unbundles succession into six separate questions, explains the three behavioral tells that reveal who is really in charge, draws a hard line between a legitimate safeguard and an open-ended veto, and makes the case that agreement from a family is not the same thing as ownership of a decision.

https://youtu.be/p2KCsftvM74Key Takeaways Succession is not one decision — it is at least six. Who gets the economic benefit of ownership, who votes the shares, who appoints and removes directors, who runs operations, who receives what information, and who retains informal influence after formal authority ends. * Watch behavior, not titles. Compensation changes and org charts are easy to read and easy to fake. How decisions actually get made — and whether they get reversed — is the real signal. * Three tells that authority hasn’t moved: the next management layer still routes real decisions to the founder; the successor has never had a disputed call stand; and in a genuine crisis, the founder is the one who walks into the room. * Speed is not the test. A five-year transition can be disciplined development; a six-month transition can be denial with a deadline. The test is whether milestones and readiness criteria are observable and stable, or whether the goalposts keep moving. * “Not ready” is not a concern — it is a placeholder. If a founder cannot restate it in specific, testable terms, the obstacle is emotional rather than substantive, and it needs a different path. * Advisor impatience often masquerades as clarity. When you catch yourself thinking “why can’t they just do this,” ask whose timeline is actually being served — the family’s, or your need to close the file. * A safeguard is bounded; a veto is not. Reserve specific extraordinary decisions with defined scope, thresholds, triggers, evidence, and duration. “The successor is in charge unless the founder feels uncomfortable” is an undefined operational veto. * Agreement is not ownership.* A family can be outvoted and formally agree while owning nothing. Ownership comes from having weighed the trade-offs and the implications of each option in the room.

Timestamps [00:00] Cold open — why “he’s just not ready” is untestable * [01:05] Welcome: founders at the sell-or-transfer crossroads * [01:48] Unbundling succession into six separate questions * [02:23] Running a diagnostic on where the founder actually is * [03:00] Watch behavior, not titles — and what the CFO tells you * [04:00] Decision reversals and the second-guessing test * [05:00] The crisis test: who owns the emergency * [05:36] Fast handoff vs. staged succession and prolonged ambiguity * [06:10] Milestones that show it’s working — and goalposts that keep moving * [08:00] Inside vs. outside successors and family dynamics * [08:54] Competing heirs and the outside CEO as bridge or avoidance * [09:47] Reading resistance: making “not ready” addressable * [11:10] The advisory ecosystem’s frustration with stalled progress * [12:16] Whose timeline is being served? * [13:31] Push, pause, or reframe — the art and science of advising * [15:00] When to change the forum, the decision rights, or bring in a facilitator * [15:36] Safeguards vs. vetoes and the trap doors founders build * [17:37] Board composition: independence vs. familiarity * [20:00] Restructuring boards to create seats for new expertise * [20:54] Income-dependent family members vs. growth-minded owners * [21:34] Agreement is not ownership: dividends vs. reinvestment * [23:31] Matching complexity to the outcomes you need * [25:00] Communicating decisions to people who weren’t in the room * [25:26] How to reach Paul Edelman * [25:46] The Edelman–Shenkman trilogy for estate planning attorneys * [29:19]* Close

Pull Quotes

“If the CFO briefs the new successor CEO and then confirms things with Dad, then the org chart is not telling the real story.” — Paul Edelman

“To have authority when things are going well is fine. But the person who owns the crisis is the one who’s really owning the leadership.” — Paul Edelman

“A safeguard should be limited, explicit, and connected to some extraordinary risk. A veto is an ongoing ability to stop or reverse any old ordinary decision.” — Paul Edelman

“Just because there’s an agreement in name doesn’t mean there’s ownership of the decision.” — Paul Edelman

About the GuestPaul Edelman, PhD is a coach, facilitator, and mentor at Edelman & Associates, where he works with family enterprise and family office leaders on decisions that cannot be delegated. He holds a PhD in developmental psychology from Harvard University and a BS in physics from MIT, and serves as faculty at The UHNW Institute and the Bertarelli Institute for Family Entrepreneurship at Babson College.

Contact Paul Edelman* Email: paul@edelmancoaching.com * Website: edelmancoaching.com (contact form on site) * LinkedIn: linkedin.com/in/pauledelman

The Edelman & Shenkman TrilogyPaul and Martin M. “Marty” Shenkman, CPA, MBA, JD, PFS, AEP (Distinguished), of Shenkman Tietz, have written a three-part series aimed at estate planning attorneys:

1. Simplicity and its trade-offs — When Clients Ask for a Simple Estate Plan, WealthManagement.com / Trusts & Estates, July 8, 2026.
2. The language of estate planning conversations — published in Steve Leimberg’s LISI Estate Planning Newsletter (subscriber archive).
3. Beneficiary education — forthcoming October 2026, expected in Estate Planning.

Paul’s running author archive: wealthmanagement.com/author/paul-edelman

More from Paul Edelman Approval Is Not Ownership: Helping Family Office Investment Decisions Hold Under Pressure — Family Wealth Report, July 1, 2026 * How Families Can Override Emotions to Make Better Judgments — Family Business Magazine, April 9, 2026 * Lessons For Families And Their Advisors From A Hit TV Series — Family Wealth Report, February 24, 2026 * Stronger Family Bonds and Better Strategic Decisions — FFI Practitioner*, January 20, 2026

Frequently Asked QuestionsWhat are the six questions a family business succession decision should be broken into?
Who receives the economic benefit of ownership; who votes the shares; who appoints and removes directors; who runs the company operationally; who receives what information; and who continues to hold influence after formal authority ends. Bundling these into a single “handoff” decision is what creates ambiguity.

How can you tell whether authority has really transferred to a successor?
Watch three behaviors. First, where the next management layer goes for real decisions — employees are excellent at reading where power actually lives. Second, whether the successor has ever made a call the founder disagreed with and had it stand. Third, the crisis test: when a covenant breaks or a key employee leaves, who walks into the room and who gets briefed afterward.

Is a fast succession better than a gradual one?
Speed itself is not the test. A five-year transition can represent disciplined development, and a six-month transition can be avoidance followed by an arbitrary deadline. What matters is whether responsibility moves against observable milestones, whether the successor learns from outcomes instead of being rescued, and whether readiness criteria stay fixed rather than shifting each time the successor advances.

What is the difference between a safeguard and a veto?
A safeguard is limited, explicit, and tied to extraordinary risk — selling the company, debt above a threshold, issuing new equity, changing core strategy, or related-party transactions — with defined scope, thresholds, process, duration, trigger, evidence, and who decides. A veto is an ongoing ability to stop or reverse ordinary decisions. If the founder can intervene whenever they feel uncomfortable, that is an undefined operational veto.

How should advisors handle their own frustration with a stalled family?
Notice that impatience often feels like clarity. When you think “I see exactly what they need to do, why can’t they just do it,” that is often the moment to slow down and ask whose timeline is being served — whether the ambiguity is genuinely damaging the company, or whether the recommendation mainly closes the case and relieves the advisor’s discomfort with uncertainty.

What makes an independent director genuinely independent in a family company?
The ability to exercise business judgment and fiduciary duty free from undue family influence or loyalty to a particular branch. A director who is the founder’s golfing buddy or tied to one family faction will struggle to deliver the value independence is supposed to provide.

Why isn’t agreement good enough?
Because agreement in name is not ownership. A family branch can be outvoted, formally accept the outcome, and still feel no responsibility for it. Ownership comes from working through the trade-offs — what each option makes better and worse — so participants can say they helped weigh the considerations even if the result was not their first choice.

Full Transcript[00:00] Paul Edelman: The resistance often takes the form of some sort of concern that is stated like, for example, the most general concern that people will say is, well, he or she, the likely successor, is just not ready. But that phrase “not ready” is at a very high level of generality. It’s not specific enough to be testable or to be capable of being satisfied. So the challenge is to work with the founder to help them express their concern in terms that are actually addressable.

[00:36] Announcer: Welcome back to the Wealth Actually podcast, the show that features experts, entrepreneurs, and commentators that will give you the right knowledge, planning, and guidance so you can preserve your assets and enjoy your wealth. Learn more and subscribe today at wealthactually.com. This podcast is for educational and entertainment purposes. It is neither investment, legal, nor tax advice and does not represent the opinions of the employers of the host or guests.

[01:05] Frazer Rice: Welcome aboard, Paul.

[01:07] Paul Edelman: Thanks, Frazer. Looking forward to our conversation.

[01:09] Frazer Rice: Well, it’s important because I deal with a bunch of founders and a bunch of other business owners, families, et cetera, that are trying to make sense out of the concept of passing along the business either to the next generation or deciding to sell it, and all sorts of parts of that tough crossroads that everybody has to go through at some point. And that’s really the crux of your practice — to help people with those conversations.

[01:34] Paul Edelman: Yes.

[01:35] Frazer Rice: So when we’re thinking about that and kind of unbundling the decision to pass the business along, when a family wants to talk about that, what are the separate parts of that decision that need to be contemplated?

[01:48] Paul Edelman: Well, I see at least six different questions that need to be separated. One is who receives the economic benefit of ownership in the company. Another is who gets to vote the shares. And a third is who appoints and removes the directors. Then there’s who runs the company from an operational standpoint, and who receives what information. And then, who continues to have influence even though they may no longer have formal authority.

[02:23] Frazer Rice: So once you get into the… it always seems to me to be tough to sort of say, okay, here are six things that have to happen, and that’s a lot for somebody to digest in the course of one or two meetings and get the buy-in from all the different constituencies that are interested in what the business is up to. How do you run a diagnostic to understand where a founder is — or generation one — in their own head space, and understanding what control being passed on looks like in summary form on those six different aspects that you brought up?

[03:00] Paul Edelman: I think the key thing is to watch behavior more than titles. People often pay a lot of attention to when the titles have shifted or compensation shifts, things like that. But they pay less attention to how decisions are being made and whether those decisions get reversed. So when the title has moved but the authority hasn’t moved, you tend to see three different things. First of all, you can see something going on at the next level down in management — not with the founder and successor per se, but with the other executives. You can ask yourself, who do they go to for the real decisions? If the CFO briefs the new successor CEO and then confirms things with Dad, then the org chart is not telling the real story.

[04:00] Paul Edelman: Employees are excellent at reading where the actual power lives, because they can’t afford to be wrong about that sort of thing. So that’s one clue. Another is to look at decision reversals, or what is more commonly called second-guessing. You want to look for whether the successor has made a call that the founder disagreed with. And if so, did it stand, or did it get reversed? If the company is two years into succession and that’s never happened, it’s possible that the successor is pre-clearing everything with the former CEO and only making decisions that they know will be approved. So in that case, it’s not real authority. And a third situation is what you could call a crisis test.

[05:00] Paul Edelman: So when something genuinely bad happens — there’s a breach of a covenant, or a key employee departs, or a lawsuit — the question is, who do people go to? Who walks into the boardroom and into the decision-making situation, and who ends up getting briefed afterwards? To have authority when things are going well is fine, but the person who owns the crisis is the one who’s really owning the leadership, in a sense.

[05:36] Frazer Rice: So one of the avenues that I think is interesting, that I read in your materials ahead of time, was the idea that a quick succession oftentimes — and maybe not often, but can be — a better avenue in terms of moving the succession forward, as opposed to having a staged succession where a long period of ruminating and decision-making often perpetuates ambiguity, or even confusion, amongst different constituencies both managerially and ownership-wise.

[06:10] Paul Edelman: Speed itself is not the test. You could have a five-year transition that represents disciplined development of the successor, and you could also have a six-month transition that essentially is a denial of what needs to happen, followed by some kind of a deadline. But you certainly don’t want to allow things to drift. If the transition is proceeding gradually, you can tell it’s working if responsibility and authority are moving according to observable milestones. So the successor is making increasingly consequential decisions. They’re learning from the outcomes rather than being rescued by the founder or the prior leader from their mistakes.

[07:01] Paul Edelman: They’re developing important relationships and they’re becoming someone that others rely on. The criteria for readiness also should become clearer over time, and the founder’s involvement should change in ways that are recognizable. So that’s the ideal. But sometimes a gradual transition represents avoidance, and in those cases you see criteria — sometimes people refer to them as the goalposts — that keep moving. And decisions are repeatedly returned to the founder. Also, each step that the successor takes toward greater authority may be followed by a new reason why the founder feels that they’re not ready. So the question that can be asked is: what are the capabilities that the successor is developing, and what specific evidence would demonstrate that?

[08:00] Frazer Rice: When you’re diagnosing what those capabilities are, as part of that diagnosis, if the successor is inside the family versus outside the family, how do you diagnose whether that is a positive or a negative, in addition to maybe the harder skill sets that are being dealt with?

[08:29] Paul Edelman: If the successor is from inside or outside the family, I would say that many of the capabilities needed for leadership are the same.

[08:40] Frazer Rice: Yeah, I was going to say — if you run into situations where a family member is capable skill-wise, but there are dynamics issues that have prevented their succession to the throne, essentially.

[08:54] Paul Edelman: Sometimes there may be a situation in which you have more than one potential successor and they’re in competition with one another, and the family is reluctant to declare a winner. And so one move that can be made in that situation is to essentially bypass the decision by going to the outside to bring in someone. It could be a kind of conflict avoidance mechanism. On the other hand, if no successor is really ready, then sometimes going to the outside can be an interim move. So some companies will hire an external candidate for CEO with the expectation that part of the responsibility will be to develop one of the family members who ultimately may take over.

[09:47] Frazer Rice: And so part of your methodology is to read resistance in the room and understand where those pain points are. How does a founder, or generation one, or the successive generations understand what the resistance is? And how do you help them overcome that?

[10:02] Paul Edelman: The resistance often takes the form of some sort of concern that is stated like — for example, the most general concern that people say is, well, he or she, the likely successor, is just not ready. But that phrase “not ready” is at a very high level of generality. It’s not specific enough to be testable or to be capable of being satisfied. So the challenge is to work with the founder to help them express their concern in terms that are actually addressable. If you try to do that and you’re unable to, that’s an indication that the concern is less about something specific and addressable, and more about some unpleasant feelings that the founder is experiencing — and that implies a different path for how to address those, or what needs to be done.

[11:10] Frazer Rice: For those of us in, let’s call it the advisory ecosystem — that can be the wealth manager, or the lawyer, or the accountant, the people who help guide the technical succession issues, whether it’s tax planning or trusts and estates or even just the corporate handoff — oftentimes we’re presented with situations that just get muddled, and we look at lack of progress with frustration. How does an advisor deal with that, when the instinct and in a sense the business model is to try to push, to get resolution and to get progress on these types of issues?

[12:16] Paul Edelman: The signal that I watch for is what that impatience feels like to the advisor. Sometimes it feels like clarity. The advisor says to himself, oh, I see exactly what they need to do — why can’t they just do this? And in my experience, that’s often the moment when it’s helpful for the advisor to slow down. Not because the family should be allowed to delay indefinitely, but because the advisor’s own need for resolution may begin to shape what they say and do, and the advice that they give.

[13:00] Paul Edelman: One useful check that advisors can use for themselves is to ask whose timeline is being served. There may be a genuine business reason to act — it may be, for example, that the continued ambiguity is hurting the company, or weakening the successor, or leaving employees unsure about who’s in charge. But I would also ask myself, and other advisors can ask themselves, whether their recommendation is mainly to help them close the case, or to demonstrate progress, or to relieve their own discomfort with uncertainty.

[13:31] Frazer Rice: The concept of — this is really, I guess, the mix of art and science of advising — between push versus pause versus a total restructure or a reframing of the conversation. There’s an intersection of, you have to have the technicals down, but then experience in dealing with personalities, experience with dealing with the specific family and situation, and guiding that.

[14:15] Frazer Rice: I imagine occasionally you run into situations where, at the intersection between the advisors and the family, they feel stuck. And so then the concept of getting them unstuck — yet there is resistance to maybe bringing in a facilitator to help grease the skids and get the conversation moving again. How do you help that reframing discussion?

[14:40] Paul Edelman: I guess the question I would ask is, where do things stand? Has a decision actually been made, or is the obstacle substantive, or is it the process? So when a decision has been reached through a legitimate process and what you see is some sort of executional drag or discomfort, those are the situations where I think it’s helpful to hold the boundary. You can acknowledge whatever feelings may be slowing things down, but there’s not a need to reopen the decision.

[14:55] Paul Edelman: On the other hand, if the discomfort that people are feeling suggests that there’s some sort of important concern that hasn’t yet been understood, then that’s where I would pause. And that pause can involve useful work. You can ask people, what is it you’re trying to protect? What are the consequences that you fear? What would need to be true for proceeding to feel responsible rather than reckless? And then there are times when it makes sense to restructure or to add structure. So for example, the choices are pretty clear, but the same conversation keeps recurring and producing the same result. In that case, you want to think in terms of either changing the forum, or clarifying the decision rights, or maybe dividing the issue into smaller decisions, or even bringing someone in to help structure the conversation, like a third-party facilitator.

[15:36] Frazer Rice: The handoff ultimately — when the founder, or generation one, has gotten to the point where they’re ready to move things along to the next set of operators, the next set of owners — and at the same time, in order to feel safe, they’ve created some safeguards, or let’s call it some trap doors or back doors, to be able to help influence decisions if they feel like things are going in a different direction. How do you think about it so that they don’t turn into pain points — maybe regret that turns into a veto power that stymies the succession, even if it’s already been decided and put in motion?

[16:21] Paul Edelman: Well, I think you put your finger on it. There’s a key distinction to be made here between a safeguard and a veto. A safeguard should be limited, explicit, and connected to some extraordinary risk, whereas a veto is kind of an ongoing ability to stop or reverse any old ordinary decision. So when it comes to safeguards, a family might reserve certain kinds of decisions — like selling the company, or taking on debt above a certain level, or issuing new equity, or changing the basic business strategy, or entering into a transaction with a family member.

[16:59] Paul Edelman: Those kinds of things can be specified, and the scope, the threshold, the decision process and the duration of the safeguard should be clear — as well as who can invoke that protection, what evidence is required, and who decides whether the trigger has occurred, and so on. So the problems arise when the arrangement is essentially one in which the successor is in charge unless the founder feels uncomfortable. If the founder is allowed to intervene anytime they feel uncomfortable, as opposed to for these specific kinds of reasons, then you’re dealing with more of an undefined operational veto.

[17:37] Frazer Rice: To that end — boards of directors related to these companies, whether they’re private or public, but we’re really talking about private in most cases. The constitution of those boards: how involved do you get in that? And what is the importance of independence versus familiarity versus family member input, to act as a go-between in many ways between founder, the operational executives, and then ultimately the owners?

[18:07] Paul Edelman: Well, in order to really add value — the kind of value that independent directors can potentially offer to a company — they need to be adequately independent. That is to say, they need to be able to exercise their sound business judgment and carry out their fiduciary responsibilities in a way that is free from undue influence by other kinds of family considerations, and potentially loyalty to particular family members. So I think in those cases where a so-called independent board member is actually a golfing buddy of the CEO or the founder, or has a tie to one particular family member or branch of the family, it may be harder for them to bring the full value that an independent director can bring.

[18:55] Paul Edelman: Then of course, another reason why companies bring in independent directors is because they have some additional expertise that the current board members or family members lack. So for example, a colleague and I are working with a company right now where the core business has been subject to commoditization, and they’ve made a strategic decision to diversify. But in order to diversify, they need to bring in people with new expertise, particularly in the line of business that they want to move into. In order to do that, they need to create some space in their board or boards of directors — they have several different kinds of boards. And as part of this, we were brought in to take a look at those existing boards and help them think about how to restructure in a way that could create some open seats while minimizing the displacement of people who are currently board members, including family members who are board members, who may not feel too positively about losing their board seat.

[20:54] Frazer Rice: Related to board seats, but more specifically to family ownership — the concept of family members who rely on the family business for income, versus maybe other parts of the family that are looking at the business and thinking of growing the valuation or innovating with the business, that type of thing. With the tension between those two different components, how do you solve for that and have that conversation stay productive, when I imagine it can get emotional very quickly?

[21:34] Paul Edelman: This is where a third-party facilitator can be helpful to slow things down. When things begin to get heated, it’s often helpful to have a neutral or impartial person present who can help to reduce the heat in the conversations. There are a number of things in particular that can be done under those circumstances. First of all, anytime there are these kinds of tough decisions, there’s never a single right answer. There’s always trade-offs involved. And some boards work their way through these things by voting. I’m dealing with a situation right now where some members of the family were outvoted. At the end of that vote, they say, okay, we now have an agreement, we’re going to move forward with this. But just because there’s an agreement in name doesn’t mean there’s ownership of the decision.

[22:34] Paul Edelman: So in order to create ownership, I think it is helpful to have the difficult conversations and to consider the implications of going one way versus another. If we were to distribute all this money in the form of dividends, what would be the benefits of that, and what would be the costs associated with that? And on the other hand, if we were to plow it all back into growth of the business, what’s the upside and downside of that? Only by considering different options and the implications of each can the family ultimately arrive at a decision where people feel like, well, I may not have agreed to this, but I was part of the discussion, I was part of the process of weighing the different considerations, and I’m willing to buy into this. In other words, I feel some ownership for this decision.

[23:31] Frazer Rice: As we start to wind down here, an interesting concept is what should all the constituencies come away with from the decision-making process. And as a follow-up to that is simplicity versus complexity of the solution. How do you manage that so that you take care of the needs of the business and the needs for structuring, with the need for simplicity, so that everyone who comes away from the discussion and the decision-making understands what’s been put in place?

[24:06] Paul Edelman: As far as the solution itself goes, the level of complexity should match what’s required to accomplish the desired outcomes. So complexity for its own sake is not useful. But when you’re trying to accomplish more than one thing at a time, it may require a more complex approach to the solution. So that’s on the solution side. Now the other side of it has to do with communication. How do you share what’s been decided with other people, especially people who haven’t been in the room? And I think that the best way to do that is to try to explain clearly what was the context of the situation in which the need to make this decision arose; what were the desired outcomes that the decision makers were trying to produce, what were they trying to accomplish; and the flip side of that is what were they trying to avoid, or what were they trying to protect.

[25:00] Paul Edelman: When you share all of that, the rationale for the decision becomes more understandable, and also you have a better case for justifying any complexity that’s part of the decision. As far as complexity goes, of course, you want to use the simplest, most straightforward language to describe what you’ve come up with. But I think the key thing to getting buy-in is to make sure that the rationale is clear, and people understand that there was a thoughtful and systematic process behind it.

[25:26] Frazer Rice: Really good stuff. Paul, how do people find you to hear more about what you’re up to?

[25:32] Paul Edelman: My website is edelmancoaching.com. So people can go to edelmancoaching.com, read more about the work that I do, and there’s a contact form there. Or people can simply email paul@edelmancoaching.com.

[25:46] Frazer Rice: Just to — because you’re being very humble — you have a couple of articles coming out with Marty Shenkman, where the intersection of probably the trust and estate planning and the actual, let’s say, getting the business ready for the next generation, whatever form that takes, is probably front and center there. How would people find that?

[26:06] Paul Edelman: So we’ve written three articles recently, kind of a trilogy, and they’re each going to be carried in different places. Two have already come out, and one is due to come out. These are aimed primarily at estate planning attorneys. But the first one is on when the client asks for a simple estate plan. And this relates a little bit to what you were describing, in a different domain — the domain of trusts and estate plans and so on. But the point that we make is that the client’s request for simplicity is understandable, and ideally the attorney will validate that. But at the same time, along with the request for simplicity goes potentially some compromises, because when you have multiple desired outcomes, it may take more of a complex structure to achieve those outcomes. So the role of the planner is not to introduce complexity for its own sake, but to make clear to the client

[27:06] Paul Edelman: what trade-offs they’d be making if they went with a simpler plan, and what additional protections they can get by considering a more complicated one. Then the second piece is on the use of language in these estate planning conversations. And again, it relates to this concept we were talking about a minute ago, of the difference between agreement and ownership. Some clients are willing to agree to whatever the attorney says. If you say to them, “Well, I think this is the best plan for you,” they say, “Fine, where do I sign?” But the goal, ideally, is more than just agreement. It’s ownership. Because in the absence of ownership — and by ownership, I mean that the client understands the trade-offs that are being made, they feel that they had agency in the process of making those trade-offs —

[28:06] Paul Edelman: and ultimately, if something doesn’t work out as well as hoped, people will not go back and point a finger at the planner and say, “You did this, how could you do this?” or something like that, but rather, “This was a collaborative effort. You made clear what the choices were, and we made them together.” So that piece talks about language, and how, for example, there’s a difference between saying to a client “you should do this,” and speaking to them in terms of what they can do.

[28:42] Frazer Rice: And then the third piece — when’s that coming out?

[28:46] Paul Edelman: The third piece is on beneficiary education, and that one will come out in October. And so the first piece came out in a publication called Wealth Management. The second piece came out in a newsletter that’s published by, I think it’s LISI. And the piece that’s coming out in October is, I think, being published in a magazine or a journal, something like Estate Planning.

[29:19] Frazer Rice: They’re everywhere. So, terrific. Well, Paul, thanks for being on. I’ll put all that in the show notes, and look forward to staying in touch.

[29:26] Paul Edelman: Thanks very much, Frazer.

[29:28] Announcer: This podcast is for educational and entertainment purposes. It is neither investment, legal, nor tax advice, and does not represent the opinions of the employers of the host or guests.

Additional LinksMark Tepsich of Family Governance

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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Choosing a Trustee: Why Naming Your Kid May Be a Mistake — Marguerite Lorenz

Short answer: Naming your child as trustee, executor, or agent under your power of attorney is the default choice for most American families — and it is frequently the wrong one. In this episode of Wealth Actually, host Frazer Rice talks with California Licensed Professional Fiduciary and Master Certified Independent Trustee Marguerite Lorenz about why roughly two-thirds of American adults still have no estate plan, why the job of a trustee is far more intimate and technical than families expect, and how to decide between a family trustee, a bank or trust company, and an independent professional trustee.

https://youtu.be/56bzuORe8YIEpisode Overview: Who Will Actually Run Your Plan?Most estate planning conversations stop at the documents. Marguerite Lorenz argues the documents are the easy part. The hard part is staffing — deciding who steps in when you can no longer make new decisions, and whether that person can absorb the technical, financial, and emotional weight of the job.

Lorenz has served as trustee, executor, agent under power of attorney for finance, and agent for health care for hundreds of families since 2003. She is the author of three books — Luck or Control? The Life-Improving Power of Estate Planning, How to Be a Successful 90-Year-Old, and the newly updated Ethics for Trustees 2.0 — and she is Vice-Chair of the Independent Trustee Alliance.

Her framing line, and the one that should stick with every listener:

“If you don’t get your estate plan done, you’re suing your family. You’re making them go to court. And who would want to make anyone else go to court?”
— Marguerite Lorenz

This is the second time Marguerite has joined the show. Her first appearance covered the mechanics of individual trusteeship: EP.75 — Individual Trusteeship with Marguerite Lorenz.

Key Takeaways•Only about a third of American adults have any written estate plan — and Lorenz argues half of those plans would not actually function when needed.

•Professionals are barely better than the public. When Lorenz polls rooms of attorneys, CPAs, and financial advisors, roughly one-third raise their hands for a complete, up-to-date, ready-to-go plan.

•The trustee role is intimate, not administrative. A trustee sees your paperwork, your bills, your medications, and your bedroom. “Who is going to be the first person in your bedroom when you are no longer able to make new decisions?”

•Incapacity, not death, is the long tail. Many people live for five or six years unable to make new decisions. The trustee’s job often runs during your lifetime, not just after it.

•A professional trustee can be temporary. Lorenz recounts stepping in for a client during cancer treatment, providing a full accounting, and stepping back down when he recovered — then serving again after his death. Would your child step back down?

•Estate planning is about preferences, not predictions. “Our power in estate planning is not prediction, it’s setting our preferences” — and preferences can only be set while you are competent.

•Quality of life belongs in the plan. Not just tax, legal, and financial terms — but how you want to live, where you want to live, and what small things matter (for Lorenz, an international selection of dark chocolate).

•Digital assets are now a core trustee problem. Phones, social accounts, and daily transactions all require someone with access and authority.

•A will does nothing while you are alive. “The will doesn’t operate at all if you go to the hospital and you haven’t granted authority to anyone.”

•Cost is usually overestimated. Both an estate plan and an independent professional trustee typically cost far less than probate court.

•Revisit every five years. Calendar a five-year check-in with your attorney to review law changes, marriages, divorces, births, and deaths.

Chapters and Timestamps•[00:00] Cold open: “If you don’t get your estate plan done, you’re suing your family.”

•[00:32] Welcome back — introducing Marguerite Lorenz, California trustee and author

•[01:14] Luck or Control? — why fear keeps families from finishing an estate plan

•[02:22] What a full-time trustee actually sees: trustee, executor, agent for finance, agent for health care

•[03:49] Why families default to naming a child — and where that breaks down

•[05:00] The skill set nobody screens for: negotiation, calm, empathy, and grief

•[05:40] Case study: serving as temporary trustee through a client’s cancer treatment — and stepping back down

•[07:51] Why even attorneys need their own attorney: nobody is objective about their own circumstances

•[09:09] The five-year estate plan check-in as a life milestone

•[09:39] How to Be a Successful 90-Year-Old — living well to the very end

•[10:20] The “black box” problem: privacy, dignity, and care in your own home

•[11:54] Preferences over predictions — planning for your future vulnerable self

•[13:40] Rewriting an advance health care directive after hundreds of hospital bedsides

•[16:13] The statistics: only a third of adults — and only a third of professionals — are actually ready

•[17:47] Frazer’s challenge to advisors: you can’t advise well if you aren’t practicing what you preach

•[18:22] The first question in Luck or Control?: “Hey professional, do you have your estate plan done?”

•[19:21] Ethics for Trustees 2.0 — what’s new in the updated audio and PDF edition

•[20:27] Family trustee vs. bank trustee vs. independent professional trustee

•[21:52] The looming crisis: the great wealth transfer, incapacity, and digital assets

•[24:54] Documenting the “why” behind hard trustee decisions

•[25:23] Probate courts overrun, bioethics committees, and next-of-kin defaults

•[26:54] Where to find the books, the podcast, and the Independent Trustee Alliance directory

About the Guest: Marguerite Lorenz, MCIT, CLPFMarguerite Lorenz is a California Licensed Professional Fiduciary (CLPF #319) and a Master Certified Independent Trustee (MCIT). She has served as Trustee, Executor, Agent for Finance, and Agent for Health Care for more than 200 families since 2003 as managing partner of Lorenz Private Trustees. Marguerite is Vice-Chair of the Board of the Independent Trustee Alliance, past Chair of the California Professional Fiduciaries Bureau Advisory Committee, and host of the Plan For This podcast. She is the author of Luck or Control? The Life-Improving Power of Estate Planning, How to Be a Successful 90-Year-Old, and Ethics for Trustees 2.0.

About the Host: Frazer RiceFrazer Rice is the author of Wealth, Actually: Intelligent Decision-Making for the 1% and host of the Wealth Actually podcast, where he interviews experts, entrepreneurs, and commentators on preserving assets and enjoying wealth.

Resources and Links Mentioned•PlanForThis.com — Marguerite’s books, the Plan For This podcast, and a free First Steps toolkit. Ethics for Trustees 2.0 is now exclusive to this site (audio + PDF bundled with purchase).

•TrusteeAlliance.com — the Independent Trustee Alliance directory for locating certified independent trustees by state.

•Marguerite Lorenz on LinkedIn

•California Professional Fiduciaries Bureau — state licensing for professional fiduciaries

•Related episode: EP.75 — Individual Trusteeship with Marguerite Lorenz

•Related episode: What If You Are Named in a Will or Trust?

Frequently Asked QuestionsShould I name my child as trustee?Not automatically. A child understands the family but may lack the technical skill to handle tax, legal, financial, and medical decisions — and may be grieving or in conflict with siblings at the exact moment judgment is required. Marguerite Lorenz notes that a trustee must be a good negotiator, stay calm under pressure, set aside personal feelings, and enforce rules the grantor set. She also raises a test most families never consider: if you recover, would your child voluntarily step back down and hand you a full accounting?

What is the difference between a family trustee, a corporate trustee, and an independent trustee?A family trustee is a relative or friend serving in a personal capacity, usually unpaid and untrained. A corporate trustee is a bank or trust company with institutional infrastructure, minimum account sizes, and staff turnover. An independent professional trustee is a licensed or certified individual — like a California Licensed Professional Fiduciary — who serves full-time, carries a succession plan, and can often be engaged at a lower cost than families expect. The Independent Trustee Alliance maintains a national directory of independent trustees.

What does a trustee actually do while I am still alive?A trustee acting during incapacity manages assets, accounts for every dollar, handles taxation, pays bills, coordinates care, and increasingly manages digital assets such as phone-based transactions and social media accounts. Lorenz emphasizes that many people live for five or six years unable to make new decisions, so the trustee’s lifetime role is often longer and more demanding than the post-death administration.

How often should I update my estate plan?Roughly every five years, or sooner after a major life event such as marriage, divorce, birth, death, a liquidity event, or a change in tax law. Lorenz recommends putting a five-year reminder in your phone to call your attorney and ask what has changed in the law and in your life.

What happens if I go to the hospital without an estate plan?The hospital and its bioethics committee will do the best they can and will look for next of kin to make decisions for you — potentially people with whom you have never discussed your personal wishes. A will does not help here, because a will only operates after death. Financial and health care powers of attorney are what grant someone authority while you are alive.

Is an estate plan expensive?Usually less than people assume, and materially less than probate court. Lorenz makes the same point about professional trustees: “Independent individual professional trustees cost a lot less than you think also. And you need to ask, because this is your life we’re talking about.”

Do financial professionals have their own estate plans?Often not. When Lorenz polls audiences of attorneys, CPAs, and financial advisors, only about a third report having a complete, up-to-date, ready-to-go plan — barely better than the general public. Her challenge to the profession is that clients will increasingly ask advisors directly: “Do you have your estate plan completed?”

Pull Quotes“Our power in estate planning is not prediction, it’s really about setting our preferences.”

“Who’s going to be the first person in your bedroom when you are no longer able to make new decisions?”

“I’m not in charge. I’m a servant-manager.”

“Once I get my estate plan done and updated, I don’t think about it anymore. My head space is so clear because everything I was worried about has been thought about, considered, allowed, and put down in writing.”

Full TranscriptTranscript lightly edited for clarity. Timestamps are approximate.

[00:00] Marguerite Lorenz: You know, if you don’t get your estate plan done, you’re suing your family. You’re making them go to court, right? And who would want to make anyone else go to court?

[00:08] Announcer: Welcome back to the Wealth Actually podcast, the show that features experts, entrepreneurs, and commentators that will give you the right knowledge, planning, and guidance so you can preserve your assets and enjoy your wealth. Learn more and subscribe today at wealthactually.com. This podcast is for educational and entertainment purposes. It is not investment, legal, nor tax advice and does not represent the opinion of the employers of the host or guests.

[00:32] Frazer Rice: Welcome back. Friend of the podcast Marguerite Lorenz is on the podcast this week. She’s a California trustee and has a new book called Luck or Control? out. We’re going to talk a little bit about fiduciary matters and what it takes to have good staffing within your estate plan. Welcome back, Marguerite.

[00:54] Marguerite Lorenz: Thank you, Frazer.

[00:55] Frazer Rice: Since the last time you were on, you have a couple of books out and we’ve gotten to see each other a couple of times with the Independent Trustee Alliance. Let’s talk a little bit about the new book that you just published and what you’re trying to do with it.

[01:14] Marguerite Lorenz: So that book is Luck or Control? The Life-Improving Power of Estate Planning. And I wrote it because I’ve seen hundreds and hundreds of families really struggle with how this is going to get done, and many people don’t get their estate plan done at all because they’re so afraid. They don’t know what to expect, they don’t want to talk about their mortality, they don’t want to have serious conversations with their loved ones. And if we don’t have those conversations, we really lose all control when we need it the most — when that medical crisis happens or when life changes in a big way.

[01:52] Frazer Rice: No question about it. And I went through the book and it’s an important read, because for those people who really have to get their affairs in order and feel stuck for some reason, I think you do a good job of laying out why you need to get unstuck and then how to take a couple of steps to initiate those conversations and get the important things down so that you can then have the deeper conversations that help out later on as you’re structuring things. What part of your experience being a full-time trustee helped to inform all of this?

[02:22] Marguerite Lorenz: Well, as a trustee professionally, I’ve met with lots of different families in lots of different circumstances. And for many of them they’ve named me, and so I’m serving in that role. It’s not just trustee; it’s trustee, executor, agent on the power of attorney for finance, and even as agent for health care. And so that’s a very intimate job. It’s a job where you end up seeing someone’s entire life, or as much as you can of another person — their paperwork, how they do things, how they pay their bills, how they live, what medications they take. It’s really very intimate.

And I think a lot of us assume that our children know us and they’ll do what we want them to do. But the thing is that it’s very likely you haven’t lived with your children in the same household for decades. And now you’re asking them to come back, drop their life, and come in and be that person for you. Be the person who’s going to protect your privacy, be that person who’s going to protect the way you want to live. And they may disagree with the way you want to live. They may actually have issues with some of the choices that you’ve made or how you’ve proceeded. So now, in addition to having a medical challenge where you’re not able to make new decisions — maybe temporarily, maybe permanently — now you have someone who wants to run the show or actually be in charge. In my job as a professional trustee, I’m not in charge. I’m a servant-manager. I’m really taking the trustor’s wishes and how they’ve structured things and really looking at that to be sure that I can continue it as best I can with all the changes that have occurred.

[03:49] Frazer Rice: One of the things we were talking about before we got on board, and something we’ve discussed generally through the Independent Trustee Alliance, is that people who are asked to serve in those roles usually are family members. And for people who are uninitiated in the field, that seems like an obvious choice, because they’re really trying to put somebody in there who understands the family. But as you and I know, they may not be necessarily qualified to deal with the technicalities of the different roles that we just discussed. But also, the idea of taking on the emotional toll of these new conditions can be something different and unapproachable for many people.

[04:30] Marguerite Lorenz: Well, I think it helps to kind of look at some of those issues. So you might have more than one child. Even if you have an only child, these issues apply. And now you’ve been in the hospital and you’re expecting this person to deal with your tax, legal, financial, and medical decisions. This person has to be a good negotiator. This person has to be calm when there’s issues that arise, and they may have feelings — they may be grieving that things have changed for themselves and in their relationship with you. So I think to be really empathetic and to be really kind and compassionate, we have to get our own stuff in order so that we can really have a good experience for our last days.

And again, some of these roles that I’ve served in have been temporary. Let me give you an example. I worked with a gentleman whose wife had passed away because of cancer. She had been gone about two years and he himself was diagnosed with cancer. So he already knew what that might be like, right? She had already had chemotherapy; he was right there with her through all of that experience. Well, now faced with it himself, he said, “In order for me to do this, I don’t have a partner. I need somebody who’s going to deal with the business of my life so that I can focus on my health.”

He named me as his trustee. I became active. I reported to him because he was still able to receive those reports. He was certainly mentally able, but physically it was really hard. He was exhausted most of the time. And he was going to grief support for the loss of his wife and going to chemotherapy treatments. So you can imagine just how full his day was.

So we’re into this two years. He met a woman at grief support. He was feeling better because the treatment worked, and he decided he wanted to travel the world before he died. And he married this woman, and they were very happy together. And he asked if he could be trustee again. So — I’m a professional trustee. It’s part of my duty to step back and step down when the trustor who wants to be trustee again wants that job back. So I gave him a full report, he had an accounting, he knew exactly what had happened during my term. He went on with his life, and then he passed away and I became trustee again. So I just wanted people to know that it could be temporary. It’s not necessarily a permanent job. Would your child step back down?

[07:14] Frazer Rice: No question. Once in the role, sometimes it’s difficult to get out of it. But you did the right thing in terms of getting an accounting, making sure that your duties stopped when you were told to get off, and then when you were ready to come back on, that those sightlines are very clear. And that’s what comes with talking to a professional like you. You understand those parts so that you’re not having things bleed from one role into another and having liability issues or misunderstandings with the next generation.

[07:51] Marguerite Lorenz: Right. And let’s talk about working with professionals from the beginning. We don’t know what we don’t know. And even attorneys need to go to an attorney to get their estate plan done. There may be attorneys who disagree with that, but none of us can be truly objective about our own circumstance. And we need someone who’s going to ask us some tough questions and really help us figure out: what is our intention? How do we feel about this? What’s important to us?

So, getting my own estate plan done — I was a single mom in a new profession. I had just become a fiduciary and I had just learned about estate planning. I was learning so much at that time and realized, every time I drive on the freeway, I’m risking my children’s future. I’m their only parent. What can I do about that? So estate planning isn’t just about money, and it isn’t just about death. It’s also about taking an inventory. What do I have? What have I accomplished? Who do I love? What do I really care about? And once we get to have those kinds of conversations, our whole perspective on life improves. And I’ve used my own estate plan, every time I’ve gone to update it, as sort of a milestone check — where am I now?

[09:09] Frazer Rice: Maybe the standard procedure is every five years to check in and make sure that life has not advanced as far as divorce, deaths, new kids, marriages, things like that, to make sure that the plan is in place. And it’s a great milestone to reflect on things. And then, as we move up the ladder wealth-wise, if there are changes in tax laws and things like that, it’s important to make sure that the plan understands that change and is able to accommodate what’s going on on that front. Let’s take that as a segue. You have another book that you came out with, How to Be a 90-Year-Old — or a well-functioning 90-year-old.

[09:36] Marguerite Lorenz: How to Be a Successful 90-Year-Old.

[09:39] Frazer Rice: More than well-functioning — actually successful. How to Be a Successful 90-Year-Old. I have not read that yet, so tell us a little bit about what’s going on there.

[09:47] Marguerite Lorenz: Well, I want everyone to have that blue ribbon feeling at the end of their lives. And I picked 90 because I have had clients that have reached a grand old age of over 100. My last client passed at 105. So it is possible to live well until the very end. And I’ve been working with people for over 20 years that are much older than me, who have lots of wisdom and experience to share. Their stories are important. So for people that are serving as trustee — whether you’re a family member trustee or you’re a professional — this book might be helpful, because I actually talk about the relationships with those clients. And I also talk about some things we could do now so that life is simpler, better, and more comfortable when we might need some help.

And that’s another barrier that a lot of us have. We have this barrier to having someone come into our home and help us. Our home is our sanctuary, it’s our private space. But I want everyone who’s listening right now to just think about it: who’s going to be the first person in your bedroom when you are no longer able to make new decisions? And do you want that person to see everything that might be in your bedroom? Many, many adults have what I call a black box. We have something that’s private that really, really we keep to ourselves. But everything gets exposed once you are not able to care for yourself.

So then what? Well, many people want to stay in their home no matter what, as long as possible. So imagine, if you will — some of my clients have lived in the same home for 30, 40, 50 years. And now they have to get care. Can we arrange to have that care in their home? So this exploration is really about living well to the very end. There are some really great tips, things I’ve learned from my 90-plus-year-old clients that I’ve employed and deployed for myself.

[11:23] Frazer Rice: Just as an example there — I’m a ripe old age of 53 shortly. The idea of getting things in place while you’re at the peak of your powers, and you don’t have the difficult decision of having the car keys taken from you, or being in a home that isn’t appropriate for you anymore, meaning you don’t have the necessary safeguards for showers and stairs and things like that. Do you get into that, as far as trying to look five years ahead to make sure that the things that you can do now in a more comfortable environment take place before maybe the emergency happens and then all of a sudden we say, “Oh my gosh, we’ve got to do a complete overhaul here”?

[11:54] Marguerite Lorenz: Well, as you know, Frazer, our power in estate planning is not prediction, it’s really about setting our preferences. And if we don’t do that while we feel good, while we’re competent, while we’re thinking clearly, we don’t get a chance to express that or do that once we’ve lost our competence. So this is really important — that I’m thinking about my future vulnerable self.

I’ll give you a small example for me personally: dark chocolate is part of my life. I like having an international selection of dark chocolate and I don’t want the same kind every day. I feel the nuances and the taste and the flavors; it’s important to me. For some people that might be wine, for other people it might be fine literature. It really depends on what you’re into. Well, our estate plan can be just about tax, legal, and financial stuff, but it really should be more. It should be about our quality of life. And that’s really what I’m instructing and what I’m talking about in a very warm, personal way in How to Be a Successful 90-Year-Old.

And even in Luck or Control?, I want people to understand the function of the documents. So we talk about the documents and what they’re supposed to do to assist your person. But you have to have a person. And you might choose to have a trust company or a bank serve as your trustee, you might have a family member, you might have an individual like me — an independent trustee. You can find more independent trustees at the Independent Trustee Alliance.

But the point is: how do I want to live? Who do I want to have help me? What does that help look like? Well, you might not know all the answers right now, but if you begin now, your eyes open to different possibilities. I’ll give you an example: I have visited lots of hospitals. I’ve been to people’s bedsides many, many times. I’ve learned that there are certain procedures I’m just not willing to go through. So in my mind I had to update my advance health care directive to basically say: this shell that I’m in, the case I walk around in, the machine that I live in, needs to be kept alive long enough so that my boys can say goodbye. And that’s not for me, that’s for them. But I don’t want it to go on interminably.

[15:00] Marguerite Lorenz: So I’m pretty specific in my documents about what I want. So I’m hoping to help people have a little perspective — use that energy you have, use the power that you have right now to make decisions for yourself, and allow yourself the opportunity to update your estate planning documents from time to time, so that what you learn goes into your documents, and what you decide and what your intention is, is clear.

[15:23] Frazer Rice: One of those points that you bring up that I think is important is that you can be a really good user of professional services with some forethought. To muse a little bit about what the end of life looks like is somewhat an unpleasant thought, if you feel like you’ve got less than your full faculties and that ends up being your future. But thinking about that and putting some planning around it, and real ideas about what you want others to take away from your end of life, in many ways I think is a great way to really get the documents put in place and reduce tension and questioning later, and any ambiguity that there might have been ahead of time.

[16:13] Marguerite Lorenz: Well, that’s the thing too that we don’t necessarily consider when we avoid estate planning. And I’m talking to all the professionals who listen to you, Frazer. The percentage of professionals who have their estate plans completed might be just a little bit more than the average person, but only a third of American adults have any kind of written plan — and I would argue that half of them are not really going to work. And when I speak to professional groups — attorneys, CPAs, financial advisors and so on — I get that same raise of hands: only about a third of them have a complete, up-to-date, ready-to-go estate plan.

Why do I need it ready to go? Because I don’t know what’s going to happen or when. So yes, it is hard to contemplate the end of our lives; it’s not something we want to think about. But how do you stop thinking about it? How do you stop worrying about it? You do everything you can about it right now, and then you set it aside. And our cell phones are so powerful that I can put in my calendar five years from now to call my attorney and ask if anything’s changed in the law, and to consider then if I need to think about anything that might have changed in my life that I want to update. So once I get my estate plan done and updated, I don’t think about it anymore. I’m so relieved. My head space is so clear, because everything I was worried about has been thought about, considered, allowed, and put down in writing. And now I don’t worry anymore.

[17:47] Frazer Rice: I scolded a group of financial professionals I was giving a talk to. I asked probably a similar question, which was: how many of you have your estate plan documents up to date? And they all shot up, out of shame. I said, “How many of you have looked at them within the last two years?” And then that shot down to about a third, maybe less. I just said, “Shame on you.” People are looking to you for help on these things and you’re not leading by example. And so — point taken, and not just the trusts and estates lawyers, but for everybody else around the ecosystem. To not go through that exercise yourself — you can’t possibly advise correctly if you’re not practicing what you’re preaching.

[18:22] Marguerite Lorenz: Well, here’s my challenge, and here’s my challenge to every professional in our mutual space: bank trust officers, administrators, paralegals, everybody. In Luck or Control? and on planforthis.com, which is where you can find my books and get a free First Steps toolkit, the first question is, “Hey professional, do you have your estate plan done?” It’s the first question. Why? Because I want to be sure I’m dealing with somebody who has some empathy for the emotional decisions I’m going to have to make. I want someone on my team that understands what this feels like — not just the wise, tax-smart decisions that they made. It’s a whole package. And so I’m putting it out there and I’m saying: I’m challenging everyone in our mutual space. Make sure you have your estate plan done, because more and more clients are going to be asking you, “Do you have your estate plan completed?”

[19:21] Frazer Rice: So then let’s talk about your third book, which is sort of an update — and we talked about it in the previous podcast that we did a while ago, and I’ll have that in there — which is Ethics for Trustees. What’s in the update? I know it’s now in an audio version, which I haven’t sampled yet but I’m sure it’s really good. What’s new now versus when it first came out?

[19:54] Marguerite Lorenz: So I’ve simplified it a bit, because I recognize that each of us can look up the probate code for the state that we live in, and it was really much more of a California-specific book. Look, I’m a California Licensed Professional Fiduciary and I’m also a Master Certified Independent Trustee. So having the audiobook, and also having it in PDF form, I think is very helpful for people so they can make notes, take a certain page with them. And the book now is exclusively available at planforthis.com. And when you purchase it, you’re getting both the audio and the PDF version.

[20:27] Frazer Rice: Cool. Well, we’ll make sure that’s in the show notes. Let’s take the last little bit of time we have here and talk about the decision to have an individual trustee — and by individual, I mean family trustee — versus a more professional trustee, whether it’s an individual or a bank trustee. You and I sort of nod our heads in agreement every time we talk on this topic, and I’ve done podcasts with others where I feel this looming crisis is coming, where people put all these documents together in trusts and then they staff them with people who may be initially qualified, barely, but then six months after the ink is dried, their interest wanes, their technical capability wanes, life intervenes, something different happens — and the problems just multiply at that point.

I guess my big question is — and from the Independent Trustee Alliance, where there is a group of people who can operate as a trustee without having to go to a bank — how bad do you think this problem could get? We have this great wealth transfer and we have a lot of assets shifting, not just from the ultra-high-net-worth but regular people shifting to the next generation, with people at the wheel of these structures that I don’t think really understand what’s going on. How bad could this get?

[21:52] Marguerite Lorenz: In my view, we’re not just dealing with a transfer of wealth — because that’s where a lot of people focus. Where’s the money going, right? It’s going from one generation who died and then the money’s going to the next generation. But in that interim — and by the way, many people live for years unable to make new decisions for themselves. So it’s during their lifetime that they might need their trustee to step in, not just after they die. And that’s really important to consider: that you might need someone for five or six years when you need someone to make decisions.

What kind of decisions? You have digital assets, you have your social media accounts, you might be doing transactions on your phone all day every day — but someone else will need to get into your phone to actually do those things, maybe. Is that somebody you want from your family to do that for you? Maybe you still say yes. But that family member has to have the ability to enforce the rules that you’ve set in your trust. They need to communicate really well with other people. And they have to set aside their own feelings. They have to put you first. And that’s a big challenge.

So when you think about the word fiduciary — and I know that the financial industry has used the word a lot — the technical aspect of that is that I’m putting my needs aside and putting that trustor, that person who created the trust, their needs first. Then I also have to consider their beneficiaries and the future of those beneficiaries. So I’m dealing with transactions and having to account for every single penny of where the funds are now and where they’re going, what the assets are, what the character of those assets are. I have to deal with all the taxation that goes with that. I have to manage those assets. So that’s one set of skills, right? But then there’s the softer skills about communicating with other people and understanding their doubts and their concerns, and not taking that personally, and putting things in writing.

So this is a big job. It’s not the simple job that it might have been at one point, where someone just wrote a will on their cocktail napkin and said, “Okay, I’m leaving you all my money.” The will doesn’t operate at all if you go to the hospital and you haven’t granted authority to anyone to be that person for you, to go to your house, get you some clean underwear and socks and bring it to the hospital for you. So I think we have to look at our lives as more complex. It’s not just driving a car; it’s deciding where that car goes, and if the car is maintained, and is the car clean, and can we have other people in the car with you? There are just so many decisions that I’ve had to make for other people that I don’t take any of this lightly — and nor should anyone who’s writing their estate plan. You need that attorney to ask you those questions and walk you through your day-to-day, so you can keep your day-to-day as long as possible.

[24:54] Frazer Rice: Well, the other part too is the people who assume those roles — and I’ve been in it too — when you are asked to make tough choices, sometimes you have to make tough choices that favor one person over another, and you may be called to account for that. And the idea of keeping diligent records and writing — in a sense putting down the reasoning behind what you’re doing and making sure that everyone, to the extent it’s possible, understands the why of what’s happening — I think that is going to help people really save themselves some issues going forward when those tough choices have to be made.

[25:23] Marguerite Lorenz: You know, if you don’t get your estate plan done, you’re suing your family.

[25:27] Frazer Rice: Ah — good way to put it.

[25:29] Marguerite Lorenz: You’re making them go to court, right? And who would want to make anyone else go to court? I mean, it’s just such a sad thing. And by the way, our courts are overrun with people that did no planning. And none of it happens quickly. So if you end up hospitalized and you haven’t selected a person, then the hospital and their bioethics committee is going to do the best they can. They’re going to ask for next of kin to make decisions for you — people that you may never have discussed your personal life with now have to be making decisions for you.

So I’m asking people to be a little more proactive. I know you’re busy. I know it costs money to get an estate plan — probably less than you think, and certainly less than probate court would cost. A lot less than probate court would cost. Independent individual professional trustees cost a lot less than you think also. And you need to ask, because this is your life we’re talking about.

I’m good. I have my plan, I keep up to date with my successors. I have a succession plan that’s worked beautifully. I’ve tested it. I know. And that’s why I can be so calm and so confident everywhere I go in my life. I’m feeling so good and so happy. Well, I want that for everyone. I want everyone to have that calm, true confidence that comes with knowing you’ve done everything you possibly can for yourself and the people you love.

[26:54] Frazer Rice: Terrific. Marguerite, how do people get the books? How do people find you and your podcast, the Independent Trustee Alliance, and any other points of contact?

[27:04] Marguerite Lorenz: Great, thank you. So planforthis.com is where you can find the books, where you can find me. We do have a podcast that has some wonderful discussions, case studies, and other topics to help people better understand the choices that they have. The Independent Trustee Alliance has a wonderful directory to find all kinds of professionals, but especially independent trustees, and you can find that at trusteealliance.com. And I’m going to be out there — I’m on LinkedIn. Come find me, connect with me. And Frazer, once again, thank you so much for the opportunity to visit with you.

[27:40] Frazer Rice: Oh, it’s always great to get your expertise. And you bring a great sense of empathy to what can be a very technical and dollar-driven process. And I think the empathy, when it gets avoided or missed, there’s something really lost. So I really value your perspective on it. Thank you so much.

[28:00] Announcer: This podcast is for educational and entertainment purposes. It is not investment, legal, nor tax advice and does not represent the opinions of the employers of the host or guest.

Subscribe to Wealth Actually on Apple Podcasts, Spotify, Youtube or wherever you listen — and if this episode was useful, share it with the person you have named in your documents.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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“Reducing the Noise of AI Investing”: In this Wealth Actually episode, Frazer Rice speaks with KEVIN SHEA, Senior Equity Analyst at BNY Wealth, about AI Investing and how investors should think about artificial intelligence as an investment theme rather than just a headline-driven trend. They discuss the difference between hype and durable fundamentals, how to segment AI opportunities across infrastructure, software, and end-user adoption, and why free cash flow still matters when evaluating companies tied to AI.

https://open.spotify.com/episode/1NGM8j2KqdiUFWSLguBMEH?si=YmB4s0OVSqyy6U3Mpg7OaAhttps://youtu.be/Wnlub-HoiUoThe conversation also explores circular financing risk, the role of management vision in fast-moving markets, which industries may be disrupted or strengthened by AI, and how large institutions are using AI internally to improve productivity, analysis, and client service.

Chapters 00:00 – Intro and episode setup
Frazer Rice introduces the episode, frames AI as a dominant investment theme, and welcomes Kevin Shea to help unpack AI Investing for the audience. * 01:00 – Hype versus disciplined investing
Kevin explains that disciplined investing is what allows investors to separate hype from durable opportunity, and argues that AI adoption, spending, and earnings revisions point to real underlying fundamentals. * 03:00 – How to bucket AI investment themes
The discussion turns to how investors can organize AI exposure, including beneficiaries versus disrupted companies, technology bottlenecks such as GPUs and networking, and industry adoption themes across sectors. * 05:30 – Valuation, momentum, and free cash flow
Kevin discusses why free cash flow per share growth remains one of the most important drivers of stock performance and why parts of the semiconductor ecosystem may deserve a valuation re-rating. * 08:15 – Circular financing and risk in the AI ecosystem
Fraser asks about the growing concern that AI companies are financing one another, and Kevin outlines both the bullish “escape velocity” case and the downside risk if business models do not become independently profitable fast enough. * 11:45 – Infrastructure buildout and competitive uncertainty
Using analogies like railroads and golf courses, the conversation highlights the risk that early builders may not be the ultimate winners, especially in a market with heavy spending and rapid leapfrogging among competitors. * 13:00 – AI Investing: Public versus private market exposure
They examine whether owning public companies such as Alphabet offers meaningful AI exposure, versus gaining more direct but harder-to-access exposure through private investment vehicles. * 15:45 – What strong AI management teams look like
Kevin emphasizes that in an environment with no clear historical playbook, vision, execution, and the ability to identify durable differentiation are critical traits in management teams. * 19:15 – Adaptability and strategic pivots
Fraser adds that thoughtful adaptation matters, and Kevin notes that sometimes acquisition activity can signal whether a company is innovating ahead of the curve or scrambling to catch up. * 20:45 – Which industries are most exposed to disruption
The conversation shifts to sectors under pressure, especially parts of software and IT services, while stressing that disruption does not necessarily mean extinction. * 24:45 – Why law and accounting may evolve, not disappear
Fraser offers a contrarian view that AI may make strong legal and accounting professionals more valuable, and Kevin compares that to earlier fears that Excel would eliminate accountants. * 26:15 – How Kevin uses AI in practice
Kevin describes how AI has made his team materially more productive, especially in data aggregation, scenario analysis, industry research, and portfolio risk work, while also helping BNY operationally across onboarding, security, and client communication. * 29:10 – Where to find Kevin and closing remarks*
The episode closes with Kevin sharing where listeners can connect with him and Fraser noting how quickly the AI landscape continues to change.

LinksKEVIN SHEA on Linkedin

RICK FERRI on BRING SIMPLICITY BACK TO INVESTING

Transcript of AI INVESTINGFrazer (00:01)
Welcome aboard, Kevin.

Kevin Shea (00:03)
Yeah, thanks for having me. Appreciate it, Frazer.

Frazer (00:06)
We’re going to tackle two words that have basically taken over the investment world for the last six months: artificial intelligence.

Before we do that, whether it’s AI or crypto or tulips or anything with a lot of hype or buzz around it, how do you think about delineating between investing based on hype and doing it within the confines of a disciplined approach?

Kevin Shea (00:32)
They really do go hand in hand. You need a disciplined approach in order to recognize whether it’s hype or not.

The reality is that it’s pretty impressive, the adoption we’re seeing with AI: the amount of spend, the companies that are participating in and benefiting from AI. There was some concern with the stock movements that many of these companies have seen about whether the market was getting ahead of itself.

Yet we have seen significant estimate increases throughout the year. If you take a look at some of the networking companies, their earnings expectations for 2027 are up almost 50% versus where they were just six months ago. The same is true with memory, GPUs, and CPUs.

Fundamentally, we’re seeing a lot of these companies have expansion in revenue growth and earnings growth, which is quite supportive of a durable trend.

What’s also very important is that adoption of AI is increasing. You can look at enterprise adoption: nearly two‑thirds of enterprises pay for an AI service. You can look at token usage — that’s how much companies are using AI — and that has been parabolic as well.

Look at the revenue generation of these AI models. Right now, they are some of the largest, fastest‑growing companies that have ever existed. So we don’t really see this as a tulip scenario, or even comparable to the internet bubble. We find it very different. We think there are fundamental drivers to this trade, and we’re seeing that through earnings growth.

Frazer (02:37)
Cool.

AI to me is a term that encompasses a lot of different things, and in some ways it’s become like real estate or water — it’s starting to touch a lot of different industries. It’s not just a thing unto itself, but something that’s becoming integrated into a lot of other types of things.

How do you define and bucket the investment themes so that it’s digestible for the investor, and it’s not just, “I’m investing in Anthropic or Google,” but people can parse out where it fits within a portfolio?

Kevin Shea (03:14)
It’s a great question and probably one of the most important ones.

Part of our overarching thesis is that for AI to fulfill its promise, it has to be in every geography, in every industry, at every company, and at almost every employee layer. We’re seeing that when you look at the business units that are adopting AI: customer service, product development, marketing — basically divisions that almost every single company in every geography has.

You phrased it as water, how it touches everything, and we’re seeing that.

So how do you segment it? There are a number of different ways:

• First, you can break it into: who are the AI beneficiaries, and who are those that will be disrupted by AI?
• Second, you can break it down into different bottlenecks. That’s a way I frequently use within the technology landscape: GPUs, CPUs, memory, networking, storage, data centers. Then you look at that framework and see which companies are most exposed to those bottlenecks.
• Third, you can ask: which industries will benefit from adoption? Is that biotech, transportation, warehousing? Which companies could be more negatively influenced — maybe that’s software?

That’s how we try to create an AI Investing framework for where we should focus our investment efforts and determine the allocation that our clients can benefit from.

Frazer (05:17)
As we dive a little bit into how you’ve bucketed these themes across different areas, there’s the concept of benefiting from momentum or valuation versus maybe the cash flow and fundamentals of these different investments.

I could imagine that, with the hype and mania around the space, there’s a lot of interest. How do you temper that valuation play versus analyzing what the cash flows look like?

Kevin Shea (05:49)
One of the most highly correlated metrics to stock outperformance is free cash flow per share growth. That’s often the most important metric, and we watch that heavily.

What’s incredible — and we talked about this earlier with estimate revisions — is that many within the AI ecosystem are generating extremely healthy free cash flow growth and margins. A lot of that is in AI infrastructure. They’re being paid to supply all the equipment and semiconductors.

There’s also this concept that valuation multiples shift to where there’s value creation. I’ll give an example:

The SOX, the semiconductor index, used to trade at parity with the S&P. But there’s been a paradigm shift. A lot of the intelligence that’s being created through these models is powered by semiconductors, networking, packaging, and hardware.

You’ve seen semiconductors go from trading at parity to trading at almost a 50% premium. At the same time, the market is intelligent; it’s shifted its view of software. Software used to trade at a 70% premium, and we think the intelligence layer has moved just one layer above where software applications normally sit.

As a result, you’ve seen valuation compression for the IGV, the software index, from that 70% premium down to about 20%.

Some people might look at the semiconductor index and say it’s more expensive than where it historically trades — maybe that’s hype. But we actually view it as a shift in where the value creation is occurring.

So we think it’s a healthy, understandable move within the market.

Frazer (08:16)
One of the questions that pops up is that there’s a lot of news around the circular flow of cash, where a lot of these companies are all investing in each other. You hear “five hundred billion is going from Google into Anthropic,” or different flavors of that, where it seems like the money is rotating.

And there’s a question as to whether it’s rotating and expanding, given sales and so on. How do you think about that and make sure that we aren’t wandering into more of the sort of things that are happening off balance sheet that we don’t see, while still recognizing the investment that’s taking place?

Kevin Shea (08:57)
At minimum, it raises the risk profile. There are many circumstances and scenarios where this has occurred in the past — the internet being the most commonly referenced — and that obviously did not work out.

There are multiple scenarios that could happen, but for simplicity we’ll break it down into two.

The first scenario is that this is such a capital‑intensive expansion that companies are doing an “all‑hands‑on‑deck” effort. The faster you can get capital from well‑capitalized firms, the faster you can build your infrastructure and reach scale so that these large language models are profitable.

If you can expand and take capital from everywhere, then you can provide enough compute for all enterprises and consumers to utilize your product and your model. You reach “escape velocity” in the sense that your scale allows you to lower costs and become more profitable faster. That’s the glass‑half‑full environment.

Glass‑half‑empty is that they do not reach escape velocity. The business models needed more time to bring the cost of delivering AI down enough to be profitable on their own; they didn’t need this extra capital to reach an enormous amount of scale, and they’re moving too fast.

If that scenario plays out, and these companies are not able to be profitable on their own, and the financial markets become tighter, that creates more downside risk for everybody in the ecosystem.

We don’t see that right now because, at the moment compute is available, it’s being taken right away. We still feel comfortable with the financing occurring right now, but it is one of the top risks that we monitor. It’s not that it’s systemic, but it provides less clarity and disclosure, and it creates a riskier profile as we go through this expansion.

Frazer (11:43)
In the back of your mind, you’re probably saying, “We want to make sure, if there are winners and losers in AI Investing, that we avoid the railroad scenario,” where you build this whole infrastructure and companies have to go bankrupt twice before they actually reach profitability.

Or the bromide that golf courses only become profitable, if they ever do, because the person who built it — a passion project — didn’t make it work, then it goes bankrupt, then the bank is stuck with it and doesn’t know how to run it, then they get rid of it, and then the third person has learned the lessons from the first two and is able to push forward.

Kevin Shea (12:23)
That’s a good point. When we look at all these different models being created, right now you have an environment where everyone is spending and keeps leapfrogging each other at different times.

It’s still a very unknown outcome for all of these players. There’s a lot of competitive intensity in the large language model space and the broader AI ecosystem. It’s certainly a very dynamic environment right now.

Frazer (12:59)
As investors are trying to access this, there are the public companies. You can go on your Fidelity account or talk to your advisor at BNY Mellon or anybody else and say, “I’ve heard about Anthropic or Google or all of these things.”

As far as a good proxy for exposure, how do you think about that?

For example, if I looked at Google and understand that they have underlying investments in their portfolio — in addition to their regular businesses — into these different scenarios, is that a way to get shorthand exposure? As opposed to trying to access a venture fund where the entry points are difficult, the hurdles are high, you need to write big checks, and access is gated?

Kevin Shea (13:53)
It’s a very astute point when you mention circular financing. That doesn’t just happen with public companies; a lot of these vendors and companies in this ecosystem are investing in private companies as well.

When those private companies go public, you find out that Company XYZ is a top owner, and one of their suppliers.

There has been a growing awareness that, with certain public companies, you have exposure to a handful of private companies.

For BNY, our Fujio funds do a lot of our private investments. That’s usually the best way to gain direct exposure.

Frazer (15:37)
Sure.

Not to be flippant, but you’re getting paid to own it at that point via their dividend, as opposed to you paying — at the SPV or LP level — to gain access to it. But yes, it’s definitely not a pure play. I wouldn’t buy Google just to be in a venture fund.

And just to reiterate for listeners, this is not investment advice. We’re trying to learn and talk through different types of scenarios.

As you’re thinking about this and looking at these different companies, what does a good management team look like?

You’d think: a bunch of PhDs, great at coding, lots of experience in the venture community, maybe hung out in Silicon Valley. But everything is so new and dynamic. When you’re evaluating these businesses, what does a good management team look like as they’re trying to scale at warp speed, while profitability may or may not be a thing?

Frazer (17:49)
I’d add that I think there’s an interesting component to AI Investing: a track record of what I would call thoughtful adaptation.

When your business plan gets punched in the face and you’re able to pivot — meaningfully pivot — I’m not talking about a dog food company suddenly putting “.ai” at the end of its name, but someone who can shift and take advantage of opportunities as they come up, as you say, without being so rigid in their vision that they end up getting lapped.

I think that’s an interesting facet to focus on.

Frazer (20:50)
When I try to get my arms around this, I bucket things in terms of:

• Disruption: blowing up something traditional
• Optimization: taking something that’s already good and turning it into great
• World‑building: taking a vision, starting from zero, and building something that didn’t exist before

On that first point, what industries do you think are under attack, and how do you invest around that so you’re not left holding the bag — you’re not a buggy‑whip company as Tesla releases their next issue?

Frazer (24:48)
As an example, I run into all sorts of law firms and accounting firms, and I hear the comment that law firms are going away. I have a contrarian view.

First, I think law has a wonderful ability to metastasize, to find issues, and I think AI is going to be great at finding those and keeping lawyers busy.

Second, for lawyers who are good, I think the ability for AI to make them more efficient and help them graduate to even more detailed and “higher‑value” discussions will only increase.

So when people say, “Law is going to be dead,” I don’t really agree. I think that ties into your point that AI will help some companies that can adapt and use it well to drive further value, probably even charge more. For others, they’ll be left behind or become cottage industries.

Frazer (26:11)
And there will be more and more issues to solve. I don’t underestimate that.

I think AI is going to start poking holes in different things we didn’t think about. Then it will take good brainpower, made more efficient by AI, to deal with these new issues as they pop up.

In your day‑to‑day job, what are you using AI for? Maybe through Bank of New York, and maybe informally, when you’re doing other research — to be smart not only about the company areas, but what you’re doing personally to be more efficient, take advantage of AI, and learn about cool stuff.

Frazer (29:11)
Cool stuff. How do people find Kevin Shea, and any final thoughts?

Kevin (29:20)KEVIN SHEA on AI Investing

Frazer (29:29)
Terrific. Thanks for being on, and we’ll be sure to stay in touch, as I’m sure everything will be completely different in not just six months — probably six weeks.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/Keywords: AI Investing

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For many, college success seems pre-ordained and the rightful outcome of a thoughtful next generation development plan, But, we all know this isn’t always the case. One of the great fears for many families is a child stumbling with their first taste of independence and outside accountability.

LAURIE DHUE shares insights on preparing young adults for college, focusing on the four S’s: sex, substances, self-esteem, and scholastics. This episode offers practical advice for parents and students to navigate independence responsibly and confidently and set those students up for college success.

In recovery for 19 years and with a career in broadcast journalism at the highest levels, Laurie is one of the foremost experts in the field and armed with real world, personal experience.

https://youtu.be/8JN2iM8gxWAKey TopicsThe four S’s framework: Sex, Substances, Self-esteem, Scholastics
Importance of consent and online safety
Managing peer pressure and peer influence
Building self-esteem in the age of social media
Practical safety tips for college students
The role of family communication and support
Long-term decision making and goal setting in college
Recognizing signs of substance abuse and mental health issues

Guest Name: Laurie DhueTitlesThe 4 S’s of College Success: Sex, Substances, Self-Esteem, and Scholastics
How to Prepare Your Kid for College: Essential Tips from Laurie Dhue

College Success Sound Bites“Consent is the most important thing to discuss.”
“Social media creates so much pressure on young people.”
“One bad decision can lead to a tough time.”

Chapters00:00 Introduction to Recovery and Wellness
03:06 The Four S’s: Preparing for College Life
06:05 Navigating Consent and Relationships
08:50 Substance Awareness and Safety
11:58 Building Self-Esteem in College
15:42 Academic Success and Responsibility
28:49 Financial Literacy and Practical Majors
33:47 Final Thoughts and Key Takeaways

ResourcesFamily Wellness First Program – https://familyofficegrowth.com
Laurie Dhue on LinkedIn – https://www.linkedin.com/in/lauriedhue/
Laurie Dhue on Instagram – https://www.instagram.com/lauriedhue/
Family Office Growth Partners – https://familyofficegrowth.com

College Success Guest LinksLinkedIn – https://www.linkedin.com/in/lauriedhue/
Instagram – https://www.instagram.com/lauriedhue/

The Citizen Heir Concept

TranscriptPreparing Kids for College: The Four S’s Framework

Featuring Laurie Dhue | Hosted by Frazer

Frazer:
Welcome aboard, Laurie.

Laurie Dhue:
Great to see you. Thank you so much for having me on, Frazer.

Frazer:
It’s a pleasure to have you. Today we’re diving into an important topic: preparing kids for the transition to college and setting them up for success.

You’ve had a remarkable career in broadcast journalism, and you’ve also been open about your personal journey with sobriety. Can you share a bit about your background?

Laurie’s Background and MissionLaurie Dhue:
I’m always grateful to talk about recovery and how sobriety can positively impact individuals, families, and communities.

I’ve been sober since March 2007—so 19 years now. Sobriety has given me everything back, plus entirely new purpose and additional careers beyond television news.

For the past year, I’ve been focused on building health and wellness resources for individuals and families—covering physical, mental, emotional, and spiritual health.

Through my work with Family Office Growth Partners, we created a program called Family Wellness First, which provides high-level resources to help families maintain purpose, preserve legacy, and operate at their best.

The College Transition ChallengeFrazer:
We talked beforehand about how this work applies to many areas, but one that deserves more attention is preparing kids for college.

You’ve framed this around the “Four S’s.” Walk us through that.

The Four S’s OverviewLaurie Dhue:
The Four S’s are:

• Sex
• Substances
• Self-esteem
• Scholastics

College brings freedom, independence, and opportunity—but also risk. For many students, it’s the first time making decisions without parental oversight while navigating relationships, substances, schedules, and academics.

1. Sex: Consent and BoundariesLaurie Dhue:
   Consent is the most important concept.

2. It must be clear, ongoing, and voluntary.

3. It can be withdrawn at any time.

Young men need to understand responsibility for ensuring mutual comfort. Young women need to understand that attention or kindness does not create obligation.

Alcohol complicates this significantly by lowering inhibitions and increasing risk.

It’s also important to understand that sex is not a reliable source of validation or self-worth.

Practical guidance includes:

• Use protection
• Communicate plans with friends
• Stay aware of surroundings
• Know campus resources (health center, security, emergency services)

1. Substances: Risk Management and AwarenessLaurie Dhue:
   Substances can derail judgment, safety, relationships, and academic performance—especially early in the first semester.

Key guidance:

• No pills, no powders (due to fentanyl risk)
• Be cautious with alcohol; it impairs decision-making
• Never accept drinks you didn’t see prepared

Warning signs of a problem include:

• Obsessing over the next opportunity to drink or use
• Repeated negative consequences with no behavior change
• Missing classes or experiencing memory gaps
• Friends expressing concern

Students should have prepared ways to say no and understand that not everyone is engaging in heavy substance use.

1. Self-Esteem: Identity and External PressureLaurie Dhue:
   Social media has intensified comparison and pressure around appearance, lifestyle, and status.

Ways to build self-esteem:

• Attend class consistently
• Tell the truth
• Leave uncomfortable situations
• Treat others with respect
• Make decisions you can live with the next day

Support systems are critical:

• Friends
• Extended family (aunts, uncles, mentors)
• Counselors and campus resources

Asking for help is a sign of strength, not weakness.

1. Scholastics: Discipline and StructureLaurie Dhue:
   Freedom in college requires discipline.

No one is managing your schedule, so students must build structure early—especially in the first semester.

Key habits:

• Prioritize sleep, nutrition, and exercise
• Review notes regularly
• Start assignments early
• Use planners or digital calendars
• Seek tutoring when needed

Discipline is a form of self-respect.

Financial and Academic PracticalityFrazer:
Students should balance curiosity with practicality—developing skills that translate into career opportunities.

Avoid unnecessary debt and understand basic financial concepts like compounding. Even small financial decisions can have long-term consequences.

Laurie Dhue:
Agreed. Use debit cards where possible, avoid unnecessary credit, and think carefully about major purchases.

Practical majors today include:

• Nursing
• Accounting
• Engineering
• Computer science
• Finance
• Supply chain and operations
• Information systems

Students don’t need to decide immediately, but they should move toward a viable path.

Final TakeawaysLaurie Dhue:

• One poor decision can have lasting consequences
• Small decisions compound over time
• Asking for help is a sign of maturity
• College is about learning to manage freedom—not proving independence through risk-taking
• Trust your instincts—if something feels off, it likely is

Where to Find LaurieLaurie Dhue:

• LinkedIn: Laurie Dhue (Family Office Growth Partners)
• Instagram: @LaurieDhue
• Facebook: Laurie Dhue

I’m always happy to connect and help families navigate mental health and substance use challenges.

Frazer:
Terrific. Thanks for being on.

Laurie Dhue:
Thanks, Frazer.

Keywordscollege prep, young adults, self-esteem, substances, consent, college safety, mental health, family wellness

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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Citizen Heir: How Engaged Citizenship Helps Solve The Three Generation Rule Destroying Most Wealthy Families

https://youtu.be/yyt4d271lSUCitizen Heir

Successful families right now are struggling mightily to raise their kids to be productive, moral people in an Instagram me‑first world. The question I keep hearing from parents who are serious about it is, where do you turn when achievement gets measured in dollars and likes?

The stories of ruined generations are as old as time itself. There’s even a phrase for it: “shirt sleeves to shirt sleeves in three generations.” Every culture has a version of that saying, and they all mean the same thing. The question I keep coming back to is, why do some families break that pattern when so many others don’t? The ones who do almost always took seriously something harder than drafting a good estate plan. They took seriously the job of raising a good heir.

And today, I want to share a concept that comes back constantly in those conversations I have with clients. I call it the “citizen heir.” Citizenship has been on my mind a lot lately with America’s 250th birthday coming up.

We live in divided times, and the discourse around civic responsibility has suffered for it. Many people feel the core ideas and institutions are no longer worthy of their trust. We’ve become loose from our moorings. That might sound like a political observation, but it’s actually a family one.

Because when you strip away the noise, what families with significant wealth are really doing is trying to transmit values alongside resources. And that’s exactly where most of them run into trouble. They get very close to the money, and sometimes in the process, they forget the values part.

Here’s the connection I keep making. A good citizen and a good heir are operating under the same moral logic. A good citizen doesn’t treat rights as pure entitlement. They understand they’ve received something they didn’t fully build. It could be a society, a tradition, a set of institutions, yet they’re responsible for what they do with it.

A good heir works exactly the same way. Wealth isn’t a possession, it’s actually a trust. In Jewish, Christian, and Islamic traditions, this idea is ancient. Wealth is treated as something given for service, not self‑indulgence. A faithful person uses what they receive with humility, with charity, and with accountability. The good heir honors the giver by using the inheritance wisely. Both are tests of whether a person can handle a gift without becoming enslaved by it.

Politically, a good citizen sustains the republic, not just by obeying laws, but by defending institutions and resisting the pull toward passive entitlement. A good heir does something analogous within a family. They preserve capital and avoid waste. They use resources in ways that strengthen something larger than themselves over time. In both cases, the person is a custodian of an order that predates them and should outlast them.

Citizenship without duty is just a passport. Inherited wealth without responsibility is just a balance. Both require something from the person holding them, or they stop meaning anything at all. Neither the citizen nor the heir chose the structure they were born into, but both are answerable for what they do with it.

The good citizen and the good heir each prove something to themselves by converting privilege into obligation, and obligation into something durable. A family’s educational efforts have to acknowledge that reality. Preparing an heir isn’t a side project. It deserves as much attention as any other part of the plan.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/https://frazerrice.com/10-family-office-myths-exposed/

https://www.jamesehughes.com

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The New CEO Social Media Playbook: Communications Strategies in the Digital Age for the Modern CEO. In this episode, TED MERZ from Principals Media discusses the seismic shifts in corporate communications, exploring how CEOs can build authentic visibility in a rapidly evolving digital landscape, and the future of traditional media.

https://open.spotify.com/episode/6MLjRILrkeCPhlG6ItXaMC?si=uQP9CdYORpmr89iL4dfMvghttps://youtu.be/clHzhrOZAps###### Key Topics

• The decline of traditional PR channels like CNBC and The Wall Street Journal and the rise of direct content creation for thought leadership.
• The importance of authenticity and transparency in CEO messaging, with real-world examples such as McDonald’s CEO controversy and insights into crisis management.
• Strategies for leveraging social media platforms—LinkedIn, X (Twitter), YouTube, and emerging tools—for building personal and corporate reputation.
• The evolving role of AI in shaping search results and online identities, emphasizing the need for content influence.
• The significance of visibility across multiple channels and the concept of the “public record” for professional branding.
• Balancing platform choice with audience targeting and the importance of integrated content strategies.
• The future of content formats: long-form videos, short clips, point-of-view storytelling, and the normalization of CEO participation in digital media.
• Traditional media’s ongoing role in establishing credibility within a pyramid of influence, from legacy outlets to influencer-generated and user content.

Timestamps:

00:00 – Introduction to CEO communications in the digital era
02:00 – The decline of traditional media outlets for corporate messaging
05:00 – Case study: McDonald’s Big Arches video controversy and lessons learned
07:30 – Why engagement in digital platforms is no longer optional for CEOs
09:00 – Platform strategies for business communication and audience targeting
11:00 – The future role of CEOs on YouTube and social video content
13:00 – Authenticity and AI’s impact on content credibility
15:00 – Cross-platform content distribution and emerging channels like Substack
16:00 – Measuring success: from vanity metrics to real business impact
17:00 – The complexity of linking social media efforts to sales and hiring outcomes
19:00 – Building visibility to enhance reputation and company valuation
20:30 – The importance of a balanced media approach—traditional and digital
22:00 – Influencer dynamics, user-generated content, and organic reach
24:00 – The societal shift towards individual visibility and personal brand
26:00 – The relevance and future of traditional media in a digital-first world
28:00 – Strategies for influencing AI-driven search and online biography management
29:30 – How organizations can foster authentic employee advocacy
30:50 – Resources to connect with Ted Merz and his ongoing projects

Resources & Links:

• Principals Media
• Pricing Culture — The Bloomberg for Collectible Data
• LinkedIn
• X (Twitter)
• YouTube
• Substack

Connect with Ted Merz:

• LinkedIn
• Twitter

Insights:

• CEOs should view digital visibility as a fundamental communication muscle.
• The importance of integrating long-form content, short clips, and authentic storytelling.
• The shifting landscape where legacy media remains valuable for credibility, but influence is increasingly driven by digital presence and influencer narratives.
• BRAM WEINSTEIN ON “BREAKING THROUGH DIGITALLY”

https://youtube.com/shorts/Ia_X8A_WhG4?feature=shareTranscriptWhy CEO Communication Is ChangingFrazer Rice:
Welcome back to the Wealth Actually Podcast. Apologies in advance for the head cold. I’m joined today by Ted Merz of Principals Media. We’re discussing how CEOs are navigating communications, the role of social media, and whether traditional media is still relevant.

Frazer Rice:
Ted, welcome.

Ted Merz:
Great to be here. Thanks for having me.

Frazer Rice:
We met at a dinner in New York, and I was struck by your perspective on the shift happening in PR. You advise CEOs on communications—what are you seeing?

Ted Merz:
We’re in the middle of a major structural shift. Traditionally, companies relied on PR firms to secure placements in outlets like CNBC or The Wall Street Journal. That’s becoming less effective—those platforms are more competitive, often paywalled, and in some cases shrinking.

Ted Merz:
At the same time, more people want access to that exposure. So companies are going direct—creating their own content through social media, podcasts, video, and written thought leadership. It allows them to bypass traditional gatekeepers and control their narrative.

Risks, Authenticity, and the Learning CurveFrazer Rice:
It also gives you more room to develop your ideas. But we’ve seen cases—Sam Altman, for example—where messaging goes sideways. Is that inexperience or the format?

Ted Merz:
It’s not the format. There’s always risk in speaking publicly—people can react negatively. Sometimes it’s inexperience, but more broadly, this shift is inevitable.

Ted Merz:
If you want to reach younger audiences—late millennials and Gen Z—they’re not watching CNBC or reading newspapers. They’re on YouTube and Instagram. So participation in digital media isn’t optional.

Ted Merz:
That said, there’s a learning curve. Executives aren’t always comfortable, and mistakes will happen.

Frazer Rice:
Just look at the reaction to a poorly thought-out tweet—it can spiral quickly.

Ted Merz:
Exactly. But opting out is the bigger risk. If you’re not visible, you’re not part of the conversation.

Choosing Platforms: LinkedIn, X, YouTube, SubstackFrazer Rice:
I’ve leaned into that with this podcast and more activity on LinkedIn and Twitter. But there’s a tension—should you focus on one platform or meet clients wherever they are?

Ted Merz:
It’s not about the platform—it’s about communication. You’re either writing or creating video.

Ted Merz:
For most businesses, LinkedIn is the best starting point. It’s professional, relatively forgiving, and widely accepted. But platforms are evolving quickly.

Ted Merz:
For example, X (Twitter) is now supporting long-form content—5,000+ word essays—and has become a hub for thought leadership in finance and tech. It’s more intense and less forgiving than LinkedIn, but that may be where your audience is.

Frazer Rice:
That’s part of why I moved my podcast to YouTube. If you’re not on YouTube, you’re invisible to Google. But not everyone is comfortable on video—how do you handle that?

Why Video and YouTube Matter for CEOsTed Merz:
I tell them to get comfortable.

Ted Merz:
YouTube is the new television. It’s where attention is going, and it rewards creators financially. Companies need to develop video capability.

Ted Merz:
Written content conveys ideas well, but video builds trust and familiarity. That’s critical today.

Ted Merz:
Historically, CEOs didn’t communicate this way. But now you see leaders like Mark Zuckerberg, Jamie Dimon, and Jon Gray using video regularly. That legitimizes it. Within a few years, this will be standard.

Frazer Rice:
There’s also a push for authenticity. Overproduced or AI-generated content feels hollow, especially with growing fatigue around corporate messaging.

Ted Merz:
That’s right. But authenticity doesn’t mean abandoning standards. You can still communicate clearly and thoughtfully.

Ted Merz:
Also, content is increasingly distributed across platforms—LinkedIn, X, YouTube, Substack. Substack, in particular, is emerging as a strong platform for serious thought leadership.

Ted Merz:
Importantly, in business, the goal isn’t to go viral. It’s to create a credible public record—so when someone looks you up, they see someone thoughtful and worth engaging.

Measuring Impact: Beyond Vanity MetricsFrazer Rice:
That raises the question of metrics. How do you connect social media activity to actual business results?

Ted Merz:
It’s difficult. Social media behaves more like brand advertising than direct response marketing.

Ted Merz:
Vanity metrics—likes, shares—can be misleading or manipulated. The connection to revenue is often indirect.

Ted Merz:
But you can see impact anecdotally. One client told me they couldn’t tie posts directly to sales, but they were attracting better job candidates who already understood and trusted the firm. That’s real value.

Frazer Rice:
And what about search? It used to be about controlling Google results. Now with AI-driven search, that’s changing.

Ted Merz:
Exactly. Large language models now shape how people are perceived online. You can’t fully control that, but you can influence it by consistently publishing clear, factual content.

Ted Merz:
If you don’t, the narrative will be created without you.

Personal Brand, Corporate Brand, and GoodwillFrazer Rice:
I think of this as building personal and corporate goodwill—like managing the name on the back of the jersey as well as the front.

Ted Merz:
That’s a great way to put it.

Ted Merz:
We’ve also seen a cultural shift. In the past, companies emphasized the collective—“there’s no I in team.” Today, we’re in an attention economy where people connect with individuals more than institutions.

Ted Merz:
That’s why CEOs are becoming more visible. It helps the brand, and it reflects how audiences engage.

Ted Merz:
Companies are also trying to involve employees, but that’s tricky—you can’t fully control messaging and still have authenticity.

Frazer Rice:
Which brings us back to the core tension: authenticity versus control.

Ted Merz:
Exactly.

Is Traditional Media Dead?Frazer Rice:
So is traditional media dead?

Ted Merz:
No—but its role has changed.

Ted Merz:
Think of it as a pyramid. At the top is legacy media, which provides credibility and validation. Below that are influencers and independent creators. At the base is owned content—what you publish yourself.

Ted Merz:
Traditional media still matters, but it’s harder to access. Increasingly, strong content created independently gets picked up and amplified by legacy outlets.

Ted Merz:
So the strategy is layered: create your own content, engage across platforms, and let that visibility lead to broader coverage.

How to Work With Ted MerzFrazer Rice:
That makes sense. Ted, we’ll have to continue this conversation—there’s more to cover. In the meantime, where can people find you?

Ted Merz:
LinkedIn is the best place—I’m very active there. You can also find me on X, YouTube, and TikTok.

Ted Merz:
My primary business focuses on content creation and ghostwriting for CEOs. I’m also building a platform called Pricing Culture, which tracks collectible assets—think of it as a Bloomberg for collectibles—targeted at family offices.

Frazer Rice:
Terrific. We’ll definitely dive into that next time. Thanks for joining.

Ted Merz:
Thanks for having me.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/Keywords:

The New CEO Social Media Playbook, CEO Marketing, CEO Social Media, Quest for Authenticity, CEO Branding, Corporate-Speak fatigue, Problems with LinkedIn

View Details

ALEXANDRIA SEYDEL from Ripples Edge Advisors shares expert strategies on “getting the business ready to sell.” We focus on exit planning and getting the most value out of the transaction. Discover how early planning, owner mindset, and strategic positioning can lead to successful exits and satisfied owners.

https://youtu.be/8OwhCRCBZl4https://open.spotify.com/episode/2qawd64OYzljBvU9xqS8df?si=1Xvv2OUFSbeBtUDeJGTMXgKEY TOPICSEarly exit planning and owner mindset,
Getting the business ready for sale and transfer.
Risk assessment and deal readiness.
Owner satisfaction and post-sale happiness.
Capital raising and growth strategies.

SOUND BITES for “GETTING THE BUSINESS READY TO SELL”“Getting clear on owner success is crucial.”
“Start exit planning 2-5 years in advance.”
“Family dynamics can be deal breakers.”

Chapters00:00 Navigating Business Exits: An Introduction.
02:57 Understanding Owner Satisfaction Post-Sale.
.05:55 Preparing for Sale: The Importance of Readiness.
09:00 Building a Succession Plan for Business Continuity.
11:49 Assessing Business Value: The Exit Readiness Assessment.
15:08 Evaluating Growth Opportunities and Capital Needs.
17:58 Cash vs. Equity: Making Informed Decisions.
21:03 Finding the Right Buyers: The Role of Advisors.
24:08 Addressing Family Dynamics in Business Sales.
26:59 Checklist for Business Owners Considering Sale.

RESOURCESRipples Edge Advisors – https://ripplesedgeadvisors.com/

GUEST LINKSLinkedIn – https://www.linkedin.com/in/alexandriaseydel/

QSBS For Founders – https://frazerrice.com/qsbs-for-founders/

TRANSCRIPTFrazer Rice
Welcome aboard, Alex.

Alexandria Seydel
Hi Frazer, so nice to be here. Thank you for having me.

Frazer Rice
Thank you for being on. We’re at a time now with the economy where it feels like it’s roaring. Valuations on things are going up, up, up. And people who have founded businesses are exploring their options. That’s kind of where you step in with your firm Ripple’s Edge Advisors.

Talk to us about what you do to help founders get ready. Not only in understanding what they have in their own business. How to go through the daunting process of exploring their options. Getting their business bulletproof for when people start looking under the hood.

Alexandria Seydel
Absolutely. My background is as an M&A attorney, so I came from the deal side. My co-founder is an operator — she actually knows how to run the businesses. It’s a very good duo. I think like a buyer, first and foremost. That’s how I was trained. So how we help business owners now is we jump in two to five years before exit. We’re trying to solve a problem still being missed by most of the industry.

Brokers and bankers know how to get deals done, create auctions, create demand, and sell for high prices. That’s all great. But the gap I was seeing was the need to jump in with the owner before that process. Getting clear on what’s a win for them. There are some startling stats about owner dissatisfaction post-sale. Some surveys show 70 to 80% of owners are dissatisfied after selling. I’d argue that’s not because they sold — it’s because they sold to the wrong person in the wrong way. So it’s the who and the how.

Jumping in with them earlier. Before we go to market, Before we start talking multiples and financials. Getting with the owner and doing the work on what a win looks like for them. What do they care about in the process? When they think about their life through this deal and post-deal, what do they want to feel and see? How do they want to operate on an average Tuesday. Yes, after all the cool vacations with all the freedom and the new chapter. After that, what do you want to be doing?

And when you look back at that beautiful business you built and then sold, what do you want to see in it? Is it that client service remains the same? Is it that the ethos of the company remains the same? Or is it simply: “Alex, I’m satisfied with the biggest wire at closing we can get, and I’ll be a happy camper moving on to the next phase of life.” Really getting with that owner earlier to get clear on that — what’s a win for them and what’s a win for their business — that’s where we start. Then we begin implementing and helping them build those exit strategies from there.

We believe that foundational vision and values work is really going to help bring down that dissatisfaction number. So now we’re building an exit that feels right for the owner, right for the business, and helps them feel good about that transaction.

Frazer Rice
From the estate planning and tax planning side of things, I totally agree that the earlier you start, the more tools you have at your disposal and the better it turns out. I did a piece on pre-exit planning — really engineering what your calendar is going to look like a year after the sale. And I see a lot of dissatisfaction with people who sell and then lose purpose, or aren’t quite equipped to deal with their lower participation in the thing they built, the baby they helped give birth to.

They end up unmoored, and that’s part of the depression they sometimes feel if they haven’t really gamed it out and thought through how to replace the structure and the drive it took to build something. It sounds like we’re saying the same thing from slightly different angles.

Alexandria Seydel
Totally, absolutely. On your side, you’re such a critical part of the team when we start this process. One of the first two questions we ask every client is: who’s your wealth advisor, and who is your tax strategist? Hopefully they’re already in communication, but if they aren’t — you’re looking at the personal side, focused on what the family structure looks like financially, the tax strategies and planning that we know has to happen.

And because you’re doing this work — which not all advisors do — you’re getting really clear on the personal side. I’m coming at it from the business balance sheet and business trajectory; you’re coming from the personal side. They work well together. I like to jump in early with the other advisors working with these owners to get really clear, because not only do we know there are structural and strategic things we need to put in place years in advance, but we also need to get clear on what’s a win for them personally and business-wise.

Frazer Rice
One of the things you mentioned is the idea of getting the business ready to be sold. I’m fast-forwarding to the concept of getting it Sarbanes-Oxley ready in case a public company wants to buy it — so it can slot neatly into a balance sheet. But that’s really shorthand for saying things are professionally managed: bookkeeping, process, accounts receivable, accounts payable — all formally documented. So that when a buyer starts looking under the hood, they don’t start applying discounts for things they’ll have to fix later. Is that part of what you do?

Alexandria Seydel
Exactly. Being trained as a lawyer on the buy side, my goal — usually at the 11th hour — was to advise my client, the buyer, on risk. And to assess whether the purchase price offered in the letter of intent actually held up once we looked under the hood.

The best part of my job now — and way more fun — is that instead of just identifying risk and applying discounts (because almost every deal goes through some form of repricing), I’m jumping in with the sellers and owners hopefully a year or two in advance. We find things a buyer is going to see as a risk, things that would prompt a reprice, and we now have the opportunity to make those things shinier. So that when the buyer looks under the hood, the high end of the multiple range is validated.

It’s not just the financials the purchase price is based on — it’s all the other things buyers care about: the people, the processes. Is this a truly transferable asset they can step into, run, and grow?

Another big thing we work on is owner dependence. Most owners think the business doesn’t depend on them, but there are often significant opportunities to continue reducing that dependence — so that a buyer sees this as a true transferable asset they can step into and grow.

Frazer Rice
I imagine there are a couple of come-to-Jesus discussions where you have to tell the owner their revenue is too dependent on them personally. On one end of the spectrum, think of a law firm where business comes in because people think you’re a great lawyer — that doesn’t transfer cleanly. You want the recurring revenue to come from somewhere else.

That’s one issue I’m sure you have to sit someone down and address. The five-year runway is helpful there — it gives you time to build in a succession plan, not just for the sale, but operationally, so that value still sits in the business whether you’re there or not.

The second thing I find interesting is where you sit somebody down and say: this would look a lot better if you took less money out of the business. If we can put that back into EBITDA, then when a buyer starts applying multiples, they’re multiplying against something bigger rather than against a number deflated by, say, buying a boat. Do you get into that conversation?

Alexandria Seydel
Yes, we do, and we take a cursory look at that fairly quickly. Then we bring in support if needed — whether that’s on the accounting side, how money flows through the business to affect the bottom line and create the story. Every buyer wants at least three years of financials; we want that growth story to look strong, and we want to start building it now. If we need to bring in a fractional controller or a fractional CFO depending on the size and sophistication of the business, that’s something we pull in right away.

On your first point — we actually have an architect client right now at exactly that phase. He has a right-hand woman architect who’s been with him for over ten years, and he wants her to have the opportunity to step into the business. He also has a son who’s an architect and wants the same opportunity for him. So we’re building a succession plan. And one of the first problems we addressed was that he’s still driving almost all of the top-line revenue — nearly all the business development runs through him.

So we’re asking: when does this right-hand woman get involved in the sales process? What percentage of meetings is she in? What is she bringing in herself? His timeline is five to seven years, so we have time to build this out — continuing to train her, continuing to elevate her and others in the business who can drive relationships and sustain that revenue flow, the recurring revenue that comes from major referral partners and developers giving him large contracts.

And on the equity side: what’s the incentive plan? How do we get her aligned with the goals of the business so she genuinely wants to take ownership, both literally and figuratively? We’re building an equity incentive plan with her. On the process and sales side, we’re setting goals — she’s in a certain percentage of meetings by year-end, driving a certain percentage of revenue. We’re helping him set those goals and build a plan to execute on them.

Frazer Rice
And all of that also sets up a longer-term exit — maybe selling the practice to a larger architectural firm or a private equity-backed platform down the line.

Alexandria Seydel
Exactly. And on a slightly longer timeline, all of that work makes the business more efficient operationally and more attractive as a potential sale — whether that’s to those two individuals in a succession plan or to an outside buyer.

Frazer Rice
What happens when a business comes to you and maybe the brand is well respected and things look good from the outside, but there’s decay underneath? They come to you and say they’re ready to sell, but when you look at it, the dollar signs in their eyes are based on something that existed a long time ago and has since been left to deteriorate. What do you do in that situation?

Alexandria Seydel
We start with what we call an Exit Readiness Assessment — it’s a 90-minute virtual session that pulls you out of your inbox, out of the fires you’re fighting every day, and lets you step back and look at every dimension of your business through the lens of what a buyer is going to assess.

It produces a readiness score and tranches everything into three buckets: value adds (greater multiple), value detractors (reduction in sale price), and deal killers — things like accounting or legal issues so significant that a buyer doesn’t just reprice, they walk away entirely. That assessment becomes the foundation for a roadmap: what are the most important things to fix, and in what order?

We all have limited time, energy, and capital. The triage framework helps you apply those resources to the things that actually move the needle. And yes, there is often a come-to-Jesus moment. Sometimes an owner comes in burned out — they just want to hand over the keys. We want to avoid that situation, but if you get there proactively rather than reactively, if you’ve already done the work with advisors like Frazer and like us to put systems, people, and processes in place, your readiness score is in much better shape.

If you haven’t done that work, it requires a harder conversation — what do you want out of this? What are your goals? And what can we realistically accomplish in what period of time?

Frazer Rice
What about founders who want to grow and are looking for outside capital, but want to stay involved? How do you think about sourcing that capital and making sure the partners are the right fit?

Alexandria Seydel
We have several clients right now raising seed rounds, and one working through whether to raise a Series A. I think that discussion has to be framed, at least in part, through the exit lens.

There’s a lot of pressure right now — especially in AI or capital-hungry industries — to raise the big splashy Series A, make the oversubscribed round LinkedIn post. Great, I’m all for it if you actually need that capital. But there’s a lot to consider first: are these the right partners? What limitations does this put on your exit pathway?

I have one client who has a really nice business growing at a solid clip — I think it could exit in the $20 million range in the next year or two, and he’s still the primary owner. He’s feeling pressure from his industry where raising a big Series A is the norm. I asked him what he wants to be doing in two years. His answer was surfing in Portugal.

If you raise a Series A right now, you are not surfing in Portugal in two years. So with that in mind, is this the business you want to keep growing? Are you ready to bring in people who have real influence over how you sell, who you sell to, and for how much? Your timeline gets extended and your decision-making authority gets diluted. Maybe the Series A is right because you need the capital to grow — but even then, does it have to be a $50 or $100 million round? Could it be $10 million? Even the size of the round affects the cap table, the governance, and ultimately the exit.

Frazer Rice
Have you had the difficult situation where someone is presented with an offer that mixes cash and stock in the acquiring company — and you’re looking at it thinking maybe they should push for all cash, or maybe they should walk away entirely?

Alexandria Seydel
Yes, and I’m very comfortable in that conversation. My advice almost always starts the same way: get as much cash at close as possible. Reduce the earnout tranche.

A lot of deals come in structured across three buckets — cash at close, earnout, and rollover equity in the buyer. I’ve seen deals close where five years later that rollover equity is worth zero. So I walk every owner through this exercise: if the earnout and the rollover equity both go to zero, are you completely comfortable walking away with just the cash at close? If that feels okay, then we can dial those other numbers however we need. If it doesn’t feel okay, then we need to ask harder questions — do we need to grow more first? Do we need to negotiate different terms? Do we have multiple LOIs with different structures we can compare?

The institutional buyers will always tell you the rollover equity is going to 10x. Always. And as the lawyer, I used to be delivering that reality check at the 11th hour when it was almost too late. Now that I get to work with owners before that process, I can prime them early: rollover equity, in our minds, is always worth zero unless proven otherwise. If it 10x’s, that’s the cherry on top — incredible. But don’t build your retirement plan around it.

Frazer Rice
Are you part of the process of generating buyer interest? I imagine it’s often industry-specific — there are people who understand the space and know the players. But how do you get a few LOIs on the table so it doesn’t become a fire sale?

Alexandria Seydel
We consciously made the decision not to become brokers or registered broker-dealers, for two reasons.

One, I want to stay fully aligned with the owner’s actual goals. This has happened: we started working with a woman, began building up her people and processes, and 18 months later she said, “Wait — I actually have more freedom now. I’m operating at a higher level because the business is starting to run without me.” The work we were doing to prepare for a sale also just made the business more enjoyable to run. She decided to grow for another year or two instead. Because our compensation isn’t tied to a success fee at closing, we can fully support that decision.

Two, deal brokers and investment bankers are often highly industry-specific. A banker who knows your manufacturing sector deeply is going to be more effective in market than we would be. So we refer our clients to multiple specialists in their industry, help them assess fit, and — because I’m trained in reviewing those contracts — help them understand what they’re actually agreeing to in the engagement letter. Then once that team goes to market, we stay on the owner’s shoulder throughout the process. My consistent message: fit matters. Trust your gut. If this buyer doesn’t feel right, honor that, and let’s figure it out before we’re at the closing table.

Frazer Rice
How do you tell a founder or family-owned business that the family dynamics are a value detractor? If there’s conflict — someone looking for income while others want to grow, every decision a fight — I imagine buyers pick up on that quickly.

Alexandria Seydel
It starts with being human first. Understanding the people behind the business, understanding the family dynamics. A lot of M&A professionals have no interest in going there. My co-founder Kim Wozny and I both actually like that part. We like knowing the people, understanding the dynamics, understanding when someone has a mental block around part of their business because of a fear mindset, or when pressure from a family member is pulling them in a direction they don’t want to go.

Being willing to dig into that — as a third-party neutral advisor working for the founders first — is part of what we do. And on the process side, if you have four siblings who own a second-generation business and three want to grow while one wants to sell, how do you show that fourth person that now isn’t the right time? You give them more information, more context, more understanding. And where necessary, you wrap enough process and procedure around that situation so that a buyer can see that this one person being out of alignment doesn’t constitute a major risk to the business.

Frazer Rice
Don’t give the buyer a reason to say no or pay less. If you can batten that down ahead of time, it’s worth it. As we wind down — what’s a short checklist for founders who are thinking about selling? What are the first steps to assess their readiness?

Alexandria Seydel
First and foremost: it’s never too early to start thinking about it. Even just getting clarity on your personal vision — what you want out of this — helps direct major business decisions as you grow. We have two clients right now considering joint ventures. One is actually moving forward with a new 50/50 partner; the other decided against it. They’re on very different exit timelines, and those exit pathways are a large part of why a joint venture may or may not be the right choice for each of them.

I’m always happy to just talk to founders about how they’re thinking about this, even without any formal engagement. I want more owners thinking about exit earlier — it only does them a massive service.

And one practical exercise I love: the Europe Test. Imagine you’re going to Europe for three weeks, somewhere with no cell reception. Who calls you first? What processes break? What sits in your inbox undone? It’s a more fun version of the “hit by a bus” question — and it’s a really useful early diagnostic for where the business still depends too heavily on you. Start uncovering those things now, so you have the time and runway to fix them.

Frazer Rice
Terrific stuff. Alex, how do people find you and your firm?

Alexandria Seydel
I’m Alexandria Seydel — last name spelled S-E-Y-D-E-L. You can find me on LinkedIn, where I’m active all the time, or look up Ripple’s Edge Advisors. Reach out via email or LinkedIn message. Even if you’re just starting to think about it, I love having that conversation.

Frazer Rice
Perfect — that will all be in the show notes. Thank you for being on.

Alexandria Seydel
Thank you, Frazer.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/ALTERNATE TITLESThe 5-Year Exit Strategy Blueprint: Preparing Your Business for Sale

Getting The Business Ready to Sell

How to Maximize Business Value Before Selling

KEYWORDS (GETTING THE BUSINESS READY TO SELL)business exit planning, M&A, business valuation, succession planning, sale readiness, owner dissatisfaction, deal structuring, growth strategies, capital raising, exit readiness assessment, getting the business ready to sell,

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In a world of noise and distraction, there is a trend in “Bringing Simplicity Back To Investing.” RICK FERRI and I talk about why it’s important for investments and why it’s important for individuals. You’re going to leave here understanding a new framework for looking at your investment portfolio and hopefully bring some peace of mind as you go forward.

https://youtu.be/8EFnt_UTjEARick Ferri has been a good friend to the podcast. He shares his insights on simple investing, emphasizing the importance of clarity, discipline, and understanding the core principles of investing. He discusses the pitfalls of complexity, the value of index funds, and how to maintain a disciplined approach amidst market noise.

https://open.spotify.com/episode/743dxOLLgZjUzKszZo4Owy?si=57mqK1ZmQ0a7LPdcwVoQ-gKeywordsinvesting, index funds, simplicity, portfolio management, financial planning, discipline, asset allocation, tax efficiency, global growth, investment philosophy

Key topicsThe philosophy of simple investing
The stages of investor learning: darkness, enlightenment, and simplicity
The importance of cash flow and intrinsic value in investments
Asset allocation based on liabilities and time horizon
Tax-efficient investing strategies for taxable and retirement accounts
Risks of alternative investments and private equity in retirement plans
Discipline and automation in maintaining investment strategies

Chapters of “Bringing Simplicity Back to Investing”00:00 The Philosophy of Simple Investing
07:03 Stages of Investment Understanding
11:19 Financial Planning and Purpose
17:57 Implementing a Simple Portfolio
23:01 Discipline in Investing
30:46 Navigating Complexity in Wealth Management

ResourcesRick Ferri’s Website – https://rickferri.com
Bogleheads.org – https://bogleheads.org
Index Fund Book by Rick Ferri – https://www.amazon.com/s?k=Rick+Ferri&ref=nb_sb_noss_2

Website – https://rickferri.com
Twitter – https://twitter.com/RickFerri

Skeptic’s Guide to Investing

Outline: “Bringing Simplicity Back To Investing”Introduction: Three parts to simple investing: Philosophy, Strategy, Discipline

Part 1: Philosophy: Overview: Embrace Simplicity – the Education of an Index Investor – 4 stages

1: Born in Darkness (who you ask, chasing returns, naive research)

2: Finding Enlightenment (measure, compare, enlightened)

3: Complexity Traps (slice’n dice, factors, the fallacy of perfection)

4: Embrace Simplicity (global equity, specific fixed-income as needed)

Part 2: Portfolio Strategy Overview: Making the Philosophy Work for You

5: Setting Goals (family – culture, career – taxes, risk tolerance)

6: Managing Risk (three ways to allocate assets: required return, risk avoidance, cash-flow)

7: Tax Management (three account types, asset class tax, tax avoidance)

8: Investment Selection (ETF vs fund, balanced funds & TDFs)

Part 3: Discipline: Overview: Implement, automate, stay the course

9: Implement fully (consolidate, tax issues, lump sum vs DCA)

10: Maintain regulatory (automate new, rollovers, TLH)

11: Adjust as goals change (accumulation vs distribution, tax situations, legacy)

12: Stay the Course (recommit occasionally, continue ed., conferences)

Transcript of “Bringing Simplicity Back to Investing”Frazer Rice (00:00.962)
Welcome aboard, Rick.

Rick Ferri (00:02.3)
Well, thank you for having me.

Frazer Rice (00:04.258)
Well, thank you. First of all, want to thank you for a kindness you showed me way back in time and having me on the Boggleheads podcast. It was probably worth at least 25 % of my book sales and it was a lot of fun to do and never forgot it. So it took a while, but here we are back on my podcast. And what I want to do is go through a little bit about really the three parts to simple investing, which I think is something, especially now with the proliferation of alternatives, a lot of noise with crypto.

That sometimes we kind of lose sort of the forest for the trees as far as what’s the right things to be thinking about in terms of an overall investing philosophy sort of embrace. And so maybe let’s start with that. How do you think about the parts to a good investing thesis and what is your overall worldview on that?

Rick Ferri (00:55.804)
So I’ve been in the investment advisory industry now for 40 years. And what I have learned is that the simpler you can make investing and the simpler you can make the portfolio, the better for you, the better for your family, the better for those who will inherit your portfolio. Don’t make it complicated.

Complexity is just job security for those people who are selling you things and trying to manage your money. And in the end, you don’t benefit from that. They do in the form of fees. And if you just had a simple portfolio of a few good index funds and maybe some individual securities, you’ll be much better off and your family will be better off in the long term. And that’s the philosophy of simple investing.

Frazer Rice (01:50.947)
Mm-hmm.

Rick Ferri (01:53.208)
The second part is a strategy. How do you go about doing this, particularly if you’ve had a complex portfolio? And the third thing is discipline, which is how do you stick with simplicity as an investment philosophy?

Frazer Rice (02:06.318)
Sure. and without the second two, it’s great to have high-minded thoughts and so on, but if you can’t do it, it’s all for naught, and then if you can’t stick with it, then the best laid plans just kind of go asunder here. So let’s go back to the philosophy for a second here, and as you think about, it’s almost like the life cycle of discovery and learning about how these things work. How do you think about that from an ARC perspective?

Rick Ferri (02:12.561)
Ha ha.

Rick Ferri (02:36.05)
So generally when you’re new to investing, you’re going to ask other people for advice. I where you get that from, might be a friend or family member, maybe a professional advisor, might be coworkers, maybe you’ll just get on the internet and start searching. I don’t know, but 99.9 % of the time you’re gonna run into advice that is not very good. And the advice will be, you should put your money here, you should put your money there.

Use these 10 different funds. It’s just a lot of confusion, quite frankly. I call this stage darkness because you don’t, you you’re just investing in the dark. You don’t know. And a lot of the advice is going to be very short based upon short-term performance. So recency biased people are going to be recommending, but you know, growth stocks because the Magnificent Seven has done well in the past.

Or buy crypto because crypto went up a lot in the past and so therefore you should buy it now. And so most of the advice you’ll get in darkness is going to be recent based upon recent performance and rather than looking at it over say how should you be investing over 10, 20, 30 years and that will end up being quite different. So darkness is where we all begin.

And most people stay in darkness. They never get out of darkness because they don’t put the brain cells to work to look at how am I doing? I mean, how has that done for me? What seems to be happening in my portfolio? Really? Do I really know what’s going on? And then the ones who are very fortunate start asking questions about, what if I just

Frazer Rice (04:06.125)
You

Rick Ferri (04:31.334)
bought the market and bought an index fund and just got the return of say the US stock market or the international stock market and that’s all I ever did. Would I be better off? And the answer to that 98 % of the time is yes, you would be better off if that’s all that you did. And if you come to this realization, I call it the second stage, which is enlightenment, where you now realize that, okay, all the stuff I’ve been doing may have been okay.

I’ve been moving in and out of things, but now I need to start looking at just buying the market and holding it for the longterm. And that’s enlightenment. But for some people, it doesn’t stop there. And they start to dig into this idea of indexing. When you start doing that, it’s good that you’re learning, but you’ll start running into a whole lot of noise.

That is alternative indexes, enhanced indexes uh… explore strategies all of these things that you’re going to take this nice simple concept called indexing and make it complicated again.

So you start adding all these things to your portfolio because it has the word index in it or maybe the word passive in it and uh… advisors are notorious for doing this it’s called complexity for job security

Frazer Rice (05:39.148)
Right.

Rick Ferri (05:54.066)
Basically, are, you know, you take the idea of indexing and you just add a lot of things all around the edges of it and you make a simple portfolio complicated. So the third stage of this process of simplicity is complexity. In other words, you’ve made something simple complex. Okay, so the last stage is

Frazer Rice (05:54.221)
You

Rick Ferri (06:18.544)
Simplicity. That is that you realize this is going on. You realize that all the stuff that you’re adding to your portfolio is just making it all complicated again. And that the people who are benefiting from this are not you, but the people that are selling you all this stuff. And you say, that’s it, I’m done. I’m going back to my second epiphany, if you will, which is simplicity. I’m just going to go back to a simple portfolio of a few broad index funds, US stock market index fund.

An international stock market index fund that covers the whole market and a couple of bond funds, municipal bond fund and maybe corporate bond funds or treasury bond funds. And you could use index funds for those as well. And it’s a really low cost, very tax efficient and very simple.

Frazer Rice (07:05.953)
A couple of quick asides here. The first one is for people who are coming into this in and they’re in the darkness, but they are informed maybe from the TikTok world or Robin Hood or Kal-She or these or these betting orientations and distinguishing between betting and investing.

How do you think about that and kick people over to the positive side of the force so that their emergence from the darkness into the enlightenment and simplicity doesn’t take them in a place where they really touch the stove in a bad way and have a bad experience that’s simple but bad.

Rick Ferri (07:32.988)
Right, okay.

Rick Ferri (07:51.484)
So there’s a concept called intrinsic value. You may have heard Warren Buffett speak about this. Well, you want to buy things that have cashflow. Bonds, for example, have cashflow. They pay interest. Stocks have cashflow. You have companies that are going concerns. They earn earnings and pay dividends. They buy back stock and they reinvest money. So you can value these things based upon these cashflows.

Real estate has cash flow, it pays rent, or maybe you own timberland that you can cut the wood or you own a farm where you can harvest or lease it out. mean, these are cash flows. So the first thing that I have for cut in investing is cash flow. How do my investments generate cash or will generate cash later on down the road?

That’s different than say buying gold or Bitcoin or currencies or commodities. Those things don’t have a way of generating a cashflow. One bar of gold put in a safe is one bar of gold a thousand years from now. It doesn’t become two bars of gold. doesn’t get little bars of gold. It doesn’t pay interest and so forth. mean, so unless you’re good at

Frazer Rice (09:12.994)
Right.

Rick Ferri (09:16.966)
Buying low and selling high, you can’t really expect to make anything other than maybe the inflation rate. And with commodities, you actually earn less than the inflation rate. Gold has earned a little bit more than the inflation rate. Where Bitcoin is going to end up, I have no idea. But the speculative assets are the ones that usually don’t have any intrinsic value. People are just betting on price because that’s all you have. I

f price is going up, let’s buy it. Because the price went up. I don’t know where it’s going, but the price went up, so let’s buy it. And maybe someone dumber than us will buy it at a higher price from us, and then we can make money. But I mean, you have to trade these things. And what information do you have? None, really. It’s very difficult to come up with information that the market doesn’t already have. And you’re not a professional trader. So you might get lucky. I mean, people do get lucky. You you can flip a coin.

And pick heads 10 times and if it comes up head 10 times it doesn’t mean you’re a good coin flipper you’re just lucky and so you can get lucky and you can make money doing this but it’s not a long-term investment strategy to do that it’s best to buy things that have cash flows or will have cash flows in the future.

Frazer Rice (10:30.175)
As I like to tell people, you not only have to be right, you have to be right twice, and then you have to be systematically right twice in order to make a living out of it. even professional traders struggle at that. And to think that you’re going to be better equipped than a lot of those folks is folly. And so I try to talk people out of that whenever I can, because I think…

Rick Ferri (10:35.42)
Correct.

Frazer Rice (10:58.101)
It’s just very difficult to play in that space and have that turn out to be a success. Okay, so we kind of have some ideas here around the philosophy and sort of the idea of, you know, sort of garnering luck versus skill and those types of components in that portfolio strategy, that second phase, maybe take us through that a little bit and how you take a good philosophy of simplicity and make it work for you.

Rick Ferri (11:22.18)
Right. So this gets into a little financial planning at the beginning of it because you can’t invest without a purpose. I you have to have a reason why you’re investing. It might be to pay future liabilities such as college for your children or retirement, or maybe you want to leave a legacy or maybe just trying to build wealth for the family, whatever it is. I mean, you have to have a purpose. And so what is the purpose? What are you trying to do?

And you have to look at your life and you have to say, are my liabilities? What are my short-term liabilities? Do I want to buy a house? Or do I want to send my kids to Ivy League school? Do I want to retire early? And what are my liabilities? And sometimes it involves other family members. Maybe you have parents who need your help or siblings who need your help.

So that’s a liability. The first thing you have to do is look at what are my liabilities? And included in that is how much you want to leave to your children. I often ask people, okay, you’ve got $10 million. How much do you want to leave to each of your three children? And they don’t have any idea. I said, do you want to leave more than 10 million or you want to leave less than 10 million? And a lot of people would say, well, they’ll get what’s left. Well, that changes the whole concept of investing if they’ll get what’s left.

Frazer Rice (12:43.318)
Sure.

Rick Ferri (12:43.634)
Versus, yes, I want to leave each of my child five million dollars when I die and I’m starting with ten. Okay, well that changes how you invest your money. So these are the liabilities. So that’s where you start with. And then you start looking at well, what are the short-term liabilities and what are the long-term liabilities? And long-term liabilities can be funded with equity. Meaning things that are ten years or longer out. I usually I tell people anything you’re to be spending your money on between say,

Now and 10 years from now probably shouldn’t be in equity. You’ll be getting dividends and interest from your portfolio, which is fine. You could just spend that money. But in addition to that, I big chunks of money that you might be spending to buy a vacation home or whatever it is really should probably not be in equity. But the money that’s going to be not used for 10 years or longer, 20 years or maybe ever in your life, that can be in equity. don’t differentiate that first.

A lot of times asset allocation, that’s what we’re talking about, starts with, well, what do you want between stocks and bonds? What do you want your portfolio to look like? What percentage in stocks and what percentage in bonds? I don’t think you really get to that number until you know when you’re going to be needing the money. If you’re going to be needing the money 10 years out, fine, that money can be in stock. So that would allocate a portion of that long-term money to stock and that might be a percentage. Okay, so that’s what we start with.

A real basic look at who you are and what do you need and when are you going to need it and what are you trying to do for your heirs. And then that leads to an asset allocation between stocks and fixed income. The stocks again, I’m not investing in any stock money in liabilities that I have in the next say 10 years. So it’s long term. Okay.

Now we have to look at the stock side. That’s the easy stocks. Stock investing is easy. I quite quite frankly, I’m working on a book right now about this, but stock investing is very simple. It’s much easier than fixed income and bond investing. Stock investing is simply we buy the global equity market. We’re just trying to buy the growth of global economic growth, global GDP growth. We’re trying to capture that, which has been going on.

Rick Ferri (15:08.594)
Fairly steady for about the last 250 years and continues to be that way as more and more countries shift more towards capitalism and away from fascism and communism and so forth and realizing that capitalism is the way if you want to take care of your people and you want to increase standards of living all around the world, it’s done through capitalism. much a fact of life. Capitalism works. Well, I’m well.

Frazer Rice (15:31.185)
I think many can agree with that, although it might not be popular here in New York.

Rick Ferri (15:37.425)
The reason New York existed was because it was a port for capitalism at first. So I mean, is the financial capital of the US still is New York. So you could disagree with it because you live in New York, but you’d be in a minority and you’d be outside of reality and history as well. But the idea is that it’s all I’m trying to capture this global growth of…

Frazer Rice (15:41.686)
That’s right.

Frazer Rice (15:55.648)
Exactly.

Rick Ferri (16:03.026)
Global economic growth, which is about 2 % per year in real terms. So if I get from equity, if I get the inflation rate and I get 2 % real growth and then I get about a 3 % dividend yield and that comes from both cash dividends and then buybacks, we’re looking at about a 7.5 % expected return from global equity. And that’s good enough. I mean, that’s all I need on my equity side. I’ll be outperforming inflation by about 5%.

I’ll have to pay some taxes, but I’ll still have an actual real after-tax return of about 3%, which is good. Okay. The rest of it then goes into fixed income. And what type of fixed income? Well, that depends on what type of account that you have and what your taxes are. So if it’s in a taxable account, it could be municipal bond income, because it’s probably your best bet if you’re in anything other than a 22 % tax bracket.

Or if it’s in your retirement account, could be corporate bonds. And depending what state you live in, it could be treasury bonds. But you don’t expect the treasuries or the corporate bonds or the municipal bonds really to give you much of a return over taxes and inflation. If you could pick up 1 % over taxes and inflation over 20 years or so by being in fixed income, I mean, you’re actually doing well.

So that is more of a stabilizer, meaning you don’t want to be all in stock because you can’t handle the volatility of the stock market. It goes up and down too much, even though the asset allocation would say, well, you should have an awful lot of your money in stock because you have a lot of money that you’re not going to be needing in the next 10 years. But a lot of people can’t handle having a lot of money in stock. So you have fixed income that at least keeps up with taxes and inflation over the long term. And that becomes part of your asset allocation as well. So it’s kind of how you

This is what you do first before you go out and pick any index funds. You have to go through this process.

Frazer Rice (18:00.116)
And then as part of that, I spend a lot of time basically all day, every day thinking about the tax management side of things and helping people understand their appetite for volatility and how that impacts their long-term goals and things like that. The creation of these buckets to understand where you are in your tax situation and where you’re going to be, that can have a pretty significant impact on how things do.

And from your perspective, I that’s really just, that’s a function of projecting out the purposes that you described before with your current situation and then the vehicles with which to invest in.

Rick Ferri (18:38.226)
Right. And you’re not trying to hit the ball over the fence here. I mean, you’re just trying to get your fair share of the returns that are available to everybody. And through index funds, and this is where index funds come in, you can get exactly that. I mean, you could buy a global equity index fund, a global equity, covers the entire globe for a few basis points, 0.05 % per year fee. It’s very tax efficient. And that wasn’t the case.

30 years ago, 40 years ago, but it is now. that’s the way you should do this. You don’t want to leave out all these ideas that you’re going to go out and hire people who are going to outperform that because they don’t. A vast majority of them don’t.

Frazer Rice (19:21.963)
And so the machinery to implement these portfolios, ETFs are sort of standard tax-efficient ways to do things. Mutual funds distribute gains at the end, which is sometimes a nasty surprise for people who are learning about this. Maybe take us through your analysis on how to implement this index investing in a way that stays simple and tax-efficient and at the same time helps you take advantage of what’s out there.

Rick Ferri (19:52.883)
So we have to divide up the world between your taxable money. Again, you already have a portfolio. So you have all these legacy assets in a portfolio, in your taxable portfolio. Then you have your retirement portfolio, 401k, 403b, 457 IRA, rollover, Roth IRAs, tax-free portfolio. So you have to look at taxes first.

To implement a…simple portfolio say in a 401k if you have access to a target date index retirement fund like a Vanguard or an iShare or a State Street very low cost Fidelity has one too but very low cost index target date retirement fund this does it all for you you don’t have to do anything you just have to buy one fund based upon what the asset allocation is underneath the hood of that particular fund.

How much in stock, how much in bond. That’s all you need to do in a 401k. You could roll your own in a 401k by buying individual index funds like a US stock market index fund, an international index fund, and say a bond index fund. So you could do your own allocation if you wish. But a target date fund works really well there.

In a Roth account, you probably just want to have equity because there’s no tax in a Roth account. So you want to get maximum growth out of that account. So I would you look at the Roth account and I’d say, well, I’ll just buy the global equity index fund and my Roth account. And that’s it. All I have. So you’ve got your retirement accounts, which are target date fund. Very simple. You’ve got your Roth accounts, which are just a global equity index fund. And the only thing you need to worry about is your taxable account.

Taxable accounts always have issues because people will come in and they will have this list of stuff that they already own and guess what there’s a lot of embedded long-term capital gains in there and if you just sell it and go to a index portfolio you may not be doing the clients a good service because they’ll pay a tremendous amount of taxes and if they’re over 65 they’ll have to pay more for medicare ermor they’re going to lose their over 65 deduct i mean lots of bad things happen when you just sell out of a taxable account

Rick Ferri (22:04.722)
So there you’re going to be a little bit more tactical. know, you’re going to wait. The market will give us some opportunities to trade out of some stocks or some investments that may have losses. So you can then take those losses. You could sell other things to that have some gains to offset the losses. And I mean, you may never get out of everything that you’ve got in a taxable account. But the idea is to have this portfolio out there of say, a US total stock market index fund and a municipal bond fund.

That you want to move towards. So as you’re selling these things off, you’re just putting the money in a US total stock market fund. And the reason I say US total stock market in a taxable account is because they’re so tax efficient. The dividend yield is down about 1.2%. They don’t distribute capital gains in an ETF. And that’s a great fund for a taxable portfolio. But you just can’t sell everything and buy it. You’ve got to crawl your way out of what you currently have.

Frazer Rice (23:05.715)
No, you have to do it thoughtfully or else you create hits that are unnecessary. So as we segue to the discipline portion here, one thing that’s popping up is the, I think the discipline to stay simple. The world out there, the US in particular, is making retirement accounts safe for alternative investments like private credit and private equity.

Rick Ferri (23:10.256)
Right.

Frazer Rice (23:31.211)
I just bristle and shudder because I think there’s a level of complexity and illiquidity that is misunderstood and it is going to be difficult, nay impossible, to properly educate people on where those things sit in the asset spectrum to the point where they justify their fees or anything like that. Maybe take us through what you think on that as we get to the discipline portion of how you sort of stay the course with this mindset.

Rick Ferri (24:00.924)
Well 401ks are allowing these private equity investments and private debt investments in, but I personally have not seen any of my clients and I have a lot of clients and I charge an hourly fee. So I’m not trying to sell anything or manage anybody’s money, but nobody’s asking for these things. where, where are they getting the idea that they should own them? Well, they’re getting from the people that were selling them, right?

The people who are making fees from them. I haven’t seen any useful data that says that these things actually enhance your return. Alpha goes to the manager. I say that over and over again. If these things actually produced a higher rate of return than say just a corporate bond index fund, you’re not going to get it.

It’s going to go to the advisor, it’s going to go to the manager, and all you’re going to do is take the risk. You’re going to take the risk and they’re going to get the excess return in the long term through fees. They don’t make any sense. You don’t do it. It’s just the rehash of active management and mutual funds, which has already been dismissed as not producing anything for you, the investor. It only generates fees for the people in the investment industry.

This is just another iteration of that and we’ve already seen some cracks. Isn’t that what Jamie Dimon said? What are they cockroaches? I think is the word that he used in the private equity market. And yeah, I mean, this is not new. This is just a repackaging of ideas just that now they’ve been allowed to go into the 401k market. But you have to ask yourself why haven’t they been allowed to go into the 401k market for the last 40 years if they’ve been so great? It’s because the SEC

Frazer Rice (25:31.978)
Right.

Rick Ferri (25:58.703)
The Department of Labor said, no, we’re not going to allow these things in there. you give people enough rope to hang themselves. They’re not going to hang themselves, by the way. Somebody else is going to put the noose around their neck. And that’s the advisors who are doing that.

Frazer Rice (25:59.499)
Department of Labor and right.

Frazer Rice (26:19.066)
And I mean, a different podcast probably, but it’s something where the liability really is going to shift to the planned sponsors. I don’t care what happens and you know, they’re going to present these things and something’s going to blow up. And it’s like, know, you may you gave me the option and they’ve already those lawsuits already already proliferate. OK, so back to discipline a little bit here. What should people be doing in order to make sure they can carry carry out the.

Rick Ferri (26:39.367)
Yeah.

Frazer Rice (26:47.147)
What they’re doing in a systematic way and keep themselves safe from being distracted by all this noise.

Rick Ferri (26:52.86)
So again, that’s why we start out with the philosophy. You have to believe in the philosophy of simplicity and simple indexing. You can’t just jump to it because some TikTok video said buy index funds, okay? If you’re just jumping to it that way, then you’re not gonna have the discipline to stick with it because it’s just another phase or fad or whatever in your mind. You don’t really truly understand.

Frazer Rice (27:14.346)
Mm-hmm.

Rick Ferri (27:22.32)
Why you’re doing it this way. So it gets back to the philosophy. Really got to understand the philosophy and why this works better than 98 % of everything else out there over your lifetime. And then you create the strategy for yourself and now you’re working towards completing that. Again, in the retirement account it’s done quickly, but in your taxable account it could take a while.

The discipline is while you’re getting your portfolio in line, the first thing you need to do from a discipline standpoint is actually do it. Actually go to your 401k and change what you’re investing in. Because so many people will do the strategy, but it never gets actually implemented. Or maybe it gets 50 % implemented. It never gets old.

It doesn’t, I don’t want to say never, because I have a lot of clients who do fully implement it, but I also have clients that I’ve given them the plan and three years later or five years later they come back and they haven’t done anything. Okay. And so I say, you need to implement the plan. Nothing has changed. So you got to, the plan first off has to be implemented fully. And then once it gets implemented fully, it’s a lot easier to maintain it.

But if it never gets implemented fully, then of course you can’t maintain it. So implementation of the plan fully is the first discipline, the first part of discipline. And then once that’s done, maintaining it. In other words, not being drawn off course. Yeah, it’s fine to say, the price of oil is gonna shoot through the roof because what’s going on in the Middle East, so I’m gonna buy an energy index fund. That sounds like something I should do.

No, it’s something you could think about. Something might be interesting, but it’s not something you should do. So discipline transcends the urge to do things. In other words, like John Bogle said, don’t just do something, stand there. And that takes more going back and remembering why you have this philosophy, going back and looking at the data.

Rick Ferri (29:46.151)
going to the right place to find information. And I’ll mention the bogeyheads.org website to go back and remind yourself why you’re doing this. If you’re gonna stick with it and these things help you stick with it. The more you automate things too, the better it is. Like we’re in a 401k just automatically invest in the target date fund and don’t do anything else. So automation helps you as well.

Frazer Rice (30:05.736)
Hey, hey.

Frazer Rice (30:14.109)
No question, if you can take these things out of your own hands in many ways and delegate it out and it happens automatically, just a chance of success on that front. And then if life intervenes and things need to be adjusted, you deal with it at that point and not have CNBC or the world news whipsaw your viewpoint on these different things.

So as we wind down here, just talk a little bit about the service that you provide, sort of these larger family office clients, because I think in a lot of times they gravitate toward complexity, they gravitate toward FOMO investing and how you help to center that back to this worldview so that they get where they’re going at scale at sort of that ultra high net worth world and remind them of you how they got there and how to not be how to not leave by by getting cast aside into these different whirlpools that are out there

Rick Ferri (31:13.778)
That’s a great question. So you got to pick your advisors well. So some of my clients have a net worth over a billion dollars. I have several clients that have several hundreds of millions of dollars and believe me,

They have simple portfolios, total stock market, total international municipal bonds. It’s all they have. And it may seem strange, but they don’t have these limited partnerships that you can’t get out of or syndicated deals that may sound good. I say to them, you don’t have enough money to own those, meaning that if you’ve only got $100 million, you’re just chump change to the Goldman Sachs of the world or the Morgan Stanley’s.

When it comes to who’s going to get the good deal on a the next private equity deal or venture capital fund. You’re the person they sell the leftovers to. I know it’s hard to people to accept this. They think they have a lot of money if they have a hundred million. But the fact is they don’t. I mean, if you’re not sitting on five, ten billion dollars, you’re not going to get preferential treatment. You’re going to get you might get lucky.

Just like everything else, the coin flip idea, but most of the time you’re not going to end up coming out ahead. That’s not the way they make you feel when they sell you these things. They make you, even if you had a million dollars and your Wells Fargo broker is trying to sell you some limited partnership, they’re going to make it feel like you’re very special and that this is a very special deal that is just for you.

Frazer Rice (32:46.505)
You

Rick Ferri (32:50.322)
And that’s how it’s going to be sold to you. But in the end, when you look at your performance and you say, I want to get out of this thing and you can’t, you realize at that point that maybe you shouldn’t have done it to begin with. And I’ve had experience going back 30 years working with some of the very largest families in the country, some magnificent seven IPO families, and they all want to get back to simplicity.

They want to get rid of all of the stuff that they had gotten. And it’s true. And it’s better for estate planning as well because you need to transfer these things eventually to somebody else’s name.

Frazer Rice (33:35.785)
you’ve triggered me. I’m dealing with this on multiple levels, on multiple different things, and I’ve had to be trustee on some of the complexity and sort of sit Indian style and try to own your way through it. It’s brutal. So.

Rick Ferri (33:53.81)
Wouldn’t it be so much nicer just to have, let’s say, a single total stock market ETF to have to deal with rather than all that other stuff?

Frazer Rice (34:01.807)
No question. OK, so as we wind down here, how do listeners and watchers find you?

Rick Ferri (34:09.478)
Well, they can find me at Rickferri.com. I’m not currently and I won’t be taking on any new clients. I’m sorry for that, but I have a set clientele and that’s all that I am working with and I won’t be expanding my clientele. But there are other people that do this that believe in what I do. And you can go to Rickferry.com and you could find their names there. But me personally, you can find me on Rickferry.com. I’ve written several books about this. I’m writing another one.

And but I apologize that I’m not off the market as far as hiring me personally.

Frazer Rice (34:45.645)
I love it. But at the same time, your books and your other ways that get out there, they are on RickFerri.com. So we’ll have that in the show notes. In the meantime, Rick, thanks for being on.

Rick Ferri (34:52.07)
Yes, exactly. Thank you.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

View Details

This interview explores the critical importance of managing digital assets in estate planning, highlighting the challenges of digital inheritance, account access, and cybersecurity risks. TATYANA THURSTON and NATALIA PARKER share insights on creating effective digital estate plans, tools, and best practices.

https://youtu.be/2N56L51cD6Qhttps://open.spotify.com/episode/01ScInrdux6UOQ0G1kPzNF?si=uiCizZbOTEisa9PJ_D_S5gKEYWORDS: Digital assets, estate planning, digital inheritance, cybersecurity, online accounts, digital executor, wills, estate law, digital legacy, digital estate management

KEY TOPICS* Digital assets definition and scope * Challenges in digital inheritance and estate planning * Tools and strategies for digital asset management * Legal and cybersecurity risks in digital estate planning

Guest NameTatiana Thurston and Natalia Parker

Sound Bites* “Biometric security doesn’t work after death.” * “Planning ahead saves hundreds of hours and pain.” * “Domain name issues can take months to resolve.”

Chapters00:00 Introduction to Digital Assets

01:28 Understanding Digital Assets and Their Importance

04:14 Challenges in Estate Planning for Digital Assets

09:17 Navigating Access and Security Risks

13:22 Creating an Inventory of Digital Assets

18:21 Preparing Executors for Digital Asset Management

24:40 Resources and Tools for Digital Asset Planning

GUEST RESOURCESDEXITPLAN

TRANSCRIPTFrazer Rice (00:01.146)
Tatiana and Natalia, welcome aboard.

Natalia Parker (00:04.206)
Thank you.

Tatyana Thurston I Dexit (00:04.211)
Hi, thank you for having me.

Frazer Rice (00:05.966)
We are, this is a new frontier for wealth actually. You are the first two person interview I’ve done so far. So it looks like the technical issues seem to have gone away. That’s great. But we’re gonna talk about something that I think is the driver for your new company and something that’s important to me because when I’m advising people around a lot of different topics, either estate planning wise or wealth management wise, the digital asset question comes up and.

You’ve formed this new company. Tell us a little bit about that and more importantly tell us the problem that you’re trying to solve around digital assets

Tatyana Thurston I Dexit (00:40.83)
Okay, so I’ll first start with what is a digital asset because there’s a lot of different definitions out there and a lot of people have different concepts of what it might mean. of all, because crypto is in the news quite a bit, it is not just about crypto. Everybody has digital assets because basically if you are logging into an account and it is storing data, you have an account that has assets online and it could be monetized.

It could be social media, which means that the information that’s there is very personal to you. It could be that you have reward points you’ve accumulated. There’s all sorts of types of assets that are out there and there is a pain point problem. Let’s die down.

Natalia Parker (01:28.462)
Yes, and we started actually, it was interesting, Tatiana just went through the process of writing a will and she will tell about it. I went through a divorce where we had online business and it was really, really hard to trace all those online accounts because I had no understanding how many we had and what to do with them and how even to find them. And Tatiana wrote a will.

Frazer Rice (01:54.67)
Yeah, no. so just to put a finer point on that, it’s not only the monetary assets and the social media accounts and everything that basically requires a password to get into it probably in this day and age.

Natalia Parker (02:10.252)
Yes, and I can tell you more than I lost pictures of my family from my daughter’s birth to age seven because I didn’t think that the iCloud password and iCloud identity gone through a divorce. Yes.

Tatyana Thurston I Dexit (02:10.336)
That’s all.

Tatyana Thurston I Dexit (02:26.88)
So she can resell for it. Yeah.

Frazer Rice (02:26.992)
Yeah, and a very painful thing to go through. so, Tatiana, as we sort of look at that example and make the definition a little bit even more in depth, how else do you sort of think about that in terms of the roles that are played from a Will’s perspective?

Tatyana Thurston I Dexit (02:49.366)
So from a will perspective, you have two kinds of entities. You have things where business owners have created online accounts where their business is running off of certain platforms. And you also have a personal side aspect. And it may be an influencer, it may just be your personal account. The thing is that we’re dealing with a problem of immortality.

And this means that these accounts remain open, active and online, ready for hackers and ready for now, today, AI to continue the trajectory of that account because they’re making money off of the data that we’ve put online. So we actually have two things to look at. One is from the business perspective and how do you transfer a business over? Because maybe you’ve built a platform for 10 years on Facebook, right?

You have a following which is important to your base. Maybe you’re just a mom and you’ve put all your baby pictures on there, like Natalia, and then what is the loss? What is the impact of that loss? And both are really difficult on families. So estate planning means that we actually need to be looking at these accounts, we actually need to be planning for these accounts, because down the line, it’s gonna be a heavy impact, whether it’s sociological, emotional, or monetary.

Frazer Rice (04:14.552)
So as we think about this little bit further, the concept that these accounts are going to live on beyond the life of someone who created them. Maybe dive into that a little bit, because I imagine you not only have points of risk, certainly during the lifetime, and someone hacking in and pillaging your bank account or otherwise maybe blocking access or something like that, but what happens when someone passes away? How do those risks translate to the people who are inheriting these properties?

Natalia Parker (04:45.258)
Okay, let’s talk about it. We have those certain pain points. The first one, when somebody dies, the executor or administrator, they don’t know what is existence. They don’t know what kind of accounts the person had, what they wanted to do with those accounts. That’s a first problem because they don’t know even what banking, where the life insurance, did they have Venmo because they don’t have access to phone.

The second one, didn’t know what the person wanted to do with that account. Did they want to close, transfer, memorize it? They have no clue. The other one is authority as an executor doesn’t mean that you will get automatic access to the account. Many people think that yes, it is. No, for Google it doesn’t matter. Unless you were appointed as inactive account manager. The same for Apple.

Frazer Rice (05:48.68)
I was going to say those annoying terms of services agreements that no one reads and you click so that you get, you move on with life and get into your accounts, that’s where some of these details are buried. And the intersection between that and maybe what we call estate law and how an executor works, that’s where the friction takes place.

Natalia Parker (06:09.43)
Yes, I agree and many people don’t even know that that feature exists like legacy contact for Meta and Apple or inactive account manager. Otherwise, when you look at the hierarchy online tool, we call it Castonian tool, outweighs everything what you have in wheel. If the online tool wasn’t enabled, then it goes what kind of language you had in wheel.

if you appointed some digital executor and if that executor was authorized to have access to all your accounts. The third one, it always default to terms of service. Terms of service for basically 99 % of each company says do not give access.

Frazer Rice (06:56.09)
So if you were stuck and you didn’t do anything and you relied on the terms of service, you could be in a really deep set of troubles. They might delete your account, they may not allow access, or they may make it otherwise very difficult in order to access and do it. You think that the person who died with it wanted to have done.

Tatyana Thurston I Dexit (07:16.246)
That’s right.

Natalia Parker (07:16.598)
Absolutely.

Tatyana Thurston I Dexit (07:17.504)
That’s why some of these really large companies have a custodial tool. You do have to go to certain settings within the device or within the account. And you can enable these tools so that you can either add what could be a legacy contact. It may not have the term beneficiary on it, but it’s important to be able to enact that so that these settings will allow certain access down the line.

A lot of the companies are very particular about that the larger ones have it and then a lot of them don’t so Knowing which company has the most value to you and those terms of service is really important

Frazer Rice (08:01.84).
For someone who has an account that lives beyond them, there are identity and financial risks to having that. I can imagine, you know, when you put a credit card on file and, it’s auto-debated or you have information lurking out there that that’s a problem. Maybe talk a little bit about how bad that can get.

Tatyana Thurston I Dexit (08:21.517).
So I think there’s a few issues on that. We all know that there are scammers and hackers. The really important stories that have come out in the past is where AI is enabling recopying your name, image, and likeness posing as you live on a video stream or live on a phone call asking for money or data or information. And this is becoming really prevalent.

This is where families, if they want to save and secure their reputational legacy. But also perhaps crypto, perhaps their banking accounts, it’s really important that they understand that they are all subject to this hacking because probably the likelihood that they have a social media account is there and that means it has public access.

Frazer Rice (09:17.636).
So let’s dive into the tech problem. I can envision, and I’ve heard before, the concept of someone passes away and people can’t access the computer, the hard drive, the phone, all sorts of mechanisms that hold a lot of this data. I think you could probably extrapolate that to the cloud accounts and things like that where other information is held. How do you help people think about that?

Natalia Parker (09:28.162).
Mm-hmm.

Natalia Parker (09:44.398).
Two-factor authentication. It is your phone, your email, it is gateway to your estate, basically, administration. If you don’t have access to the deceased phone or email, you don’t know anything about their accounts, first of all, second of all, where all those codes are coming to, to that devices.

Frazer Rice (10:08.72).
Right. And how do you fix that problem?

Natalia Parker (10:12.91).
There are some settings on iPhone because we kind of everybody has iPhone some have androids but mostly it’s iPhones. Yes, you have to establish the legacy contact. You have to make sure that specific features are turned off or on like stolen device protection. If it is on, it’s basically impossible to override it.

Frazer Rice (10:20.793).
Right. Beware the green text.

Tatyana Thurston I Dexit (10:24.212).
Bye.

Natalia Parker (10:40.302).
because if 48 hours, is it 48 or 72, Tatiana?

Tatyana Thurston I Dexit (10:44.981).
Well, so what she’s referring to is that the latest update in Apple has this feature for stolen theft mode, it’s called. So this happened to us on an actual case. Someone had given us a phone and they said, can you help us? The problem was the person had passed away over 100 miles away. because Apple tracks our location everywhere we go, it’s a habitual, you know, we’re creatures of habit, right?

Same coffee shop, we go to the same store. So they know what our patterns of behavior are. As soon as it leaves that circle of trust, call it, that map of trust, theft mode can become enabled if the setting is on, which means that Apple has cut off any access to the phone. So for people who are dealing with families, let’s say, who live across state borders, this is a really difficult task for them. Because their phone is completely inaccessible because of theft mode not even because of the legacy contact.

Natalia Parker (11:51.278)
8.

Frazer Rice (11:51.345)
And then, you know, I’ve seen in movies and I’ve actually heard anecdotally, you know, the concept that the biometrics at play, they in a sense turn off too. It used to be you could take the phone and put it up to somebody’s face or you could take their finger and maybe get into the laptop by putting it onto the biometric reader. That world doesn’t exist anymore, correct?

Natalia Parker (11:58.594)
Mm-hmm.

Natalia Parker (12:12.162).
Correct. When you’re dead, the Face ID doesn’t work really well.

Frazer Rice (12:17.59)
Well, and that tells you something that they can tell whether you’re dead or not. And I would not have made that comment maybe six weeks ago before we started talking about this, saying, geez, these things are getting smarter. So as we start thinking about this, we’ve sort of analyzed a couple of pain points, areas where if you’re an executor and someone’s situation comes across their desk and they say, gosh, first of all, I have to try to know.

Natalia Parker (12:19.758)
Yes.

Frazer Rice (12:43.81)
What accounts are out there, what social media accounts, what subscriptions, what bank accounts, what crypto, what IP, that type of thing. So getting your arms around that’s important. Then the idea of hopefully someone has been organized enough to lay out where the accounts are and how to access them in one way, shape or form. And we can get into what a good practice is on that. But then if you’re the executor slash in conjunction with the estate planner slash the client,

Natalia Parker (12:48.545)
Yes.

Frazer Rice (13:13.402)
How do you plan for this so that you create a real organized state of affairs for the person who has to actually manage this stuff going forward?

Tatyana Thurston I Dexit (13:22.797)
So I think it’s important to understand priorities. So everyone’s different, everyone’s unique. There may be priorities that are social media based priorities where there’s a lot of crypto at stake or monetary funds, even perhaps reward points. That priority list is best done in an inventory.

Where we specialize is in the directives for this. So we’ve actually researched all these terms of services for hundreds of companies. We maintain this database so that someone can say, okay, if it’s company A, company A has three options for a directive. You can select that directive.

That means that the executor will then know exactly, this is what needs to be done with this account and this is what is of value either for the descendants, the beneficiaries, and so on. So first the inventory, but actually the directives is really important.

Frazer Rice (14:21.904)
By directives, mean something maybe an addendum to the will or something like that that says these the information or the value, whether it’s monetary or otherwise, is going to be transmitted to such and such a person and given full access to it. Is that really is that part of the advice is to say, you know, for the modern will drafter, let’s say that it’s a really good idea to have an inventory of what these digital assets are.

To set out who gets what in the will so that there’s a, let’s call it a backstop, so that if you have problems with the terms of service or something like that, you have something that goes through probate where somebody opines on that and you can actually get access to it after the fact.

Tatyana Thurston I Dexit (14:50.061)
Yep.

Tatyana Thurston I Dexit (15:08.565)
Yeah, so there’s two points there. There’s the access part and then there’s the directive part.

Natalia Parker (15:09.313)
Yes.

Frazer Rice (15:13.315)
Okay.

Natalia Parker (15:13.556)
Yes, there’s, yes, sorry, there is a language in the will where it’s actually specified that this is a digital executor who has the right to access all those accounts and perform all those duties.

Frazer Rice (15:32.068)
Got it. so in your experience, so Facebook or Google or Coinbase or things like that, for me anyway, in the last maybe three or four years ago, to get somebody on the phone to even have any understanding of what you’re talking about was gonna be just forget it, not happening. Are they getting better at understanding these situations?

Natalia Parker (15:56.074)
No, they’re not. They’re not. They don’t care. Facebook, it’s all AI. You don’t get a person on the phone in any case, Coinbase. You can, but it’s weeks of waiting for the response and they will ask you, we lost it. Can you resend it again?

All three companies you name, they do have policies.for transferring or for somebody who is dead. But it’s still very, very difficult to deal with them.

Tatyana Thurston I Dexit (16:32.069)
To add to that too and I’ll give you a case example is that we had social media requests to take the accounts down. Meta of course owns both Instagram and Facebook right and the images and memories that were left on these accounts were actually harming the kids.

The request was can we close these accounts out and of course you can but Facebook interestingly enough agreed of course to close the account and even though it’s owned by Meta, Instagram said, no, these photos do not violate our terms of service. So it doesn’t mean you can close out both just because it’s Metta. It’s really, really specific and it’s really in their hands.

Frazer Rice (17:19.003)
Lovely. That will warm people’s hearts that have to deal with this.

Tatyana Thurston I Dexit (17:22.143)
Natalia Parker (17:22.638)
Yes, it’s hard. And can you imagine we deal with this day after day, but people who have never been in this position, they don’t even know where to start.

Frazer Rice (17:34.747)
So walk us through what you think a good scenario would be for someone who wants to, let’s say they have, I don’t know, a bunch of accounts, both monetary and social media and maybe miles and maybe other things, stuff like that. And they walk into a trust and estate lawyer’s office and they say, okay, I’ve got my house, I’ve got my liquid assets, that stuff trust and estate lawyers know how to deal with.

but let’s say the lawyers aren’t as facile with the digital assets. A, help the person be a better client for that trust and states person so that it’s organized. And then, let’s start with that and then I have a follow-up question.

Tatyana Thurston I Dexit (18:21.055).

Okay, I would say the first thing is that, you know, there are modern problems and we need modern solutions. And that starts with the discovery and conversation that we do have these immortal accounts online. As much as we may not want to think about it, and we can get into other stories about this, but I won’t do that now, there are reasons to enact on these accounts.

That means deleting them, transferring, closing, out data, it might be biological data. There’s a lot of data and for me that means that data is money. It may not be money to us, but it’s money to companies. And what you want done with that is your choice still. So it’s important to make that decision.

I think that any estate planning attorney who starts this conversation with their clients is already helping move the needle because everyone has online accounts, the average user has at least probably around 200 accounts by now. And that’s without a work account.

Natalia Parker (19:28.492)
Yes, we developed a tool basically where we have inventory and 15-20 minutes with assigned directives and it’s prompt. Just choose the companies you have accounts with. They don’t have to remember. just, okay, I identified those companies and we already give them a choice of pre-selected, pre-vetted directives, assigned a directive. Then take these report and go to your state attorney.

Bring it, yes, bring it to them, include it into the wheel with specific language, appoint a digital executor, you’re set. Then you will just have to support it, kind of.

Frazer Rice (20:11.609)
No, so then the next question, so let’s say the paperwork from a will and a revocable trust, et cetera, is up to speed and covers the authority to access these. Then let’s say the executor is not the attorney and it’s a family member or a friend or something like that and you’re giving them the honor of helping to deal with all of this stuff. What do you deliver to them to help them be prepared for that time when you pass away?

Tatyana Thurston I Dexit (20:39.479)
We-

Natalia Parker (20:39.5)
We give step by step directions on how to deal with each company. We give what this company has, what kind of account is that, what kind of paperwork you need, what kind of documents in what time frame. For some companies it’s three years, for matter in their terms of service it’s 28 days, but hey, you have an account for years there.

Anyway, we give step by step directions. How to deal with this account to fulfill the directive. But if they can’t or they don’t want to, they can always hire and come to us.

Tatyana Thurston I Dexit (21:11.597)
Go.

Frazer Rice (21:17.361)
Sure. No, that’s the backstop too, is that you not only provide the tool, but also some support behind the tool and the experience of having dealt with some of those folks, maybe even the contacts to call it one or the other company to maybe get from A to Z a little bit faster.

Tatyana Thurston I Dexit (21:18.326)
Well…

Natalia Parker (21:20.717)
Yeah.

Tatyana Thurston I Dexit (21:21.26)
you

Tatyana Thurston I Dexit (21:35.245)
It can be very overwhelming, that is for sure, and I think tech is constantly changing and the terms of service is constantly changing. So we have lot of barriers to entry to enact professional executorship and do it as best we can and a lot of it is because of technical bottlenecks, if you like.

Natalia Parker (21:45.165)
Mm-hmm.

Frazer Rice (22:00.101)
So this is a bit of a catty question, which is how many times have you seen this properly set up? Because I can tell you right now, I feel like I’m pretty fashion forward as far as tech’s concerned. I see the issue. I know my estate plan. The poor person, in this case, my sister, who’s my executor, she’s gonna take one look at this and be like, thanks a lot, man.

Natalia Parker (22:08.651)
None.

Tatyana Thurston I Dexit (22:25.901)
What?

Frazer Rice (22:26.033)
And so I’m guilty as charge number one, but is anybody doing this with any sort of specificity yet?

Natalia Parker (22:26.478)
you

Tatyana Thurston I Dexit (22:34.785)
Well, can I just… sorry.

Natalia Parker (22:35.112)
No. I’ll start, Tatiana. Here’s the problem. We came across some people and they say that, I have spreadsheets where all my accounts and passwords are written down and my wife will deal with that at some point. First of all, there is no directives for those accounts. And second of all, it’s still illegal to log in under somebody else’s logins.

Frazer Rice (23:02.853)
Right.

Tatyana Thurston I Dexit (23:04.567)
And I was just gonna say the reason we started this company is exactly what you just described. My brother is my executor and I was like, man, there’s no way he’s gonna know how to start at all because I have my fingers in a lot of different businesses, my personal. And so, you know, that floor plan and sort of direction guide was sort of how we started this.

It became intense. I mean with Natalia. It became a really intense research project. We have a database that is constantly being updated. As executors become executors or as will writers are writing wills, we really want everybody to understand the importance of technology in this process. Because it’s moving really fast. Now that AI has come about we can even throw in the whole name image and likeness problem which a whole other sort of barrier of questions to ask.

Frazer Rice (24:11.501).
No, I’m going to bring you all back on to tackle that one separately. I think it’s worth its own half hour sort of figuring that out. But in the meantime, tell us a little bit about how people can find you. One of the things that I think you have on your website and some of your materials is a digest.

Really almost like a questionnaire or a brief that allows people to think through where they may have digital assets. It’s not just social media accounts and your bank accounts. They’re like fruit and flower miles, things like that. I hadn’t thought of that, but yes, that’s a big one. Where can people find you and what kind of resources do you have that people can get familiar with the topic as they embark on this fun assignment?

Tatyana Thurston I Dexit (24:45.399)
Thank you.

Tatyana Thurston I Dexit (24:59.809)
So the first place is our website and it’s actually, even though our company name is Dexit, which stands for digital exit, it’s Dexitplan.com because where we are proud is the actual plan of action that we’ve been able to customize for any individual. And then yes, we do have a sort of discovery questionnaire so that they can understand exactly what impacts them the most, where they may want to look at these accounts and have a plan for them.

And yeah, contact us anytime, email, phone. We’re here, we’re not chat bots. We want to be sure that you are talking to a human. We know how this AI slop is turning out and we don’t want to be any part of that.

Frazer Rice (25:46.501)
I was going to add on to that too. mean this is not just for the end clients, so for anybody who sort of understands that they have this issue, obviously check out your website and do all that. But I would argue that for the estate planners, the accountants, the wealth managers, etc. who are advising clients, it’s a good resource to kind of help you get your arms around it in terms of advising people who are looking for help on all these different things.

Tatyana Thurston I Dexit (25:55.041)
Yeah.

Natalia Parker (25:55.575)
Yes.

Tatyana Thurston I Dexit (26:04.68)
See you

Natalia Parker (26:11.136)
Yes, because you can have the most compliant language in the world. But the executor will still start with the zero on day one. They don’t know the inventory. They don’t have the directives. Finally, they don’t know how to deal with those accounts.

Frazer Rice (26:32.491).
So give us the website one more time. Then take us out here with a funny story. One you’ve dealt with in putting this company up to getting it up and running.

Tatyana Thurston I Dexit (26:42.381)
Okay, so that sounds great. So Dexit Plan. It’s D-E-X-I-T-P-L-A-N dot com. Dexit Plan dot com. And I guess I’ll leave you with a text story. We worked with a church here locally. They had their domain name purchased in 1997 and posted as in your own personal name. The person passed away over 20 years ago. Nothing was ever done with the titling of the church’s domain name.

But the church has been forever on this domain name. It’s been over 50 years so to remark it. Rebranding a dot org is not an easy task. Actually, no kidding it took us nine months to get the church back their domain name. That was finding people from 20 years ago reopening email accounts from a long time ago, getting signatures verified and processed.

It is actually doable, but it is definitely a task. So planning ahead of time would save hundreds of hours and a lot of pain. Absolutely.

Frazer Rice (27:52.241)
No, good object lesson for companies too. That it’s a good idea to see who owns what. Your domain name, any other digital IP, we’ll call it that. If you don’t have that in place. You may have a real forensic accounting job in the tech world to get everything back.

Tatyana Thurston I Dexit (28:02.274)
Yep.

Tatyana Thurston I Dexit (28:10.337)
That’s right.

Natalia Parker (28:10.72)
Yeah.

Frazer Rice (28:11.705)
Natalia, Tatiana, thank you so much for being on and we’ll look forward to talking again soon.

Tatyana Thurston I Dexit (28:16.811)
Thank you so much.

Natalia Parker (28:16.888)
Thank you.

TRUSTEE RESOURCESTRUSTEES AND DIGITAL ASSETS

NORTH CAROLINA ESTATE RESOURCES

Titles* Mastering Digital Estate Planning: Protecting Your Online Legacy * The Future of Wealth: Managing Digital Assets After Death

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

View Details

BRADY WELLER discusses the intricacies of QSBS rollovers, including eligibility, timing, and strategic planning for founders and investors. The goal is to help the listener maximize tax benefits and navigate the legal complexities of this powerful tool.

https://youtu.be/gvQ0ZskvWVIQSBS, tax exemption, startup founders, rollover, legal structuring, investment strategy, tax planning, startup exit, C corporation,

Key Topics* QSBS eligibility and benefits * Challenges in executing rollovers * Legal and tax considerations for founders * Timing and risk management in rollovers * Strategic structuring for maximum benefit

“QSBS ROLLOVERS” Sound Bites* “60 days is a very short window for founders.” * “Rollover continues your holding period clock.” * “Partial rollovers are common for founders.”

Chapters00:00 Understanding QSBS and Its Benefits

03:07 Challenges for Founders in QSBS Compliance

05:54 Advising Founders on QSBS Rollovers

08:57 Structuring New Ventures for QSBS Eligibility

12:00 Navigating QSBS for Tech and Non-Tech Founders

14:54 Investor Considerations in QSBS Transactions

17:46 State-Specific QSBS Regulations and Planning

20:57 Future of QSBS and Strategic Planning

Resources* Brady Weller on LinkedIn * qsbsrollover.com * qsbsreference.com * Frazer Rice and Michael Arlein discuss the nuts and bolts of 1202 QSBS Features for Founders

Guest links* LinkedIn

TranscriptFrazer Rice (00:01.314)
Welcome aboard, Brady.

Brady Weller (QSBS Rollover) (00:03.043)
Hey, Frazer, thanks for having me.

Frazer Rice (00:04.738)
Well, you are the nice compliment to a piece I just did with Michael Arlene on QSBS. We covered some of the nuts and bolts around 1202. You come at it from a little bit different angle. It’s usually where people, founders especially, have issues sort of complying with things like the three and five year rule. And otherwise really maximizing the capability of the rollover and the tax significance for it. Tell us a little bit about who benefits and what you do here.

Brady Weller (QSBS Rollover) (00:35.107)
Yeah, QSBS is.

by far the biggest tax exemption available to individual taxpayers in the U.S. So it’s been something that hasn’t been up. I should say there’s not a massive advisory network around it. So it’s not something that’s been taken advantage of, I think, to its full scope. Michael, who you had on recently, is a top trust and estate planner for founders of companies around QSBS.

The specific problem that QSBS rollover solve is for a shareholder of an early stage company. Most often founders or very early investors, say, maybe series A or earlier shareholders. It’s an incentive to basically hold your stock for a quote unquote long time. In this sense, that means, you know, now under some new rules, basically three to five plus years.

It’s a tax exemption available to folks who hold their stock for at least five years. Then they can exclude from federal income tax now up to $15 million of gains when they sell that stock. So you have to be a shareholder in an early stage C corporation, early stage company.

Frazer Rice (01:50.616).
Those founders before three to five years are trying to figure out how to use this tool. What are the challenges in making sure they don’t blow up the transaction by transferring something poorly. Or having their company grow too large or have too much cash or those types of things? Maybe list out a little bit some of the challenges that are out there that that a founder needs to be aware of.

Brady Weller (QSBS Rollover) (02:22.509).
Yeah. So we don’t have to constantly caveat. I’ll mainly talk as though we’re speaking about the pre July 5th, 2025 rules for QSPS. Anything, any stock issued after that date, middle of last year. is under a slightly different set of rules. They are more expanded rules, but I’ll speak to this sort of from those old rules. And so the old rules state that you have to hold your stock for at least five years. And if you do, you can exclude a large portion from federal income tax, usually $10 million for founders. But if you don’t hold the stock for five years, your only option is to take the cash from that sale. For example, say you sell stock at year three or year four,

and purchase new QSBS eligible stock with that cash within 60 days. So it’s sort of like the 1031 exchange. Folks maybe are more familiar with real estate property exchanges. Its sort of like a 1031 exchange for stock. So you take the cash and you purchase a like kind quote unquote asset with it. Now the challenge with that is 60 days is not a very long time. And when you’re a founder of a company who just went through liquidity. You just got your deal done and the whirlwind that that is.

Now you’re dealing maybe in a post liquidity world. You’re maybe running another team at the acquirer or you’re otherwise involved. 60 days is not a long time to be able to find and diligence a new opportunity. . It’s just not feasible. Especially for founders to use that cash to say buy stock in someone else’s company. It just doesn’t make sense. Like risk adjusted, I suppose.

Frazer Rice (04:05.579)
No, it’s a miracle that your company did great. Now you have to go and find another miracle and make it work within 60 days. It’s crazy.

Brady Weller (QSBS Rollover) (04:10.143).
That that’s the biggest that’s probably the biggest barrier to executing them. For the longest time there just weren’t a lot of people. They hadn’t come alongside founders to help advise them on structured ways that they could do these rollovers.

Yeah, the options are risky. It’s like take your money and invest it in Dave’s startup in San Francisco. He’s going to lose your money. So that may be what you want to do with that money. To keep your risk profile sort of moving. But that’s not tax planning in any way. Right.

To make that decision just to save on federal income tax might not be the best way to use your rollover. So we’ve seen it much more for angel investors, something that they might use. People who want to maybe have a lot of deal flow. A lot of investment opportunities in front of them. But they want to keep that risk profile moving. I’d say timing and risk are the two biggest challenges when you’re trying to execute a rollover.

Frazer Rice (05:13.805).
As a detail on that, you’ve got your company. You’ve got $10 million coming to you. Hopefully tax free, similar to a 1031. You don’t have to go into one company, you could go into a basket of companies.

Brady Weller (QSBS Rollover) (05:28.579).
Yeah, you could take the cash, say you make $10 million from a sale. You could pay taxes on $3 million of it, assuming you haven’t hit your five year requirement. Then, you could roll over the other seven in various other deals. You could put it all into one new company. What the rollover actually does is it continues your holding period clock from the last stock. So if you held for three years in your original company stock,

You sell. You’re able to reinvest those proceeds within 60 days. It continues your holding period. Once you’re beyond a combined five the next liquidity event in the second company. Now you have proper seasoning on your shares, for lack of a better word, and then you can sell them under the QSPS exemption.

Frazer Rice (06:17.143)
So, this gets to what you do on a day-to-day basis. So a founder comes to you and says, all right, I’ve got this situation I think that’s coming. And I need some advice. You’re sort of letting them know what’s happening here. How do you advise them, in a sense, whether it’s through your company or even as a general matter? Do you have a suite of other founders and companies that are out there? And then…

Maybe also similar to a 1031, is there sort of an intermediary function that needs to happen in order for the asset or the cash to go into sort of a, for lack of word, like an escrow account to then be deployed correctly into the eligible next company so that you keep that period going.

Brady Weller (QSBS Rollover) (06:50.713)
Boom.

Brady Weller (QSBS Rollover) (07:05.839)
That’s a good question. It’s not as formalized as the, you know, in terms of the 1031 world where there’s sort of a designated intermediary and that’s sort of required step in the process. This is very much the wire goes into your checking account for the sale of company A stock.

Frazer Rice (07:11.703)
Mm-hmm.

Brady Weller (QSBS Rollover) (07:22.281)
You send a wire back out to purchase stock in company B. When someone comes to us and is looking for guidance on how to do a rollover, sometimes they’ve talked to tax or trust in state attorneys already, or maybe they’re CPA. And there are maybe 50 folks in the US who have, I’d say,

Frazer Rice (07:37.463)
Sure.

Brady Weller (QSBS Rollover) (07:45.07)
I call it advanced QSPS planning knowledge, which is they have the trust planning strategies, rollover knowledge, all of these things that sort of at their disposal that they can speak to, but it’s a very small network. so our firm is actually the only non-CPA non-law firm in the country that deals directly with founders on these. And so we ended up kind of playing quarterback, connecting them with the right attorneys, maybe the right CPA, if they don’t have one to make sure that the team is sort of assembled.

You know, because the risk profile of taking your money and investing in someone else’s company typically doesn’t align with most founders’ interests at that time, the service that we provide is helping them to roll that money into a new startup of their own.

We think these founder-led rollovers where the founder or the shareholder who sold their original stock can now direct the proceeds into a new entity that they own and control. It’s a really great way to execute this. It gives the shareholder, the founder the optimal amount of flexibility and control over the proceeds over time. So they can handle their own risk profile.

Frazer Rice (08:57.921)
So for the founder who built their business originally, they sell it and you’re sort of with them along the way to roll it over into another founder led situation. Are there any mechanics that you help with to sort of ensure that that takes place correctly? There’s so many, it seems like so many tiger traps along the way that you can stick your foot in and you did every, your intent was there, but maybe you did something weird or incorrect.

Brady Weller (QSBS Rollover) (09:26.617)
Yeah.

Frazer Rice (09:26.721)
Maybe a better way to ask this question is what are the things in that receiving new QSBS rollover do you want to see or a founder should make sure they have in place before they go ahead and pull the trigger?

Brady Weller (QSBS Rollover) (09:41.904)
We want to make sure it’s a C corporation. First of all, a lot of times when founders start their first companies, they just, you know, incorporate an LLC somewhere and start doing business. A lot of times there’s not even, maybe there’s, you know, two or $3,000 transferred to a checking account, you know, from their personal to their checking. That’s how you start most businesses. But when you’re, when you’re starting a rollover business, we have to see a couple other things. One is we want to make sure it’s a C corp from day one.

Frazer Rice (09:58.989)
Right.

Brady Weller (QSBS Rollover) (10:09.123)
You know, it’s okay if it’s a single owner C Corp where the founders, the, you know, only board member, only director. It’s, you know, it’s your entity. That’s fine. but we also want to see a purchase agreement, some kind of stock purchase agreement. So you can’t just transfer money from your chase savings account where the wire landed to the new business account and, know, go on about, about the business. we want to see a stock purchase agreement. And so some of those agreements, and the optimal way to do those for sort of the, the, the long run.

Sometimes, we would obviously we have our template docs in ways that we might advise to do it. But very often we refer that out to legal counsel and coordinate there to make sure that just all the purchase agreements and governance docs and those types of things are in a good place. You know, it’s really making sure we have the purchase agreements and that the money gets moved to the corporate bank account, the new business bank account within 60 days. It’s really not a long period of time. And we run into a lot of situations where

If someone’s not kind of quarterbacking the process, deadlines get away quickly and then administrative issues with a bank might push you beyond the 60 day window. We’ve seen that a few times and it can obviously cost you a lot of money.

Frazer Rice (11:24.468)
The, when you get to a point where the next business that this is going into, often the qualifications of being a QSBS eligible business can be a little bit murky. I’m thinking healthcare for instance, where like a hospital or that type of thing would traditionally probably not be a QSBS situation, but a healthcare service provider or a biotech company or something like that is.

Brady Weller (QSBS Rollover) (11:46.937)
Yeah.

Frazer Rice (11:51.029)
Do you help founders think about that? in many ways, there’s sort of the which came first, the idea for the company or the company itself. How do you make sure people stay on all fours on that front?

Brady Weller (QSBS Rollover) (12:00.56)
Yeah.

Yeah, I if you build a startup before, know that the ideas in the early stage sometimes are extremely malleable. And when you start testing things in the market, the business very often changes. You know, we majority work with tech founders and that’s not because, you know, QSBS is well suited for tech. I think a lot of people think that to be QSBS, to be a technology company. That’s not true. It’s just that we most often see QSBS.

We run into people who are knowledgeable about QSBS in the venture space. So venture backed start up, like traditional startup businesses, has 80 % plus of those companies are tech businesses.

And then the other 20 % is manufacturing, biotech, life science, e-commerce, those types of things. But majority of people that we do these transaction with are in tech. And so by virtue of that, their rollover business ends up being, most of the time, ideas that they have are tech adjacent. So that’s a great place to be.

I’d say some things to avoid. What we hear often people coming to us wanting to roll over into real estate in some way or another. And there are ways that the business that you start as part of a QSPS roll over can hold real estate assets long term, depending on the business type. But you have to be really careful there not to, in the eyes of the IRS, look like a real estate holding company or have too much of your assets tied up in sort of like passive real estate holdings. And so I’d say that’s the murkiest stuff that we run into.

Brady Weller (QSBS Rollover) (13:37.822).
Most of the businesses that we are helping founders start and grow as part of a QSPS rollover are B2B or B2C tech. Either web applications or mobile applications, e-commerce stores. We have a few hardware sort of based companies or like very physical product based companies as well.

Frazer Rice (13:58.431)
For a lot of tech founders, the idea of taking some money off the table is important. And I would think that maybe partial QSPS situations come up. This isn’t an all or nothing thing. You can take some money off the table and then allocate other parts, maybe half off and then the other half you can roll into the next company.

Brady Weller (QSBS Rollover) (14:14.137)
Yeah.

Brady Weller (QSBS Rollover) (14:18.798)
I’d say an extremely common situation that we see is maybe a founder.

in New York who is raising maybe a Series B, call it a 50 or $60 million Series B. We saw a lot of these size rounds with the AI kind of boom happening and might be an opportunity to take, you know, four to $6 million off the table as secondary at that stage in the company’s growth. so you have this founder who just got $5 million wired to their bank account, maybe their first money. They’ve been renting in a condo or apartment in the city and they’re still very much like in high growth stage with

company so they don’t have a lot of bandwidth to run a new business. And so they’ll really try and de-risk themselves. That is, maybe pay taxes on a million, a million and a half, give themselves a cushion right away, maybe buy a condo or you know whatever, stabilize their life just a bit and roll over the other four, three and a half million, you know, and manage a project on the side that way. That’s a really common situation we see.

Frazer Rice (15:19.624)
For investors who are invested in a lot of different things and maybe you know, they’ve got six or seven companies that are QSBS eligible and they are sort of rolling the dice on that and sort of picking and choosing which one should go into which that type of thing What’s different about it from an investor standpoint than from an operator standpoint?

Brady Weller (QSBS Rollover) (15:43.758)
Yeah, I think the biggest thing investors have to pay attention to is if you receive a distribution that isn’t QSPS eligible because of holding period, you cannot just take that money and invest it back into a venture fund.

and call that a rollover. The money can go into a venture fund, but that capital also has to be called and deployed into, an investment from that fund. Meaning you can’t just invest in the, in the partnership at the partnership level in a venture fund and it’s sit there undeployed and be eligible for QSBS. It actually has to be fully deployed into target, target opportunities within 60 days. So that’s something that I think that we’ve run into a couple of times with, with investors is they think,

I’ll just, know, Fund2 is open at, you know, XYZ firm. I’ll just roll the money over there. But it does have to be deployed still within that 60 day window. So that’s something that we hear a lot of. You know, if you’re an investor, I would keep, you know, you don’t always have the perfect deal ready at the right time. But keeping good relationships with the founders that…

you’re partnering with, you know, you never know when someone might be able to open up a tranche on the side or sell some secondary to you. if you’re trying to still get access to that deal sort of outside of a normal round.

Frazer Rice (17:07.445)
So for the companies that are in your orbit, obviously you’re probably checking in saying, hey, you didn’t do anything to blow up your QSBS status. But for the companies that aren’t that way, and let’s say you’re a founder and you’ve got a nice situation where you’re able to take some money off the table and maybe put it into.

one of the things that your friends put together or something like that. How do you think about a checklist or what are the questions to ask to make sure that the recipient investor or recipient of the investment is QSBS eligible and will sort of stick to it?

Brady Weller (QSBS Rollover) (17:46.48)
Yeah, you want to ensure first that the company is small enough. so under the old rules that I mentioned, the company would have to have less than $50 million of gross assets. A really great proxy for that is just how much has that company raised? You know, if you’re trying to invest in a company and they’ve raised $120 million, it’s very likely that they have at some point blown the asset test and they’re not issuing QSPS anymore. It’s very, it’s not always, but it’s very possible. A lot of people confuse that test for valuation.

which is a mistake, you could have a billion dollar company in terms of market value, you know, with only 20 or 25 million dollars worth of assets on the balance sheet. It is possible, especially in some of these high multiple high growth tech businesses. And so, yeah, not confusing valuation with gross assets is one thing to pay attention to.

the other is ensuring just that the company is a C corp, especially for early stage investors. I’m talking like first money in, maybe before, you know, pre seed or pre seed, would say, ensuring that the right structuring is in place such that, know, you’re getting stock issued directly from a C corporation at that time you’re investing. So I would say that’s something to worry about more if you’re, you know, an angel.

who does a lot of sort of direct sourcing of deals and you’re not going through a fund. Most of the time, if someone’s raised capital directly from a venture fund, all the paperwork and things that you’re going to look for as far as QSPS are going to be in place, because most VCs are pretty well acquainted at this point with, hey, let’s make sure this is eligible before we get in here.

Frazer Rice (19:27.913)
Right. And just to distinguish, an LLC that elects to be taxed as a C Corp versus a C Corp, C Corp, is there any distinction there for our listeners?

Brady Weller (QSBS Rollover) (19:39.673)
Yes.

Generally, we would say as long as the LLC has made that C-Corp election before issuing more at that stage, guess, membership units of stock, as long as they’ve made that C-Corp election prior to issuing the stock, then we feel generally good about it. But yeah, an LLC, it’s an entity structure whose default taxation is as a pass-through, but an LLC can also be taxed as a C-Corp and can issue quote unquote QSBS eligible shares.

or units as well, so it is possible.

Frazer Rice (20:12.683)
I was gonna say, so for the listeners out there, C-Corp doesn’t just mean C-Corp, but the real operative language is that it’s taxed as a C-Corp component, and that should be part of your checklist as you go down the list of companies to potentially roll into. So for those people who aren’t exactly founders,

but maybe are investors or otherwise part of businesses that they’ve been included in, et cetera. Those non-venture-backed businesses, what are the opportunities there for QSBS and then the ability to roll it over into other things?

Brady Weller (QSBS Rollover) (20:48.708)
Yeah, I would say it’s very rare that we see a non-venture-backed business in between the coasts, I’ll say, right? Like not one of these like kind of like call them coastal elite tech businesses. I’m talking about your like legacy family business in, you know, North Carolina.

Frazer Rice (20:59.488)
I mean…

Brady Weller (QSBS Rollover) (21:11.856)
Most of the time we’re going to see those as pass-throughs or partnerships, maybe like an S-Corp. You would see that type of structure and those businesses, while they could be amazing businesses, the interest in them isn’t QSPS eligible because it has to be issued from a C-Corporation. Most of the time, the planning opportunity we see with those types of businesses is around the time of maybe a generational transition or other type of transition planning where

Maybe the children take over from the parents and they establish a plan. Hey, we’re going to take it over, but we want to plan to sell maybe the next five to seven years. I hear this a lot. And opportunity. If you are in an industry in a sector where stock sales are common in the industry for exiting the businesses, changing, electing to

be treated as a C Corp or restructuring to a C Corporation from one of those pass through structures is an opportunity because you could sort of reorganize, reissue stock, now start your QSBS five year time clock. And, you know, hopefully the business keeps doing well and you can have that exit opportunity down the line. And at that point, take advantage of QSBS.

Again, the thing you want to pay attention to is that you actually be able to do a stock sale at that time because QSBS requires a sale of stock, not an asset sale. And so that’s a really important distinction. So make sure either that you’re in an industry where that’s common or you’re working with counsel who understands what you’re trying to accomplish before you make those decisions about how you’re setting your entity up at that stage.

Frazer Rice (22:41.353)
Right.

Frazer Rice (22:56.758)
I just have a comment for me with the passage of the new law that we sort of alluded to where previously you really didn’t start thinking about this until fully five years. The new law, people can start thinking about it within three. You get 50 % of the benefit of the exclusion at three years.

Brady Weller (QSBS Rollover) (23:08.282)
Mm-hmm.

Frazer Rice (23:15.21)
And I’ve run into people where three years suddenly seems like a short amount of time, whereas five years, I think everyone was sort of like, we’ll get there eventually. you know, they’re they’re they’re fighting for their survival anyway. And if that happens to work terrific in this case, I think that the law moving the timeline up a little bit has had an interesting impact on those conversion discussions, because I think people are now starting to say, hey, you know what? I can get to three years. And, you know, with the speed at the

and the rate at which things change at this point, it’s much more realistic than I think it might have been going back in time.

Brady Weller (QSBS Rollover) (23:50.896)
And if you have a stable business where you feel comfortable making projections, say three years out, so to what that business could look like at that time, it’s really becoming more common now to do what you’re calling like choice of entity studies, right? So working with someone who can model out with the difference in taxation, both at the company level and at the point of.

Frazer Rice (24:05.482)
Mm-hmm.

Brady Weller (QSBS Rollover) (24:15.276)
selling stock, what the optimal structure may be depending on your time horizon tax it, your expectations for growth or lack thereof. So that’s something that some valuation firms, business advisories, some law firms or CPA tax advisories may be able to do. If you’re in that situation, you’re trying to figure out, hey, what’s the math look like based on my baseline assumptions of what this business will be and can help you sort of make those decisions about how to plan.

over the next three to seven years.

Frazer Rice (24:47.402)
As part of that reorganization too, I’ve talked to a few people who are in, let’s call it personality-based businesses, whether they’re podcasters or influencers or other types of things that are a little bit adjacent to maybe typical software companies. And I’ve brought up the notion that you may be disqualified now, but you may have a future growth opportunity within your business to make it fall more in line with a QSBS-defined business.

And so, you if you’ve got the time and the ability and it makes a business sense, it may make sense to start thinking about either sectioning that off or developing that business line for something a little bit later on.

Brady Weller (QSBS Rollover) (25:27.95)
Yeah, being strategic about where those adjacent businesses, how they’re structured and where they’re built. And I mean, where like in terms of a legal entity level sense, I’m thinking about, for instance, several golf YouTubers, make a lot of golf content online, but now they’re announcing partnerships to, you know, design clothing, you know, have their own clothing line, or maybe they’ve entered a, a joint venture with a golf club maker or maybe an emerging brand and they’re taking equity.

Frazer Rice (25:41.983)
Mm-hmm.

Brady Weller (QSBS Rollover) (25:57.826)
Those are really interesting options and I think that you still have the opportunity to leverage your personal brand to grow that business but separating them out so that you know your reliance on your personal brand doesn’t ruin QSBS. That’s actually getting to one of the rules around qualified small business stock which is that the companies can’t be based on the skill or reputation of a single person. And so that’s when we think about

Frazer Rice (26:24.938)
Mm-hmm.

Brady Weller (QSBS Rollover) (26:27.632)
Like entertainers, athletes, social media personalities. MrBeast, for instance, couldn’t sell MrBeast, the YouTube channel necessarily, as QSBS eligible interest because of that rule more than likely. And that’s obviously a broad brush, paying attention to where you hold your business interests is important for this if you’re in that space.

Frazer Rice (26:53.5)
Any state thoughts? I know California QSBS is uncoupled from the federal QSBS and New York threatened it and apparently that got knocked down. New Jersey just coupled with the federal government so that people weren’t scared away from doing that. How does that figure into your analysis?

Brady Weller (QSBS Rollover) (27:04.304)
you

Yeah.

Brady Weller (QSBS Rollover) (27:12.784)
It’s sort of a battle of the coast. It’s like which coast of the United States is going to be most investor and founder friendly with relation to these things. Yeah, because California hasn’t followed it for a long time. Oregon and Washington state are close behind there. And then we have the sort of somewhat the opposite happening on the East Coast. So as an East Coast guy, I hope it becomes a hub. But yeah, there is some sort of.

Frazer Rice (27:19.528)
Right.

Brady Weller (QSBS Rollover) (27:36.388)
you know, state and local tax planning, strategic planning that you might be able to do if you have the foresight and, you know, the right data to determine where you might become a resident or taxpayer prior to an exit. You might talk with a.

assault attorney or assault advisor state and local tax is usually tax advisors CPAs or or tax attorneys who can help you think through Hey, does it make a difference whether or not I move from California to Texas? What does that look like for my family? What does that look like for my post-tax exit situation?

because where the company is headquartered, as long as it’s in the United States, doesn’t matter for QSPS, just has to be a domestic USC corporation. And so remembering that QSPS is fundamentally an individual taxpayer incentive means that regardless of where the shareholders are located, you’re gonna be beholden to that specific state of where you live and their roles around QSPS.

Frazer Rice (28:36.906)
Terrific stuff. Brady, we’re winding down here. How do people find you and your company and any sort of parting thoughts?

Brady Weller (QSBS Rollover) (28:44.516)
Yeah, I’m personally very active on LinkedIn. So you can find me there, Brady Weller and our website, qsbsrollover.com. We also have a sort of an open source QSBS advisory referral site called qsbsreference.com. And so you can find us at either of those places. We’d be happy to help you out and point you in the right direction.

Frazer Rice (29:05.13)
Brady, thanks for being on.

Brady Weller (QSBS Rollover) (29:06.874)
Thanks, Frazier, appreciate it.

KeywordsQSBS, tax exemption, startup founders, rollover, legal structuring, investment strategy, tax planning, startup exit, C corporation, legal advice

Titles* Mastering QSBS Rollovers: Strategies for Founders and Investors * The Ultimate Guide to QSBS Tax Exemptions and Rollovers

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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Organize your medical records and update legal documents.
Engage a healthcare advisor to understand your coverage and treatment options.

Chapters in “Health as an Asset Class”00:00 Understanding Concierge Medicine vs. Health Advisory
02:11 The Importance of Team-Based Care
03:49 Collaborating with Client Advisors
06:23 Navigating Complex Healthcare Needs
08:07 Addressing Client Misinformation
09:40 Challenges in Mental Health Treatment
12:24 The Purpose Behind the Book
14:26 Debunking Myths in Healthcare
16:31 Preparing for Healthcare Interactions
20:56 Managing Healthcare Risks
23:05 Finding Resources and Support

ResourcesWellworth Advisors – https://wellworthadvisors.com
John Samuels’ Book on Healthcare Management – https://www.amazon.com/Healthcare-Management-Advisor-Guide/dp/B09XYZ1234

More From John on “Wealth Actually”: https://frazerrice.com/ep-126-john-samuels/

Guest linksWebsite – https://wellworthadvisors.com
Email – mailto:john@wellworthadvisors.com

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/Keywords

healthcare, concierge medicine, health advisory, high-net-worth individuals, patient navigation, mental health, healthcare risk, medical research, healthcare myths, health insurance

Titles

Beyond Concierge: The Future of Personalized Healthcare for Wealthy Clients
How Expert Care Navigation Transforms High-Net-Worth Healthcare

Sound Bites

“We map out the cost of treatment for clients.”
“We focus on evidence-based treatment options.”
“VIP care often doesn’t mean better care.”

View Details

“Breaking the Glass Ceiling: Julia Carreon’s Fight Against Corporate Gaslighting”In this episode, Frazer Rice sits down with Julia Carreon to explore her recent high-profile litigation against a major financial institution and her powerful insights on women in leadership, corporate culture, and overcoming systemic barriers.

YOUTUBEhttps://youtu.be/e05k7SVQ2xIWe discuss:

• Julia’s experience with workplace gaslighting and her litigation journey with Wells Fargo
• The importance of transparency, accountability, and protecting yourself in corporate environments
• How societal and corporate cultures disadvantage women, especially around motherhood and leadership
• The themes and motivations behind Julia’s book, Walking on Broken Glass
• Practical strategies women can use to build political capital and safeguard their careers
• The significance of external networks and understanding your personal strengths
• The evolving landscape of equity, ownership, and governance in corporations
• How to proactively prepare for and respond to systemic workplace challenges

SPOTIFYhttps://open.spotify.com/episode/5c546gs6Qctx4bGOvalgXj?si=1dDyJxnwSyu4tnhXxpzVxg###### Timestamps:

• 00:00 – Introduction: Julia’s litigation and book overview
• 02:03 – Gaslighting in corporate culture and early experiences
• 04:14 – Dealing with systemic backstage politics and fighting for justice
• 05:10 – Motivations for writing Walking on Broken Glass
• 08:08 – Diagnosing workplace culture and gender dynamics
• 09:33 – The weaponized HR department and accountability
• 11:38 – Protecting yourself: cultural awareness and bias
• 13:12 – Demographics, gender disparities, and moving forward
• 15:12 – Institutional misogyny and societal shifts
• 16:05 – Motherhood, work-life balance, and corporate support
• 18:28 – Questions of corporate culture change post-COVID
• 22:21 – The fear factor and change in workplace loyalty
• 27:12 – Tactical career strategies and building political capital
• 28:15 – Always Be Executing (ABE) and tracking success
• 30:53 – The ownership mentality and equity’s role in career resilience
• 34:45 – Building internal and external networks for support
• 36:49 – Understanding personal aptitudes through testing and reflection
• 40:12 – Leveraging political capital and seizing opportunities
• 43:31 – How to follow Julia and stay updated on her journey

TranscriptFrazer Rice (00:01.004)Welcome aboard, Julia.

Julia (00:03.32)Thanks for having me.

Frazer Rice (00:04.652)Well, as I said in the opening, the concept of gaslighting in the boardroom is something that certainly isn’t new, but it doesn’t make it any more comfortable for the people who deal with it on a day-to-day basis or as part of their career. And you’re in the midst of litigation right now with a major financial services company. Maybe talk a little bit about what’s going on there.

Julia (00:24.801)Yeah, so I am in a high profile lawsuit with my former employer. I would say this is not a path that anyone chooses on purpose. In my particular case, Frazer, I spent 20 years at Wells Fargo, 15 of which were pretty spectacular. I have come to realize almost maybe fairy tale like in terms of my experience.

I want to talk about some of the things later on that made it a fairy tale. So yeah, I wouldn’t have chosen this. I did not see the culture at my former employer coming for me. I was blindsided by it and it got ugly quickly. One of the things that I think I am doing here. Or at least trying to do is not be shy about it. Not hide from it. Try to show women a different way for how to deal with these situations. Because I have very strong feelings about the fact. With the rollback of DEI and the current administration’s point of view on women, that we’re going backwards. If women don’t start fighting for ourselves in a more public way and without fear, then I don’t know where we’re going to be in the next five to 10 years.

I am soldiering on and it’s not easy to your point. But it is what it is and it’s a fight that I believe is worthy.

Frazer Rice (02:03.608)So it’s a daunting task taking on a big bank. Big financial services firm, whether it’s in this situation or frankly any. It’s just these well-resourced big behemoths. What has been the experience been like so far? As far as gathering information? Of getting the walls built that you need to in order to live your life while you go through this conflict with this bank?

Julia (02:29.822)It’s hat that is the million dollar question. Right? I will say that in my case i got really fortunate and came across a quote. It’s going to sound really strange. But i came across a quote that said fear is fake and danger is real but fear is fake. I believe that the patriarchy wants women to be afraid.

So it tells us these bad things are going to happen if you take on a big firm like this. It is grueling. The days are long sometimes. But once I internalize the reality that it is all fake in terms of all of the bad things that you think could happen really can’t happen. Worst case scenario, there’s nothing

Like I’m not going to die. They’re not going to, you know, take away my family. Like all of these things, right? We tell ourselves that it could get really nasty. And in my case, I have to stay really grounded in the fact that what I’m doing is worthy. We tried my lawyer and I tried for 14 months to come to a different answer. And so in a way, not just telling myself fear is fake. But in another way, I kind of feel like it’s my destiny.

Because, I just want to say this real quick, I had 20 years at a place that was not toxic. And so I know what good looks like, and this is not good. So in that way, I really feel like it’s my destiny. And so that’s what you do, and you have to have a good support network. I have a great husband, so that really helps.

Frazer Rice (04:14.21)The, as I’ve told people, sometimes doing the right thing or going after something that upholds justice. It can be expensive and hard. I give you kudos for standing up. Not only for yourself, but others who are going through a difficult situation. Where you’ve had a significant wrong done to you.

You’ve written a book about this experience as well. We can take some time to think, to talk about what the book tries to do. First of all, writing one in tandem with the process here, I think is a bit unusual. Some people do it after the fact. To go through a catharsis after going through a difficult process. Talk about first the why of the book.thhen we’ll talk a little bit about what you talk about in it.

Julia (05:17.241)The book is called Walking on Broken Glass: Navigating the Aftermath of the Glass Ceiling.” It was co-written with a fabulous woman named Shannon Nutter. I hope people follow on LinkedIn. The book is not squarely about what happened to me the book came together.

With Shannon and I meeting on LinkedIn. Then discovering that we had a lot of the same shared experiences as we are Gen X. in hindsight. Our generation has had the opportunity to have the most benefit of the Gloria Steinem Women’s Movement.

Think about the fact that we got the advantage of the birth control and all of the DEI efforts that have been in the last 15, 20 years. And we really felt like there was still a long way to go. Then all of that is starting to go backwards. So last year when we met or the year before, we’re like, my God, the idea that we got the best of the best is shocking to us. And so what are we going to do about it?

We really wanted the book to speak to women of all ages in their career. But it was written from a lens of two then 53 year old women who had seen a lot. We wanted to give the book as a love letter or a gift to our 35 year old self. To say, this is what we should have or wish we had known 20 years ago. Because we would have done things differently if we had really faced kind of what the challenges were that women are facing at work. In a real way right not in a way that sugarcoats it or pretends to throw it under the rug.

And or always makes it the woman’s fault like the woman always has to be changing and evolving in order to adapt to the systems and i you know it’s exhausting right so the book was written for that reason and it does tap into a lot of the things that we both experienced.

Julia (07:35.17)But it isn’t a kind of a personal journal of what happened to me with my former employer.

Frazer Rice (07:39.82)Right, one of the things that I found useful about the book is you divided it into three sections. I think it brings us sort of clarity into what you’re trying to achieve here. The first one is just diagnosing the situation that you’re in. Maybe talk a little bit about that. Part one the understanding of your surroundings. What’s happening around you. The conditions that women are facing as they embark on these big situations in the workplace.

Julia (08:08.982)Yeah. So the first part of the book does give a primer on kind of the history of feminism and how did we get here and what are some of the big open questions that are still left to answer. We also want to set the stage that makes it very clear that women are accountable for our actions in the workplace.

Like this is not in any way a book that seeks to make someone who’s failing feel good about the fact that they’re failing, right?

Shannon and I both reached really high levels of corporate success at major global firm. There is a lot of work to do. So we really try to dimension how, what are some effective ways for you to approach that work? What are some of the pitfalls and how are some of the ways that you can handle that?

In a way that’s kind of clear-eyed, but never about putting the blame or the onus on the company. And if you don’t mind, I want to say something about that because it relates to my lawsuit. One of the things that I’ve heard criticisms about is that people on social media often I saw when I kind of scanned the landscape of it recently are, this woman is naive. She thinks.

HR is her friend because one of the things that I have sued my former employer for is a weaponized HR department and I want to get very clear. mean, Frazer, you don’t manage hundreds of people in 13 states like I did for a very long time successfully innovating, having great client experience team scores and having great employee team scores, right? If you believe HR is your friend.

So that’s not what i’m trying to say what i’m trying to say in my lawsuit is. HR shouldn’t be picking off people for political reasons either. We are saying all the way along there is shared accountability between the employer and the employee. That’s really important. I think that you know one of the backlash is going too far field here.

Julia (10:27.401)We went so far politically correct on some things that some employees do show up to work and think that they just need things handed to them. And I do think that that was part of the backlash, right? So I just am always striving for balance. I think we should all be always striving for balance.

Frazer Rice (10:45.13)One of the concepts too, I think in the book that I sort of grabbed onto and enjoyed was the idea of taking steps to protect yourself. You’re dealing with a lot of different asymmetries when you work for a big company. You’re dealing with information asymmetry, you’re dealing with political asymmetry, you’re dealing with resource asymmetry. Sometimes you’re even dealing with just…

Accountability asymmetry in terms of, you some people get free passes at other times people are judged on things or unfairly judged on different criteria that just don’t make a lot of sense.

If we step back for a second and for people who are trying to understand, I’ll put it in quotes, how the world works and how to how to be aware of one’s and to protect yourself, what would be the first couple of things that you would tell people to think about on that back?

Julia (11:38.471)The number one thing is I would be very aware of the kind of culture that you’re operating in. And it’s very easy to take for granted what a culture really is, what your own personal bias and history is, and then how is it that you are fitting. into that culture with your own shared history.

So I love to be candid, right? And provocative about my own situation. If I could do something different, I would be very aware of what my biases were going into Citi with 20 years of being at a place where

It was a really fair game, but probably because I had a lot of political capital and I grew up there. So I understood it. But I went into that place thinking that I was a fancy managing director, that obviously I was hired to be a change maker. I can do a lot of great things.

And I was, you know, doing my thing, not realizing that I was swimming in a different lake and that lake was filled. with a lot of different kinds of wildlife that I was unprepared for. So, I mean, that’s really important.

Frazer Rice (13:12.398)As we talk a little bit about some sort of bullet questions as far as how your experience has gone, the demographics of the workplace are different and changing. On one hand, college graduates are now majority women or higher in just about every college situation. Yet institutions like the CFP, the women make up…

Believe the number is somewhere in the 24 % range. So you have this weird dichotomy of more women entering the workplace, but not in the numbers necessarily that would indicate that they are in places to make as much change as they would like.

They are still in the vast minority in terms of boards of directors and executive positions at almost every Fortune 500 company that I can think of. As we chart a path forward where, let’s call it merit.

Julia (13:58.813)Mm-hmm.

Frazer Rice (14:04.494)presides over sort of misogyny and I guess I would call it sort of political gamesmanship. How do you think about that in terms of advice for people entering the workforce?

Julia (14:16.461)Yeah, look, so nobody gets to say that women aren’t in the pipeline, right? I mean, that just, doesn’t hold up, especially at the more junior levels, right, of entering the workforce after college. What starts to happen is that it starts to go downhill as you get higher and higher up into hierarchy.

And I believe that there is a mismatch between women who want to work and do the right thing. And we’re going to talk about this. Then what does it mean to also then become a mother and give birth and have to manage all of that?

And then coming up against institutional misogyny. Obviously my perspective in the last 18 months has changed about the degree to which institutional misogyny exists.

Because I had a fairy tale experience before I was able to be willfully blind about the realities. so a really direct way of answering your question is that our book is seeking to hit women in the face with the realities of this because I don’t think we’re gonna change it overnight, right? And it is so entrenched, it’s getting worse and it will get worse.

Before it gets better, but I do believe that it will get better eventually because the old system that’s, know, aging out, baby boomers are aging out. Like I think that there’s going to be cracks in that. And then there would be a tsunami of change. But right now the old guard is hanging on and, we are going backwards. And so we just have to be realistic about what it requires to go forward. And we talk about what that is.

Frazer Rice (16:05.58)One of the things, right, and so let’s touch back on the motherhood issue, is, that is biology. And so women who go that route and have kids. Which is frankly one of the big precepts in society. Unfortunately. n some ways takes you out of the normal trajectory of a corporate path, just from a time perspective.

Certainly, the balance of work that happens at the household level. Where that ends up alling usually, creates a stress that is not well understood or received at the corporate level.

What are your thoughts on that front? As far as charting a path that recognizes that reality and at the same time doesn’t put upon going the other direction necessarily in terms of favoring one outcome or the other.

Julia (17:02.019)I know a lot of women who did not have children because they felt like that it would, it would harm their career. And, um, certainly it’s a personal issue and there’s no judgment from me. I don’t think I would have had children if I hadn’t met my husband. He was willing to do 50 % of the workload and he has, and, always has probably does maybe more than 50.

It is a very deeply personal issue. What I have strong feelings about the fact that companies who lean in to, don’t expect the woman to lean in, but the company leans in to supporting pregnant women, have higher loyalty scores. They have better team member satisfaction. They get a lot from those women that they have supported.

This is a crazy story, Frazer. I was pregnant and or just coming back from maternity leave all three times I got major promotions at Wells. I mean, think about that. And I now, because I lived my life kind of in a vacuum for a long time, I didn’t realize that this wasn’t happening to other people, right? So look at me now. I am 25 years from when I got hired, still saying that Wells is a great company.

because of my own personal experience. And they got a lot out of me, but I gave a lot back. So to me, supporting women who are pregnant doesn’t have to be a zero sum game. Yet somehow that is the narrative. And I would love to ask you why that is. Like, I mean, what has happened to corporate culture that this is such a pervasive issue when

If you were to scan a lot of my Gen X friends, we did not have the same experience.

Frazer Rice (19:04.147)
I mean, from my perspective, I don’t know. I think that I blame some of this a little bit on the COVID blip in the sense that managers of all types just have no idea where to go as far as how to treat people fairly, either from a work from home experience or how that reconciles with…

women in particular who are having careers and families in addition to what’s going on with other folks like the men in the world. My short answer is I don’t know. The longer answer is that I think between the shorter news cycle, social media, work from home, there are a lot of different change agents out there that have taken the focus off of.

maybe the issues that worth talking about right now. And as a managerial class, especially as millennials are taking up the mantle on that front, they’re either forgetting about this particular issue and understanding the importance that it has, or they are just so overwhelmed by change at this point and self-preservation that it’s just an area where they’re triaging the different issues that they can deal with.

Julia (20:22.492)
Do you do you at all think that it is a problem of losing common sense and like letting rigid ideology take over from common sense. I certainly was benefited from working from home for most of my career, right? So it’s fascinating.

Frazer Rice (20:46.061)
Common sense isn’t common. And depending on the institution that you’re dealing with, work from home is either an excellent tool or a cover to hide under if you’re a mediocre performer. If you’re a manager out of sight, out of mind is a difficult place to be.

I think that we’re I think everyone is reconciling to the relative absence of work and sort of acclimating to Zoom phone calls and things like that. And that gets you then away from taking care of the real issues, which is to make sure that the company’s doing right, the employees are doing right by the company, and at the same time that people are being treated fairly, because I think when people are so disparate, it just becomes a real management challenge.

What we’re talking about as far as making sure that women are treated fairly in the workplace,

Combine that with, I would say, message confusion that occurs in social media, where some loud voices may not be the right voices to be taking up this mantle, versus some of the quieter, stable people who are really the exemplars that we’d really like to point to. Sometimes that gets mixed. And I think the brew, if you stir it together, I think is created.

Maybe if we think that there was progress since the 70s on through the 80s, 90s, 2000s for fairness and women progressing within the corporate ladder nicely, I think this the COVID blip has been a bit of a toe stub on that front. That’s an opinion, extremely uninformed, but more of an observation.

Julia (22:35.713)
No, no, but well, listen, I just I love it because I do want to unpack it just a little bit. It’s what’s fascinating to me is that I negotiated 15 years before covid to work remote and then my boss knowing that I had to be on the road three to four weeks a month regardless was like, I’d rather you be happy where you live because you’re to be on the road regardless. So

I got to work from home and then during COVID when they tried to bring everybody back, they’re like, well, you can’t be the only exception. And I’m like, okay, I have been an exception for 15 years. So that’s where I go back to, know, where is this right balance? did, I mean, COVID is as good a reason as any that it’s things are upside down. I mean, really it’s a great theory.

Frazer Rice (23:22.671)
Well, it also bespeaks different corporations have different cultures and certainly some people are worried about other things than others. Muriel Siebert, who I think is an amazing example of someone who took a look at Wall Street and said, look, I refuse to be held back by anything here. She started her own company and to call it a company is to not give it the respect it’s due. She’s a major absolute force in Wall Street and one of the real legends.

To me, entrepreneurism is one way through this. to create the company that you want to work in is, in some ways, to me, one of the solutions for people who are having difficulty in a corporate environment that they’re in right now.

Whether they’re able to be the change agent within, which is often hard at a big, you know, bulky company that turns with the agility of a battleship as opposed to being nimble in doing things or going out and starting on their own, which involves its own risks.

That to me is one of the solutions. But again, not without risk, not easy by any stretch. Where did that fit into your mindset as you were thinking about this?

Julia (24:37.16)
Well, so, so she is an icon, not just because of what she was able to accomplish, but she also did it, I think, without a college degree. And she did it. And this is important. She did it fearlessly. And what I would love to go back in time and have a conversation with her about where did she tap into that fearlessness? And you will start to see.

Frazer Rice (24:48.665)
Mm-hmm.

Julia (25:06.77)
On my own social media, am trying to tap into that whole mindset of women need to lose fear. I’ve already talked about it, but here’s what’s important to know, right? By 2030 in the US alone, women will control $34 trillion of investable assets. I believe that that is when you start seeing the game change.

Look at how Mackenzie Scott is giving without glory. I posted that in a remark that’s gone semi-viral on LinkedIn. Like she is giving without glory. She wants to give, she wants to be anonymous almost about it, and she’s giving without handcuffs. And what is she giving to? She’s giving to communities, she’s giving to schools, she’s giving to healthcare. I mean, it gives me goosebumps every single time. And so I feel like women

When we start to control more, we’ll start giving in, Alice Walton is the same way, giving in a different way to change society in a more meaningful way at scale.

And Muriel was a pioneer in that regard. And she is someone I think we need the next generation to know about. because she was so fearless and it’s an inspiration. But you and i both know that all kinds of things that women have accomplished are never spoken about in the same way that they are about man and about men.

I do think that that’s one of the great things about some of we can go into social media some of the social media change that we see happening with alpha female and all of these great accounts that are just starting to say, know what ladies, we don’t have to buy into the patriarchy.

We can do it our own way. And so I think we will finally see change, but I wanna be very clear, Frazer, it’s going to get worse before it gets better.

Frazer Rice (27:12.195)
Got it. So for people who are in a corporate structure, corporate environment, aren’t ready to make the leap to starting their own business, which is obviously a difficult decision, but when you’re in there, what are the things tactically that one can do to prepare, not only prepare themselves, but protect themselves against these forces that are out there?

One of the thoughts I had is making sure that in the job description that you’re able to point to numerical or formulaic successes so that if a narrative is being built against you, you can point to dollars created or jobs saved or metrics that in the boardroom.

Not only just qualitative successes, but also quantitative ones that makes it difficult for people to ignore you from a pure dollar perspective. Things like that, what pops up in your mind? That you would tell people to think about in terms of art directing their career.

Julia (28:15.023)
Yeah, well, the number one thing that I always say, and I’m kind of, it’s kind of a legend for it. So it’s ABE and it stands for Always Be Executing. And when I look back and see how successful I was in a corporate setting, of course, in my case, it was that I had a great boss and a great mentor and sponsor in him.

But actually, I was always focused on executing and doing it in a way that is collaborative so that you don’t have the knives coming for you from every direction. think a lot of people who the more successful that you get in your career, you think, I’m fabulous because I’m fabulous. No.

You need a mindset of I’m fabulous because I am creating a team around me, no matter who I am, even if I’m not the boss, to protect each other and help each other and lift each other up. if you are always executing and you hit on it, right, as a woman, you should always be keeping track of your metrics in a way that is tangible and defensible. But you also should

never take for granted the fact that no matter how senior you are, you need to be getting something done. And I do think that it is a big mistake for people to get high on their own supply and forget that. And then, and then the sharks will come for you. So always do something. And this is just a final thing, cause I have lots of people that I mentor. They’re like, just name one thing. I’m going to give you one thing. Send meeting notes.

If you go to a meeting, and everybody’s on a call, 15 people are on a call. If you’re the one who sends meeting notes and this is a hot button, right? For women, they’re like, well, I’m not the secretary. I don’t wanna take me. You know what? Put your ego, park it in a parking lot and send meeting notes. You would be shocked how much goodwill and how effective you’re perceived when those notes, like say a project is going downhill and somebody goes, but.

Julia (30:30.157)
Such and so committed to this and you’re like, those meeting notes were written by Julia Carrion. Nobody has to do that. But corporations get unwieldy. lot of churn happens. A lot of stuff doesn’t get done in a day. If you can demonstrate that you are someone who is acting in good faith and doing small things to keep the needle moving, somebody in senior management is going to notice that, I promise.

Frazer Rice (30:53.763)
The other thing I sort of, and this doesn’t just go for women, this is for people generally, is the ownership mentality and the move toward equity, and by equity I mean stock equity, where the mindset to me shifts when you move from sort of salary and bonus to equity in the firm.

And that subtle shift suddenly puts you in a different position in terms of sitting at the same table as someone who is, let’s call it quote unquote, making the decisions. When you’re there and your ownership of the firm, however small it is, is rendered unimportant.

First of all, that tells you to go. Second of all, I just feel like the people who exist on that plane bring up different things and then are thought of differently. Does that track with your experience?

Julia (31:48.819)
It does, but I think that this goes to kind of how is the corporate world changing and then how does that impact employees? So, and where I’m going with this is when I was at Wells, my compensation was a third, a third, a third. So it was a third cash, a third cash bonus and a third in stock. Do you want to know what’s going on?

And I don’t know if you know what’s happened on Wall Street.

Every single major bank is moving to you only get a quarter in equity and the rest of it is cash. So I think that the onus to here is on corporations to be thinking about how they’re treating employees. And to your point, what, what does that mean when you show up and how vested are you in the option? Just real quick, I want to give a shout out to Maureen Clough.

I don’t know if you follow her, she just yesterday did an amazing six minute post on why companies are losing loyalty from employees. so like, again, this goes back to is everybody backsliding right now because these corporations have to realize that in order to keep good talent, you want them to have a stake in the game, but that’s winnowing, I think.

Frazer Rice (33:11.819)
I know. I agree. Frankly you know to me at the larger institutions that aren’t willing to sort of play ball as far as involving people in the ownership that’s a signal and when it’s a signal then you know if you’re good at your job and you bring things to bear you know there are other there are other places out there.

I think those places that value you want you around and they want you to be able to participate and how the broader governance of the company works. It’s a lot like how Goldman Sachs was back when it was in the partnership days.

Everyone who was a partner there understood how everything else was working and ultimately that meant that, I don’t know, I feel like Goldman still does well now, but it’s a different climate, different firm where you’re completely involved in everything else and therefore the information is out there and… it’s something that you’re not blindsided as much by what’s happening in other divisions within your firm.

Julia (34:15.472)
Yeah, totally agree.

Frazer Rice (34:16.911)
One other thought that as we were sort of squiring through this was the idea that it’s important to have information sources or networks both within your company that are outside of your reporting line, but also information networks and support outside your company.

I call it sort of the kitchen cabinet of people who are similarly situated or in different spots so that you have context into which to sort of find out what your what you’re up against both inside the company and outside of it. Is that something that makes sense to you or is it something that was lacking in your current situation? How did you think about that?

Julia (34:57.906)
Hmm. I love that because in 2017, I took stock of the fact that I had become too comfortable in my lane and I was seeing that my influence at Wells was waning for whatever reason.

And so I started blogging on LinkedIn in 2017. Because of a conversation with a Harvard sociologist that I write a lot about. Fscinating guy who predicted the current turmoil 10 years, almost 10 years ago. And so I started networking outside and I could not agree with you more that you need to be building your networks, not just inside. That goes without saying, right? Like I had a great career partly because I was a boss at gaining political capital at Wells all the time, right?

Giving goodwill and getting it back but outside is critical. during our book, what we found out is, that women are more likely to put that aside. Because we feel like we’ve got too many other things going on, work, know, kids, all of the pressures, trying not to, you know, have a nervous breakdown on any given day, trying to stay fit, dealing with menopause. Which of course is a whole other thing that is a whole other bag of tricks.

And so we don’t do it as much and it hurts us. So I absolutely think being deliberate about an external network is essential. When women ask me how to do that, I say to commit to a certain number of hours, half an hour to two hour, whatever you can give a week to doing it deliberately. I wish I had done that earlier in my career for sure. So it’s great advice.

Frazer Rice (36:49.865)
Along that line, I’m a big believer in being aware of your surroundings. In a sense aware of yourself and what your skills. Things that you’re annoyed are at are and what you’re good at and what you’re not good at. Did you take any tests or anything to understand what your aptitudes were or what you were interested in or more importantly not interested in or how you interact with other people personality wise and

Is that something that resonates with you? sort of am a big sports fan. Dan Quinn, who’s the Washington commander coach. He got fired from the Falcons. He did a real deep soul searching and went in and got tested on a whole bunch of different things and where he came up short, where he was really good. And that allowed him to get hired again and to have at least some initial success with the team and hopefully going forward from my rooting perspective.

But where does that fit into your analysis for people?

Julia (37:50.351)
Did somebody set that question up? That’s what I want to know. I am a huge believer in strength finders. Some people take discs, some do Myers-Briggs. The reason I asked if it was a setup is because strength finders saved my life. I was deemed top talent when I was like 34 years old at Wells and they gave me a career coach who by the way was Sarah Grady is her name. and she was Dick Kvasevich’s legend on Wall Street.

She was his leadership coach and she gave me strength finders and I very quickly was very clear my top five strengths and then my bottom five strengths are not a surprise. Like I am zero. I’m like negative zero at woo. I was like, it won’t even shock you for a minute.

Yes i do think that those kinds of valuations are critical and in fact i’m gonna talk to my twenty year old son about taking one i think you’ll end up taking disk but. One thousand percent if you if you do not know what you’re good at and why then try to find out because it can save your life i mean the awareness and the learnings that i got about myself.

From taking one test have stayed with me for 25 years. And I’m gonna be really blunt here. I forgot those lessons when I stepped into a new culture and it was painful. So I think you have to also be disciplined about…

Take it again, remind yourself, reread whatever book helps you stay grounded in who you are and how you’re showing up. And get some friends to give you feedback.

Frazer Rice (39:44.111)
Well, mean, people get better or change or worse at certain things. And so you’re not the same person you were 20 years ago. And, you know, it merits revisiting every once in a while. As we wind down here, unfortunately, we probably could go on for about three hours, which I wish we could do.

But one of the things that I think is interesting, too, you talked about political capital and building it up, is that I think one piece of advice that I tend to give to people who are starting out and might be useful in the situation that we’re describing here is that when you have political capital, you’ve got to be willing to spend it occasionally.

Careers, in my experience, take quantum leaps in that you’ll be going around for a while and then something good will happen and then you’ve got to kind of take advantage of the advantage while you have the advantage of having the advantage and moving up and then reestablishing the plane.

And it’s a little bit like a ratchet where when the wrench turns, it doesn’t turn backward. You can kind of continue to elevate on that point. Is that something that you saw where, you know, as you were making the moves up the ladder that didn’t happen at the last situation that maybe might’ve been something that could’ve turned out differently?

Julia (41:01.791)
Yes, and I think that being more aware of my surroundings would have helped. I don’t think it would have changed the outcome in the other example. But the political capital that I was able to gain is that I got promoted every single time Wells did a major merger when people were panicking about their jobs.

Frazer Rice (41:08.623)
Mm-hmm.

Julia (41:31.061)
And one of the things that I did that you and I could probably discuss for two days is I gave up control of trying to manage the outcome. In other words, I went to senior management with two major mergers and I said, you know what? I don’t care what I do for the time that the companies are trying to come together. You give me something hard to do and ugly and I will get it done the right way.

And then you decide whether I get rewarded or not. And when I crushed both of those tasks, I got major promotions. So I think it, I think a lot of people think, I’m going, I had a, had an employee who told me I should just get promoted because I’m sitting here and I’ve been sitting here for two years. mean, it really, life just really doesn’t work that way.

In my experience, you got to work your ass off for it. And, and you have to put your ego aside and you have to hope that the universe is gonna pay you back. And I believe that because the universe always has. I believe that even now with my current situation, like everything that has brought me here has made me a spokesperson for like a better way because of what happened to me, right? I had 20 years of goodness and then I had something really hard happen.

And I’m trying to make lemonade out of a very difficult situation because it is the only way, the only way out is through. So I just have to keep going through and I love the idea of yes, you’ve got to spend your political capital. can’t, know, George Bush said that you can’t just collect it. What are you collecting it for? If you’re not going to spend it.

Frazer Rice (43:17.817)
Exactly. Okay, we have to disembark here, unfortunately. How should people keep track of your situation? How do they find the book? And how do people get in touch?

Julia (43:31.846)
Yep. I have, um, I’m on LinkedIn. I have a website, juliacarrion.com. If you are looking for, I’m doing some consulting on a digital transformation always and org design or whatever. So you can find me there. And then, um, you know, today’s a big day. We are filing today or tomorrow, a response to my lawsuit.

So it would probably make the news. Thank you to you for being a great ally to women and having me on. The book is walking on broken glass.com. It’s such a great name. So you can order the book on the website from any of your favorite book resellers.

Frazer Rice (44:14.639)
Super, well good luck with the legal proceedings. All of your information will have that in the show notes so people can find it easily. I think you’re coming off of a difficult situation. I think you’re gonna turn it into something far more transformative. Even you’re envisioning it right now. So I’m hoping for the best here.

Resources & Links:

• Walking on Broken Glass: Navigating the Aftermath of the Glass Ceiling
• StrengthsFinder Assessment
• Julia Carrion on LinkedIn
• Julia Carrion’s Website

Connect with Julia:

• LinkedIn
• Website

Stay tuned for updates on her legal case and ongoing advocacy efforts. Don’t miss her insights into transforming adversity into empowerment and systemic change.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/###### Keywords:

Gaslighting, Corporate Culture, Women in Leadership, Workplace Equity, Julia Carreon, Wells Fargo, Citi, Legal Battle, Glass Ceiling, Political Capital, StrengthsFinder, Work-Life Balance, Systemic Change, Weaponized HR

View Details

There is a storm coming with the challenges of navigating the TRUSTEE CRISIS. It is one of the biggest blind spots in the “GREAT WEALTH TRANSFER” and will be the source of mountains of litigation for the unwary,

https://youtu.be/hwQev88A03MSummaryIn this conversation, Frazer Rice and Jennifer Zelvin McCloskey discuss the current crisis in trusteeship, highlighting the shortage of qualified trustees amidst a significant wealth transfer. They explore the importance of modern trust planning, the challenges faced by individual trustees, and the need for better education and training in the field. The discussion also covers the emotional and interpersonal aspects of trusteeship, the functions and responsibilities of trustees, and the necessity of managing risk effectively. They emphasize the importance of building a pipeline for future trustees and improving the perception of the profession, while also identifying opportunities within the trust industry.

https://open.spotify.com/episode/4qpkrVdaUa2AfDxgl7j3yN?si=XVgG3jE_Qpqq2JTqi8XLXQEditing and post-production work for this episode was provided by The Podcast Consultant (⁠https://thepodcastconsultant.com⁠)

Takeaways* The coming crisis in trusteeship is already here. * There is a significant shortage of qualified trustees. * Trusteeship requires strong interpersonal skills and emotional intelligence. * Managing risk is a fundamental aspect of trusteeship. * Trustees critically need education and training. * The role of a trustee is evolving with increasing complexity. * Beneficiaries need to understand their rights and the trustee’s role. * Custodial responsibilities are essential for asset protection. * There are many opportunities for growth in the trust industry. * Trust law and investment management are distinct fields.

This Episode is for . . . * Anyone that has an estate plan with a trust in it and doesn’t know what a trustee does * Any advisor who works w/ multi-generational situations (that’s everybody in wealth management) * Any RIA looking to sell * Financial types worried about compliance world * Fiduciary litigators

Chapters of “THE TRUSTEE CRISIS: Navigating the Challenges”00:00 The Coming Crisis in Trusteeship

02:06 Importance of Modern Trust Planning

04:11 Challenges with Individual Trustees

08:03 The Dwindling Pool of Qualified Trustees

10:06 Functions and Responsibilities of a Trustee

12:20 The Emotional and Interpersonal Aspects of Trusteeship

16:05 Managing Risk in Trusteeship

19:07 Building a Pipeline for Future Trustees

22:10 The Role of Education in Trusteeship

25:07 Improving the Perception of Trusteeship

28:19 The Need for Better Trust Education

30:39 Bifurcation of Trustee Functions

33:26 Distribution Functions and Beneficiary Relations

36:52 Custodial Responsibilities in Trusteeship

40:19 Consequences of Poor Asset Management

46:41 Curriculum for Trustee Education

52:13 Opportunities in the Trust Industry

Transcript of “THE TRUSTEE CRISIS: Navigating the Challenges”Frazer Rice (00:01.068)
Welcome aboard, Jennifer.

Jennifer Zelvin McCloskey (00:02.723)
Thanks Frazer, how are you today?

Frazer Rice (00:04.782)
I am doing great. We’re going to dive into a topic that is near and dear to both of our hearts. And that is what I’m describing as the coming crisis in trusteeship, but I think it’s already here. Which is the concept of qualified trustees being in short supply, right in the face of a gigantic wealth transfer. And first of all, before we get into that, just describe what you do on a day to day basis first.

Jennifer Zelvin McCloskey (00:33.445)
Sure, I actually wear a bunch of hats. Day to day, right now, I’m a full-time practicing trust and estate attorney. I’m also an individual trustee for a variety of trusts that need either somebody here physically located in Delaware for a short period of time or even a successor trustee. But I’ve also spent many, many years building programs in trust management and trust administration.

Because there is this crisis of human capital that just does not exist. I built multiple programs. They’re housed out of the University of Delaware. So I act as a trust and estate attorney, do planning, administration, I teach in the area, I build programs in the area, and I serve as a trustee.

PEAK TRUST MANAGEMENT CERTIFICATE

Frazer Rice (01:23.182)
A full plate to be sure. To me, I came out of Wilmington Trust and another trust company served an individual trustee too. I’ve seen all these different flavors of trusteeship. My general sort of bon mot around that is that the individual trustees. I’d say 95 % or higher don’t really have an appreciation of the risk and responsibility that they’re taking on. And then the corporates have their own issues, which we’ll get into in a little bit. If we pull back even further, modern trust planning in wealth management, why is this so important?

Jennifer Zelvin McCloskey (02:06.275)
That’s massively important. It’s not just for the mass affluent or the ultra high net worth. It’s for everybody. We have all of these assets that we have this hyperfocus on building and increasing our wealth. Making sure that we have the ability to sustain ourselves throughout our entire lives.

But if we don’t do this type of planning, if we don’t have structures and implementation for when we die, then our assets that we’ve planned so diligently for will fall off of a cliff. We lose the ability to control ultimately what happens to those assets.

Layered on top of that, of course, is the tax component for ultra high net worth folks who are trying to really focus and direct their assets to make and create generational wealth transfers.

Without this type of functionality and wealth planning and estate planning long-term, people lose control of what they’ve spent so much time building.

Frazer Rice (03:13.338)
One of the things I tell people as far as trusts are concerned is that, you know, we’re putting these structures together. They’re durable enough to withstand taxation or creditors or other asset protection features, create some guidelines around distributing the assets to the next generation or other constituencies. But also have some flexibility to be able to deal with the things we can’t look into the crystal ball and figure out over time.

And that those three things just putting a document together that tries to do all that is hard enough, but then to put it in the hands of somebody or something to administer and to exercise discretion around it. That’s where the real art and science kind of stitched together and create this issue.

You know, as we think about that too, the idea, the history of these types of scenarios kind of goes back to, you know, you’d put a structure in place and then you’d go hire a bank and they’d take care of everything.

How do you look at that and say, all right, we’ve gone well past banks to individuals and then to dedicated institutions. What is the problem there?

Jennifer Zelvin McCloskey (04:22.956)
Now the problem, there’s two problems. In my opinion, what I see is that, you know, your individual trustee by and large is Uncle Joe, right? He’s the guy that everybody goes to in the family. The responsible one. He’s the smart one. The wealthy one who, great, doesn’t know what the fiduciary duties are. He doesn’t know that he has a duty of impartiality. He doesn’t know that…

Frazer Rice (04:32.419)
Right.

Jennifer Zelvin McCloskey (04:48.475)
He can’t self deal unless the instrument says so. Doesn’t understand how the instrument works. He doesn’t understand the nuance and the legalese written into the instrument. But he’s flying by the seat of his pants and everybody looks to him as the respected one in the family. No one knows that they have the ability to challenge him.

So with your individual run of the mill trustee named in the instrument, they just don’t have the expertise, they don’t have the technical knowledge. Don’t know what they don’t know. They can get into trouble in that way. The other problem that you have with professional individual trustees oftentimes is that they are not formally trained.

They may be an attorney who is working in that area, who’s doing plans for people who may or may not know what the full scope of being a trustee is. They may not realize, I have to get a special insurance policy because my malpractice insurance policy doesn’t actually cover this type of fiduciary engagement. There’s a lot of landmines that individuals can run into when they’re doing this type of work. On the corporate side, the problems that we run into is that there’s just a complete and utter lack.

Frazer Rice (05:50.061)
Hmm.

Jennifer Zelvin McCloskey (06:12.059)
Of available educational programs to teach people the proper way to be able to understand trusteeship. It has always been, and it just has developed over time through, you know, oh, we’ll give it to the bank, the bank will do it. This apprenticeship model, and that just does not scale well because if you learn improperly at the edge of a desk from somebody that learned improperly at the edge of the desk. Then the person that you’re teaching now at the edge of the desk is learning what you learned improperly.

So anecdotally, I did karate for a long, long time. And the man who taught me karate, I’m almost a secondary black belt to like, was serious in karate. And the man who taught me karate said, you practice, it makes permanent. Don’t practice wrong. Because when you’re practicing wrong, you’re making permanent wrong things.

And that’s what the apprenticeship model has the risk of lending itself to. It’s not that every trustee that learns at the edge of the desk learns wrong, but the risk is too high because the fiduciary responsibilities and the duties are too high to run that risk.

The other problem is that we have a dwindling pool of really qualified senior trust officers because of just the nature of the job. You’re a human being, you’re an individual, you age, you retire. And it’s not something that people go to school and say, when I grow up, I want to be a trustee. They fall into it sideways. And unless there are academic programs that are out there that people are aware of and that they can get some formal training, some formal education to enter into the field.

Frazer Rice (07:49.742)
Yeah

Jennifer Zelvin McCloskey (08:03.82)
Separate and distinct from, I’m in the field and now I want to get a CTFA. I want to earn my certification to really show that I have the chops in this area. We have this shrinking pool of expertise. We have a lack of knowledge, a lack of formal education, and an apprenticeship model that doesn’t scale. On top of, with the individual side and the corporate side, this massive wealth transfer and an explosion of trust complexity that’s all taking place at the same time.

Frazer Rice (08:31.918)
One of the issues at the corporate level too is that as you say that the impregnance model is not necessarily the best way to do it. They’re cutting back on training programs. The business model around being a trustee or even a specific trustee does not make the big money.

And so the ability for those types of institutions to develop the people.who ultimately are now in a very sort of pro-employee environment where there’s such a demand for trustees that they can kind of switch around and get a 10 or 20 % bump each time they go because people are desperate to have them.

There’s a real cavern there to try to create the permanence that you’re looking for in a structure that really rewards consistency over time, especially as it relates to discretion and process of decision-making.

Jennifer Zelvin McCloskey (09:23.15)
Yeah, that’s exactly right. And that leads to this revolving door in the industry, because people are just trying to make more money and they’re going and bouncing to different trust companies. And there isn’t that backfill.

Just because it’s a trust company and there’s policies and procedures, trusteeship is about relationships that you make with your beneficiaries, the relationships that you develop with multiple generations in a family. And when you have somebody that’s acting and serving in that and they move, they leave, they’re no longer acting and serving in that capacity, a new personality comes into the mix and it can really be disruptive. So having that consistency and minimizing the attrition is so valuable.

Frazer Rice (10:06.766)
The other thing I try to bring up, especially to individual trustees, is that the thing that you’re signing up for is probably going to look a lot different in five or 10 or 15 years when people are aged on, they remarry, they have kids, etc. That the conditions are a lot different than what they were before. And it’s going to be difficult to take on a structure that has eight people when before there were two.

Jennifer Zelvin McCloskey (10:37.517)
Yes, and that’s that complexity, that increased sophistication and complexity of trust structures that are available now to people. With the increase in the exemption, these trust structures, they’re not necessarily changed. For example, qualified personal residence trust, if people really need that anymore, but there’s a ton of them sitting around there. Are trustees properly administering it? Did you actually transfer the real estate into the trust at the time?

So there’s all kinds of sophisticated structures that the trustees may or may not have the right skills. But they’re saddled with having to do it.

Frazer Rice (11:19.47)
Let’s take a step back and just talk about the functions of a trustee for a second. I break them down basically into three. Which is the first one. You have to administer the trust, meaning you have to dot the I’s, cross the T’s, make sure things get executed, tax returns are filed, statements get sent out to the extent that that happens, and that the administration of a structure like that occurs.

Then I talk about the concept that the investments have to be made monitored moved around decided and that they’re appropriate for all classes of beneficiary that are in there and then the distribution function which is The assets have to be distributed according to the law. First the trust then maybe the intent or the law if everything is silent and that those three things are very different components and that it’s tough to find somebody who’s great at all three housed within one brain.

Jennifer Zelvin McCloskey (12:20.217)
Yeah, I agree with that 100%. It is a three legged stool. It’s the investments, the administration and the distributions. And in that administration umbrella in and of itself, there’s a tremendous amount of work that sort of goes unsung. know, it’s not the sexy stuff where you’re investing and making a bunch of money for your income beneficiaries and managing to preserve the corpus for your principal or your remainder beneficiaries.

And it’s certainly not the personal interaction that you’re doing with your beneficiary day to day. Making distributions, helping them, seeing the product of that help. It’s the making sure you file ax returns are properly. Understanding how to read that tax return. Even if you’re not preparing it, making a proper selection on the accountant that you’re using to prepare those tax returns if you’re not preparing it.

Make sure to set up statements properly, make sure that in this world of silent trust documents that you’re not sending a statement to somebody who’s not supposed to have it. Communicating with beneficiaries on an even keel. Making sure that you’re not inadvertently violating your duty of impartiality because it’s more than just a substantive duty, there’s a procedural duty as well.

That’s really, really challenging to find within one human being, let alone add on top of it somebody who’s financially savvy enough to understand investments and all of the different complex investment tools that are out there, as well as having the personality and the interpersonal skills to keep beneficiaries engaged and happy.

Frazer Rice (13:56.426)
Just on top of that, the EQ, the bedside manner, and the ability to simplify the complex, et cetera. At the same time, that dedicated note taker that is able to document everything that happens within a decision. Whether distribution or investment or otherwise, that it’s just two different people most times. I find that something falls apart as time goes on. Ultimately if things aren’t laid out correctly, that’s when conflict starts to simmer. Then you know if there is something that’s wrong. That’s allowed to compound that’s where you get into a huge problem later on.

Jennifer Zelvin McCloskey (14:36.922)
It’s all that feeling. People are behaving in ways that they may or may not be able to articulate their emotional proximity to. When you’re talking with beneficiaries. There’s something simmering under the surface that you inherited because you’re a trustee. You may not even be aware of it because the beneficiaries may not even be able to articulate it.

You have to have a certain sense. A gut check of feelings of rntuitively being able to read what’s going on under the surface. To pull it out of people in a very balanced and even keel way. It’s not an easy job by any stretch of the imagination. On top of financial literacy and personal liability and executive functioning skills, being detail oriented, making sure your documentation is not overly explicit. isn’t, you know, scarce. You’re now wondering how and why did you make those decisions?

People don’t think about the decisions that they make on a day to day basis. We don’t think in a way to articulate why I made this decision. Why I exercised this type of judgment. And that’s what we’re being asked to do as trustees is to document what is my decision making process? Why am I making the decision? What are my factors involved in making that decision in a way that’s defensible. If we ever need to defend it.

Frazer Rice (16:05.292)
Well, in favoring one class of people over another is usually where the rubber hits the road on this. People who are used to seeing the income from a trust and don’t want that touched come hell or high water. Then future beneficiaries who’d like to see the trust go from X to 2X to 5X. So that they have something larger to enjoy.

You have a natural tension that you have to manage. It’s just not easy. If you don’t document the hows and whys of what you’re doing, you set yourself up for a problem. From one class or another looking at you saying, you you should have done it differently. To go back to that liability component. You’re the only one who sits in the chair of having made that decision. You’re the one with the bullseye on your back when it’s called to account.

Jennifer Zelvin McCloskey (16:53.093)
That’s right, that is exactly right. And now add on top of it, you’re just named because you’re Uncle Joe and everybody goes to Uncle Joe. You have no technical background and you just don’t know the landmines that are there. You don’t know what you don’t know.

Wouldn’t it be wonderful if we were able to create a pipeline of really sophisticated entry level employees or folks that are, you know sophisticated in financial literacy that now want to take the job to become trustees, that we were able to give them this technical roadmap for what the job actually is and then have them get the ability to apprentice on all of those policies and procedures. What does this corporation do? How do we document things?

When you’re trying to learn it all at one time, it’s like drinking from a fire hose. Let’s give people the ability to really have a chance at doing it successfully.

Frazer Rice (17:53.048)
So let’s dive into that pipeline issue for a second. We already diagnosed that the, let’s call it the trust companies or the banks are, they’re just not resourced enough. They can’t run people through an internal school to do it quote unquote correctly. The apprentice model really kicks in. Which means you’re at the sort of mercy of what people are good at, not good at, et cetera. People turn over quickly so that apprenticeship doesn’t even work anymore.

The RIAs I think are the worst place to learn about this type of thing. They have a completely different modus operandi as far as keeping clients happy.

The word fiduciary means something so different to them than it does to an actual trustee. I wouldn’t feel good about the training on that front to sort of create trustees

And then so law schools. They’re they’re just trying to create people the trust in the states vertical as a general matter. Let alone trying to delineate into a trustee situation. You’re putting the pipeline together and you put these programs together. How do you stitch together the needs and what does that manifest itself into?

Jennifer Zelvin McCloskey (19:07.642)
So that’s a really, really good question. I think that the very first place that we start with answering that question is advising on a trust as an attorney. It’s different from the administration of a trust and the skills that you need for that.

So when you create a program like this where you’re trying to teach about trust management. You have to start with the technical skill. The legal side of what is it that we’re even doing? What is a trust? What are the fiduciary duties? Where do they come from? Then we have to, after we teach or create a structure or foundation on what the legality is. Now we go into how does this translate into administration?

So when I created the programs, I looked at what’s the law they need to know? What is the level of sophistication of the student? And what do I need to, from a foundational perspective, teach first? What are the building blocks? And then how do I translate that into administration? The one thing that I have found is trust law does not equal investment management. So if people are coming along…

Frazer Rice (20:26.254)
No question. I’m nodding audibly at that comment. I like that.

Jennifer Zelvin McCloskey (20:31.226)
Your fiduciary duties as a trustee are fundamentally different than those of an RIA, where some RIAs are not even fiduciaries by law. They’re not. So being able to delineate and explain where that line is, what makes you a fiduciary, what are those duties, after you know the legal basics.

And taught to you at a level that you can understand. I don’t expect everybody to be a lawyer. And people have asked me time and time again, do I need to be a lawyer to know this? No, you don’t need to be a lawyer because you’re not advising on the law. You’re advising on the administration of a legal structure and how that administration affects the fiduciary duties that are inherent in the relationship.

Then how those fiduciary duties are translated out to the beneficiary. That’s the way that I’ve always built these programs. Where do I start? Start with the law. Where do I go from there? Start with how the administration translates the law. And then how does that administration get heard by the beneficiary? Where does the RIA come into the mix? The RIA should not be dabbling in advising on trusts. They should know that they need to bring in somebody who has this particular skill. And if they’re not doing that, they’re doing the client a disservice by trying to give one-stop shop advice.

Frazer Rice (22:06.85)
Yep, no question about it. One of the things that…we delve into the world of trusts and their function, et cetera, is that you’re dealing with an ecosystem from client to outside advisor, whether RIA or even accountant, et cetera, that they’re looking for certainty and airtight. quality to these structures that you put them in place and then everything runs like a clock going forward.

When in actuality, I think there is a bandwidth of risk around everything. And so it’s the poor trust officer or individual trustee who sometimes has to be the bearer of bad news to say, yeah, you know, I think this is going to work 98 % of the time, but there’s a 2 % problem here or we’ve got this to fix or something like that and everybody else sort of sighs with disappointment and gets mad at the administrative function when in actuality they’re really doing their job and trying to, you know, keep a lot of things that are spinning out of control kind of within view.

How do you get a trust officer or that administrative function or even the full trustee function to be comfortable with that risk and everything that’s involved with that?

Jennifer Zelvin McCloskey (23:20.504)
You have to start with explaining that there is risk and we’re not our job is not as a trustee to eliminate risk. Our job is to manage and identify risk. It is inherent in the job. There is going to be risk. No matter what you do, you cannot divorce risk from trusteeship. It’s a matter of identifying perceived risk and actual risk. And if you can teach that, if you can teach

These are the things that are going to trigger a likely outcome. They’re gonna trigger a likely risk. Then you can essentially, you can’t foresee everything. I mean, there are things that are just gonna happen. But in a trust instrument, you’ve got contingency plan upon contingency plan upon contingency plan. That’s what the flexibility of those structures are building. We need to, as trustees, be able to recognize What is the risk with contingency plan A? The risk with B? What is the risk with C? How can we minimize the risk? And how can we make sure that we’re managing perception of risk versus actual risk?

Frazer Rice (24:29.31)
as someone who’s been in trust companies, advised trust companies, advised trustees, and advised clients, the lack of appreciation for the management of that risk and that that as the intersection of the business model of trusteeship and risk management and use of discretion and making hard decisions and even kind of an insurance quality around these structures, how do you fix that, where people place a level of respect on the job that I think is completely lacking in the wealth management ecosystem?

Jennifer Zelvin McCloskey (25:09.089)
Absolutely. It’s a tough one to answer. How do you fix it? First and foremost, I think that it’s a top-down fix, especially at a corporate trust company, a bank, and even an independent trust company that’s not affiliated with a bank.

The management has to… really understand the function of the trust company. For so long, it’s been just an extra service that we provide and and we’ll do this, the back office trust company. It’s really, really important that the management recognizes what the functionality of the trust company is and stops treating it as sort of a back office stepchild. From the corporate level, I think that’s the very first place we start.

Frazer Rice (25:38.478)
Mm-hmm.

Jennifer Zelvin McCloskey (25:57.818)
The second place we start is investing in our trust officers, investing in the team, giving them the education that they need, continuing to give them education, providing training programs, whether they be in-house, external, bring in trainers.

None of this is set it and forget it. At the individual level, I think it’s really, really important to have functions like the Individual Trustee Alliance, groups like that, where you have an ability to talk to other professionals that are doing what you’re doing. That’s another way to impress upon people that we have to manage the risk and we can’t do it all alone. Nobody knows everything. You really have to, you have to talk to other people.

You have to engage. have to, what is it called when we were practicing law and we’re a little bit outside of our comfort zone, we have to consult with other people who know more than we do. It’s our obligation as lawyers. It’s the same thing with a trust company, with a trustee, whether you’re an individual or you’re not. Widen that circle.

Frazer Rice (27:08.474)
I think this is my idea for the day that there’s got to be a bit of a public relations campaign sort of describing what’s going on here because I think especially when we go into the family members that sort of occupy these roles, they have no earthly idea what they’re doing. They’re usually doing it for free. Everything’s hunky dory up until a point and everyone hopes that everyone is not going to sue each other if something goes wrong.

But the level of wealth that’s being transferred now is now so significant that everyone sort of talks about, AI is going to get rid of lawyers. Nope, not in fiduciary litigation. I think that’s a medium term growth industry, especially around insurance, around ILITs, around revocable trusts, around elder care.

But this is my advertisement for people who are in law school looking for a productive way to go. I think that one is going to be, I think that one’s recession proof, at least for a while until I retire anyway. So my thought is that awareness over these things, and it’s probably going to take a very difficult case or a class action suit, something like that, where somebody really gets hurt in order for that awareness to come up.

Jennifer Zelvin McCloskey (28:24.922)
Yeah, I would agree. think that some of the solutions would include better trust education, you know, whether it be for RIAs, lawyers. Trust in the states is a throwaway class in law school. And there are so many law schools that are essentially rolling it back because bar exams aren’t testing it anymore in a variety of states. And ACTEC is definitely working with the law schools to try and increase trust in the states being taught and certainly being tested.

So education for lawyers coming out of law school, education for RIAs that are advising on trusts, education for trust officers, for trust administrators, trust professionals in general, clear role delineation. What is the role of the RIA? The role of the trust officer?

What is the role of the trustee if they’re an individual trustee? And then creating a culture of collaboration on what we’re doing as a team for the beneficiary, not substitution, but collaboration with the advisors and the trustees.

Frazer Rice (29:32.59)
Let’s go into the role delineation for a second. About 20 or 30 years ago, the concept of bifurcating or sort of cordoning off the different functions I described before the investment, the administration and the distribution has come into vogue.

I think that came out of frustration with bank trust companies where you got one set of advice for every trust that they had as far as investments and distributions and administration and a lot of modern larger families wanted something a little bit more specific to their needs.

And that’s really turned, it’s exploded as an industry for increasing sophistication and size of wealth. Along those different functions, where maybe the administration goes to a professional trust company or a trust officer in the state that you want,

Then there’s some intersection maybe in the distribution committee. And then the investment side of it is a bit of a free for all, think, depending on what you’re, dealing with. How do you educate the, that continued the delineation, but the coordination within those types of structures.

Jennifer Zelvin McCloskey (30:41.275)
Yeah, I think it’s really important. And I’m a Delaware lawyer. I’m licensed in multiple states, but Delaware is my home. It’s where I learned how to be a lawyer. It’s where I grew up as a lawyer. So this directed trust model that you’re describing, where you’re bifurcating, truly bifurcating these particular functionalities of a trustee, it originated in Delaware. sort of, we didn’t, I mean, we invented it, right? We codified it. It was being done, but we codified it.

The idea of making sure that everybody understands what their function is and knowing that there’s a limit of liability that’s built into the instrument and communicating what that means to the RIA that is named in the document. I can’t tell you how many times I have heard companies, heard trust companies say, we’re advisor friendly. And I’m like, not unless you’re directed, you’re not.

Frazer Rice (31:37.528) “THE TRUSTEE CRISIS: Navigating the Challenges”
Yeah.

Jennifer Zelvin McCloskey (31:40.439)
If you are directed, you are 100 % advisor friendly because there’s no chance that that trustee is going to try and take the investment management. They’re not a portfolio manager. Not a clerical administrator. They’re not a passive rule follower. We need to identify what does that trustee actually do when they are an administrative or directed trustee.

Clarify that role so that people who are engaged in this bifurcation, this structure where we’ve got a distribution committee, maybe it’s individuals who are close to the family, close to the beneficiaries, where you don’t have somebody who’s objectively uninvolved with the family members making decisions as to whether or not there’s a distribution that should be made.

But also advising those rolls those advisors that your administrative trustee is not just a pencil put a paper pusher. Not just checking boxes. They really do add value to the role that they provide and making sure that everybody understands what each other are doing, having regular meetings amongst the team instead of operating in a vacuum or operating in a silo.

And taking the approach of it’s not my job, misunderstanding trustee powers and the advisor’s authority. So when that’s delineated, when that’s really understood, not just by the advisors, but also by the beneficiaries, there are so many beneficiaries out there, Frazer, that have absolutely no idea that they actually hold all the cards. They don’t know.

Frazer Rice (33:25.87)
Along that line, so in the administrative, we just walked through pretty nicely. The distribution function is one that, let’s talk a little bit for a second about what it means to ask a trustee for a distribution and maybe the difference between income and principal and why having a steady hand at the wheel within that function, whether it’s a corporate trust company of qualified individual or family input in that function, why real good thought needs to go into how that’s staffed.

Jennifer Zelvin McCloskey (34:04.73)
Yeah, absolutely. 100%. In a corporate trustee ship or a corporate trust company structure, there’s always going to be distribution committees, right? So if you are the trustee, you’re going to have to go through a committee that’s looking at what your reasoning is for making that distribution. They’re asking questions about what have been the prior distributions?

Have they come from principal? Have they come from income? What is the spend rate on that trust? How is this going to affect long-term spend rate? Is this an aberration? Is this something that’s gonna become a habit? Really understanding what the distribution, the guidelines are in the trust. What is the distribution standard?

Making that decision? What are our factors? And how many people are at the table? Who’s communicating that to the beneficiary? Does the beneficiary know that the trust officer alone does not have the ability to say yes or no? That when they’re in this ecosystem of a corporate trust company, they have their checks and balances to make sure that that risk is being managed.

So when you’re looking at corporate trust companies, are a lot of layers behind understanding what the distribution standard is, whether it’s hems or if it’s purely discretionary. The other thing that you need to look at when it’s not a corporate trustee and it’s an individual trustee is, how is that individual trustee making that decision?

Are they doing it in a vacuum? Alone? Are they favoring one beneficiary over another because they like them more, you need to have some communication to the beneficiaries so that they understand what they are, what their interest is, what they are entitled to, if anything, and why the trustee stands in that position as the gatekeeper. And I really think in my heart of hearts, we need to make a shift from a gatekeeper trustee

Jennifer Zelvin McCloskey (36:16.708)
to a beneficiary enhancement trustee, where the beneficiary is really taking on the understanding that the trustee is there to facilitate enhancing the beneficiary’s life. That even though the trust may have started at the outset as a tax strategy or something that the grantor decided they needed to do with the advice of counsel.

At the end of the day, you wouldn’t have been named as the beneficiary if there wasn’t some sense of love or obligation even, that it’s for your benefit. It’s in the name. Beneficiary. Trustees need to understand that and beneficiaries need to be taught.

Frazer Rice (36:54.958)
Right.

Frazer Rice (37:00.646)
And it goes to the circle back to the notion of making sure that you write down the whys of the decision because ultimately if the concepts of favoritism or you didn’t communicate this or anything, the idea of having the beneficiary submit a budget but having them understand why they are submitting a budget and then if there is some discretion that’s happening around that decision that the data points that are informing that discretion, that’s gonna keep everybody safe a lot later on.

Jennifer Zelvin McCloskey (37:32.666)
Absolutely. I break it down into a couple of different factors. It’s fiduciary decision making. How is that fiduciary making the decisions they’re making? Why are they making those decisions? And who is being affected by the decisions? Document interpretation. Do you understand the document that you’re administering? If you don’t understand the document you’re administering, hopefully best case scenario, you know what you don’t know and you ask.

But if you don’t understand the document and you don’t even have the wherewithal to say, hey, I need help to understand the document, it’s really problematic. The third part, balancing beneficiary interests. Really taking on board this idea of the principal income problem that all the assets in the trust are not the same. That some of it doesn’t at all in any way affect a certain class of beneficiaries.

And at the same time, it’s inextricably intertwined in the way that it affects another class of beneficiaries. And then risk management and governance. How is this being governed? How are we managing perceived and actual risk as a trustee?

Frazer Rice (38:40.13)
The investment function, which I alluded to before, I see storm clouds on that horizon, not really at the RIA level, because I think there’s sort of a default mode that investment policy statements are in place. Diversification is a true commodity at this point. And I never really worry about an RIA sort of understanding how to invest to get to a certain expected return and deal with the risks and drawdown and all that stuff.

The storm cloud I see is when individuals sit in that role and they are being tasked with, let’s call it quote unquote, overseeing concentration, meaning that trust is holding a building, farmland, a nuclear reactor, crypto, all of these different things that sometimes can be, A, they have their own different maintenance responsibilities that are not just looking at a fidelity statement, but that they also have their own volatility

And, you know, in the case of a building, you got to make sure it’s managed correctly. are they going to get sued or the windows kept up, all of that stuff, and that there’s a whole different component there. And I’m waiting for the shoe to drop on some fact pattern there where somebody is sitting in the role of an investment advisor. It doesn’t say trustee in the document, so they don’t really think that they have trustee liability.

But. they sit in that role and all of a sudden somebody finds 10 55 gallon drums of green fluid in the basement of a building and all of a sudden the trust has a big set of red brackets that say minus $100 million that you owe to the federal government and the EPA. How do you think about that?

Jennifer Zelvin McCloskey (40:21.454)
Hmm.

Jennifer Zelvin McCloskey (40:25.242)
That’s a heavy question. so the Delaware stock answer, obviously, direct it, right? It’s just to get the trust, cut off the liability. At the first, at the inception of your hypothetical is bad drafting, right? So if there’s no statement as to whether or not your investment advisor is acting as a fiduciary or not,

Frazer Rice (40:35.042)
Right.

Jennifer Zelvin McCloskey (40:52.836)
What does your statute say? Does your statute impose that they are as a default a fiduciary or not? So that’s the very first step. That’s bad drafting. We need to know. But if it’s silent, let’s say it’s just a lousy document, there’s, God knows. Anybody who’s seen trust documents knows that, you’ve seen them all, right? And everything in between. Some are good, some are bad. If this is a bad one.

Frazer Rice (41:13.08)
Seen good and you’ve seen bad.

Jennifer Zelvin McCloskey (41:20.079)
Then we need to document the statute. If we can correct it, modify the document, let’s modify it. But if all of that can’t happen, then I would say the best way to handle it, make sure you have adequate insurance. mean, over-insure that, over-insure it. Make sure that there’s regular checks on the actual…

Assets that are in the trust, if you have a concentration and that concentration is real estate, get the advice of counsel, put that bad boy into an LLC, get yourself some distance from the actual asset itself being held in the trust, hold an interest, hold a financial interest, push it down to the corporate level. But if you can’t do all of that and you’ve got those 500 gallon drums of green fluid and now you’re…

Frazer Rice (42:14.286)
You

Jennifer Zelvin McCloskey (42:15.371)
You you’ve got a super fun site. What do you do? You don’t shy away from it. Have to address it head on. You got to take the accountability. You got to communicate and document, communicate and document some more. Talk to your beneficiaries. Make sure that they’re aware of where it went wrong, why it went wrong. Because I have found in my exposure in the industry over time and in reading case law, it’s when you’re trying to cover stuff up.

Frazer Rice (42:43.913)
Jennifer Zelvin McCloskey (42:44.027)
You’re just making more problems. Bad news doesn’t age well. It doesn’t get better over time. You have to approach it head on and make sure that there’s communication and documentation. Meet with your beneficiaries. If there’s a trusteeship where you are appointed as a trustee individually and you’re not having at least quarterly meetings with your beneficiaries,

If you’re not going out and seeing the asset, if you’re not going out and making sure that the asset is properly custodyed, you’re not, you’re violating your fiduciary duty. You are not doing what you’re supposed to do.

Frazer Rice (43:21.804)
You brought up an interesting word there, custody, which is the administrative function, whether held corporately or individually, one of the major things you have to do is to safeguard the assets. And that’s a big two syllable word that carries a lot of weight with it. That custodial function, how do you teach the trust officers or the individual trustees where that starts and stops?

Jennifer Zelvin McCloskey (43:48.579)
Yeah, mean, custody is super, it’s a really touchy, touchy subject, especially with the dynamic way that trusts have developed in the current climate from tangibles. You know, I’ve got artwork and my beneficiary wants to hang the artwork in their house. Well, do you have custody?

Has it been assigned to the trustee and how do you maintain that asset? Make sure nothing’s happening to it. Do make an appointment, go over to the, visit your artwork? What if it’s prize horses, you know? What if it’s, you know, a stud that, you know, we’re gonna need to breed and it’s gonna be the next Triple Crown winner? How do you make sure that the barn is properly safeguarded?

It’s a really touchy subject, especially with things like tangibles and things like assets held away when you technically custody the asset, but you don’t have control over the asset. I think in the education part for custodying, what I do in my programs and when I teach this is I make sure that we talk about different types of asset classes.

And what the risks, again, what are the risks that you run with these asset classes? How can we manage the actual and the perceived risk of holding that asset? Even if you have custody and name only, but you don’t have physical custody, how do you maintain your control over that asset? Because it’s really the C’s, right? The custody and control. Just because you don’t have custody doesn’t mean you don’t have control.

So we have to make sure that there’s an education that’s provided about the different asset classes, whether it’s tangibles, intangibles, assets held away, if it’s a concentration of stock, if it’s crypto, and most trust companies are not taking crypto. I think that there’s like a circuitous way that they’re getting in right now, but it all boils down to education, isolating what the issue is and educating people on it.

Frazer Rice (45:59.586)
I’ll give you a third C, it’s consequences, which is what happens when you don’t understand these functions. on the crypto side of things,

Jennifer Zelvin McCloskey (46:01.786)
Uhhh

Frazer Rice (46:11.544)
Holds the key to get to the crypto. What happens if that trust officer quits and walks away with the key and they’re like, well, multi-sigil figure this out. I’m like, okay, that’s not that. That doesn’t make me feel great at the moment. And now there have been some advances, which is good, but traps for the unwary to be sure. the good news too for crypto is for people who want exposure, the spot ETFs take away 90 % of the problems with that.

But as we start to think about winding down here, because I have a feeling we could probably talk for four or five hours on this subject, when putting your programs together, what does a curriculum look like? And we don’t have to go through it bit by bit, but how does that work when someone comes to your program? How much time does it take? What’s the commitment?

Jennifer Zelvin McCloskey (46:47.172)
Yeah, I think so.

Frazer Rice (46:54.851)
Mm-hmm.

Jennifer Zelvin McCloskey (47:06.33)
So the program that I created that’s really available anywhere across the country is called the Peak Trust Management Certificate Program. Peak Trust Company, may be familiar with it. They have name rights because they gave the donation to the University of Delaware for me to build the program. So it’s housed at the Lerner College at the University of Delaware, but bears the name of Peak Trust Company. I look at five different things.

The first thing is trust law and administration. So like I said previously when we were talking, you lay that foundation of what is the legal component of this? What is the baseline that people have to know? And then what is the administration?

The second component is, and it’s inextricably intertwined as taxation. What is the income tax? What are the deductions? And now let’s take all of that income tax knowledge, individual income tax knowledge, and build on it with fiduciary income tax. What is DNI? What is FAI? How does it go out to the beneficiary? What’s the character of the distribution? How do we manage that? What are we deducting in the trust? So teaching taxation and not because trustees necessarily are tax preparers, but because the trustees obligation is to be able to understand and read that tax return, they need to know how to spot problems.

So from my perspective, teaching fiduciary income tax is a critical component. It also helps. Yeah.

Frazer Rice (48:38.828)
No, no, I was gonna say no question about that. And there are elections to make, just because it doesn’t just go on autopilot, there are choices to be made so that if you’re the trustee, you may not have to prepare the tax return, but you may have to make a choice on the tax return and you’ve got to be informed because that can be an issue.

Jennifer Zelvin McCloskey (48:58.651)
65 day elections, perfect example, right? You just, you need to understand what your role is and how it overlaps with that of the CPA.

The third part, of course, investments. Investments are inextricably intertwined, whether you’re doing it yourself as the trustee or you’re directed or even delegated, which is like the hairy scaries of every trusteeship known to man, because you’re not actually in control, but you’re responsible. So it’s the gray. When I build a program, because of the, you know, the directed trusteeship being so popular in today’s day and age, we have to talk about not just investments of, you know, marketable securities, not just the custody of tangibles, but also subscription documents, because so many alternatives are held in trust right now. unique assets, need to know how the trustee is actually carrying out their fiduciary duty when it comes to engaging in an investment that is an alternative investment.

The fourth component is of course compliance. We cannot ever get away from compliance and I think we could do a whole nother podcast on compliance in trusteeship but.

You know, it’s a regulated entity. And even if you’re an individual trustee and you’re not using what those compliance frameworks are, what the guidelines are by OCC, Reg 9, FDIC, if you’re not looking at that and using that as a guideline, don’t do the job. understanding KYC, BSA, AML, all of those compliance components that have tentacles.

That’s the fourth part.

And then for the fifth part of this program, because it’s specifically geared toward trustee education in trust companies, although it can be applicable, very applicable to individuals, is operations. I was very fortunate that I was able to partner with SCI on building the operations component. So we license their platform called Plato. It’s essentially their training platform.

Jennifer Zelvin McCloskey (51:12.888)
so that trustees can see how fees are set up, fees, that’s a whole other podcast, fees, statements, distributions, how are we doing this? How are we documenting everything? What are the logistics of the day-to-day operations? So that’s how I built the program and it’s available anywhere in the country. It’s 10 weeks, how long does it take? I would say from three to five hours a week of an investment that you’re making at a bare minimum.

Obviously there’s a whole lot more of depth that you can go into. The resources are built in. But I would say 10 weeks, about 50 hours of time where you’re actually engaging with the material. And then I bring in guest lecturers on each different area of expertise for lack of a better description.

And they get a certificate at the end, they get a digital badge, and now they really have something where they can add value day one in a trust company or as a trustee.

Frazer Rice (52:17.902)
With Delaware being, you one of the real gold standards as far as trust jurisdiction, I assume that everything that comes out of this program is pretty transportable to the other useful jurisdictions, let’s call it, within the country. know, the Tennessee’s, the South Dakota’s, the Nevada’s, the Alaska’s, Wyoming’s, New Hampshire’s, et cetera. Obviously, there are hairs to split with different foibles in their law, but everything that you’re describing sounds like works everywhere else.

Jennifer Zelvin McCloskey (52:47.928)
And I’ve always taken the approach, you’re 100 % correct, I’ve always taken the approach of UTC. I base everything off of UTC and if there’s something different or unique based upon the jurisdiction that you’re in, I always encourage people you have to look at your statute, you have to look at the jurisdiction that you’re actually practicing this in and administering in. I use Delaware, South Dakota, Alaska as examples quite often when we’re talking about the directed stuff, but

By and large, it’s UTC.

Frazer Rice (53:20.966)
It just a weird subset. So special needs trusts and islets, which are two types of trusts, very specific. One holds life insurance. The other is designed to really take care of people who can’t take care of themselves. And they are types of trusts that a lot of trust companies don’t like to take on because the liability is harder or the profit margin is less.

For those individuals who get the opportunity to participate in those and I put that in air quotes. How would you advise people to get ready for those types of situations?

Jennifer Zelvin McCloskey (53:58.308)
People who are in need of those types of trusts.

Frazer Rice (54:02.122)
Well, maybe both. The people who need those trusts, you know, they’re going to, they, you know, it’s almost like they get set up and then the staffing gets kind of figured out later, barely. And then, you know, the, for the people who end up taking on that role, they really have no idea of what they’re in for in a sense. Is there sort of like a mini, I’m not going to say a full course like you’re describing, but a crash course in, in what’s going on here and what can I do to keep myself safe?

Jennifer Zelvin McCloskey (54:30.271)
Unfortunately, no, I don’t know of one. and there isn’t much built in. there’s, we talk about a little bit in the program that I built, but, those are specialized and eyelets we talk about a little bit more there, you eyelets had their day and sort of they has done ish. but special needs trust. It’s a whole other ball game because

It really incorporates state law and social security and Medicaid, all of those government benefits that I think you would need something more specialized than my program that I developed. And I don’t have a great answer for that, I’m sorry.

Frazer Rice (55:12.482)
No, there’s not a great answer for it because it’s tough. it’s a, all of which is to say for someone who’s involved with those things and feels confused by what’s going on, that’s one where it’s worth it to spend the money to lean on a dedicated Medicaid elder care, special needs type of lawyer on that front because there are traps for the unwary. Okay, now we’re starting to butt up against an hour here of.

Jennifer Zelvin McCloskey (55:29.764)
Yes . . .

Frazer Rice (55:38.827)
Four hours. No, I’m kidding listeners. We’re not going to talk for four hours, but How do people find your program and and then I’ll ask a bonus question at the end

Jennifer Zelvin McCloskey (55:49.339)
So the program is on the University of Delaware’s website. You just type in peak trust management certificate and it’ll pop up. My name will be there. I think my picture might be there. It’s all over my LinkedIn. So if you look me up, you’re going to see the peak trust management certificate program. You can always email me, jennifer at zeldenlaw.com. Happy to push people into it. start, I’m in the new cohort right now. We’re two weeks into a 10 week program.

But we have a new cohort starting in May. I think it’s May 4th. So may the fourth be with you.

Frazer Rice (56:24.622)
Terrific. So the final question here is really more of a crystal ball question. In this trust industry, trustee industry, what are the real, I’m going to say opportunities out there, and we’ve sort of painted a picture of doom and gloom and its low profit margin and things like that. Where can someone who is thinking from a business perspective about this find something?

Once they’re properly educated about it and being able to participate in it.

Jennifer Zelvin McCloskey (56:57.582)
There are so many opportunities. There is an absolute need for good trustees everywhere. Trust companies from coast to coast, individual trustee alliance. People really, really need trustees. There’s tremendous opportunity with Heritage Institute, not the Heritage Foundation, but the Heritage Institute.

There’s opportunities with…various family offices and various trust companies for education, for beneficiary education. So many opportunities out there. Trust companies are just clamoring for people. So if people are interested in becoming a trustee, getting that education, you will not have a hard time finding a job. Like you said, it’s basically recession proof. This wealth is going to transfer. We need sophisticated, knowledgeable trustees. on the receiving end of that transfer so that it happens correctly.

Frazer Rice (57:56.578)
I’d go so far as to say financial advisors. I just gotta say, a CFP is useful, CFA is on your investment side, but something like this, you know so much more about how intergenerational wealth works than what’s happening in those particular situations that I think it helps people stand out when I see something like that on a resume.

Jennifer Zelvin McCloskey (58:00.302) “THE TRUSTEE CRISIS: Navigating the Challenges”
That’s all the podcast. I hear you. I hear you.

Frazer Rice (58:24.386) “THE TRUSTEE CRISIS: Navigating the Challenges”
All right, with that, Jennifer, it’s great to catch up and I will have all of your information on the show notes and I will either see you at the ITA conference in Dallas or what I’m down in Delaware next.

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https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/Keywords for THE TRUSTEE CRISIS: Navigating the Challengestrusteeship, wealth transfer, trust management, fiduciary duties, trust education, estate planning, risk management, trust administration, individual trustees, trust companies, the trustee crisis, navigating the challenges, the great wealth transfer,

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Frazer Rice and Bram Weinstein, the “Voice of the Washington Commanders,” discuss the shift in sports media for entrepreneurs. The current state of sports journalism is in flux, especially with the decline of the Washington Post’s sports section and its implications for local coverage. We explore the opportunities that come from this void. (Including the potential for new media ventures and the challenges of monetizing content in a fractured media landscape). The discussion also touches on the future of the Washington Commanders, the importance of audience engagement, and the evolving nature of podcasting and digital media.

https://youtu.be/O0syDGcSkvUhttps://open.spotify.com/episode/3Ut9QRj7X9QD1pGEA6y6qt?si=39nLO2reQ8SK_nj0zenzDAEditing and post-production work for this episode was provided by The Podcast Consultant (⁠https://thepodcastconsultant.com⁠)Takeaways* The Washington Post’s sports section closure is seen as a significant loss. * There is a growing opportunity for new media companies to fill the coverage void. * Monetizing media ventures requires innovative strategies and diverse revenue streams. * Podcasters face challenges in gaining audience traction and monetization. * The Commanders’ future depends on effective roster changes and health improvements. * Engagement with the audience is crucial for media success. * Digital platforms like YouTube provide exposure but limited revenue. * The media landscape is rapidly changing, requiring adaptability. * Local sports coverage is essential for community engagement. * The importance of maintaining journalistic integrity in a changing media environment.

SPORTS MEDIA FOR ENTREPRENEURS CHAPTERS00:00 The State of Sports Journalism

02:59 Opportunities in Media

06:07 Monetizing Media Ventures

09:05 Navigating Podcasting Challenges

11:59 The Future of the Commanders

15:06 Engaging with the Audience

DISCOVERING BRAM, THE COMMANDERS, AND AMPIRE MEDIABRAM on SPOTIFY

AMPIRE MEDIA ON YOUTUBE

AMPIRE MEDIA WEBSITE

Transcript of “SPORTS MEDIA FOR ENTREPRENEURS”Frazer Rice (00:00.686)
Welcome aboard, Bram.

Bram N Weinstein (00:02.551)
Hey, Frazer, how are you?

Frazer Rice (00:03.736)
Doing great. The last time we spoke it was about three days before the Chicago Hail Mary, so I’m viewing that as good luck. That must have been something having to call that game.

Bram N Weinstein (00:14.071)
That was part of the most magical season I’ve ever been a part of. Not only first ever for the franchise, but 12 and five, NFC championship game, hadn’t done that in a generation. It was pretty incredible, yeah.

Frazer Rice (00:28.652)
No, as a skins fan, now commander’s fan, it’s been a long time, but it was a wild ride. One of the things that’s happened recently, which I know strikes near and dear to your heart, and frankly, for people who grew up sort of following it, has been, I guess, kind of the evisceration of the Washington Post sports section. And it’s got all sorts of impacts.

But from your perspective, How do you make sense of that and what does it look like going forward for a city essentially that has all the major sports and the major paper not really covering it?

Bram N Weinstein (01:09.719)
I don’t make sense of it. I don’t understand it. I think at its core, The Washington Post is two things. It’s one of the most important publications in the world as the paper of record in the most powerful city in the world and the democratic center of the world. But it also is a local newspaper for one of the top 10 markets, top five markets in the country.

And the idea that it would not cover its sports teams, or Metro desk, which, I know, you know, for our purposes, we focused a lot on the sports desk being shuttered. The Metro desk is too. So the Washington Post not covering the mayor’s office, city council meetings like in especially in these political times where, you know, the district budget is held by the federal government.

To me, it doesn’t even it doesn’t compute that that wouldn’t exist. as far as like the sports section goes, which I think is like the lesser of the two real problems with this, but obviously is a real problem is, you I think for me, it feels like a death. I grew up reading the Washington Post. A lot of the reasons why I wanted to do what I wanted to do was through osmosis of reading Tony Kornheiser and Michael Wilbon and Tom Boswell and all of the great writers that came through the Washington Post.

And I just don’t really understand how it’s not within the business model to be part of this. At the same time, you know, it does open opportunities for entrepreneurs like myself who have media companies and are always looking for new talent and always looking for openings. And I can tell you that void is going to get filled.

But I do think it is sad that the Washington Post could not figure out a way to modernize itself to allow its coverage to continue for its loyal readership. This is a local paper that isn’t covering local news. That is astoundingly terrible in terms of a business practice to me.

Frazer Rice (03:14.317)
It’s weird because from my perch here in New York, I work across the street from the New York Times building and there’s a little bit of sort of guffawing that the New York Times has turned into a gaming company and sort of a media company second, which has helped to subsidize its continued commitment to long form journalism. But even then, I mean, it’s really focusing on arts and leisure and cookbooks and wordel and all sorts of things like that.

And it’s a shame that the Washington Post either couldn’t pivot in that direction or otherwise make sense of things.

Bram N Weinstein (03:48.727)
Is the business model of media the same that was no. so there are a few things that play here to be fair. I’m not asking Jeff Bezos to lose money. You know, like, or just be the beneficiary to subsidize something, but you do bring up a point, which is.

And I read this quote recently from, the old ownership group, the Graham family, who basically said. “You know, the newspaper is a grocery store. Like you are supposed to go in there and pick all the different things that you want. And hopefully there’s something for everybody or hopefully a number of things for everybody. And in modern times, the New York Times has done a very good job of putting together a new modern grocery store for people. So there’s a variety of different things that does subsidize the important work that it does. And in the end, like to me, the New York Times and the Washington Post and maybe the Wall Street Journal.

Are the three most important newspaper entities, if you can call them that, in the United States of America. And for one of them to not understand their role in protecting democracy, in covering our world, in informing the readership, whether it’s locally or nationally, to me is an absconding responsibility. So I don’t know what the answer is.

Again, I’m not like demanding Jeff Bezos just…money to keep things subsidized. Like it is a business and I understand that, but there must have been better ways to go about it or maybe, you know, sell it to someone who does have ideas because it’s important for its foundations to remain intact. And so I just, you know, for me, it’s, been hard to digest, honestly. And like to your original question of like, like, how do you make sense of it? I really don’t. I don’t make any sense of it.

Frazer Rice (05:39.692)
Well, you also now have a fledgling media company and I’m a devourer of yours and Kim’s and Standix podcasts and I learned something from it each time. I see an opportunity there if major component of the media establishment in the area is abdicating its role, not only to the major sports that aren’t getting covered as much.

There’s an opportunity there. But even like the local hotbed sports like lacrosse, they’re completely ignored, I would imagine. And that might be a way to sort of get some grassroots component going.

Bram N Weinstein (06:17.195)
Yeah, we also here with my company Empire see the opportunity, unfortunately, but we do. And there’s a lot of talent that is available. There is a void in coverage. We know, you know, the size of our community, the appetite for sports. And so, you know, I don’t want to say too much, but we are actively seeking partners to expand in a pretty large way if possible. So

Frazer Rice (06:24.045)
Right.

Bram N Weinstein (06:46.067)
We’re working towards that and I’ve been working towards that and moving very fast in the hopes that we’re not the only ones thinking this like you. There’s a lot of people thinking there’s an opportunity here. I wish it wasn’t the opportunity that it is, but it has presented itself and it’s an opportunity that we intend to see through. So we are actively speaking to a number of different interested parties about funding a major expansion of what we’re doing.

Frazer Rice (07:11.379)
Really cool. Well, I’ll be sure to keep an eye on that as it develops. When you’re thinking about sort of the money making aspect of it, we don’t do things for free and it’d be lovely if we all had time and disposable income to do that without giving away the playbook because you’re raising money and you don’t want to give that up necessarily. But how do you think about that in terms of delivering value for sponsors or advertisers or the general audience? Have you made any…sort of commitment strategy-wise there.

Bram N Weinstein (07:42.197)
Yes, digital audio video forward. You know, I also believe in enterprise journalism. I also very much believe in long form journalism, but the audience appetite for it is limited. And so you do have to subsidize it. And that comes in the form of a number of different properties repurposed for different platforms in various ways, podcasts, video shows, YouTube.

All offer opportunities to monetize the same content. I have been studying very closely the things the New York Times has done and thought about what kind of engagement tools would be necessary to be an added perk for those who would end up probably subscribing to a situation like this. So there are a lot of different types of financial models.

One is subscriptions. in a variety of different ways, whether it’s premium content, newsletters, one of them is obviously advertising, which would come with YouTube or different streaming channel, streaming network, podcasts, obviously, sponsorship, which could go across the board for all of the different categories. And, lastly, live events. And this is something that we are very capable of doing as well.

So there are a tremendous amount of different models to make money. None of them are easy. And because the audiences are so fractured, I think you have to find ways to make financial streams in the same content in various different forms. But we’re willing to do that. And we’ve already kind of done that with what I’ve done with Empire on a very limited role, which is why we think we’re ready to make this expansion and move.

But we need an investor to buy in and to the investors, I would say to them, we intend to make you money and we intend to be something that could be purchased in a three to five to 10 year plan. So we understand the importance of making sure that the investment is paid off in the end as well.

Frazer Rice (09:52.205)
Cool. Are you thinking about expanding into other subject matter areas? you’re in DC, so politics, guess, would be a natural fit. Right.

Bram N Weinstein (09:59.965)
Not really. And I wouldn’t personally, like, I just don’t feel like that’s my expertise. So no, but like, could we be something like the ringer where you’re looking into culture, you’re looking into arts, music, dining, those types of things? Yeah, I think like that’s something I’m not sure that I would move fast into a realm like that. Like we see the void in sports coverage for this marketplace. We would like to fill that void.

And whatever we do after that would be dabbling in those spaces to try to, again, find new ways to find new audiences. But we want to go with our core products first. And certainly for me personally, the politics world is completely above my pay grade. So I’m out of that. Yeah.

Frazer Rice (10:46.028)
It’s above everybody’s I think if anybody could figure it out It’s it’s one of those Rubik’s cubes that it’s not worth solving oftentimes So, you know one of the things I don’t know if I’d struggle with or I’m Would like to expand on my front is just getting my podcast out to more people and the concept of discover ability and one of the strengths that I think you have Is you know your current position in traditional media with the commanders?

Keim has it a little bit with ESPN, Ben Stendig has it with his Substack, which isn’t traditional media, but there’s different outflows on that front. How do you view that competitive advantage in terms of getting the message out and almost having a bit of a head start over some of the other possibilities out there?

Bram N Weinstein (11:30.175)
Yeah, well, I think there was always like, you know, for the podcast world. Yes, anybody can do a show and you know, they could be good. The reality is, though, you know, the people who already have stakes in the marketplace, at least from name value, are always going to have a head start. It’s going to come down to how you market yourself and how you go about getting your show out there as much as possible.

The reality is you need some level of a robust social presence to get to as many eyeballs or ears as possible. And if you don’t, then you typically have to kind of go down a paid route of making sure that it gets into algorithms. And so it’s a hard climb, like for sure. You know, like when podcasts and kind of open the gates for everybody, same thing with YouTube, like

Frazer Rice (12:14.54)
Mm.

Bram N Weinstein (12:23.444)
You know, there’s going to be a lot of success stories. There’s going to be a lot more people who are either doing it for love of the game, but not for money. And that’s just the reality of how much time any person has to give up to content. And secondarily, who can get to enough of an audience to make it worthwhile? As you probably know, you need thousands of downloads to really make any kind of real money at all on a podcast episode.

Getting to thousands of downloads. doesn’t sound like a big, like if I said, you have to get to a thousand, like a thousand doesn’t sound like a lot for one episode, but it’s way harder to do. wager a guess that 90 % of podcasts do not reach 1000 downloads per episode. So it’s a very hard number to reach. And if you really want to make money, money on it, we’re talking about getting 10,000 an episode.

Sure, anybody like myself that has various different platforms I can use to promote my own shows has a head start in that manner. And that would always have been for anybody in traditional media who had a following to start with, if they were willing to jump into the digital side quickly, they were always going to have a head start because they already had an audience that was built in. It was just converting them.

Frazer Rice (13:39.572)
You know, and for me, the conversion isn’t so much, you know, buying pillows or mattresses from the advertising that comes on the show. I don’t have any advertisers. The ROI for me is, in a client, one client, maybe listening to it and then calling up. And all of a sudden that pays for everything, in sort of my day job.

Bram N Weinstein (13:52.992)
Yes.

Bram N Weinstein (13:57.813)
Yeah, well, I think you’re actually looking at it the right way. Like, could your show end up having a big audience? Yeah, of course it could. But like, the reality is for most people who are doing podcasts for the other purpose, which is either marketing, client curation, branding, like those have extraordinary value to like my company’s done a lot of B2B type podcasts. And I explained this, you know, to them, and most of the people I work with aren’t looking, they don’t think they’re going to be Pat McAfee. But like, they understand that like,

The value in doing this well is going to get paid back exponentially in client curation, marketing, entering new market spaces, expanding business opportunity, because it done well, it can really have that kind of benefit for you.

Frazer Rice (14:43.563)
How do you make sense of all the different platforms that are out there? You know, I converted to video because ignoring YouTube meant basically ignoring Google and I was like, well, that’s dumb. I know, Spotify’s out there. iTunes has just converted to video.

And then you’ve got all the different podcasts, platforms, et cetera, et cetera, et cetera. How do you, it just seems like it changes weekly in many ways as to what’s in favor, what’s not. When you’re making a bet on your company, how do you deal with that?

Bram N Weinstein (15:06.996)
Yeah. Yeah, think. Yeah, it’s hard. Things have changed a lot. Like, for the most part, we double up our podcasts now and they’re taped on video. So they’re disseminated with not a tremendous amount of production value behind them. And of course, you know, used as audio podcasts as well. So it’s a two in one situation.

And we find that YouTube. The advertising dollars there are very small, but the exposure, not unlike when we were talking about kind of marketing yourself, the exposure of being there, if you can get thousands of views, often offers up a lot of different opportunities. Sponsors prefer to be visually seen than just audibly heard. So like in both of those cases, they can be beneficial. like we don’t frankly make a lot of like we have on YouTube.

We only have two primary shows with Empire Media that are on YouTube on our channel. We have about 18,000 subscribers now and we get on an average month like 127,000 views between just the two shows, which is a lot, know, especially for like a niche thing where we’re really just talking about one thing, the commander. So we’re like, we’re not expanding out much more than that. So it’s a very niche thing and yet we’re getting a really, really sizable number.

Frazer Rice (16:11.787)
That’s good.

Bram N Weinstein (16:25.15)
If I told you how much money we get paid for that, you’d laugh like it’s it’s pennies on the dollar. But the exposure of having it and the amount of views and impressions that it generates gets us sponsorship opportunities because people want to be part of that. And that’s where the real opportunity comes with YouTube. As far as like using Facebook Live, IG, like TikTok, I suppose. Like. I don’t know, like I don’t think you can be everywhere.

I think the idea is to try to be, I think you’re talking to different audiences on each of these things. So I don’t think it’s one size fits all. And it has to be worth it. For me, it has to be worthwhile. Like, is there a reason why we’re there other than we’re just trying to get people but if there’s no benefit of a carryover beyond it and it just happens to hit their feed, but we’re not getting any sponsorship money out of it or any activation out of it? Well, then what was the point?

So I’m always looking for right places to be. But there has to be an incentive structure that makes sense, either true carryover audience growth or obvious sponsorship opportunity.

Frazer Rice (17:32.076)
The cost of coordination of all of that too starts to overwhelm. I know you’ve got a schedule to keep here. I would be silly not to ask about my commanders a little bit. Two new assistant coaches, offensive and defensive coordinator, lots of changes coming in terms of personnel and hopefully sort of a rethink of Jaden and hopefully a lot better health going into next year. But…

Bram N Weinstein (17:36.17)
Yes. Yeah.

Frazer Rice (17:59.84)
Potentially better division in many ways, how do you see things going forward?

Bram N Weinstein (18:04.71)
I don’t know what their team looks like yet. So this is like a hard question to answer because I think they’re going to be very aggressive in free agency and then obviously they have the seventh overall pick. I kind of need to see what their roster looks like before knowing. I you know, David Blough been here the last couple of years. He is one of these very young, very impressive people. I’m glad they kept him in the building. It’s a big ask to jump from where he was to go to offensive

He at least is talking a big game like he’s ready for this and I hope he is, you know, like we’ll have to see. I think a lot of it will have to do with the quarterback stays healthy and that just didn’t happen a year ago and the whole team didn’t stay healthy. So they fell apart and you know, like I don’t think health was the only reason they had the record they had, but I think the health made it worse than it could have been like their record probably would have been a little more respectable if the health wasn’t as bad as it was.

Hopefully Jayden stays healthy. He’s fine now. So hopefully he stays healthy and on defense Deonte Jones. This is his first opportunity doing this but he’s actually been in the league for 20 years and he’s worked with every almost every major defensive coordinator up until this point So he feels like someone that’s been overdue for an opportunity. I like the system He’s coming out of does he have the personnel to win with I don’t think right now and that’s why I’m like Let me see what they do in free agency. How much money do they spend at what positions?

How are they looking to upgrade that side of the ball? And if they bring in what I think will be two, three, four new starters, whether it’s via the draft and free agency combined, then I think we could have a different conversation about what I think it’s gonna look like, because I kinda need to see what the roster looks like first.

Frazer Rice (19:44.691)
No, there’s so many holes in the free agency component.

Not to pin you down on a record going into next year, because we don’t even know what the components are going to be. To that end, as you said, the injuries were a real problem. Everything that possibly could go right in 2024 didn’t in 2025. How does that work over the course of time in terms of regression to the mean? Is just every season completely different or is there something that carries over?

Bram N Weinstein (20:19.542)
So 2023 was nothing like 2024, which was nothing like 2025. So we’ve had a roller coaster for sure. Um I last year was a surprise like. If you had told me the beginning of the season look like the schedules too hard. They had too many injuries. They went 9889 didn’t make the playoffs. I would have believed you. You know, like it’s just things were just harder to try to replicate. I didn’t expect what ended up.

So can they flip that back around and be more competitive again? I do believe so. I also agree with something you said, which was. Right now and again don’t know what the teams look like exactly yet, but I do think the division on the whole will be better. The Giants will be better coached for sure. They have a lot of defensive talent and we’ll see if Jaxson Dart takes another step. And if that’s the case, the Giants may be more formidable than they’ve been in 10 years. The Eagles are still going to have a very, good roster. No matter

Frazer Rice (21:04.938)
Mm-hmm.

Bram N Weinstein (21:16.106)
Whatever they do this off season, even if it includes moving off of a couple of primary people, they still have an extremely strong high level roster. And I like how the Cowboys pivoted from Micah Parsons. I know it hurt them last year, but I do like what they did in the return that they got since. So they play their cards right. They could be in line to really make a jump back this year. Like they’re the ones that feel kind of ready to me.

If they play their cards right and if they don’t end up, which is the second part, which is never they avoid, they never avoid this. They turn themselves into a circus. So if they could ever stop turning themselves into a circus, I think it would serve them. You know, I think it would be a very positive outcome for them, but their owner doesn’t live in that world. He likes to be a ringmaster. And, you know, I think that that’s probably more than anything been the hindrance to them winning a Super Bowl over the last.

Frazer Rice (21:55.004)
You

Bram N Weinstein (22:14.422)
30 years, they’ve had good enough teams to do it. They just don’t and I think they get in their own way. But you know, maybe this year’s a little different for them.

Frazer Rice (22:21.364)
No question.

Alright, how do people find Ampire and sample all the different media that you’re putting out there?

Bram N Weinstein (22:31.766)
YouTube is Empire Media AMPIRE. We have our YouTube page. You can find that there. My show is under my name, Bram Weisside Show. John Keim Report covers the commanders and Last Man Standing is Ben Standing’s show. And who knows, maybe in four to six months, we’ve got some new offerings. I’m hoping that’s gonna be the case pretty soon.

Frazer Rice (22:51.466)
Terrific. Thanks for coming on, Bram, and rootin’ for your success.

Bram N Weinstein (22:55.414)
Thanks a lot. Take care

BRAM on “WEALTH ACTUALLY” three days before the JAYDEN HAIL MARY

Keywords: sports journalism, Washington Post, media opportunities, podcasting, Commanders, monetization, audience engagement, digital media, sports coverage, media landscape

Titles* The Decline of Sports Journalism * Seizing Media Opportunities

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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This conversation delves into the intricacies of Qualified Small Business Stock (QSBS) and its significant tax benefits for founders. MICHAEL ARLEIN, Partner at Patterson Belknap, explains the eligibility criteria, the importance of strategic planning, and the potential pitfalls that can arise. The discussion also covers the implications of state taxes and the advantages of gifting strategies. We cover innovative approaches like the “GOAT” trust to maximize tax-free gains. Founders are encouraged to engage with legal experts early in their business journey to fully leverage QSBS opportunities.

https://youtu.be/lfBt0j7BlW0?si=LufZ8j2YtgdspLMJEditing and post-production work for this episode was provided by The Podcast Consultant (⁠https://thepodcastconsultant.com⁠)

Takeaways from “QSBS For Founders”QSBS is a powerful tax benefit for founders.
The maximum exclusion amount has increased to $15 million.
Careful planning is essential to avoid QSBS pitfalls.
Gifting QSBS stock can multiply tax exemptions.
State tax implications vary; California does not recognize QSBS.
Discounting shares can aid in estate planning.
Converting from an S-Corp to a C-Corp can preserve QSBS benefits.
Early engagement with legal counsel is crucial for founders.
Innovative strategies like the GOAT trust can maximize benefits.
Almost all businesses should consider QSBS eligibility.

Chapters00:00 Understanding QSBS: A Founder’s Guide.
02:56 Navigating the QSBS Landscape: Common Pitfalls.
06:07 Maximizing QSBS Benefits: Stacking Strategies.
08:42 The Importance of Timing: Gifting and Valuation.
12:03 State Tax Implications: The QSBS Challenge.
14:52 Entity Structures and QSBS: What Founders Need to Know.
17:37 Transitioning to C-Corp: Strategies for S-Corps and LLCs.
20:29 Who Should Pay Attention to QSBS?
23:44 Innovative Business Structures: Technology and QSBS-
26:36 Early Stage Strategies: Cloning Yourself on the Cap Table-

Transcript of “QSBS for Founders”Frazer Rice (00:01.109)
Welcome aboard, Michael.

Michael Arlein (00:03.096)
Thank you. Good to be here.

Frazer Rice (00:04.617)
So let’s get started here. QSBS, Qualified Small Business Stock, is something that certainly all founders should be aware of. It’s a tax feature. It’s probably one of the nicest goodies that the federal government gives to people who are starting businesses. Take us through a little bit about what happens there.

For founders, you’re going to hear the numbers 1202, which is the section that is quoted here. Take us through a little bit about what happens at QSBS and why it’s a powerful feature.

Michael Arlein (00:37.496)
Sure, that sounds good.

To your point, the New York Times called QSBS a lavish tax dodge that is easily multiplied. And I happen to. I’m not aware of any other provision of the tax code that can save anyone as much money as QSBS. It’s really incredible.

I think the policy reasons behind the provisions are that they’re designed to encourage entrepreneurship. Everyone on both sides of the political aisle is in favor of. The basic premise of it is that if you create a company.You own the stock for five years. The company’s in the form of a C corporation,

It’s not in one of a series of restricted industries. Mainly service industries, that when you sell the stock, you can exclude from paying tax $10 million, the first $10 million of your gain. That’s the old rule, which I’m still dealing with, that that’s for stock that was issued before July 4th, 2025. And now QSBS has gotten even better.

So if you get stock after that date. You hold it for actually now three years, you can exclude ultimately up to $15 million from tax. So we’re now dealing with two different regimes. I’m still stuck in the old regime. Most of the people I’m dealing with got their stock before last July. But I’ll try and point out the differences as we go along.

Frazer Rice (02:29.066)
Sure, as you said, there are a bunch of things you have to jump through. To make sure that you can sort of apply and then to further comply with the rules associated with it. Things like services. Making sure that maybe you don’t have too much cash and that it’s deployed correctly. Making sure that the original stock issuance persists throughout.

What are some of the things that you tell your clients? How do you walk them through the process so that they don’t trip on themselves and lose this nice tax advantage?

Michael Arlein (03:09.676)
Yeah, there are some landmines, things that you can step on and blow it. There’s some weird rules around redemptions. Like if you have redemptions. Let’s say you create a company and then there’s three co-founders. Then very early on, one of the co-founders wants out or you want to kick them out.

And then the mechanism for that is the company kind of buys back their stock. You know, there’s complicated rules that can, you know, blow up QSBS for the entire company. I think some people start their businesses as LLCs or S-Corps or things like that, and then later convert them. And that has to be done very, very carefully with good tax advice.

Otherwise that can also blow things up. When I talk to founders, it’s pretty clear their business qualifies. They didn’t screw anything up.

Frazer Rice (04:19.626)
So the OBBBA in a sense turbocharged a little bit the tax savings. That five year requirement that you talked about. You can now get some of the benefits even as early as three years. And then the dollar amounts got expanded. In addition, and this was not necessarily OBBBA related. The ability to take one exemption and maybe multiply it via stacking continues to be a powerful tool.

For those people who are walking into your office now. How do you get them when they sit down situated so that they do that planning upfront?

Michael Arlein (05:08.598)
Yeah, that’s, you we kind of buried the lead.

The benefit of QSBS: it would be incredible if you could just pay no tax on 10 or $15 million. But what’s even more incredible is that you can stack or multiply the number of exemptions. You have using a provision of the code. It says that if you gift QSBS stock to some other person or entity. That that person or entity can take their own up to 10 or 15, their own QSBS exemption.

I’m just gonna say it’s 15. We understand that’s for newly stocked. So, classic move for a founder would be to set up trusts for children. There’s a special kind of a trust for a spouse. You can do this with sometimes people make trust for their parents, their siblings.

There are certain states where you can actually make a trust for yourself. Usually when people come to my office, the conversation is around creating entities. Typically trusts, and then gifting shares to those trusts. that

As a family, you could go from 15 million tax free to 30 or 45 or 60 million tax free. The record I had one guy who had a very large family. He married, he had kids and was very close not only with his parents. With his siblings, his nieces, his nephews, even his aunts, uncles, and cousins. He created 23 trusts, which on paper at least would save up to $230 million. Wow. Yeah.

Frazer Rice (07:08.896)
There’s a danger with that though, with those 23 trusts had to be different. I imagine the IRS would say, wait a minute, we see what you’re doing. Stacking all of these different things is theoretically nice and all, but is there a way to create differences within those trusts so that the IRS doesn’t view them as one big pot?

Michael Arlein (07:39.692)
Yeah, great question. So you can’t create multiple identical trusts. Meaning I can’t create five trusts for my child. The IRS has rules that consider those trusts as one trust and would have only one exemptions. So, one of the limiting factors on creating trust is often, who are the people you’re willing to gift to? You know, so this guy with the 23, he actually was willing to create trust for his cousins, his aunts, uncles.

Now, those individuals were the beneficiaries of the trusts, which means that they were eligible to receive money from the trust. But those trusts were designed so that when those people passed away, the money would circulate back to his children. So, you we never talked about it, but it’s possible that in his head, his plan was that he would maybe provide some benefit to his cousin.

Maybe he’d say to his cousin, hey, if there’s $5 million in this trust and you need a little money, I’ll make some distributions to you, but I’m going to request that the trustee kind of withhold most of the money. And then when you die, it’ll come back and benefit my kids. So there are nuances there.

But generally speaking, most people aren’t willing to do that. They’re not close enough with their cousins and their aunts and their uncles. So they end up maybe creating trusts, you know, for their kids, for their parents, sometimes, you know, for their spouse and maybe sometimes they go a little beyond that, but not that far. One thing that’s important is that the U.S.

Frazer Rice (09:33.472)
One thing that’s important is that the the QSBS is a capital gains tax Concept meaning you’re you’re saving on the tax. From a QSBS for Founders standpoint when the the founder sells the business, and you have to pay capital gains tax on that front. Part of the reason I’m skewing this toward founders is that there’s an gift in a state exemption of 15 million dollars.

So it’s important to get these assets into these trusts as early as possible and with as low evaluation as possible. That in many ways is where the real leverage is. Does that square with your thinking?

Michael Arlein (10:11.019)
Yeah, absolutely. We have a permanent $15 million lifetime gifting limit. $30 million for spouses. And when you gift stock into these trusts, you’re typically gifting at a common stock valuation.

People are familiar, founders are familiar with common stock valuations because they do that for purposes of issuing stock options, you know, the so-called 409A valuation. Now, a gift tax appraisal is different than a 409A valuation, but in many ways, they’re very similar.

S0 founders know that, you know, they could be raising a preferred round at $10 a share, but their 409A common stock valuation is still $2 a share. So you can get a lot of gifting done. You can give a lot of shares away.

You know, using your $15 million exemption, even if the company is very valuable. So we see founders doing this sort of gifting, you know, late in the game, even right before a transaction or an IPO. But if you had a crystal ball, or at least, you know, you were willing to take some risk, obviously, the earlier you do it, the better, because you could gift…

I mean, theoretically, if you set up trusts and you gifted shares the day after you created your company, they would be worth essentially nothing. And so you wouldn’t have to use hardly any of your gifting exemption.

The problem is most people, A, aren’t thinking about that on the day they create their company. They don’t have anyone whispering in their ear and telling them to do that. And number two, they wouldn’t want to spend the money on legal fees to set up structures because at that point they’re like, don’t know what this is going to be worth. This could be zero. This could go out of business in a year.

So there’s a trade off that I see between doing this later in the process where you’re gaining visibility into outcomes, maybe for younger people sometimes, you know, there’s visibility into their family lives. Maybe when they founded the company they were single. Then if they wait five years they marry, they’ll have children, i.e. people who they could create trust for. But the cost of doing that is that you’re gifting at a higher value.

Frazer Rice (12:46.591)
One of the considerations that people don’t understand is the state tax implication. QSBS is a federal concept that a lot of states join onto and link to. But a state like California isn’t. And so sometimes that can be an untoward surprise to people that there’s a state tax that happens that they may not have expected.

Michael Arlein (13:16.299)
Yeah, it’s kind of bizarre that California, the home of Silicon Valley, doesn’t recognize QSBS. But most states do. My home state of New Jersey, in fact, very recently joined the QSBS club and now recognizes it at the state level. There are a few other states, I think.

Pennsylvania, I don’t think recognizes it, but the vast majority of states do. But unfortunately, if you live in California, you’re probably only in quotes saving the federal tax. But the federal tax on $15 million, 23.8 % of 15 is a pretty big number.

Frazer Rice (14:01.086)
No question and absolutely worth doing. one of the things that I find happens is that from an income capital gains tax perspective, we’re on top of it with the QSBS. When we get into the estate planning world, we use the concept of discounting, meaning putting QSBS shares or any shares for that matter into other entities so that you get discounting for lack of marketability and the ability to make decisions around it.

Are there any tripwires on that front as far as putting things into other LLCs so that you don’t, maybe in a sense that in trying to really maximize the estate planning and the estate tax avoidance that you create issues that might cause problems with your QSBS tax avoidance usefulness there.

Michael Arlein (15:02.413)
Yes. Again, the rules under Section 1202 of the code for QSBS have some strange traps for the unwary and some gray areas. And one of those gray areas is around transferring interests in partnership type entities, which would mean like an LLC or a partnership. that owns QSBS.

So essentially, it’s very clear that if you have QSBS stock and you gift it into one of these entities we’ve been talking about, that that entity would take the QSBS attribute and be able to enjoy the benefits of QSBS. If the QSBS is held in an entity like an LLC, let’s say you set up a, well. Let’s say a realistic example is that you made an investment in a venture capital fund that invested in an early stage company that’s QSBS.

And now you’re a limited partner in that fund and you know that that fund is going to have a large exit in this QSBS position and that you’re going to get the benefits of that, but it’s going to exceed $15 million. So you say, what I should do is I should take my interest in this venture capital fund. I should give them to trust for my kids so that when the fund distributes those shares or distributes the proceeds from selling that company, it’ll be split among various entities and I’ll be able to stack QSPS. The transfer of an interest in a fund that owns QSPS, there’s a gray area about whether the recipient of that fund interest would actually have QSPS and it’s generally viewed as something to be avoided.

Frazer Rice (17:08.944)
In a sense putting it at risk. A question that I think pops up is that there are people who started businesses maybe pre that July 4th date that you were talking about and maybe they chose an entity like an S Corp or an LLC that isn’t sort of a good qualifying C Corp and they’re looking and saying you know what I may be able to sell this business three to five years or beyond and take advantage of this QSBS. Are there avenues to be able to change that tax elections so that you can begin that QSBS and what’s the analysis around?

Michael Arlein (17:44.972)
Yeah, in fact, a fairly common structure is, and we haven’t really gotten into these details, but it’s a great question.

So QSBS is actually the greater of $15 million or 10 times your basis. Now we ignore the basis rule for the most part because the vast majority of founders do not have basis. They create their company and they put nothing into it.

With a bank account with $10,000 in it, and they’re not contributing actual dollars into their business. And so the 10 times basis rule doesn’t actually apply.

But there’s a way for a founder to take advantage of that, and this strategy is actually called PACKING.

And the packing strategy involves starting your business as an LLC and with an LLC and then converting it to a C corporation. with an LLC, when you convert, there’s an attribution of basis to the founder based on the value of the LLC’s assets.

Theoretically, if you started off as an LLC, and before the LLC hit $75 million value of its assets, $75 million being sort of the cutoff for qualifying for small business, you have to acquire your stock before your company assets are worth $75 million. Theoretically, let’s say you did that when it was $74 million, then if your basis was $74 million,

10 times your basis would be $740 million, you would have up to $740 million tax free. So people kind of play this game. I think for a lot of companies, it’s not realistic to be an LLC because venture cap, if you’re going to raise venture funds, they want you to be a C Corp. This works for bootstrapped companies, but most companies are forming a C corporations.

You know, there is a path to convert from an S-Corp to a C-Corp and preserve QSPS for Founders. I’m no expert in that. All I can tell you is that it has to be done very carefully and very specifically. And I’ve seen a lot of people who didn’t know they needed to do anything specific and they do not qualify for QSPS.

Frazer Rice (20:45.085)
As we sort of, I’m not going to say wind down here because we may have some other topics that pop up. But when someone walks through their door, I guess maybe the way to think about it is, who does this apply to?

You said the services industry. So accounting, finance, that type of thing- NO. For those things that venture tries to invest in, whether it’s software or other processes, who is really should be paying attention to this?

Michael Arlein (21:16.491)
I mean, I think almost anyone should be paying attention to this because it may be that you don’t qualify, but often people do. And more often than not, you do. This has broad application for most businesses. There are excluded industries, architects and lawyers and accountants. But if you’re doing something in the tech world, you’re probably going to qualify.

It’s good to get some advice from the corporate lawyer who’s helping you create your business. I think one of the considerations of whether you form as a C Corp or an LLC is probably the availability of QSBS status. You know, I think stacking strategies, it’s worth having a conversation probably sooner than later with a lawyer to find out what the menu of stacking options is.

I talk to people all the time and we decide it’s premature for them to do something. And then they call me back a year or two later and all the time I’m calls from people who say, hey, we spoke a few years ago and now

Frazer Rice (22:34.013)
Alright.

Michael Arlein (22:39.913)
the time is right. So it’s good to get educated, learn what the options are. QSBS stacking is not just about giving shares to your kids. There are strategies that are specifically designed for single people where you can create these benefits for yourself and

You know, it’s too good to be missed. if you, I do talk to people who say to me, they’re usually on their second venture or third venture and they say to me, I really screwed this up the first time around.

I paid no attention to it and I was focused on my business and I just screwed it up. I literally cost myself millions or tens of millions of dollars had I done it correctly. And now that’s why I’m calling you, because I want to do it correctly the second time around.

Frazer Rice (23:33.278)
Part and parcel with that, I ran into somebody really more of what’s called a media personality. And usually the way I think of it is that the QSBS isn’t necessarily available for people whose value is centered around them as a personality or them as a brand.

But I said, you know what, the QSBS component, while it might not apply here, if your business morphs into something where you’re developing other things, slash maybe you turn into a media production company or, youbecome involved in a technology that drives other things, that you shouldn’t dismiss that.

The pivot in the business from sort of a personality generated to something a little bit more business process generated might be something to think about, not only from a strategy standpoint, not that you necessarily wanna do things purely for tax reasons, but if that’s a natural consequence, that’s something to think about. Has that ever popped up in your world?

Michael Arlein (24:31.915)
Yeah, for sure. Every business these days is technology enabled. And I think sometimes businesses that you wouldn’t think of as being technology businesses are doing enough technology things that they can claim that they’re a technology business and not a business providing a particular kind of service. So, you know, with the help of a clever accountant or a tax lawyer, this is not an area that I operate in.

I’m more about multiplying QSBS once you have it. But there are tax lawyers and corporate lawyers and accountants who can advise you how to make your business eligible for QSBS by leaning into, as you said, things that you’re doing that may be…you know, eligible versus other parts of your business that would not be.

Also, you know, you can, sometimes you see companies that are divided, right? Like, so there’s a company who provides counseling services, like, you know, they’re actually hire psychotherapists that will counsel you, you know, online, like on a Zoom. and their business is split.

There’s a medical services company that employs all the counselors and medical services is one of the excluded industries. But then they also have a completely separate business that is their technology platform. And the way they structured it, the value is really in the technology platform. That business is QSBS eligible because it’s a completely separate company.

Frazer Rice (26:28.771)
That’s a great example. part of the purpose of the question was to elicit that, is that people may say, well, we fall squarely into one classification when maybe some underlying thought might lend itself to structuring from a tax perspective that might be useful later on. OK, now as we wind down, for someone who is, at this point, starting a company when they’re forming these things, not that you, QSBS for Founders should drive the world, but how do they get involved with the discussions so that they do the right things early?

Michael Arlein (27:06.401)
Yeah, I mean, I do have a very specific strategy that I love for people who are about to form a company. And it really works best in that scenario of an early stage company that’s just about to launch.

The way I describe this to founders is that you can and should clone yourself on the cap table. So if you start off a company and you own all of the shares, you’re basically eligible for 15 million tax free. That’s great. But what if you could clone yourself and there were three Frazers on the cap table, then Frazer would have $45 million tax free. So how do you do this?

You can do it with trusts. And the beautiful thing is if you have other people create trust for you, then you can be the beneficiary of the trust and control it as well. And I have sort of branded and named this strategy a GOAT trust, which of course has the double meaning, know, greatest of all time.

Frazer Rice (28:21.02) QSBS for Founders
Right.

Michael Arlein (28:21.165) QSBS for Founders
But actually stands for gift optimized to alleviate taxes. The essentials of it are is that we would work with your parents, the founders parents, we would work with your grandma, your uncle, and we would spin up some trusts that they create for the benefit of you as the founder. You would have all sorts of control and access to those trusts and they make a gift into those trusts, probably something fairly modest. Then those trusts on the day of formation buy up some of the common stock. And so those are your clones.

You know, you’re having your cake and eating it too. You’re getting, you know, QSBS stacking for Founders. You’re getting some other benefits we haven’t even talked about. Those trusts can be exempt from a state tax and state level income tax. And you control those trusts and benefit from them. So we’ve essentially cloned you on the cap table. And that is a beautiful strategy that most people miss out on because they don’t do it. And then they come to me a few years later and they own the stock and it’s valuable and then we have to do the more traditional stacking strategies.

Frazer Rice (29:40.432)
Really cool stuff. Michael, how do people get in touch with you if they have these problems slash opportunities?

Michael Arlein (29:48.525)
Sure, well they can Google me. I have a nice web presence. We have our…Founder Focus Practice Group that I lead at the firm, which is very specifically tailored to provide legal services to founders, personal legal services. And I focus on the tax side of that and QSBS stacking for Founders. My email, msarlein at pbwt.com. Phone number 212-336-2588.

Frazer Rice (30:23.324) QSBS For Founders
That will all be in the show notes. Michael, thanks for being on.

Michael Arlein (30:26.753) QSBS For Founders
Thank you.

FAMILY OFFICE MYTHS

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/QSBS for Founders

QSBS for Founders

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Foreign Options for US Citizens Summary:

https://www.youtube.com/watch?v=d-Jnr3Go2GgEditing and post-production work for this episode was provided by The Podcast Consultant (⁠https://thepodcastconsultant.com⁠)

In this conversation, Frazer Rice of Next Vantage and Judi Galst of Henley and Partners discuss the increasing interest among U.S. citizens in exploring global mobility options amidst geopolitical chaos. We delve into the distinctions between residency and citizenship, the implications of U.S. taxation, and the motivations driving individuals to seek alternative living arrangements. The discussion also covers the potential for citizenship through ancestry, popular destinations for relocation, and investment opportunities in countries like New Zealand and Australia. Judi emphasizes the importance of understanding the legal and practical aspects of relocating, as well as the need for personal exploration before making significant decisions.

Takeaways* Interest in global mobility has surged among U.S. citizens. * Many seek residency as an insurance policy rather than leaving the U.S. * Understanding residency vs. citizenship is crucial for potential expatriates. * Residency can lead to citizenship but often requires time and investment. * Tax implications are complex; relocating should not be primarily for tax benefits. * Ancestry can provide a pathway to citizenship in several countries. * Popular destinations for U.S. citizens include Europe, the Caribbean, and New Zealand. * Investment opportunities exist in countries like New Zealand and Australia. * Emerging markets in South America and Asia are gaining attention. * Practical steps include consulting experts and visiting potential countries.

Chapters00:00 Navigating Geopolitical Chaos: The Rise of Global Mobility

02:55 Understanding Residency vs. Citizenship: Key Differences

06:06 Tax Implications and Motivations for Seeking Alternatives

08:48 Exploring Ancestry-Based Citizenship: Opportunities and Challenges

11:54 Popular Destinations for U.S. Citizens: Europe, Caribbean, and Beyond

15:10 Investment Opportunities: New Zealand and Australia

17:59 Emerging Trends in South America and Asia

20:50 Practical Steps for U.S. Citizens Considering Relocation

TranscriptI’m Frazer Rice. We’re certainly living in crazy political times right now, and a lot of US citizens are worried about what’s happening here and abroad. And they’re starting to think about other residencies and citizenship options. I talked to Judy Gost at Henley and Partners about what is and isn’t possible on that front. By the end of this, you’re going to understand the locations that are interesting, the difference between residency and citizenship, and why that may matter as you make choices for your retirement and your location long-term, both for yourself and for your kids.

Frazer Rice (00:00.874)
Welcome aboard, Judy.

Judi Galst (00:03.022)
Thanks for having me.

Frazer Rice (00:04.244)
Well, we’re in the midst of a lot of geopolitical chaos, and I think you have seen and I’ve seen a lot of interest in United States citizens looking abroad for either places to live or other situations to either get away from the chaos or try to address some other needs in their lives. What is the state of the union? assume interest has ticked up.

Judi Galst (00:27.874)
Yes, I’ve seen more business than I could have ever predicted, but it’s not necessarily people that are leaving the United States. For the most part, most of the clients that I’m working with are doing it as an insurance policy. A lot of the conversations I have with a client start out with them saying, I don’t want to leave the United States, but I’m feeling unsettled and the way to mitigate the way that I’m feeling is to have options.

So they want to understand what if I did want to have a guaranteed right to go live in another part of the world? What is available to me? How do I pursue this? How long will it take?

Frazer Rice (01:08.434)
And we’ll get into some of the technical aspects here, but one of the concepts is understanding the difference between being able to reside somewhere else and being a citizen of another country, and then how that interacts with being a citizen of the United States. Maybe take us through the comparison of residents versus citizenship.

Judi Galst (01:28.748)
Yeah, that’s actually a really important distinction. And it doesn’t mean that one is better than the other, but they do have different benefits. And so it’s important to understand the difference. So let’s start with residents. Residents doesn’t mean the ability to have a house in another country. It means the ability to reside legally in another country. So the US passport is very strong. You can go into a lot of different countries even without having a visa. But we can’t stay there forever. We have limits, for example, in Europe.

We can go in for 90 days, but then we have to leave for 90 days before we can go back in for another 90 days. So if you become a legal resident of another country, you have the ability to live there unlimited for a certain period of time. Residency is not permanent unless there’s a path to permanent residency. So usually you’re going to have to renew it and there may be some conditions in order to maintain it. Now, how frequently you have to renew it is going to vary by the country.

For example, in Greece, you can become a Greek resident via a golden visa and that is good for five years and you’ll renew for another five years. In Italy, it’s good for two years. Then you renew for another three years. In Portugal, it’s good for two years. Then you renew for another three years. And as I said, there could be conditions. So in Greece, you qualify via purchasing real estate. If you sell the real estate, you’re going to lose your golden visa, not be able to renew it. In Italy, you qualify via purchasing stock.

Frazer Rice (02:51.925)
Right.

Judi Galst (02:55.945)
If you sell the stock, you’re not going to be able to renew it. You can get some travel rights by being a resident. Usually this benefit is not as important to a U.S. person because we already have really good travel benefits with our U.S. passport. But it can often be a strategy for someone from a country with a weaker passport, say even someone living in the United States that has only a Chinese passport. If they want to go into Europe, they have to get a Schenken visa.

So a strategy for them might be let me become a resident of say Greece and then I gain Schengen access. Not unlimited, but I get that 90 days out of 180 days. Finally, I would say that residency can have a path to citizenship. Usually it’s a pretty arduous path. For example, in Italy, you can become a resident. You have to live in the country of Italy for six months a year for 10 years before you’d be eligible to apply. In Greece, six months a year for seven years.

But there is ultimately a path in most residency programs.

Frazer Rice (03:56.755)
So let’s dive into citizenship, which my predilection on that is that it’s a much more permanent component, but it’s also a much more difficult process in general.

Judi Galst (04:05.646)
It doesn’t necessarily have to be difficult. It really depends on what program you’re doing. But you’re right. It’s a guaranteed right. It’s very difficult for a country to take away someone’s citizenship. The other big difference is that you get a passport. So in addition to gaining the ability to live in the country that you’re a citizen of, you also get another travel document. So depending upon what treaties have been done between your country of citizenship and other countries, it may really improve your mobility.

Again, U.S. passport is pretty strong. you’re U.S. passport holder, unless there’s something unexpected like a pandemic when borders close to Americans, you already have a good travel document. But it can be another mobility option. Perhaps you’re going into a country you don’t want to identify as a U.S. passport holder, or perhaps you have a weaker passport and you want to travel on a secondary citizenship passport that might improve your mobility. Where citizenship is particularly powerful is in Europe.

Because if you become a citizen of one country in the European Union, you gain the right to reside and work in any country in Europe.

Frazer Rice (05:11.104)
And just to distinguish, how does that impact UK people after they Brexited?

Judi Galst (05:16.942)
Sadly, with Brexit, the UK is no longer part of the EU. So many people in the UK are quite upset about this because no, you’re not going to gain the ability as a citizen of an EU country to live in the UK, nor are citizens of the UK now able to live anywhere in the European Union as they were previously.

Frazer Rice (05:36.992)
So let’s apply this directly to US citizens. So US citizen taxed on worldwide wealth. Let’s start with that. sure because I just got a Twitter fight with somebody who said, well, if you’re crypto, you can move away and you’re not out of the system. I’m like, that’s just no. We’ll start with that. But taxed on worldwide wealth, good passport can travel, but there are limitations as far as how long you can stay in various countries, probably around

Judi Galst (05:52.622)
Mm-hmm.

Frazer Rice (06:06.578)
Investment options, land ownership, things like that, depending on it. Where are the benefits of that U.S. person looking for another place to either reside or gain citizenship?

Judi Galst (06:20.312)
Well, it’s not a tax benefit. You started out with taxes and I know when someone, a client calls and says, you know, can you tell me what my options are? I’m really sick of paying us taxes. I’m like, well, this isn’t the right call for you. Yeah. So, but it’s important to understand. It doesn’t mean you’re going to be double taxed because that is a misconception that many people have about whether they should pursue a strategy of alternative residents or citizenship, because unlike the U S and Eritrea,

Frazer Rice (06:22.079)
Right.

Frazer Rice (06:30.08)
Puerto Rico that that’s it. That’s your best bet if you’re gonna try if you’re gonna try to play games

Judi Galst (06:49.774)
Every other country in the world, you don’t automatically become a tax resident by being a legal resident or even by being a citizen. Usually, you’re not going to trigger tax residency unless you reside 183 days in another country, but there are some exceptions. Switzerland is 90 days. Some, like New Zealand, will say it’s 183 days, but in a 12-month period, not necessarily in a year. I’m not licensed to give tax advice, so I’m giving high-level answer to this question.

But in general, just by pursuing an alternative residence or citizenship, there’s no tax consequences. And if you were to become a tax resident, many of the countries that we support programs in have treaties. So it doesn’t necessarily mean that you’re going to pay double tax, but it does mean it has to be looked at. If I am talking to a client and they really have full intention of relocating to another country, immediately I want them to have a local tax consultation, which I set up for them to understand what, if any, consequences they have to be aware of.

Frazer Rice (07:50.322)
And those consequences can change. did an episode probably about six months ago on the change in law in the UK. And it’s a different environment than it was even six months ago for people either going in or coming out of that country as it relates to their US intersection. So I think that the summary on all of that is, look, if you’re going there, A, don’t do it for tax purposes, B,

If you’re going to do it, make sure you get local tax counsel because those relationships can be complicated and will affect your planning.

Judi Galst (08:25.198)
Let’s talk about why people are doing it because taxes is not the strategy. And I would say, and my clients are almost exclusively Americans. So why are people calling me about this? There’s really four key motivators that tend to come up in the conversation. The first is because they do want another mobility option. They kind of have some PTSD still from the pandemic. They remember that feeling.

Frazer Rice (08:27.935)
Mm.

Judi Galst (08:48.226)
We could all work remotely. You had the vacation house in Italy or you had the private plane and all of a sudden you couldn’t take advantage of it because all the borders are closed to you and we could only stay in the United States. So some people are just realizing there is some risk to having one mobility option and they want to have an alternative. But I would say 90 % of the conversations I have there’s some reference to a plan B. People are feeling unsettled for so many different reasons.

You know, I talked to people whose family fled the Holocaust. It is literally in their DNA where their family thought it could never happen here. And that comes up in every conversation with them. But I have same sex, you know, couples, have transgender clients, I have people whose family lived in other countries where they saw the fall of democracy. And then I just have a lot of wealthy clients, and they’re diversifying their assets right now. And they want to diversify their mobility. They pay a lot of money in insurance and they say, Judy, this is just another line item.

Frazer Rice (09:45.896)
You

Judi Galst (09:46.703)
I’d say some are thinking not just about themselves, but they’re thinking about protecting generational opportunity and legacy. Some say, you know, I’m a student of history and yeah, maybe it’s going to take 10, 15, 20 years, but I’ve seen this happen before. And I want to know that my kids and my grandkids are going to have options to either live a life in another part of the world for cultural or educational opportunities or in a worst case scenario, because the U.S. isn’t where they actually want to be.

And finally, I’d say it fits nicely in a diversification of asset strategy, which many, many people are thinking about right now. Maybe they don’t want to hold all their money in the United States. Maybe they don’t want to all their real estate in the United States. And there can be strategies that are separate from what I do in terms of opening bank accounts in Switzerland or Singapore or other parts of the world. But really, all the programs that I do require you to move some assets. You’re either investing in stock or venture capital or private equity or real estate. So it does complement a diversification of asset strategy.

Frazer Rice (10:42.911)
Cool, so let’s think about, we sort of beat the tax horse to death a little bit here, but relocating versus renouncing. And different things, know, people probably come up to you with questions, do I have to fully leave? Do I have to renounce my US citizenship? How does all of that

Judi Galst (10:51.608)
Mm-hmm.

Judi Galst (10:58.222)
Great questions. So I’ve never had a client renounce. The US right now does not limit the number of passports one can have or citizenships one can have or how many residences they can have. Now, there is a congressperson who has just decided he wants to introduce some sort of bill that’s going to eliminate dual citizenship for Americans, although most constitutional scholars feel that’s like dead on arrival. But I have to acknowledge that.

So no, you don’t need to renounce. And frankly, if you have a lot of money, renouncing is quite complicated and expensive, and you need really good counsel to make that very, very significant decision. In terms of relocation, almost all of the programs that we support require little to no physical presence. You’re always going to probably have to go for biometrics and give fingerprints. But a lot of these programs, you don’t actually have to come back to that country again, except to renew it.

So for people that really want it as a Plan B and have no intention of really going to live in another part of the world at this stage in their lives, there’s not an obligation for you to spend time in order to maintain the ability to live in another country if you so choose.

Frazer Rice (12:08.017)
One thing that comes up that people ask me about and I only vaguely understand it is the concept of being able to get citizenship via ancestry. Comes up with a lot of people of Irish descent, Germany and Austrian especially. What’s the state of that and how realistic is it across different countries?

Judi Galst (12:15.993)
Mm. Mm-hmm.

Judi Galst (12:26.767)
It’s very realistic. And in fact, I’m doing German citizenship for myself. So for anyone whose family fled due to Nazi persecution from Germany and Austria, you and all future generations are entitled to citizenship. And my friends are like, why do you want German passport? But first of all, my kids got it. So my kids can go now live and work in Europe if they want, which is great, tremendous optionality. If you remember, I said before, it’s not just Germany. It’s any country in the European Union.

Frazer Rice (12:30.473)
Okay.

Frazer Rice (12:47.956)
Right.

Judi Galst (12:56.899)
And it’s very affordable if you actually are entitled to it. At Henley and Partners, we have established relationships with experts, lawyers in several countries that specialize in citizenship by ancestry. It’s very complex. And every country has different rules about like, it was passed down on the mother’s side, or if there was a break in the bloodline, or if it was passed a certain generation, or if there was a name change, there’s a lot of complexity to it.

But clients who think they may be eligible can contact us and we will have an assessment done. And if there is a case, we’ll refer them to someone that can help them through the process. And, you know, it can cost around 5,000, 7,500 euros versus I have clients getting EU citizenship through, you know, Malta and they’re 1.5 million out of pocket. So if you can qualify via Ancestry, I’d say certainly it’s worth considering.

Frazer Rice (13:50.879)
Terrific.

Judi Galst (13:51.311)
But don’t call me and say, like, I did 23andMe and I’m Irish. Because you do actually have to produce documents. Not a humongous list of documents, but you’re going to need naturalization certificates for the descendant. You’re going to need marriage certificates, birth certificates, and other documents.

Frazer Rice (13:55.187)
Ha ha ha!

Frazer Rice (14:10.844)
So there’s definitely an exercise involved with it, but if you can legitimately trace lineage, you may have a shot. So let’s talk about what jurisdictions are popular with United States citizens. We talked a little bit about Europe, and I’m sure there’s some, let’s call it, some that are easier than others. But then Caribbean, South America, Australia, New Zealand, maybe even Asia, what comes across your desk as being

Judi Galst (14:14.094)
Mm-mm.

Exactly.

Frazer Rice (14:40.488)
more reasonable than others maybe.

Judi Galst (14:43.246)
So I’d say clients that I’m talking to are basically going in one of four different directions. One is Europe. For residency, we’re looking at Portugal, Greece, Italy, and Malta. Those are all great programs because they require little to no time in the country to maintain the residency rights. So for people that really have no intention of spending significant time in another country, they’re really good solutions. And for citizenship in Europe, there very limited options. There’s ancestry, which we just talked about.

But the concept of citizenship by investment in Europe essentially was killed by the European Court of Justice in the spring of 2025. To give a little bit of explanation, Malta used to have a citizenship by investment program. And it basically said, do these three things, make a large gift to the Maltese economy, rent a property for six years and spend somewhere around 21 days in the country. And you will have a path.

to citizenship in Malta, which is an EU country. And the EU hated it. They felt it was transactional, that the passport was being sold, and they felt that people were being granted citizenship that didn’t show a tie to the country. And when this court ruling came out and deemed Malta’s program illegal, it essentially killed citizenship by investment programs in Europe. So I don’t think you’re going to see any European Union country have a citizenship by investment program, nor any country that wants to join the EU have one.

But many countries in Europe have provisions in their constitution that say, if you are an exceptional person that make an exceptional contribution to our country or to humanity, we have discretionary ability to grant you citizenship. And so there are some paths to citizenship via merit, specifically through Malta and Austria right now, as well as some other places. So that’s Europe, snapshot of Europe. Let’s talk a little bit about Caribbean, which you specifically brought up.

Frazer Rice (16:35.581)
Right.

Judi Galst (16:40.862)
So Caribbean is a path to citizenship. If you remember, said citizenship, lifelong, right? Not many countries have a path to citizenship. It’s very fast. It’s very affordable. What does it give you? So there are five countries in the Caribbean that have programs St. Kitts, Antigua, Grenada, Dominica, St. Lucia. It gives you citizenship in one of those countries. A passport, another passport that you can travel on. Right now, it’s pretty strong.

You can go into Europe with it, the UK, Ireland, not unlimited, same as the US, limited amount of time. Although I’m not sure the strength of the Caribbean passports is always going to be.

as strong as it is today. Europe doesn’t love these programs. And I wouldn’t be surprised if the Caribbean passports tend to get weaker. However, for a client that says to me, this is purely an insurance policy. I want to cover my kids and my kids are in their 20s because a lot of times these program kids are going to need their own investment if they’re over the age of 18 or 21. Caribbean wouldn’t be a bad place for us if we felt we wanted to get out of town for a little while.

Frazer Rice (17:23.23)
Sure.

Judi Galst (17:50.031)
The Caribbean’s a great solution for a very affordable amount, maybe 400,000 for family. You can get and make an investment in real estate that you can sell in five or seven years and your entire family can gain citizenship. So that’s Caribbean. I can pivot to something else that you want to ask a question. OK, so I actually love the program that New Zealand has out right now, especially for a high net worth person.

Frazer Rice (18:05.342)
Okay, no, let’s try Australia and New Zealand.

Judi Galst (18:18.414)
I think every high net worth person should do New Zealand. And for a couple of reasons. First of all, it’s purely investment driven. You have to move a lot of money. So it has to be for a high net worth person because they’re going to move three million US dollars to be invested in private equity, venture capital and private credit in New Zealand for around a three year period. And children up to the age of 25, provided that they’re single and not working full time can be included in that investment.

There’s very little time that the family needs to spend in New Zealand. As soon as you move the money there, you gain the right to live unlimited in New Zealand. But the main applicant only has to do 21 days, and the other family members only have to enter and exit for one day in the first year. At the end of three years, provided you didn’t invest in things that have a longer holding period, but from an immigration perspective, you can liquidate your investment. And then you can become a permanent resident.

So you have a lifelong right at any time to relocate to New Zealand, or you never have to go back again. English speaking, good healthcare, good education. You could have a life there, unlike I don’t think people really want to envision spending 10 years in the Caribbean. But 10 years in New Zealand, you know, there’s many industries and many things that you could be doing. And you could have a quality of life, maybe not akin to the United States, but good. So I love the New Zealand program.

Australia used to have a citizenship by investment program. They do not have one any longer. There is a route that they extend to people, which they call sort of like a talent visa. So there are certain sectors that are important to Australia and they would very much like to attract talent in those sectors. Usually it’s younger talent. So when I’m talking to a client that’s over 55, it can be difficult to get you approved for it.

But I’ve had people over 55 that have gotten approved. And if you have the background that Australia deems valuable, they’ll grant you a five-year visa for you and your family at no cost. Children have to be under the age of 18 or financially dependent up to age 23 to be included. But this is a visa that’s only good for five years. And if you don’t contribute to Australian society, it’s not getting renewed.

Judi Galst (20:38.082)
But I’ve had people from Hollywood, I’ve had songwriters, I’ve had producers, directors, people in private equity that specialize in sectors that are important to Australia. People in finance have been approved. So it’s worth considering if the idea of being able to live in Australia means something to you. Interestingly with that visa, you can also live in New Zealand.

Frazer Rice (20:58.095)
Okay, it’s one of those things too. If people aren’t forcing you to say, don’t hate me because I’m beautiful, that might not be a good route, but if you are talented or bring something to bear, it may be worth taking a stab at. Is it reciprocal? If you’re in New Zealand, can you go to Australia? Got it. So let’s pivot to Asia and or South America, which you hear about Singapore, you hear about…

Judi Galst (21:16.194)
No. Good question.

Frazer Rice (21:27.131)
Other different sort of haveny types of places where people place their wealth or establish family offices and South America I think is, know, think about like Uruguay and places like that which, you know, have the reputation of being the Switzerland of South America. What’s the state of play there?

Judi Galst (21:44.527)
So I have actually had a few clients that have done residency in Uruguay. They don’t have a formalized program, although I think a more formalized program is going to come out of there. Henley and Partners actually has a government advisory line of business, so we design a lot of these programs and we’re very active in South America. There’s a lot of interest in South America to have citizenship and residence by investment programs, so I think you’re going to see a lot coming from that region in the near term. But Uruguay does have a path to residency. You have to spend time there.

Frazer Rice (21:58.611)
Mm-hmm.

Frazer Rice (22:12.893)
Judi Galst (22:13.251)
And they don’t tell you exactly how much. Yeah. But most of my clients went with the expectation that maybe they’d have to stay for 30 days and they ended up getting the visa approved faster. You have to go back every year for a period of time or not renew renewing it. But yes, there is a path in Uruguay and more in Central America. People are doing Panama.

Frazer Rice (22:36.637)
Costa Rica.

Judi Galst (22:37.773)
Costa Rica is really interesting, very affordable. know we wanted to talk a little bit about the range, but in Costa Rica, you can gain temporary residence by demonstrating you have $2,500 a month in passive income. Many people will have that with interest and dividend income. Or you could invest $150,000 in real estate. It’s a temporary residence for two years, and then you renew for another two years. But at three years, you can transition to permanent residence.

As a temporary resident, cannot work for a company in Costa Rica, so you’d have to be able to work remotely. And then once you become a permanent resident, that requirement disappears. Once you are approved, you do have to pay into Social Security in Costa Rica that gives you access to health care. So it’s about $300 per application per month. But Costa Rica is very interesting, I think.

Frazer Rice (23:26.67)
As we go back, pivot back to Asia, are there any countries with Singapore or others that are possibilities for people in the US?

Judi Galst (23:33.722)
So Singapore is a possibility. However, you have to move a family office with over 200 million there, or investment levels are around 30 million, and you have to relocate, and the ability to renew it is contingent upon how much time you spend in Singapore. So I would say a very niche client could do Singapore. A more affordable option might be Thailand, which you can get a residence permit very…

Frazer Rice (23:44.125)
Mm-hmm.

Frazer Rice (23:52.605)
To be sure.

Okay.

Judi Galst (24:00.782)
Inexpensively. mean, a five-year permit for $25,000.

Frazer Rice (24:05.159)
Wow. And to round out our tour of the world here, Middle East countries, maybe the UAE, you hear about that as a place where a lot of Europeans go to move their wealth. Is that becoming popular with United States citizens?

Judi Galst (24:16.463)
Mm-hmm.

Judi Galst (24:22.381)
Golden Visa in Dubai is very popular. Honestly, not so much among Americans. It’s usually people from other parts of the world. mean, my firm has 70 offices around the world and we do a lot of UAE Golden Visas. I don’t have a huge amount of interest from Americans. I’ve done a couple of them. It’s not hard. You do have to spend time, like 30 days as part of the process there.

Frazer Rice (24:26.525)
Mm-hmm.

Judi Galst (24:46.703)
You can invest in real estate at 550,000, but there’s like 19 different visa types. You can set up a company. If you’re a member of YPO, Young Presidents Organization, they’re deemed talented and they don’t even make an investment. So, you know, it’s an option and we could certainly help it. But to be honest, I don’t see huge demand among Americans.

Frazer Rice (25:03.259)
Interesting. So let’s round this out a little bit here. For a U.S. citizen who is feeling unsettled or is just curious what’s out there. They want the ability to go live in Madeira, buy a place there. And to be able to go unfettered or something like that. What’s a good thought process or sequence of events for them to go through in order to make that happen?

Judi Galst (25:31.344)
I mean, we don’t charge for consultations. So I don’t know if you’re going to share my email at the end of this, but just hit me up. To me, any client conversation is about educating. This is generally a new topic for someone. It’s very rare that someone calls me and they really understand what is available to them and also what would be a good fit for them.

They may not understand if they want to include their children. There are going to be some that are going to be better fits for them than other based on the ages of the kids. They may not understand how much time they have to spend in a country to make it happen. How much it’s going to cost, and just learn about it. Learn what your options are. I can usually pretty quickly. Once I understand a client’s objectives, tell them. This is a strategy that I think makes sense for you and exactly how it would

Frazer Rice (26:14.206)
And it strikes me too, that for people who are exploring different places, it’s probably a good idea to have visited them first before just jumping in, jumping in feet first and sort of solving a problem without understanding what actually implementing the solution looks like.

Judi Galst (26:21.111)
Yeah.

Yeah.

Judi Galst (26:29.177)
For sure. I because many of the clients that I work with are of higher wealth, they usually have done a fair amount of traveling. So the idea of envisioning, know, residency in Italy, they’ve been to Italy. But when I talk to clients, especially about the Caribbean, where they might be investing in real estate and they have to decide between which country makes the most sense, I always tell them they should try and go because it can be a lifestyle decision. And they want to see where they could actually envision themselves if, in fact, they triggered this insurance policy.

Frazer Rice (26:58.59)
Judy, great stuff. Here it is. Put your email out there in case people want to reach out and find out more.

Judi Galst (27:05.099)
Okay, amazing. So my email is my first name, Judy, J-U-D-I dot my last name, GALST, G-A-L-S as in Sam T, at henleyglobal.com, H-E-N-L-E-Y, global.com, or you can give me a call at 646-856-3712.

Frazer Rice (27:29.406)
Great stuff. We’re going to have that in the show notes too so people can look on webpage, etc. to get that information. Thank you so much. It’s something, you know, when you’re at the desk and dreaming wistfully about what life looks like, what you’re done working, if you’re done working, my calculation is I’ll be able to retire when I’m 127. But it’s great just to sort of envision what that looks like. the expertise is out there. Thanks for being on.

Judi Galst (27:56.047)
My pleasure.

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In this episode, 10 Family Office Myths exposed (and debunked).

https://youtu.be/j1cgcZZcRBMEditing and post-production work for this episode was provided by The Podcast Consultant (⁠https://thepodcastconsultant.com⁠)

Welcome back and Happy New Year on the Wealth Actually podcast. I’m Frazer Rice. We have a fun show today where we talk about 10 myths in the family office space. Mark Tepsich, who runs the family office governance practice at UBS is here as we dish into the ideas and concepts that are misunderstood in the family office world.

SummaryThis conversation delves into the complexities and myths surrounding family offices, exploring their structure, governance, and the unique challenges they face in wealth management. The discussion highlights the importance of understanding the specific needs of families and the role of family offices in managing complexity and preserving wealth across generations. It also addresses common misconceptions about family offices, including their necessity, governance, and their relationship with institutional investors.

TakeawaysFamily offices are established to manage complexity in wealth.
Not all family offices are the same; each has unique needs.
Governance frameworks are essential for effective family office management.
Many family offices outsource functions rather than internalizing them.
The myth that 85-90% of family offices shouldn’t exist is false.
Shirt sleeves to shirt sleeves is a debated concept in wealth preservation.
Family offices need to adapt to the evolving needs of families.
Investment functions in family offices are often secondary to administrative roles.
Family offices are driven by complexity rather than just size.
The future of family offices may involve more direct investment opportunities.

Chapters: Family Office Confidential00:00 Understanding Family Offices: Myths and Realities
02:02 The Complexity of Family Office Structures
04:37 Debunking Common Myths About Family Offices
06:17 The Role of Outsourcing in Family Offices
07:54 Generational Wealth: The Shirt Sleeves Myth
10:51 Flexibility vs. Permanence in Family Offices
12:48 Governance and Decision-Making in Family Offices
15:49 Investment Functions in Family Offices
18:05 Size vs. Complexity in Family Offices
20:09 Family Offices vs. Institutional Capital
21:19 The Aspirational Nature of Family Offices
23:30 The Relationship Between Family Offices and Institutions
25:36 Technology in Family Offices: Current Trends
29:03 Family Offices and Private Equity: A Comparative Analysis

Myths * 85-95% of FO’s should not exist vs. “there is no such thing as a family office’ * Family office internalize everything * A Family Office Anchored by an operating business is the same that is one funded solely by liquidity event * Shirtsleeves to Shirtsleeves is myth * Family offices are designed to be permanent’ * Family Offices don’t need high end (almost SOX) like governance * Family Offices are driven by net worth (no, by complexity) * Family Offices are built on a robust investment function (no, it”s complexity management- often rooted in bookkeeping and accounting) * Family Offices are like institutional Capital (no, many more motivations than pure returns- including whimsy and the knee-jerk ability to override the IPS) * Family Offices are the right result for a career (they could be, but it is extremely unlikely- a lot of things have to be “just right” and there is little to know patience for development * Family Offices make great wealth clients (very much depends on the function and the product- they can be difficult consumers) * Family office tech is best – in – breed (No and it probably never will be) * Family offices shun Large institutions (Surprisingly, no- needed for deals, expertise, and most importnatly financing and introductions)

Keywordsfamily offices, wealth management, governance, investment strategies, family dynamics, myths, financial planning, family wealth, complexity management, family governance

Transcript: Family Office Myths BustedFrazer Rice (00:04.462):Welcome board, Mark.

Mark Tepsich:Hey, Frazer, good to see you again. Appreciate the opportunity.

Frazer Rice: Likewise. So let’s get started first. We’re going to go into some of the myths around family offices. But you really participate in kind of an interesting subset of that in terms of helping families design and govern them. What exactly does that mean on a day-to-day basis for you?

Mark Tepsich:Yeah, good question. So, you know, it means a couple of things, right? So if you think about a family office, you have families that are at the inception point, right? Where things are getting too complex for them. They need to set up some sort of infrastructure. And it’s really like, what is a family office? What can it do for me? What are the pros, cons, and trade-offs? Where do I start? What’s the infrastructure, the systems? Who do I hire? How do I structure a compensation? So you’ve got families maybe coming at it.

From post liquidity event, maybe coming at it from, we need to lift up, lift out this embedded family office out of the business to, hey, we’re an existing family office. We’ve got, you know, we’re evolving, right? The family’s growing, their enterprise is changing, the world around us is changing. People are leaving the family office, the next gen’s getting incorporated into the family office in some way. We’ve got some questions that could be, how do we engage the next generation through the family office?

Mark Tepsich (01:21.614):How do we make decisions, communicate around our shared assets and resources, which could be a portfolio, maybe even a business, or hey, how do we come together and hire? What is this profile of this person look like? Who should we hire and not hire? What’s the structure of their compensation, carry co-investment, leverage co-investment? What’s the tech stack look like across accounting, consulting, reporting? Now, how do we insource and outsource?

So it’s sort of. I like to call it organizational capabilities. So, you know, sometimes it’s soup to nuts, like starting from zero, other times it’s, we’ve been around for a long time, but we have a couple of questions. So that’s kind of my day to day. And, you know, I’ve been living this really since 2008 pre-global financial crisis.

Frazer RiceSo we’re going to go into, I think, some of the craziness of the family office ecosystem where we have people who wear many hats, people who wear masks, some people who are jokers and other people who are really good technicians and provide a lot of great insight. One of the things you were talking about is that the different types of mandate can be different. And I think maybe one of the first myths we should tackle is the

The bromide that if you’ve seen one family office, you’ve seen one family office, which is thrown around at every family office conference and everybody chuckles for a minute and then it sort of washes away and no one cares anymore. What do you think about that statement?

Mark Tespich (03:19.006):So I don’t necessarily think it’s true. And here’s what I mean. Let’s make an analogy to this, right? A business needs certain core infrastructure to just operate, right? And using accounting back office, you know the inflows, the outflows, you know, if you’re make a decision, these are the steps you have to go through. And so a family office, right?

It needs to incorporate that, but it needs to incorporate it with the family and the family enterprise that is existing for that family, right? So, yeah, each family office is different because each family is different, but that’s like saying you’ve seen one business, you’ve seen one business, right? The strategy could be, the culture could be different, but, you still need some core operating infrastructure. And again, there’s accounting infrastructure, and that’s the basics, right? So there’s a curl of truth, but largely I think that it is false.

Well, and at the same time, yes, families are different, but in general, families are trying to get to the same place, which is, know, they want to steward the wealth. They want to make sure it benefits the family and the other constituencies.

And they want to make sure that it’s preserved over time. And those functions, you know, it’s very infrequent. You’d find the functions not there. And so how you get from A to B may be different, as you said, but there are a lot of universal truths to setting one of these things up.

Frazer RiceSo one of the other myths that we’ve come across is the idea that 80 to 90 percent of family offices shouldn’t exist. is, people and families set these up for, let’s call it the wrong reasons. Maybe it’s fear of missing out, maybe it’s great cocktail party chatter, maybe it’s an overdiagnosis of their needs. What do you think about that?

Mark TepsichAgain, false. know, family offices are largely a function. They largely exist because there’s a market scale here. And what I mean by that is when you look under the hood at a family office, you’ve got basics of an accounting firm. You’ve got basics of an investment slash wealth management firm. You’ve got the basics of a legal slash tax firm. And then you’ve got essentially everything in between. And when you look at professional service firms out there,

They can’t provide all of those under one roof, whether compliance or regulatory reasons. But the other reason is because no business model out there can really scale the complexity that each one of these families has. So yeah, you could outforce a lot of this stuff, but at the end of the day, family offices often exist because of a market failure. so, false, 85 to 90 % of family offices should exist.

Frazer Rice (05:41.164)One of the other things, I’ve been around enough of these getting set up, is that the family office, if we get into sort of a technical structure, such that you set up a structure so that you’re able to deduct the expenses related to administering the wealth around that, that’s a valid reason to do things in addition to the organizational component. So I agree with you that there’s, to say that they shouldn’t exist is sort of belying the notion that these functions should take place internally. And I think you spoke to that. And I guess that gets to another myth, which is that family offices should internalize all of these functions. You just talked about it a little bit, that that’s not a great business model either.

Mark TepsichNo, mean, yeah, so, you know, 85 to 90 % of family members out there, you just use that statistic, outsource a fair amount of things, right? And what that means is let’s just use tax counsel, for instance, right? This is something that these issues exist in every family office, they exist for every individual, but at the end of the day, should you have, you know, a tax counsel in-house in a family office that’s only doing, you know, income tax advisor work? Probably not.

For 95 % of family offices because the frequency just isn’t there, right? So, you if you look at general councils alone, right? So they should have a broader mandate than income tax. should have well-transferred estate planning. Every family has those issues, but do they have the frequency to warrant bringing that individual, that professional and the rate, the cost? Probably not. a lot, you know, most family offices outsource a fair amount of whether it’s investment management, manager selection and due diligence. So false. Most fair amount offices do outsource a fair amount.

Frazer Rice (07:31.374)One the things, this is one of my favorite controversial topics in the family office ecosystem of vendors that are out there is this notion that shirt sleeves to shirt sleeves is a myth. that the, and for those who don’t know what that means is, know, the first generation has generated the wealth, the second one enjoys it. And then the third one for a variety of reasons is ill-equipped to carry the wealth forward. And then everyone kind of goes back. It transcends culture. It’s lily pad to lily pad.

You know, there’s a British version and a Russian version and whatever version. But the advice ecosystem around this is such that there’s a lot of debate about the statistics that have, quote unquote, proven that. And I can listen to that and say, yes, those may be very narrow. But there is a myth out there that shirt sleeves to shirt sleeves is a myth. Maybe you have some comments on that.

Mark TepsichMan, this is a tough one. I will say this will probably be the toughest one. So I think once a family becomes wealthy, right? And you can kind of define that as, the wealth, meaning the financial wealth will last a few generations with really out, with really nobody working, right? Let’s just define it that way. It’ll last a couple of generations if you make some not dumb decisions, we’ll call it.

I think such as the financial markets today, right, as long as you’re diversified, you will stay wealthy. Does that mean you are going to have the same amount per capita over time? Maybe not, right? So if you look at it today, is a nuclear family of four, and you look at it 50 years from now, and the family is 30 people, right? I don’t know what the growth rate would have to be on those assets.

So I think the family will remain wealthy whether they remain, you know, on a per capita basis, right? That’s a different story. I think what this is missing, however, I think the numbers kind of overshadow what this is getting at. I think when you look at it, when you take a step back, that first generation wealth creator, right? Will the family continue to be builders and entrepreneurs down the road?

Frazer Rice (09:50.26)That I think that’s the question. Will they continue to kind of reach their full potential? I think that is that should be the focus. I’m going to punt on this one. I think it’s TBD and it’s there’s no set answer. I think the idea that the returns, To get back to your point is that as you go from generation to generation, the complexity increases, I’d say geometrically. Whereas the assets in many ways are going to be designed to increase linearly. And so at some point it may be 14 generations down the line when you’ve got 300 people that you have to take care of, are those assets gonna be in place to be able to support the level of living that people expected in generation one, two, and three?

I think that’s the equation we’re all trying to fight. And so I’d say while Shirt Sleeves to Shirt Sleeves isn’t necessarily a prophecy, it’s definitely something that has to be addressed. So I’m gonna say that the fact that Shirt Sleeves to Shirt Sleeves is a myth, I think that’s the myth.

Mark TepsichSo that’s where I draw my line in the sand there. think there’s an equation you constantly have to fight. Okay, so here’s another one. Family offices are designed to be permanent. I happen to think that they start out trying to be permanent, but in actuality, they really have to be more flexible and flex with the needs of the family, even at the first or second generation.

Yeah, I would agree. Often they’re established for a good reason, right? That reason is complexity. Whether that complexity continues to exist for the family is a different story, right? You might have a business being sold. The family might just say, “hey, we don’t need to do all these direct investments, these alternate investments. Let’s just keep it simple, keep it passive.”

I don’t think they’re designed to be permanent. I think families don’t really think about that too much. They want to exist for probably the existing generation that’s leveraging it and they wanna transition it, to your point, be flexible over time. But I don’t think anyone like a business, right? If you think about a business, the business generally speaking, it’s meant to exist in a perpetuity. That’s why you have a business, right? It’s not a sole proprietorship, but a family office, I think it’s TBD, right? So, you know. I don’t think anyone’s setting up a family that will say this is going to exist a thousand years from now. And I think if they came out and said that, think that it would add question and motivations.

Frazer RiceMaybe we may be welcoming the Martians, we may be speaking Mandarin. There’s a thousand things that could happen in between here and then, that’s for sure. Here’s a myth that I think you and I are both going to agree is one, which is that family offices, for the ones that we think are going to try to persist, don’t demand necessarily Sarbanes-Oxley or high-end governance.

Mark TepsichI think as family offices mature, meaning as the family evolves, they do need some sort of decision-making framework. Especially if they’re going to really come together and act like somewhat of an institution. What I mean by that is, under the hood of a family office or under the hood of a family, let’s say there’s 10 family members. Let’s say there’s 20 to 25 trusts within that.

You know, you could come together and pull your assets, right? And pull your resources. That’s part of the reason for having a family office. And so you just have a larger pool of capital. When you’re doing that, you do need governance. Okay? But if you’re gonna have, it’s just like, hey, we’re gonna have our separate portfolios. We’re not gonna come together and have pooled investment vehicles. You might not need an investment company, okay?

And there might be good reasons to have an investment committee. In fact, many the investment committees I see, they’re not like college endowments where, we got eight people or nine people on here. We need to agree at least have five people to agree to allocate to this manager or change the allocation or change the IPS, depending on where that authority resides.

I often see many investment committees for families, hey, we’re just collaborative in nature. We’ll get together. We’re going to have a meeting and talk about different strategies. Different advisors, things we should be doing. But if they’ve always had to agree at the family business level, they might not wanna have that same construct in the family office slash investment portfolio.

If they’ve always struggled, know, come into agreement at the family business, now they’re gonna like, hey, we’re gonna recreate this dynamic. don’t have a binding construct. In fact, we ran a report, it’s coming out hopefully in the next couple of weeks. on family enterprise governance and a component obviously is the investment committee.

70 % of the investment committees out there are advisory in nature, meaning they don’t make binding decisions. They take it back to the trustees or whoever the authority is and they say, hey, here’s what we think, right? So individual family investors, whoever that is, co-trustees, it’s a, okay. So I do think governance is important, but it depends on what you mean by that, right?

Should there be an IPS in place? I 100 % think that each family investor should have an IPS in place. The biggest mistake I see there is, hey, we’ve got this shared pool of capital. We’ve got 50 trusts. We’ve got one single IPS, right? I think that is a big mistake. don’t think that’s good governance. So it really depends on what you mean, but I think, yes, there should be some decision-making framework that you’re following. Otherwise, what exactly are you? Adhering to it, right? Like, what is your framework? What is your decision making tree?

Frazer Rice (15:53.902)On top of that, possible myth. Family offices are built on a robust investment function.

I mean, yes, there are some that are like that, right? You know, there’s a big names out there, MSD, Pritzker, so on and so forth. Those are the exceptions rather than the rule. Most family offices, 85 to 90 % are formed to manage the complexity, right? So again, otherwise you’re gonna have all these outsourced providers and that just doesn’t make sense when you’re trying to make a decision, because you need all the different parts to come together.

They’re often built as administrative functions first, rather than, we’re gonna go start the next, you know, a private equity firm. that’s false.

Frazer RiceThe, as I like to say, probably to the boredom of a lot of people who talk to me a lot is that a lot of these really are built on a bookkeeping or an accounting spine. You’ve got to manage the inflows and outflows of everything and keep track of what you have or else you can have a great investment function, but things are going to spill all over the place.

Mark Tepsich (17:30.872)I’ll never say, yeah. mean, and that actually goes back to good governance, right? So I always say, it’s not provocative. I’ll say, listen, this is not a provocative answer, but you need to create that first. And most of the people that are considering this rate are business owners. So they’ll intuitively get that. In fact, that function might exist somewhere at the business, but it’s really not organized. And without that function, like, it’s hard to make a decision, right?

If you’re going to allocate 20 % of your portfolio, to private equity drawdown vehicles. got cap calls, capital commitments, distributions, like that needs to be budgeted and forecasting, right? So a lot of these families will have, one nuclear family can have three to four homes, 10 bank accounts, 20 entities. It’s not like a single piggy bank that you could take cash out of and move it every which way, right? Those are owned by different vehicles, different trusts, different assets and things like that, so.

Frazer RiceHere’s a myth that I espouse which is Family offices and whether you have one or not is driven solely by size whether you have five billion or two hundred million or something like that that if you aren’t a certain size you shouldn’t have one and if you’re Of a certain size you must have one.

Mark TepsichThat’s a myth. It’s driven by complexity first. I’ve seen, I’ve spoken to people that are worth two to $3 billion. It’s concentrated in a few stocks, meaning like they were early stage employees, right? They’re still in it. They’re getting a healthy dividend at this point. Guy talked to couple years ago. He had two homes, two cars, probably 95 % of his network was tied up into two separate securities that were probably traded.

And he’s like, I don’t think I need a family office. You want to know what one was, what it could do from. And I’m like, listen, if you don’t have the complexity, it probably doesn’t make sense. Okay, if you can make a decision within whatever framework you have, whatever complex you have. Now, the other, you know, there is a cost factor to it, right? It gets easier to start a family office, meaning hire a couple of people, if you’ve got the… asset base for it to make sense on a cost perspective. So most of the time it’s driven by complexity, but cost does become a factor, right? If you’re worth a hundred million dollars, you’re to go hire 10 people. That probably doesn’t make sense.

Frazer Rice (19:28.342)Right. Well, on top of that too, if you, and there’s a sort of the difference between a family office driven by a liquidity event and meeting that’s, that’s all you have versus a family office that’s tethered or sorry, a family business that’s tethered to it, that is also generating cash flows to help pay for things that that’s a big part of the decision. Because if you’re hiring people, you know, a CIO minimum, absolute minimum is probably $500,000.

They’re going to need people, you know, you’re looking at at least 3 million. just to get the thing up and running before you start figuring out what you actually have to do. And so the concept that the size is going to dictate completely, it underscores sort of that cost component that you described there.

Frazer RiceThis is an interesting one and I like this concept to talk about. Family offices are like institutional capital as investors.

Mark TepsichAgain, myth, there are some, again, there are some that are like institutions. They have the size and the sophistication. Oftentimes you see them, they’re former PE or hedge fund founders, right? That just aren’t doing any more of it. They made their wealth in the financial ecosystem, in the markets. And so they’re very sophisticated. But by and large, I mean, they’re sort of quasi-institutional, right? So I’ve seen multi-billion dollar family offices that

Again, they’re more of the administrative hub rather than, we’re gonna be splashing around and playing in the markets and using a lot of leverage and doing a lot of control equity investments. So by and large, it’s the myth. 85 to 90 % are institutional-like. They are there to fill a need and that need is complexity management.

Frazer RiceHere’s one on a different angle, which is family offices are the goal for people in the wealth management industry to work for, meaning family offices are a great aspiration for people who work in the industry and that that’s universal.

Mark Tepsich (21:34.35)Myth, I think it’s an option. I think it’s interesting. I think it is a growing opportunity for folks that work in, you know, maybe wealth management or investment management or the financial ecosystem. But you didn’t, again, family has been around for a long time, but they’ve really only became, you know, kind of popular post global financial crisis with the rise of PE because of ZERP. You know,

I’ll talk to a lot of people that are like in the hedge fund ecosystem looking for a change, right? And I say like, listen, like these opportunities for you are out there, but it depends on the family. It depends on their compensation philosophy as on the culture that you’re going to have to live within. There’s a lot of key man risk. Is it an opportunity? Yes. But again, it is, it is family office by family office.

Frazer RiceI tell people too, it’s for people who are used to having lots of clients or lots of institutional support that is going to be a shift. It’s different to have one client. It’s different to have a scenario where the business of a family office, the business model of that particular family office can change on a dime. And if you don’t share the last name of the family you’re working for, you could be in a tough spot.

Mark TepsichYeah, “we’re gonna build out a sustainability impact portfolio. We’re gonna build out, we’re gonna have a direct investment initiative. We’re gonna allocate whatever, a few hundred million dollars to it.” That person, that professional gets there and then a year or two or three years goes by and the strategy changes because a family member too had to change a heart. And then it becomes, okay, why am I here? Where am I gonna go now? So again, they could be great opportunities. I had a great experience.but it really just depends on the family.

Frazer Rice (23:26.894)Here’s one, and you’ve got UBS over your shoulder there, so this is dramatic foreshadowing in some ways, but I think it bears talking about. It’s that family offices shun the large institutions, and that they want it bespoke, they want something peculiar all the time. What do you think about that?

Mark TepsichNo, I mean, it goes back to the earlier myth that, you know, basically we’re saying family office should, family office do outsource a lot, right? So again, most family offices are five to eight people, right? I call it family office island, meaning you’re there on the island and you’re like, what is going on outside of the island or off of the island? You know your island really well, right? You know the family, know all the facts inside and out, but they are, I mean, there’s a reason why all these institutions, including UBS, has built out the resources to cater to family offices, right? I’m the perfect example. They brought me on to help our clients build family offices, right?

They would not do that if it was gonna cannibalize their business. So they could be great clients and other times it’s like, hey, we’re very insular and we’re gonna keep everything close to the vest. Again, it’s family office to family office. But by and large, they’re great wealth clients.

Frazer RiceNo, and they also, you know, they need institutions to partner with of size, whether it’s at custody or lending or any number of other functions that are out there. Sometimes, you know, the RIA space is such that, you know, they try to be all things to all people and the appeal of being in, you know, the billionaire space.

It takes a lot of people and a lot of effort and frankly a different business model to deal with that and to just sort of wander in and say we’re great and we can do these things. I think that’s a short road for a lot of institutions.

Frazer Rice (25:17.602)Again, like we are brutally honest too. And I’ll, and here’s what I mean by that. Well, like we’re rated a lot of things, but I’ll say like, listen, there’s things that we can’t do for you. We can’t be your accounting back office, right? Like we just don’t offer that. We don’t have it. We’ve got a couple firms that would do that. They’re pure plays on it. So they’ve got to be good at it. but you know, use the various institutions for what they’re good for. They’re, know, again, that’s why you’ve got a family office. You can kind of pick or choose and be agnostic as to what you’re using them for.

Frazer RiceIf we wind down here a couple of last ones: The tech that family offices rely on is going to be best in breed.

Mark TepsichI, listen, I have this power station all the time with family office meeting, like what, what, you know, what tech providers should we be looking at? Listen, family office have grown in, right over the past 10, 15 years that there’s not a question. they’re historically, right. had to use in a family office, had to take basically institutional tools, try to repurpose them for the family office and they just, they’re just kind of clunky, right? The family office is still a cottage industry.

If you’re trying to sell the family offices, you’re selling the two firms with five to eight employees, right? So the tools are going to continue to get better. But in my opinion, they’re always going to lag the institutional tools and kind of sophistication. But that’s also because institutional tools are very kind of narrow and deep, whereas the family office tech tools, you’ve got the accelerated reporting, but it needs to link to the accounting.

That’s an issue. And so the family of standard day is left with like a bunch of disparate fragmented systems that have a challenge talking to each other. With that said, AI, I’ve been talking to a lot of these sort of mom and pop shops, I’ll call them. They’re firms that are trying to incorporate AI to break down these walls. So it’s not fragmented disparate systems. I use the analogy of it’s like jailbreaking an iPhone. I don’t know where this is gonna be in a couple of years, but I think the tools are going to continue to improve. But again, you’re probably not going to take a family office tech tool and deploy it at institutional scale. So if that answers your question, I guess it’s a measure.

Frazer RiceFirst of all, I think it’s going to take a long time before something, quote unquote, replaces Excel, which is still a powerful tool that is flexible and does what it says it’s going to do. And people use it sometimes at their own peril to be the underpinning of everything. the one thing I would add is that the mom and pop software components, I think, have a lot of great ideas. The total market to sell into that, though, does not necessarily make for a great software business.

As you say, to get those tools that are specific and required at the family office level to be profitable, you got to figure out a way to sell that into something bigger. I’m not sure there is anything bigger.

Mark Tepsich (28:49.358)Yeah, I mean, you’d be better selling it to, you know, small businesses, right? So, I mean, the tools are going to get better, but there’s been a lot of interest recently in the past couple years. I don’t think, I think most of them are not going to survive. I don’t want to say there’s only going to be a couple winners, but on the Consolidated Reported Front, I really think there’s only going be a couple winners because you need scale.

And again, family office, if you’re looking to make a decision, you’re like, well, okay, well,
5,000 users use Adapar and 50 use this other platform. So which one are you gonna choose? You don’t wanna onboard to the one that has 50 and then three years down the road, they’re out of business, or there’s fold or something like that. So with scale comes a little bit of security that at least you know that a lot of other people are using. You could point to that.

Frazer RiceLast question. Family offices will rival PE firms in terms of influence in the investing market?

85 to 90 % will not rival PE firms. That’s not what they’re set up for. That’s not the goal of most family offices. Again, it’s complexity management. Will some rival PE firms? Yeah. But again, you… Listen, I’ve seen some family office go out there and raise their party capital. When they do that, they’re not a family office anymore. They might have a component in there, but they’re private equity firms.

What you’re getting at is private equity firms are raising a fund every couple of years. Can a family office do that? No, because once they do that, they will be a private equity firm. So PE by and large has an infinite capital source, as long as they are good at what they do, right? So with that said, you know, there’s a lot of entrepreneurs that are are post liquidity events have played in the direct investment space, they really wanna do it. They’re still young, right?

They’re billers, operators created. They wanna do it from a different vantage point. They’re coming to a realization: “that w”We need to start a fund.” I really love that story because again, they’re founders and operators. They didn’t come from the financial ecosystem first to do this. So I think they’re putting a different spin on PE. I think it’s great for the PE industry as a whole, by the way.

And I think, if you’re a founder or a business owner, you might have an easier time taking an equity investment from somebody like that, who’s known in that specific industry that they made their money in, who’s had to make payroll. And they probably have a different timeline than normal PE that’s looking to flip every three to five years.

So I think as an investor, I think that would be an interesting investment opportunity, right? And so it’s like, okay, well, part of my PE allocation, you know, This might look interesting. I hesitate to make, you know, I’m not an investment person, so.

Frazer RiceGreat stuff. Mark, how do people find you and reach out?

Mark TepsichI’m on LinkedIn. I would attempt to just spell my name with my email address at ubs.com, but it’s very lengthy. You just hit me up on LinkedIn. But, Frasier, I appreciate the time. This was great.

Frazer RiceI’ll have that in the show notes and as a final parting, we sort of listen to people say, the family space is getting loud. I’m not sure it is. I think the vendors are more loud than the family offices are. I don’t know what your experience is there.

Mark Tepsich100%, the family members themselves are still quiet. You don’t see them out there on LinkedIn. It is the ecosystem to your point around them that is getting loud, right? It’s LinkedIn. It’s like, you know, every time I’m on there, it’s like somebody’s got something to say about families, which is good. Again, if you think about every boom in history, they attract people, right? You could say the same thing about AI, right?

But again, it’s become loud, but that’s the industry. It’s not the family offices themselves.

Frazer RiceGreat stuff. Thanks, Mark.

Mark TepsichThank you, Frazer. Appreciate it.

FAMILY OFFICE DEFINED

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We have Mike Monaghan on the show today and covering the “Birth of an ETF.” He’s going to talk about the Founders ETF and its new launch. We’re also going to talk a little bit about what it takes to get an ETF up and running. From a compliance perspective, remember, there’s no guarantee of future performance.

https://youtu.be/o-m3PYHKXqk?si=qBaHkJpUt7xgdpjGTranscript of “The Birth of an ETF”00:00 The Founders ETF Frazer Rice (00:00.986)
Welcome back, Mike.

Michael Monaghan (00:02.616)
Frazer, it’s great to be back.

Frazer Rice (00:04.4)
You are at an interesting point in time right now. You’re about to start up Founders ETF and I think you’re about to get trading authorization to get going. Maybe tell us a little bit about the process to set up an ETF. Then we’ll dive into the strategy a little bit.

Michael (00:21.25)
Yeah, absolutely right. We should start trading on the SIBO Thursday, so two days from now. And we’ve launched our first fund, the Founders 100, that owns the 100 best founder-led companies. I’d be happy to go through some of the process that it takes to set up an ETF.

Frazer Rice (00:40.014)
Love it. ETFs are the main way to go now in terms of getting an inveestment cvhicle up and running. What has your experience been around?

The Popularity of the ETF StructureMichael (00:52.014)
Yeah, so ETFs have become the primary investment vehicle for a few reasons. Let’s outline those reasons. Then we can go through some of the steps that it takes to set up an ETF. So on the advantage side of an ETF, they’re typically a bit lower cost than traditional mutual fund products. Importantly, they’re tax advantaged. So there’s no gains or losses that occur during the normal ETF growth phase.

Everything that happens within the ETF is done with what’s called an authorized participant. So you do exchanges. And so there’s no capital gains that are assigned to the investors. As long as they hold the ETF, a tax trigger only occurs when they actually sell the ETF.

Finally, it’s a great way to get exposure to the market. So whether you want to own a broad market index, one of the legacy indexes, or a vehicle like ours. That gives you in one single trade, rather than having to guess who’s going to win. Is Nvidia going to win or Palantir who’s going to win? You can own a hundred of the best winners in the market in one single stock ticker. In our case, FFF.

Frazer Rice (02:07.364)
So let’s dive into that theme a little bit. As you said, it’s the top hundred founder led companies. First and foremost, public I assume, private, you’re not diving in those waters.

Public vs PrivateMichael (02:20.59)
Correct. So these are the hundred best publicly traded founder led stocks. And we generally fish from the 200 largest founder led publicly traded stocks. So a lot of these are names and founders that are very well recognized. Whether it’s Elon at Tesla or a Mark at Metta, Larry at Oracle, Rich Fairbanks at Capital One. These are all very well known founders.

They’re great entrepreneurs who are leading highly scalable, very high performing publicly traded stocks.

02:53 Understanding Founder-Led Companies Frazer Rice (02:53.914)
So let’s define founder a little bit. Obviously we have sort of the cult of personality around high-end CEOs. It sounds like you’re identifying companies that have been founded. The people who are running them not only founded them, but they scaled them. They have now gotten them to a level of maturity. That’s different from the typical public company that we find in the S &P 500.

Definition of FounderMichael (03:19.104)
Yeah. So first let’s define a founder. Then let’s talk about why we think the founder led companies outperform a traditional S&P company. We define the founder as being a chief executive leader. It could be chief executive officer, could be chief technology officer. Sometimes that say a scientific or medical company, would be the chief scientific or chief medical officer. And that person conceived and founded the company, took it from zero to one.

It’s their imprint that has guided it over its 10 or 20 or 30 year period. That’s taken it from a small private company to a venture backed company to a large publicly traded company. And so the idea being the person that founded it continues to run it to this day. We talk about the fact that we own an Nvidia that Jensen still runs. But we don’t own Intel. We own Meta because Mark still runs it, but we don’t own Google.

We own Dell computer because Michael Dell still runs it. But we don’t own Apple. We own Capital One because Rich Fairbank still runs it, but we don’t own American Express.

Investment ProcessFrazer Rice (04:25.86)
Got it. So lots of things to get into here. How does it a company get on your radar screen? And then ultimately, how does it get off of it?

Michael (04:35.806)
Great question. the getting on the screen is fairly mechanical. We look at the 200 largest by market capitalization founder led stocks. So we look at all U.S. listed. So it could be listed on the New York Stock Exchange or NASDAQ, but it has to be U.S. listed. We then look at the 200 largest. And from there, we select the 100 best using a quantitative factor model. So I’m

have a Sanford Bernstein background and so do some of the folks here. And so for folks who are familiar with Bernstein’s research, we use a Bernstein factor model to pick the best, the hundred best names out of the 200 largest. That’s how they get on our radar. And to get off is quite simple if they retire. So if a CEO announces he’s retiring, per the prospectus, we have 90 days to sell the stock. once we, so for example, Mr. Buffett recently stepped down from Berkshire Hathaway.

And so we sell Berkshire Hathaway on his announcement and no longer own the stock.

Frazer Rice (05:38.0)
things like corporate mergers or divestitures or maybe even a reclassification of stock where the founder stays on in some capacity but their decision making has been reduced. How do you analyze that?

05:54 The Investment Strategy Behind the ETF Michael (05:54.326)
Yeah, so there is some human overlay judgment calls here and the founder has to be an executive officer leading the company. So they can’t just run a division. They can’t just be chairman of the board. They have to be the executive in charge of running the company.

Frazer Rice (06:14.0)
And if for, I guess one of the exits possibly would be if, and I don’t know if this is even possible, but if NVIDIA were to take over Meta and there isn’t room for Jensen and Mark in the same suite, how do you analyze something like that?

Michael (06:34.253)
So in the business combinations where you have two founder-led companies or a non-founder-led company swallowed up by a founder-led company, as long as an original founder remains, it remains in the portfolio. So we’ve had some stocks that had, say, three to four co-founders. And as long as one of those co-founder remains, it remains in the portfolio.

Voting SharesFrazer Rice (06:58.352)
So one of the things that’s a bee in my bonnet is the concept of having shares where, in a sense, they’re super majority or voting components and then shareholders that have less decision making authority to act as a check and balance around the company. Is that something you’re not really that worried about or is it something that may be a factor that’s important later on?

Michael (07:24.525)
So we actually think that’s one of the opportunities that this exists. Like one of the things that we haven’t talked about yet is why is all this alpha there? Why is this uncaptured alpha there for us to go get? And we think historically in the past, active money managers have sometimes shied away from these founder led companies because to your point, Frazier, oftentimes the founder has managed to have super voting control, 10 to one shares, 101 shares. So they completely control the company.

And some of these larger active money management complexes have said, well, we as the shareholder, we need to be able to have a vote and we’re going to underown these stocks. We have the opposite view. We think these founders are special. So we think that by the time a Mark or a Elon has driven their company into the public markets, they’ve showed that they know how to set the vision, ruthlessly execute and generate value for the shareholders.

Concerns?And so we’re not concerned by super voting structures. Oftentimes those are the stocks that we want to own because it’s the founder that’s in control and setting the direction of the business and generating high returns for the shareholders.

We view it as you either believe in them and you own the stock or you don’t believe in them and sell the stock. We’re not interested in other people’s getting on the board and monkeying with the decisions of the founders.

Frazer Rice (08:30.255)
Is this it? What is it about the founders, especially for those that go from zero to one, then to scale, and then to shepherding a mature business? What makes them better and what drives the alpha that you’re trying to seek? In terms of putting together a portfolio of these types of companies?

09:01 The Importance of Founders in Business Michael (09:02.891)
Yeah, so the great ones tend to be a bit irreverent. They tend to be highly visionary. They tend to be charismatic communicators and relentless in their execution ability. They’ve got a great ability to pivot if a change needs to be made. And rthe moral authority to set a tone to generate very high rates of return. We see it sort of over and over and over in these founder led companies. And if you look at some of the studies that we’ve done.

There’s a study that Bain Capital, Bain had done years ago in combination with Harvard Business Review, founder led companies tend to outperform non-founder led companies in say the S &P 500 by 3X. So it’s this personality type of high vision and high execution tends to drive outsize returns. And it’s a bit of a self-selecting process.

What makes Founders Unique?If you think about it by the time any of these founders that we own or talk about have got to the public market. They first had to identify an opportunity to go after. They had to develop a great product by listening to their customers. And they’ve shown that they can scale all the way from a series A round, B, C, D, all the way investing and generating high rates of return in the private markets.

Transitions of Founders to ExecutivesThey get to the public markets, continue to do that. And now you get a little bit of an effect of a echo of that, of now all of sudden you’re in the public markets. If you get enough scale, you have this highly effective business. Now you’re getting relatively cheap capital that you’re feeding into your business through the public markets. And now you continue to grow.

Frazer Rice (10:42.096)
Just to summarize at least what I’m hearing is that they’ve gotten to the point of becoming public. They’ve been able to say no to losing control in exchange for either putting some liquidity back in their pocket or otherwise moving on. And so they’ve almost ratified their vision and message and they keep going. And by the fact that they’re public, there’s enough liquidity for everyone else out there in terms of their investments. So it ends up being a win-win.

Michael (11:11.157)
I think so. That’s what we see.

Frazer Rice (11:13.316)
So one thing that I’ve been sort of reading about and thinking about is the concept that the number of public companies is becoming less, well, it’s decreasing, and that many people are able to stay private for longer. Do you worry that your universe is going to get too small to provide sort of a canvas for your ideas here?

12:02 Market Trends and Future Outlook Michael (11:37.549)
Let’s talk about three phases of that. We don’t, we actually see the data showing that there’s more and more opportunities within founder led. So let’s look at history and then let’s move to the future. So historically, probably about the time you and I joined the securities business, they would actually take the, to your point, they would take the founder, they would kick out this charismatic founder.

They would put in some mid-level proctor or GE middle level manager to be the you know, the suit in the room to take the company public. And that was sort of in the late nineties and people figured out that wasn’t such a good idea. So if you actually look at the chart, there’s more and more founders staying and leading their public, their, their publicly traded companies.

That’s number one. Number two. Yes. We have seen some companies stay private, obviously Stripe, SpaceX, but we are now seeing, for example, SpaceX coming to the public markets. Eli is talking about coming next year. so we, we haven’t seen it so far impact the pool with which we can fish in. And as I mentioned, that’s what we saw historically.

Public Markets and the FutureIn the future, think, Frazer, I think we’re going to start to see a conversion of public and private markets, meaning these private mega cap companies have liquidity. And I think that you’ll see more and more ability to trade those stocks almost in public liquidity. So I think these two markets are converging. So I think that

Not only do we have plenty of founders in the traditional public markets, I think that the liquidity and the big privates is going to converge to a public market style shortly anyway.

Frazer Rice (13:13.232)
You’re in a curious time as far as launching an ETF around this concept. I know a lot of people are wary of Mag-7 and ultra valuations and issues related to that. How do you respond to that concept that a lot of the growth has taken place in seven, maybe seven out of the hundred that you’ve chosen?

Debunking the Mag-7 (to the Mag-3)Michael (13:33.356)
Yeah, so that’s a misconception. We see Mike Saylor get on TV and wave his arms around it, but it’s not really true. First of all, what’s interesting, if you tear apart the Mag-7, it’s actually the Mag-3. The outperformance in the Mag-7 has come from Meta, Tesla, and NVIDIA. So it’s not just the Mag-7, it’s a founder led. And now you say, well, that’s a small sample set. Let’s look at a bigger sample set. So if you look at the NASDAQ 100, for example,

It’s actually the 20 founder led companies have driven most of the outperformance over the last 25 years. And what I’m about to tell you about the S &P 500 probably won’t surprise you. It’s the 37 founder led companies that have driven most of the outperforming the S &P 500. So the outperformance is coming from founders, not from any specific part of the market. And one of the things that we think is great about this ETF is to avoid concentration.

14:50 Risk Management I know you’re really familiar with the concept of active share and that’s how different you are than the S &P 500. We have an 85 % active share to the S &P 500. So if you own the founders 100 ETF, you have much different exposure to the market than say the S &P 500. And so we think it helps reduce some of that concentration. We’ve done some things to make sure that we are diversified. First of all, we do own 100 stocks.

DiversificationSo really good diversification across that. And then number two, while we run a market weight portfolio, we cap. No stock can be bigger than 7 % of the portfolio, so we don’t get out of balance at any point. So we think that we mitigate some of those concentration risks and we allow people to invest in innovation without being over concentrated to any one name, say the MAG-7, for example. So we think that we’re giving our investors really good exposure to innovation through the founders, but not exposing them to pre-existing market concentrations. And then finally remind everyone

It’s not the MAG-7, it’s not the NASDAQ-100, it’s not the S &P-500, it’s the founders within each of these are what are driving the outsized performance in those analytical groups.

Frazer Rice (15:36.218)
So from a diversification standpoint, obviously not everything in one name, the 7 % cap you described, do you have sector concentration guidelines as well?

Michael (15:45.749)
We don’t have sector concentration guidelines, but if you look at the nature of the portfolio, we were fairly well diversified. We’re slightly overweight tech and financials versus say the S &P, but we own healthcare stocks, own consumer stocks, we own energy stocks. So we’re giving you a broad exposure to the market.

LeverageFrazer Rice (16:05.924)
Let’s talk about leverage for a second. I know a lot of people are trying to juice returns by piggybacking off of other people’s money on that front. Does that have a place in your ETF?

Michael (16:17.004)
So there’s no leverage in the ETF. We sort of believe in get rich the slow way. I like to tell people that it’s very hard to make money in the stock market over the short term, but it’s not particularly difficult over the very long term. think Mr. Munger and Mr. Buffett used to talk about this. the idea being, leverage can impact you in times that are not favorable.

So we believe in just owning the stocks unlevered, let them compound over very long periods of time. And we think that by doing that, we and our shareholder, we think our shareholders can generate wealth over very long periods of time.

TaxesFrazer Rice (16:54.98)
So tax efficiency, the concept of holding period, does that play into your process at all?

Michael (17:04.316)
So remember within the ETF, as long as you’re managing your trading properly within the ETF, there’s no tax implications inside of it for your shareholders. Your shareholders only would be impacted at selling. So assuming they hold the stocks for over a year, any gains would be long-term capital gains treatment.

Frazer Rice (17:27.024)
And when you’re describing the investor profile that you’re looking to attract here, who is this for?

Michael (17:35.916)
Yeah, so the person that, you we really think it’s appropriate for you if you have a five year or more holding period and you want to have long-term capital appreciation. You know, if your goal is to be exposed to the best minds and public securities, that’s the founder led companies, and you want to compound your wealth over a very long period of time and have a high probability of outperforming the traditional broad market indexes, this ETF is designed for you.

17:59 Investor Profile and ETF Positioning Frazer Rice (18:04.705)
And as you’re sort of outlining that profile and for those people who are trying to figure out where this fits in from an equity allocation perspective, you’re in charge in many ways of the spoke of a hub and spoke component of people are really sort of looking at indexes as the base of their equity portfolio. What are you looking for? What kind of benchmarks do you sort of measure yourself against?

Michael (18:35.007)
Yeah, so we think this is absolutely a core holding. So if you’re looking to build out you or your client’s portfolio, we think this should sit at the core. It is on the growth side, so it’s core growth. We think that it is a one-for-one replacement for, the NASDAQ 100. Or, for example, somebody holding the triple Qs. We think this is a better holding than the triple Qs. So we benchmark ourselves against them and against the S &P 500. Ee look at beating those two broad market indexes, generating better risk return for our investors.

Frazer Rice (19:13.019)
For those listeners that are out there and want to find out more, what’s the best way that they can either get a hold of you or maybe even better, do you have a ticker symbol ready that people can discover?

FFF and Contact InformationMichael (19:25.215)
Yeah, absolutely. So the ticker is FFF. So that’s the FFF ETF that we’ll trade on. And investors can find that at their favorite brokerage firm, whether they’re Schwab customers, Interactive Brokers customers, Fidelity customers, trades under one ticker, just like a stock.

Frazer Rice (19:44.365)
And let’s take, we have a few minutes to go here, which is great. Your experience in terms of establishing the ETF, maybe a couple of some of the touch points when you went from vision to execution here, what was the process?

Michael (20:00.106)
Yeah, so ETF has a few basic processes that are regulated under the 1940 Securities Act. And so a lot of those rules are set up to protect the end investors. So for example, the securities live within a trust. So we set up our own trust. Some people use a mingled trust.

We thought it was better for our end investors to have our own trust that we set up that has an independent trust board that oversees to make sure that we’re executing our strategies as we’ve outlined in the prospectus to make sure that we’re Doing the best we can for our investors.

You’ve got to set that up There’s a few firms that do the plumbing for the for the ETFs would say US Bank is probably the largest player. So US Bank provides our our fund custody and fund administration and then there’s just a few other vendors in the space that sort of help with all the plumbing to make sure that the ETF runs smoothly. So it’s probably a six month process if you stay really focused to get all of that set up.

20:58 Navigating the ETF Launch Process Frazer Rice (21:03.313)
You get that set up, how do you approach the Schwabs and the Fidelitys and the other platforms to make sure that people can access, buy, sell, whatever they want to do with your ETF?

Michael (21:14.347)
Yeah, that’s a great question. So the online brokerages typically put you on the platform as soon as you’re listed on a major US exchange. So you’ve got to get listed on NASDAQ, NYSE or CIBO. We chose CIBO.

So again, on the traditional online brokers, you’re there day one. And then the big wire houses, JP Morgan, Goldman, Morgan Stanley, BAML, they typically have a few hurdles that you’ve got to get through, whether it’s daily trading liquidity assets under management.

And over time, as you run the wickets through their process, you’re added to those platforms.

Macro Issues?Frazer Rice (21:48.721)
We live in a political age and a time when there’s just chaos everywhere, different types of rules in order to allocate capital. If you’re an investor trying to guess what’s happening politically, et cetera, that are difficult, you must be positive as far as the environment for founders to find success in this country and beyond. Is there anything that you’re looking for to make sure that those conditions hold?

Michael (22:18.225)
Yeah, we don’t really look at the macro or political backgrounds. think over very long periods of time, U.S. innovation outperforms. so we sort of we think that, again, one of the great things with investing in founders is they keep adapting as the background changes behind them. So we think over very long periods of time, the U.S. has great economic growth. And for those people that have worried about little blips along the way, we think the founders are the absolute best at mitigating those blips.

Frazer Rice (22:48.334)
I like to say you bet against America at your own peril and it sounds like from a founder perspective it’s still a great place for them to locate their businesses and grow them here.

Michael (23:01.042)
Absolutely.

23:50 Final Thoughts and Contact InformationFrazer Rice (23:02.971)
Just to reiterate, FFF is the ticker symbol for people to find it. any other contact points for people to find you if they’re interested in what you’re putting together.

Michael (23:15.613)
Yeah, so we have a great website at FounderETFs.com. can go check out there or anyone’s happy to email me, just michael at FounderETFs.com. Happy to chat with anyone who has interest about the portfolio, the strategy, or what we’re building.

Frazer Rice (23:32.197)
Well, great to have you back on, Mike. Thank you for putting up with my attempt at looking like Steve Jobs. It’s 25 degrees in New York here, and I am the stupid one who’s not in California or somewhere warm. appreciate you taking the time to be on and talking about your new product.

Michael (23:48.011)
Yeah, it was great to be on here. Really a huge fan of your podcast and just the level of guests that you’re able to interview and help educate your viewers.

Frazer Rice (23:56.849)
Mike, thanks for being on.

Michael (23:59.061)
Thanks a lot, Frazer.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/Previously with Mike Monaghan

ETF EDUCATION ARTICLES ON ETF.COM

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BROOKE SUMMERHILL has written a new book to address “Divorce and the Wealthy Woman.”

https://youtu.be/FFSeBg3XT8MIn this conversation, Brooke discusses the complexities of divorce, particularly focusing on the financial aspects that wealthy women face. She emphasizes the importance of understanding one’s balance sheet, hiring the right professionals, and navigating complex assets during divorce. The discussion also covers the emotional components of divorce, the significance of having a supportive team, and the benefits of open conversations about finances, including the role of prenups.

Takeaways from “DIVORCE FOR THE WEALTHY WOMAN”* Divorce can be a daunting process, especially regarding finances. * Understanding your balance sheet is crucial during divorce. * Breathing and staying calm can help alleviate anxiety. * Hiring the right professionals is essential for navigating divorce. * Complex assets require specialized knowledge and support. * Cash flow planning is vital for post-divorce stability. * Parenting during divorce needs careful planning and support. * Open conversations about finances can strengthen relationships. * Prenups can facilitate healthy discussions about money. * Divorce is a journey that can become easier with the right support.

Chapters* 00:00 Introduction to Divorce and Finances * 02:58 Understanding the Balance Sheet * 05:45 Navigating Complex Assets in Divorce * 09:05 Building Your Professional Team * 12:04 The Emotional Component of Divorce * 15:09 Modeling Settlements and Cash Flow Planning * 17:56 Parenting and Financial Responsibilities * 20:41 Preventative Measures and Financial Awareness * 23:53 The Role of Prenups in Marriage and Divorce

Transcript of “DIVORCE FOR THE WEALTHY WOMAN”Frazer Rice (00:01.186)

Welcome back, Brooke.

Brooke Summerhill (00:03.378)

Hi, thanks so much for having me. I’m so excited to be here. Let’s chat about the most fun topics in the world. Divorce and finances, right?

Frazer Rice (00:09.952)
Well, and codified in your new book, Divorce for the Wealthy Woman. I have already started, and I think it’s a winner for a bunch of reasons. The big one really is addressing a viewpoint that I think has been missed by the financial books generally speaking,

Brooke Summerhill (00:15.794)
Mm-hmm.

Frazer Rice (00:31.086)
It really corrects a problem, I think, around information asymmetry in finances generally. And unfortunately, we’ve both been around it from a divorce perspective. Tell me what, first of all, let’s let our listeners remind themselves of your practice. And what do you do there? And then what was the book trying to accomplish?

https://www.amazon.com/Divorce-Wealthy-Women-costs-that-ebook/dp/B0G1ZMFVCN/Brooke Summerhill (00:53.554)Okay, so hi, I’m Brooke Summerhill. I do specifically for the last like 15 years in finance. Specifcially in the last five specifically in divorce and finance for wealthy women. So I’m not very creative my book specifically and my podcast is literally called divorce for the wealthy woman. I love being able to understand the perspective of someone going through divorce,not feeling the fire, and creating a years long fight.

I help alleviate the stress of divorce and go through the finances, the emotional aspect, I’m in financial psychology. I’ve been doing that and I plan on continuing doing that. It’s a fun, fun, fun career path for me.

Frazer Rice (01:40.526)One of the great things I think about your book is it starts where I start. You really have to be comfortable with what your balance sheet looks like.

Take us through a little bit about your experience in helping wealthy women get acquainted with something they weren’t familiar with initially. However, they have to get familiar with it real fast.

Brooke Summerhill (02:03.014)So typically, you go to a lawyer . You’re about to get divorced and it was blindsided in your face. my god, what is going on? He wants to get divorced or she wants to get divorced. Doesn’t matter who you are, heterosexual couple or not. It does not matter.

You might not know where the finances are, right? And you’re going to a lawyer. You expect them to help you out, but you don’t even know where the assets are. You don’t know it’s on the balance sheet. So the first step is breathing.

Let’s not get into this sympathetic nervous system. No fight or flight, freeze, thaw, and let’s not go there if we can’t avoid it. And really just breathe and understand it’s going to be OK.

That’s the first thing I want to just point out is you can do the work on yourself without having to do hard interval training. You can just breathe. So you’re going to breathe and understand, OK, the balance sheet. I can figure this out. You got it.

And you might need to hire someone like myself who’s a certified divorce financial analyst, you might have your lawyer help you. You might ask your soon to be ex if they’re willing and amicable to understand the balance sheet. You might go to a financial advisor, wealth manager, your family office and ask some questions.

So this is a time of learning and it’s okay that you don’t know where everything is. And the balance sheet is terrifying for most people. 98 % of us have money anxiety. It’s okay. Breathe.

Get help and support where you can. The foundation is the balance sheet. If this is the only thing you take from today, is just breathe and know that the foundation is your budget, your expenses, what’s coming in, what’s going out.

Can you figure that out? Even though you might not know where your assets are. Do you have Bitcoin? Or have different properties? Do you even know if there’s liens, mortgages, loans on them? That all will get figured out. But you’ve got to know what you’re spending.

I would say, you tell me if you have a different experience. But most clients do not know their budget. And that’s OK. Doesn’t matter your wealth, income, anything. Most people, at least in America, do not know what they spend every month.

So that’s the foundation is to start theirs. Understand, what are you spending? Just keep a little log. It can be old fashioned. And I have plenty of technological apps that can help with this. But keep it old fashioned. Just write down, what are you spending? And keep that for a week.

Brooke Summerhill (04:28.752)That can help you in your divorce process and remember to breathe. There you go.

Frazer Rice (04:32.91)And it’s part of my process, I think, is to just understand what you’re spending. And then the next step is really understand where it comes from to help support that spending. It’s like analyzing someone who earned 100 million dollars from this movie. It’s like, OK, that’s the headline. Now it’s a lot different in reality. Certainly taxes, how it’s paid to you.

We’ll get into this in a second, and sometimes it’s not in cash.

Sometimes it’s in different types of assets. Whether it’s stock or maybe you own homes, and it may not be necessarily liquid right up front. It sounds like we’re parking our cars in the same garage on that front.

Brooke Summerhill (05:19.154)Absolutely, absolutely agree with you.

Frazer Rice (05:22.114)So maybe let’s go through some of the complex assets that you think about that come up in any, not all divorce situations, but definitely in many of them. Many times people have grown their wealth through a private business. so even, you know, the number that is settled upon in the divorce settlement may not be readily available from a cash payout perspective. How do you take people through that?

Brooke Summerhill (05:47.473)Oof. So I have an entire chapter on businesses because majority of my clients, I’m going to be very sexist here and say majority of my clients, husbands in a heterosexual relationship do own a business or have just been bought out of a business or are starting a startup or have something behind the scenes that they’re aware of or maybe not even aware of. So businesses are huge thing. That’s why I put a chunk of it in my book because

The biggest advice I can give is hire, I’m going to be a repetitive throughout this whole podcast today is hire the right professionals if you can, because you don’t know what you don’t know and that’s okay. You’re going to breathe through that and acknowledge you don’t have to be an expert in divorce. But when you have a business reading, listening to podcasts, doing all of those exercises are wonderful and hiring an expert.

So getting someone who’s understanding the finances in a divorce specifically, so business valuator, or just having a consultation. That’s enough to understand, this, I need a forensic accountant, because I don’t know anything that’s going on within this part of the businesses that I’m a part of, but I’m not really a part of, or I need a business valuator. Let’s just have a consultation. It could be really a non serious, non threatening, non emotional way to start it.

I’m just going to have a consultation to understand, do I need this business valuator? I would just at least have those conversations to understand more about your husband’s business or your business in general on what are the numbers behind it? Because it is very complex, just as you’re saying. Businesses, absolutely, you want the right experts involved.

Frazer Rice (07:30.506)And sort of as a broader business, or not really business, but sort of as a broader sort of contextual situation here, the type of wealth, whether it’s private funds, people who are invested in private equity or hedge funds or stock options or RSUs for people who are in the tech world, things that are held in trust, there’s the concept of carried interest and real estate and concentrated stock.

This is to go back to your comment that there are people out there that can help you. Understand those assets, I guess for lack of better word, can and can’t do. As far as either provide cash flow or are easily divisible in a divorce settlement. Does that square with your thinking on that?

Brooke Summerhill (08:13.522)Absolutely. And my role is to really divide assets in a creative way that benefits both parties. They can move on, clean the slate, know, not have fights for years to come. So when you talk about dividing assets, that is spot on. Get the right professionals involved, understand your options and the scenarios, and then you can drive the car with control off the right highway scenario, or you can continue down that highway to another off ramp.

If that suits you in that creative solution of dividing the assets with complex assets like RSUs. And RSUs, restricted stock units, we can go into some of these definitions that are complex, or we can just say, reach out to us if you have questions on what is RSU or what is stock option, or what is these terminology things that you guys are saying. Because it’s very complex and scary, but it doesn’t have to be if you get the right professionals involved, understanding your options.

Frazer Rice (09:07.564)So let’s pull back a second in terms of assembling your team. If you’re going, you’ve been side swiped by sort of potential for divorce, you’ve hired a divorce lawyer probably right off the bat. But that you really, in my opinion, you need more than that. We talked about the financial advisor to help you work through what’s owned and how it’s owned and what cashflow it can throw off and whether it can support you or not.

I would argue that this is a good time to reengage a trust and estates planner because when you go through a situation, know, divorce situation, the things that you have in place don’t necessarily apply in the same force that they did before and definitely need a look.

Your accountant, of course, if you don’t have one, it’s probably worth it to get started thinking about that because how you receive assets are gonna be important and how you pay taxes on them.

You’re gonna be on your own going forward. And so it’s gonna be important to understand those ramifications. What other people do you have in your cabinet there?

Brooke Summerhill (10:10.547)Okay, so if we’re on a yacht and we have crew members, we have to have a few of them like you mentioned. I would say nowadays, if we go into the differences of litigation versus arbitration versus mediation versus collaborative divorce, there’s different types of lawyers that we would hire.

So we can go into that, but we’ll just say, you’re gonna hire the right attorney for you to help you with the divorce process, understand the law, and it’s not going to look the same for everyone because you might not need someone who’s going to litigate and really be your advocate every second when you can hire a mediator that can help you both get creative and neutral setting wise, get you divorced faster potentially. You hire the right divorce arena lawyer, advocate or mediator, someone in that nature.

And then yes, you absolutely need the accountant, CPA, tax attorney, sometimes the complex assets require hiring some consultants within the tax arena to understand what the private equity actually means within the contracts because they don’t even understand it. It can be very convoluted. So hiring the right teams with a tax standpoint is very important within the state that you are in or that business is in. That’s just another arena. The other crew member you want in a lot of

Frazer Rice (11:16.046)
Definitely.

Brooke Summerhill (11:36.691)
times I’m the one who’s bringing them in is absolutely trust the states. You might need a whole team and a crew around that because if you have dynasty stress that you didn’t even know you were signing off on for your children, you know, five to 10 years ago, you need someone to understand what that means. Or if you have an estate plan that is in the midst of there’s a lot of creative solutions here that you need the right team members. So trust in the states, like you said, big, big, big deal. Then we have therapists.

Frazer Rice (12:05.454)
No, I was just going to dive in and say dramatic foreshadowing talking about the emotional component of this. so divorce is a dramatic situation. To me, being a good user of professional services is using the right person for the right situation. I’ve gone through it and had friends go through it. I’ve had clients go through it where

Brooke Summerhill (12:06.792)
Go on.

Frazer Rice (12:27.212)
Sometimes they go through and they use the divorce attorney as their therapist and that’s an expensive and not very productive way to do that. Whereas having a therapist in your crew and using that person who’s trained for that and can get you from here to there in that journey of recovery.

It’s an important part and one that shouldn’t be neglected, especially when you’re facing… maximum stress legally and maximum stress emotionally and if you’re trying to sort of manage the firehose of information in order to make good decisions.

Brooke Summerhill (13:03.731)
Absolutely. Well said. I agree. So therapist is a tool. Parenting coaches, I utilize that a lot of the times. I’m a divorce mediator, but I don’t like to practice it because I like to stay in my financial analyst realm and helping women on that end. And so I’ll bring in, you know, divorce coach and a parenting coordinator.

So there’s a lot of little rules that you don’t think about that might be necessary to help a mediator, to help your divorce attorney and you, as the client understand what’s best for you, your children and your emotional setting during this financial whirlwind. And you mentioned financial advisor. I’m going to just put a little caveat there. It cannot just be a general financial advisor.

There’s tens of thousands of those all over the United States. I absolutely have a bias here, but it has to be someone who is specialized in divorce and someone who understands complex assets.

You cannot go with someone who is non-experience in the higher to ultra high net worth realm because they will not grasp what you need as quickly or as efficiently as someone who’s done this for years in that bracket. It’s definitely something that I like to point out all the time.

Frazer Rice (14:19.245)
No, and it’s absolutely just such truth right there because the assets are complex, the machinery around it can be complex and whether you can or can’t do things, you have to understand that quickly.

The tax ramifications of even dividing assets can be net less to everyone involved. And so we’re going to talk about modeling settlements in a second.

But then the other thing I tell people is that sometimes people walk into these situations having done trust in the state’s planning in conjunction with theoretical asset protection planning, maybe in lieu of a prenup or something like that.

And that’s not necessarily a sure thing. Family law is such that judges can take a look at certain situations and say, hey, you know what, this isn’t equitable. We’re going to go in a different direction here and you may owe it anyway. And so to have that

I hate the word holistic, but I’m going to use it here. The broader view of not only how the numbers work, but how it relates to the different legal and structural things in place. It’s vital to have, especially at the numbers that we’re used to talking about, because those mistakes, even unintentional ones, can be really expensive.

Brooke Summerhill (15:29.523)
expensive is the word there. It could be extremely, extremely devastating to not only you, but in the future, your children are going to most likely be part of that legacy or your philanthropic endeavors.

And if you’re making mistakes, even with your team unintentionally hiring the wrong people that don’t understand the complexities or the tax ramifications, that’s devastating for not only you, but yeah, yours to come and your family and charitable giving.
Frazer Rice (15:57.071)
So once we compartmentalize, it seems to be an important thing here. You have to be able to sort of put different things in different boxes as you step into the different components of settlement that are in place here. So let’s say you’ve got the emotional part kind of addressed in the sense that you’re working on those issues that you need to work on to come out the other side. You’ve got your team together from attacks and legal and trust in the states and divorce settlement.

Now, to me, is the notion where you have to step in and say, OK, this is now becoming a bit of a business arrangement where you have to model a settlement that is going to work for you and it’s going to work for your soon to be ex-spouse so that, as you say, you can move on rapidly, but in an orderly fashion. So you come out the other side and have something that’s workable so you can move on in both of your situations.

from the modeling settlement part of it, how much do you go into that cashflow planning, knowing what you cost and making sure that those things are funded so that you can enjoy your life going forward?

Brooke Summerhill (17:03.271)
Think that is the foundation of the house. think that again, I have a bias coming into it, seeing what can happen when it goes wrong and I’m coming in after the divorce and helping with money coaching. really is devastating to see, wow, you took this, this, this, this, and they didn’t model what would happen with your cashflow if you didn’t take this, this, this. It’s devastating.

Why I do what I do is really to be that precursor to look at those options before you make decisions. And there’s others that do what I do, you know, as a certified divorce financial analyst, we model out scenarios with the cash flow. So you have to understand your expenses and income and what’s going to be coming in and out basically. And that’s okay. Again, you are like most people and you don’t know what it is.

You can hire someone to help you through that and really work on it in a very easy and manageable step-by-step manner, where once you understand what you’re spending and what you need to live off of, then you can model out those cashflow scenarios with the different assets coming through.

And the software that I utilize makes it really easy and more fun and crisp and clean. Calculations are not hard. We’re not doing it by an Excel sheet, managing it every second for hours. It’s just, let’s look at this scenario for five minutes. And then

Frazer Rice (18:21.423)
you

Brooke Summerhill (18:26.939)
Again, let’s go off the highway. You’re steering the car. You have the foot on the gas. You tell me your values. And client, let’s go see if this highway will match. Let’s look in my software and see. Will it match your values if we took this scenario versus this other scenario? So she, for me, it’s a she.

She’s getting to make those decisions. But I’m there in the passenger seat making sure. You’re not going to come to someone in six months to a year and be devastated because you don’t have the cash flow. You’re going to take the right settlement.

Or present it to your student to be X, where it’s best for both of you. You both can move on and not fight in court year after year. Because you didn’t get what you deserved, right? That’s resentment building. We don’t need emotions in it if we can make it part of the business thinking process.

Frazer Rice (19:12.751)
No, and it’s important to underscore the difference between owning assets versus generating cash flow. You can be wealthy on paper, but if you’re having trouble getting the tuition payments made. Or if that hasn’t been discussed as to where certain financial requirements are being taken care of either at one spouse level or the other, that’s when you end up tripping over things that might have been dealt with with a little bit more organized approach going forward.

Brooke Summerhill (19:44.787)
Absolutely, hire the right team members to help you through that. Because if you’re listening right now and your anxiety is spiking a little bit. Because you’re like, my gosh, I don’t know, I don’t know, I don’t know, it’s okay, breathe. This is all you need to hear is hire someone or at least consult with some people in this divorce world and you’ll get through it.

Frazer Rice (20:04.719)
So the part that I know least about, I don’t have kids. from a parenting and support component, I can sort of look from afar and have an opinion on it. But it’s quite a bit different when you have your own kids and you’re making sure that they’re taken care of, that their five, 10, 20 year plans are squared away going forward.

The emotional component of shared parenting, the establishing a schedule post divorce, those types of things which seem obvious in some ways but aren’t because suddenly you and your soon to be ex-spouse are going to be having different schedules and different priorities, etc. How do you take your clients through that?

Brooke Summerhill (20:46.653)
OK, great question. That’s a whole chapter in the book as well, children. And that is a difficult journey for most clients right at the start. And it gets easier. So if you’re listening to this and you’re just thinking of divorce.Oor you are just hit with papers and you are about to go through a divorce, or you’re in the middle of it and you still feel like it’s crunchy and it’s really difficult and you’re walking through mud in a way, it gets easier. It really does.

The first step is again, you can hire the right professionals. So hire a therapist for yourself. And it’s better than just friends and family because friends and family might fuel the fire. That is a mistake that I see a lot of men and women make as they divorce. So hiring a therapist for yourself, then parents and coaches, parenting coordinators, those who can really understand where you’re at and level with you to make those decisions or hiring the right mediator or divorce attorney.

Work specifically with those who have children because it gets way more complex with children, especially when you have bigger assets, then you need to understand what’s going to happen with the cash flow for schooling. mean, private schools, let’s just say you have two, three children, you’re going to have hundreds of thousands going out a year for just schooling, curricular, extracurricular activities, right? And things like that, you need to prepare who’s paying for that.

And it’s non-emotional, but it is very emotional, right? So we want to say it’s non-emotional, but it is absolutely going to be in preparation, hiring the right professionals around you, and knowing it will get easier. Because when we look at this from a standpoint of, OK, how do we talk about with our children? How do we work through this, our scheduling? All these things can be a lot easier and simplified if you have the right professionals guiding you on that path.

Frazer Rice (22:34.211)
One of the things I liked about your book is that even if you’re not getting a divorce, I think a lot of the things that you have in place are very useful in terms of a spouse who knows less about the financial situation.

This book in many ways brings, in my opinion, kind of a good framework from which to discuss things and how to ask questions.

There’s another book I just read which I like called MONEY TOGETHER by Doug and Heather Bonaparte and so this one I’m going to recommend pairs extremely well with that in terms of building, just really building a knowledge base. For those who aren’t in DEFCON 5 and are facing a divorce and so on and they’re able to maybe get to you ahead of time to say, you know what, everything’s good. But I don’t feel comfortable.

How do you talk to those types of people?

Brooke Summerhill (23:31.44)
My favorite part of the role is if we can be preventative because if we get in at the right time in our thought process of thinking maybe about divorce, most likely you could shift your mindset and understand more about the finances and gain confidence and clarity and then that control can just whirlwind into, I know my options and I want to stay married.

Like I’m happy in this. really uncovering and discovering what your values are around money and yourself, understanding your own memories around money and how you deal with money. So your money scripts as, okay, how did you deal with money as a child? That’s some of the questions I go into is, okay, and are those still popping up right now?

Have you seen some patterns and behaviors around money as a kid and as a teenager and as a young adult that are still affecting you now? And do we want to shift some of those behaviors and patterns so that you can stay in this relationship?

And also we want to uncover the finances in a way of, let’s be open and understand. Maybe we bring in your spouse to these conversations so we have an open conversation about where the money is, how you’re going to be living the next few years with your values.

Together you guys can build that relationship. Because most of the time, one of the person in the relationship does not want to deal with the money, or they’re scared of the money, or there’s some kind of script around money that’s scary. And so they put their head in the sand, or they turn out the light and they don’t deal with it. The other person is more in control of the money, right?

That person is making the money or dealing with the finances. So if we can bring them together during marriage, when they’re thinking of divorce or before that, that’s the best part. And then they can see they’re gonna be okay as long as they both understand it and have the support.

Frazer Rice (25:17.327)
As we wind down here, we’ve gone from divorce during marriage and now before marriage. Preenups, I in general, if the discussion can happen, I like the idea of having them. And I think frankly, it accelerates good discussion ahead of time anyway and helps get that information to both spouses. And as you say, give them confidence within the relationship. That’s such a great, I like that narrative a lot. What’s your predisposition there?

Brooke Summerhill (25:48.308)
There’s so much stigma around having a prenup. There’s so much stigma. There’s so much potential though in my mind in a positive light of having these tough, scary financial conversations. If you have a prenup or if you’re thinking about a prenup, if you guys can be open around the finances, how can you not both benefit from that? Talking with a lawyer or with someone in the financial realm with the lawyer paired in a room, having these really, really intense conversations.

And I say intense because it’s about money and that’s usually intense at the beginning and then it gets easier. If you can do that, how are you not gonna be set up for success? And you’re gonna most likely be well prepared for that marriage and stay married. I wish there was some research I could say, like this is the statistic. If you have a prenup and you actually, you didn’t just do the prenup because your parents are the wealthy ones and you wanna keep the money in the family.

It was for the right reasons of I wanna understand my asseets. I want you to understand your assets, I want to understand that we’re in a marriage because we love each other. Here’s the financial ramifications of this and that. And you guys have open conversations well before marriage conversation, like not the day before the marriage, right? And have it be an open dialogue with professionals. I think that’s a wonderful way to keep you both in this beautiful marriage for long term, where it’s healthy. That’s I agree with you having a prenup and that’s in my book too is

Frazer Rice (26:59.907)
Got it.
Brooke Summerhill (27:14.621)
Preenups can be a very, very positive tool. And in divorce, on the other side, understanding what you signed before you get divorced, or if you are thinking of divorce, understanding and going to the right lawyer, maybe the one who drafted it, who you trust, is a very good idea, too. Beware, they will most likely have to talk to both of you. you guys, long story short, go to the right attorney, make sure if it’s a neutral person that you both worked with, which is rare.

That should be a red flag. But if you both worked with the attorney, you both are in the room understanding the prenup before you get divorced so that you understand the ramifications of what you chose to do and what you chose to sign. So divorce, you need to know the prenup. But before you get married, get a prenup and have those really tough, scary conversations upfront.

Frazer Rice (28:01.871)
Terrific. Brooke, so glad we got to catch up again. What is the best way for people to find your book and otherwise find you?

Brooke Summerhill (28:10.887)
You know, I think nowadays Amazon is really an easy target to type in right there. Divorce for the Wealthy Woman is my book. And my phone number is in the book. My email is in the book. I’m very open. People have questions, conversations to be had. I’m right there for you. So they can reach out on my website. Just type in Brooke Summerhill. You’ll find me or buy the book online and learn something new.

Frazer Rice (28:36.111) – Divorce for the Wealthy Woman
All of that will be in the show notes. Great stuff, Brooke. Thanks for being on.

Brooke Summerhill (28:40.519) – Divorce for the Wealthy Woman
Thank you for having me.

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Wealthy families are discovering Tennessee's legal and tax ecosystem as a key component for their long term wealth strategy. I spoke with ANDREA CHOMAKOS from Pendleton Square Trust on Tennessee around these advantages that the Tennessee Wealth Ecosystem provides in the context of other states' legal systems and economies. We cover directed trusts and Tennessee situs, and even a tip like the Community Property Trust, which is interesting in both prenuptial tax planning and estate planning contexts.https://youtu.be/CiR8eoAG-iI"The Tennessee Wealth Ecosystem" TranscriptFrazer Rice (00:00.814)Welcome aboard, Andrea.Andrea Chomakos (00:03.128)Thanks, Frazer, happy to be here.Frazer Rice (00:04.696)Well, glad to have you on. Always happy to talk to friends of mine at Pendleton, talk about Tennessee and trust administration generally. Our listeners are probably pretty well versed as far as the idea of trusts, but I don't think it hurts to go and talk a little bit about what the trustee function normally entails as we talk about what is interesting about Tennessee and other jurisdictional issues.Andrea Chomakos (00:29.358)Absolutely. So Frazer, it's great to be here and share some conversation with you and your audience. While I have been in the professional fiduciary role for several years, for several decades before that, I was a practicing attorney. So I would often have conversations with my clients and drafting their documents and asking them decisions about who to appoint as a trustee. One of the very first conversations we would have is what does it mean to be a trustee?As I have now come over to the other side, broadly stating that the trustee has the responsibility to administer the trust for the sole benefit of the named trust beneficiaries in accordance with the trust terms. That seems like a lot of really big words that don't make a lot of sense to the average person. I get it.When I was practicing, a lot of my clients, their reaction would be, okay, so you're just telling me that this person is the person who makes the decisions about distributions and that's great. I can go, you know, no big deal. And the reality is, yeah, the reality is it is a big deal. Because it's more than just making distribution decisions or making them in a vacuum. You have to look at the broader picture.Frazer Rice (01:41.228)It's more than that though.Andrea Chomakos (01:55.598)But it also entails managing the trust assets and investments. It means making those important distribution decisions and understanding the impacts those are going to have not just in the short term but the long term. Filing and paying tax returns for the trust. Communicating with trust beneficiaries, providing reports and accounts. And even all of that sometimes seems like not that big of a laundry list butLet me give like an example that I ran into. Everybody loves a good example. So when I say a trustee is responsible for investing and managing all of the assets of the trust, that also means the protection and preservation of those assets. And it's incredibly common to see a trust hold some real estate, oftentimes a residence that a trustee or a beneficiary lives in.Frazer Rice (02:24.58)That'd be great.Andrea Chomakos (02:51.094)And you may say, OK, well, no big deal. Like if something happens, we'll just get it fixed. Well, it's more than that, right? You need to really understand what that means and the risks you're taking and the potential liability you're taking if you don't manage those issues in a way maybe different than you would if it was just your own house. So I was at a prior institution andthat institution was serving as co-trustee with a beneficiary who resided in some trust-owned property. And lo and behold, you know, got a call from that beneficiary saying, hey, there was a leak with one of the pipes in the house. So I just went out and got some duct tape and put that around the pipe to stave off the leak, but now it's gotten really bad. And you're just sort of like, well, wait a minute. Like that's.Frazer Rice (03:34.276)Hmm.Andrea Chomakos (03:47.573)As a trustee, that's not an appropriate response to fixing a leak, it's not a roll of duct tape. So it's things like that that trustees are responsible for.Frazer Rice (04:00.004)One of the things too that's happened in modern legislation is that those three functions you talked about, the investment, the distribution, and the administration have been in many states you're able to, we like to call it bifurcate them, so that you can put an expert maybe in the investment role, maybe a family member with a corporate trustee in the distribution role, and then a corporate trustee in the administration role who, you know, they're used to doing the paperwork and the tax filings and the eye dotting and T-crossing.And in your, I guess in your experiences, we've gone through that. How have trust companies evolved to take into account this new flexibility?Andrea Chomakos (04:42.254)Absolutely, think you hit the right word. I always say the same thing, Frazier. It's a bifurcation of those duties and responsibilities. And so there are more trust companies who are embracing what we call the Directed Trust Model, where the corporate trustee is handling the administrative functions.So the reporting, the trust beneficiary communications, filing the tax returns, all of those very important functions, but ones that oftentimes are overlooked, their importance is overlooked. And other people are given the role of either distribution advisor, and sometimes the corporate trustees in these roles will make distribution decisions.But certainly the investment function is one. And as you see arise in individuals, families, using private equity for investments, other alternative investments, you see them using RIAs, multifamily offices, to manage their investments that, and those entities don't have that trustee function. There are more corporate trustees who are filling that role. And I think that we're only going to see that market increase and that demand increase.Frazer Rice (06:11.196)I don't think I could agree more with that statement. I think the idea of people having all of those functions under one umbrella really ignores just the way wealth is being managed these days, whether it's sort of peculiar assets or even, you know, regular run of the mill stocks and bonds, people have their advisors and they don't want to necessarily give that up to take advantage of trust situs and professional trustee services.Andrea Chomakos (06:21.998)Listen.Frazer Rice (06:36.524)As I talk to people around this topic, the culture of a good trustee, and especially sort of a good corporate or a good administrative trustee, there are a lot of things that go into that. In your experience, what is it that makes a good sort of corporate or administrative trustee for particular family?Andrea Chomakos (07:01.422)There's I mean, that's a great question. And it should be top of mind for all clients. Right. I think there's a couple of things. One is the institutional professionalism that a corporate trustee, independent corporate trustee provides, as well as the skill, the background and then the lack of conflict of interest. So when you think about an administrative trustee that's not managing the investments, we have no dog in that fight as they say about what's going on with the investments, how they're being managed, how they're being allocated. We, Pendleton Square and others are here to serve the beneficiaries, to facilitate communication, to help beneficiary wealth education, to continue the continuum of family values and conversations, as well as be some be a person who can sit there alongside them and educate them about the trust, about the wealth, about the impact the distributions from the trust are having on their own estate, on their own lifestyle, and really honing in on the things that they're really good at. And I think predominantly it is that being free of conflict. We don't have any other interest in the trust.Frazer Rice (08:28.252)I think the concept of staying in your lane is important. I think in the old world where the big trust companies did everything and they would allocate resources to that because doing everything required good integration and so on, it made a lot of sense. But nowadays, as we talked about the bifurcation just now, the provision of the administrative trustee functions and the distribution committees, et cetera, that feels more like an accommodation.Andrea Chomakos (08:30.913)I'm sorry.Frazer Rice (08:56.696)than a sort of focus for them. And so these trust companies that have developed, the new ones that are less worried about the investment function, that that focus is now a strength in the sense that people hire experts in that field in order to get what they need from an estate planning perspective or a site of choice, et cetera, but then to really effectuate that culture we just talked about.Andrea Chomakos (09:26.956)Yeah, I mean, think there's a couple of nuances there that you touch on that always resonate with me. And so one is.Trust business, it's a business, we all have to admit that it's a business, but is it relational or is it transactional? And at its core it's really relational. You're working alongside a family for hopefully multiple generations and as an institution you can carry forward that historic bank of knowledge in the grantor's intent, the family values as you're administering the trust.But in many larger institutions, because of just structural considerations and constraints, sometimes you have a lot of turnover in personnel. You have some loss of historic knowledge and information. And you have a compression of what it takes.not just the skills,

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Musician and label owner, Blake Morgan, discusses the Music Business and the importance of "Reputation over Fame." Ever wondered how musicians really make money? It's a tough journey filled with losses and small wins, but it's all about persistence! In this episode, Blake Morgan shares that every small gamble counts, and eventually, one big win can turn it all around.: "The people who are "for real" have no choice."https://youtu.be/j8vf5dI-cbETranscriptFrazer Rice (00:01.135)Welcome aboard, Blake.Blake Morgan (00:02.946)Good to be here.Frazer Rice (00:04.111)Well, it's really nice for you to be here. You were nice enough to invite me to your show, your residency downtown. And I was glad to reconnect and remind myself how talented A, that you are and B, that musicians are. And it got me thinking about business and how musicians and the world of music works these days. So it's a treat to have you on there.Blake Morgan (00:27.714)Thanks so much. I'm glad you could make it to the show and it's great to talk to you again.Frazer Rice (00:32.155)So let's start at the beginning. So if you're a musician, you've been bitten by the bug, you're talented, and you get that wonderful curse, what are the ways that musicians really make money and support themselves? I imagine it goes from a spectrum of busking and performing and having your guitar case open and taking…donations from there on up to the professional musician and then to the actual creator of the music itself. How do you think about that?Blake Morgan (01:01.858)Right. So, you know, I think I'm thinking about your audience and finance people and business people, you know, right off the bat, of course, for starters, the marriage between commerce and art has always been, shall we say, an interesting one, or it's been it's been a conflicted one. And it's mostly been conflicted for the artists. But the reality is, you know, I thinkFrazer Rice (01:22.747)Sure.Blake Morgan (01:32.897)in a lot of ways and I do have something of an eagle eye view because I'm an artist, I'm a songwriter, I'm a record producer and I'm a record label owner. And so whether you've had a career and are having one like I am or like the person that you're imagining who's just getting, who's just starting out, I think your experience basically it's very similar to quantitative finance.in that you're acquiring a lot of small bets that rarely pay off, but when one does, they make up for all the other losses. And every part of being a musician is very much that experience. So when you're first starting out, whatever that means, if you're making, if you're building tracks on your laptop, if you're, you know, I think the days of busking on the street are,probably behind us because I don't see it very much, honestly, in New York. And we can talk about why we don't see it very much later. But the reality is however you're getting into it, you're immediately in a position where you know you're going to be taking a loss. And what you're hoping is that there will be a payoff at some point so great that it will pay for all or most or some of your losses that you'veFrazer Rice (02:30.203)Right.Blake Morgan (02:58.414)crude. And the truth is that really never ends. And I think that that really also kind of never ends if you're a superstar. That's really that's that's that's the gig. I don't see I don't see billionaire investors usually sort of hang up their investment coat jacket. I don't know what it is, but I don't see them hang up their cape and say, I'm out. You know, they're still trying to somehow leverage what they have into something else.Frazer Rice (03:20.279)Bye.Blake Morgan (03:27.822)And so that's the financial part of it, which is that, you know, I think especially now, if you were talking about the beautiful curse, like I think especially now there is this feeling in music that musicians make music, you know, for fun. And I've never, I'm not a musician who makes music for fun. I've never met a musician who makes music for fun. We make music because we're compelled to. That's the beautiful curse. It's not because, hey, I've gotI'm thinking about doing this and it's just the people who are for real have no choice. And so I often say that my relationship to making music, and this was true when I was a kid, when I was just starting, my relationship to making music is exactly like my relationship to breathing, which is that I really like doing it. But if I didn't, it wouldn't matter because I'd still have to do it to be alive. It's a part of who I am, right?Frazer Rice (04:21.403)Sure.Blake Morgan (04:23.894)And the thing about breathing is we aren't in a position to being like, how's the breathing industry? How am going to leverage my breathing into some sort of better form of breathing that would keep the lights on? We're all doing that, I guess, with our lives in some form. But that's that awkward marriage of commerce and art, which is that our strength as artists, as musicians, comes from the fact that we have an absolute bedrock. We are compelled, a bedrock need.to continue to make music no matter what, no matter what's thrown at us. And then that's also exploited because the people who exploit us know that we're still gonna do it no matter what, in whatever form that takes. So that was like 20 pounds of answer to a one ounce question. But that's the real truth, which is I think if you're starting out, you really are hoping thatyou're gonna you're gonna start trying things basically to get some kind of a career off the ground, some kind of path forward to be able to make more music, some path forward where you're gonna be able to make music where you wouldn't want to have to do something outside of your own profession. People don't tend to set out to be in a profession with the overwhelming feeling like they're gonna have another profession that they're gonna have to have to pay for their bills for their actual profession.Frazer Rice (05:52.611)No question. How do you graduate from hobby to commitment in many ways?Blake Morgan (05:53.39)So.Blake Morgan (05:58.734)Exactly, exactly. And so right out of the gate, you're hoping that your ideas and your talent and your perspiration and your inspiration are going to be enough to leverage the next moment and the next moment and the next moment. Moments where you know, and you know, a 13 year old who's trying to write their first song or pick up a violin and practice, they know that they're going to lose and lose and lose.and lose and they're hoping that somewhere down the line they win and that pays for these losses and this is financial a financial truth and an emotional truth to like I've taken I often say to people like I'm a good humored person generally speaking but like I'm 96 % scar tissue at this point and so I still the joy offsets the scar tissue right I don't want to be bitter and and and I'm and I'm not butFrazer Rice (06:47.62)youBlake Morgan (06:56.969)The moments of artistic wonder and satisfaction, just like the moments of financial hope, like, my God, this actually is hitting or this actually works. This really gets the monkey off my back to be able to do more of this, right? It's very, very much the same, whether it's financial, emotional, or temporal. The time you've put in to try to do something pays off when it works.Frazer Rice (07:26.731)So this massive investment, time, emotion, skill, dollars, et cetera, what are the ways that you start to get into the green and turn it into a situation where you're actually sort of making money on what you love here?Blake Morgan (07:47.832)So if there was an easy answer to that, I would hope that you would have it and you could teach me what it was, but there's a complicated answer to it. And it's harder than ever. Art and music are devalued more than ever. The rungs under the ladder of where I've been able to get in my career have been kicked out. It's harder for people to get to where I am. The world has changed because of piracy and streaming andFrazer Rice (07:52.89)Right.Blake Morgan (08:16.043)now AI and you know, we can touch on all of these things. But I do think that there's an important panacea that will lift every facet of this. And in a world where we're seemingly fixated on followers and likes and streams and these kinds of numbers, the reality is the place that I get paidAs a label owner, as a record producer, as an artist, as a singer, as a guitar player, as a bass player, as a piano player, all the jobs I have, the place that I get paid is that I have a reputation. And we live in a fame-obsessed business, music, and a fame-obsessed culture, but reputation and fame are not the same thing. And…When you're in, for lack of a better way to describe it, when you're living in sort of in a Mad Max world, the music world has turned into this kind of wasteland in a lot of ways, unfortunately. When you can prove that you know where the fresh water is and you have some fuel for your car, you know how to evade the raiders on the highway, when you actually have a reputation.Frazer Rice (09:28.603)YouBlake Morgan (09:35.278)there's any numbers of ways that that winds up being valuable. And that could be a reputation of just being an incredibly professional singer who on short notice can go and sing a national anthem. That can be a reputation to say, we've been trying to make this record for months. We can't get out of our own way. We're screwed. We need someone who actually is from the before times who knows how to make a freaking record as opposed to just generating one. Right?Frazer Rice (09:48.581)Mm-hmm.Blake Morgan (10:04.683)Why would you go to a doctor? You'd go to a doctor because you need something. You can't do it yourself. Home dentistry, bad idea. Home lobotomy, bad idea. And then you're going to say, well,

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Family Office Security with EDWARD MARSHALL, CEO of PRESAGE GLOBALhttps://youtu.be/uLbbZg52ABgIn this conversation, Frazer Rice and Edward Marshall delve into the complexities of security within family offices, emphasizing the importance of understanding risk as a multifaceted concept. They discuss the vulnerabilities unique to family offices, the interconnected nature of various risks, and the necessity of a comprehensive approach to security that encompasses governance, internal threats, and physical safety. The dialogue highlights the need for families to engage with security experts who prioritize diagnosis over fear-based marketing, ultimately aiming to enhance the quality of life for families through effective risk management.TranscriptFrazer Rice (00:01.173)Welcome aboard, Eddie.Edward Marshall (00:03.074)Hey Fraser, how are you?Frazer Rice (00:04.375)Great. Thanks. You are now a member of the two episode club. We've got a few of them out there. We one of my favorite ones was with you talking about there is no such thing as the family office, which I thought was a terrific bromide that I bring out every once in a while. It can be controversial depending on who you're talking to.Edward Marshall (00:23.15)So some people like that and some people hate when I say that, but it's all good. I mean, it speaks to the whole issues around family offices and I think some of the things that we'll probably talk about today around security is if you're defining it so many different ways, we've to look at it more as a process than some actual thing that we can put our finger up.Frazer Rice (00:46.421)Well, so security and whether it's family office or regular high net worth or people generally is foremost in the headlines these days. We had the United Health Care executive who got shot. We've got different scenarios of global conflict out there. The theft around financial assets is everywhere. The urgency in the family office space, though, it seems like it's really taken on a new thing. What is your experience with it?Edward Marshall (01:17.612)Well, mean, I think we could take a look at it from the perspective and start out with this, is risk is really what we deem it and how families and companies…offices and investors are looking at risk, they can perceive it in a lot of different ways. But I think one of the things that are important for high net-worth individuals or family offices is that some parts of their just organizational DNA create these engineered vulnerabilities. So what they are makes them more susceptible. And if you think of it just from the Willie Sutton effect, right?Why do you rob banks? Because that's where the money is. It's kind of myopic. Because you have to look at the other factors. What does the family office typically have as characteristics? You tend to have a very lean operation. There tend to be sources of time, line, agnostic capital. They have a lot of trusted relationships. Their customer is the family.And they're pretty agile. So a lot of those factors come together and make them attractive for bad actors in a lot of different aspects. They could also be politically outspoken, which attracts a different kind of attention to them. And so it is…It's really an ability to understand the nature of family offices and what makes them attractive for them because they have enterprise level wealth and oftentimes amateur or retail level security and risk management practices and processes in place.Frazer Rice (03:08.009)So how do you get your arms around it? When I hear risk, think, my gosh, you've got physical risk, you've got technological risk, you've got all sorts of other things. One of the frameworks you have is really these 10 domains of risk. And we may not list all 10, but how do you get your arms around it when you're helping a client think through what their vulnerabilities are?Edward Marshall (03:30.873)Yeah, think the 10 domains of risk that we have put together as kind of an organizational philosophy for Presage Global really harkens to the fact that traditional security, traditional risk management is very siloed. I've got my cybersecurity thing that I'm focused on, then I'm focusing on physical security. Unfortunately, risks and threats don't really respect your self-constructed silos.And that old school mentality tends to lead to lot of whack-a-mole behavior and reactive behavior to these types of risks that come out. So we came up with this framework. The risks range from privacy, technological, reputational, legal, operational, financial, and so forth. And the reason we came up with that is that we were seeingthe interconnected nature of risks in this space, whether it's for family offices, companies, or investors.there's a lot of interconnectivity between these risks and they can cascade. So something that starts out as a privacy risk, exposed information, a bad tweet, an Instagram post that puts out some information around you can lead, cascade into reputational issues or financial…fraud types of issues or even legal fights depending on kind of the situation that's there. And if you're not looking at risk across these different domains, how they interact and really taking a deep dive to assess it, you don't look at the entire picture. And I think that combined with not just focusing on the shiny object of a technology drivenEdward Marshall (05:31.617)approach to solving risk in these issues is important as well. Oftentimes you'll see folks that work in the security space or people that have purchased something to support them on security or risk management. They'll say, you know what, we're doing great because we have X, X software, X tool or whatever it may be. But they haven't even evaluated if they even need X tool that's out there or even if X tool is properly configured so you could be spending thousands of dollars hundreds of thousands of dollars or millions of dollars if you're a company on these tools, but if they're not properly configured then all that money is for nothing and it's and And it becomes like security jewelry. We've got all this stuff that's in place. We have cameras that are of X brand and they're doing all these things. We have firewall that is of Y brand and it's doing all these things. But if you haven't properly configured it or the people that are supporting you internally and externally…some of the externally creating supply chain risk there, then it's all for naught. it comes down, and it's similar in the work that you do. If you're not looking at somebody's entire trust and estate picture just beyond the documents that they're trying to draft, how do you figure things out? It has to be not just a black and white, here's a legal document for your trust and estate. It's part…archaeology, part anthropology, part psychology, multiple other science disciplines and other disciplines that come into it to develop a document, to develop a plan, to have an execution that actually keeps the family safe.Frazer Rice (07:30.315)So when, part of this seems like a real governance issue at the family level or at the family office level. When you see it done well, who owns this task, the security task at the family level? Because I could imagine the Generation One, the matriarch or patriarch, they wanna deal with it, but I'm not sure they're the best ones to be driving it. What is a good practice there?Edward Marshall (07:58.189)Well, listen, think risk management and security, oftentimes, whether you're talking about a Fortune 100 company or a family office, is looked upon as a cost center.And I think that's an unfortunate aspect to it, instead of an enablement factor for you to go and do the things that you want, right? Good security, good risk management for a family should enable the quality and improve the quality of life for that family.If you're constantly thinking of it, we have to spend X amount of dollars on our cybersecurity or planning for our travel or purchasing this trying to reduce my privacy footprint by buying some security tool that does that and says that I'll get all of your information off the web news flash. Not possible. You know, there's thousands of data brokers that are in this country. There's legislation that is going on in different states and at the national level to try to limit the aspects of the data broker stuff. But you know what?At the end of the day…Edward Marshall (09:14.178)that information is out there to nation states and to bad actors and try telling a hostile foreign country or a hostile hacker whether they're in Brooklyn or Belarus to remove your private information from their data sources. It's not going to happen. you have to, putting it in the perspective of governance is shifting the mindset away fromFrazer Rice (09:31.318)Right.Edward Marshall (09:41.467)Just being a cost center and to how does this help? All of the family office operations that are there and the family improve their quality of life by keeping them more secure. And that's a critical step to it. Then having a robust plan and really looking at the plan and testing it. This may say simple, but if you're not, if you don't have a plan and you're just trying to patch things together and you're not testing that plan, then you're spending a lot of time and not of getting a lot of good results. If you're not thinking of security governance and risk management governance through a maturity model, understanding what good looks like, where we are today, where we want to go into the future, here's my gaps, here's the things that a good family office that's focused on this issue or a good company that's focused on this issue looks like, then I think you're missing out on a lot of things for these families to really keep them

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RICHARD HAASS returns to the podcast to talk about the US FOREIGN POLICY implications of Trump’s Tariffs and other initiatives. We take another tour of the world’s hotspots after the recent UN conference here in New York. Finally, we weave in an analogy of the recent crowd misbehavior at the Ryder Cup as a symptom of America’s current mood.

https://youtu.be/z4FlnrXl8tEUS FOREIGN POLICY: INTROFrazer Rice (00:01.277)

Welcome aboard, Richard. We are past our technology glitch, I think. The next big thing here is to try to figure out what the US looks like. We’re on the heels of the UN week and also the Ryder Cup. I’m not sure which one was more chaotic, but as you look at the US’s standing after the UN, what do you take from the events that took place last week?

Richard Haass (00:02.744) on US FOREIGN POLICY

Great to be back.

THE US MOOD (AND THE RYDER CUP)Richard Haass (00:28.172)

It was not a great week for what Joe and I, may he rest in peace, called soft power. What happened at Beth Page, the terrible manners, the coarseness, vulgarity, choose your word, the lack of sportsmanship, we could go on, but you get the point, was really poorly received in Europe, as it should have been. And I thought the PGA here just showed a blind spot would be generous. So it was not good. I felt somewhat between embarrassed and ashamed and also just overshadowed some unbelievable golf on both sides.

Frazer Rice (01:11.069)
Kind of where I came out on it. And it just felt bad watching some really good players doing their thing and then all of a sudden, again, overshadowed by pretty boorish behavior.

Richard Haass (01:22.51)

Particularly golf, because golf’s a game of rules and norms. I think it was Rory Mclroy who used the word etiquette, and what we saw was anything but. I really wondered at times whether some of those people ever played golf. And then the UN. Look, it didn’t happen in isolation. The President’s US Foreign Policy speech was…at times just, it was seen, it was taken badly by Europeans. It was for understandable reasons, seen by them as something of an attack on them. The comments like about Sharia law in London were over the top. The criticism of immigration policy, some of which, for the record, deserve some criticism, I would say. The total denial of climate change was badly received.

So it was not good, even though, and I think the president detracted for some of his legitimate criticisms of the UN. My own sense, though, is the UN’s got bigger problems than Donald Trump’s speech. The UN has basically made itself increasingly irrelevant. It’s no longer a place for serious diplomacy. At most, it’s a venue for side meetings. And since then, you’ve had the announcement of a “peace” plan for Gaza and so forth.

So the world’s moved on. quite honestly, what matters is not what happened during a few days of traffic in New York, but rather what happens more broadly. So we’ll see what, if anything, comes of this Middle East announcement. We’ll see what happens next, if anything, diplomatically with Ukraine. President Trump’s about to meet his Chinese counterpart in less than a month in South Korea. So there’s a lot going on.

And not to mention domestically, there’s a lot going on we can discuss. So the fact that the Ryder Cup or the UN were not great in and of themselves, they’re more data points. And I think what matters is more the larger story for better and for worse.

US Foreign Policy: Russia and the UkraineFrazer Rice (03:32.339)As we just a couple of quick points to hit back on Ukraine Russia. What’s the state of play in there right now?

Richard Haass (03:41.71)

Well, we’re reaching the end of what you might call the third fighting season of this phase of the war, the one that started just over, mean, just under three years ago, in February of 22, if I have my dates right. My sense is things will dial down militarily somewhat during the winter, and then they’ll dial up again early next year for a fourth fighting season.

I don’t believe diplomacy will gain traction until the United States does probably two things, puts much more economic pressure on Russia and gives Ukraine much more military wherewithal, both to withstand Russia and to take the war to Russia. Ultimately, diplomacy will only happen in a context where Vladimir Putin comes to the conclusion, however reluctantly, that time is not on his side. Right now, he believes time is on his side. He has no reason to compromise or settle. Only if we convince him.

The time is not his friend, I believe. Will he agree to something like a ceasefire? I don’t think we should be pushing for peace for any number of reasons. We can go into it if you want, but I don’t think we need to. So at the moment, diplomacy is dependent on the calculations of the two sides, and I think the Ukrainian leadership is willing to accept a ceasefire in place, but the Russian leadership isn’t. We’ve gotta change that calculation, and that’s more than anything, I think, a function of whether we give Ukraine greater military help, which persuades Putin that more war will not give him more results.

Frazer Rice (05:15.571)
Any inside baseball and any potential weaknesses in Russia that we don’t hear about over here, as opposed to sort of the general posturing we get from Putin?

Richard Haass (05:25.389)

There’s been a lot of talk about it recently. The president mused on true social, about Russia’s economy and so forth. Look, Russia’s paid an enormous price for the war in terms of manpower, in terms of its economy. But China continues to buy oil, India continues to buy oil, Turkey continues to buy oil. So think the Russian economy limps along. Militarily, they’ve got a pretty good wartime economy. Putin still controls the narrative within Russia.

I don’t sense, I’d love to be wrong, but I don’t sense that Russia’s on any brink where it can’t sustain a version of what it is doing. So no, no, could we reach a point, phrase it like that, is no longer true, and Russia, literally and figuratively, begins to run out of gas? Yeah.

But I don’t think we’re there yet, but time, the medium to long term is not in Russia’s favor, only because their productive capabilities are getting diminished and so forth. again, I still think what we want to do is help Ukraine more. don’t know if we will. I don’t know if we’re going to impose sanctions. can’t explain why this reluctance to pressure Russia directly and indirectly.

It gets into places I don’t have any evidence on. But I would simply say…President Trump is right to want to bring peace. I think he’s sabotaging or undermining his own US Foreign Policy efforts by not creating a context in which diplomacy is more likely to succeed. But I don’t see any signs at the moment that either side is ready to essentially shout uncle.

US FOREIGN POLICY: ISRAEL AND GAZAFrazer Rice (07:10.163)
Trump just came out with his 10 or 20 point plan for Israel and Gaza to

Richard Haass (07:15.373)
It was to inflationary times. It was 20.

Frazer Rice (07:18.951)
It’s power of compounding. Hopefully, maybe that’ll help. What do you make of that? We’ve just had all sorts of different iterations of from the invasion to the counter invasion to all the fighting. on one hand, I’m happy to see that there’s an attempt to try to stake out some peace plans here, but I’m not confident that it will come to pass. Do you have any thoughts on that?

Richard Haass (07:44.258)

I pretty much agree with what you said. Look, it’s the shortest 20-point plan in history. And by that, I mean there’s 20 points to it, but none of them is fleshed out. So the immediate question is whether Hamas agrees to it, the Israeli government did. But even if Hamas does any number of implementation questions. Certain preconditions have to be met and so forth.

When I used to teach at Harvard, we used to say that 90 % of life is implementation. Well, this plan is the 10%. It’s a design. It includes all the things a peace plan would need to include, at least it mentions them. But they’re not developed. And so all sorts of things to tall for a technocratic that could run Gaza, a stabilization force, full humanitarian aid, all sorts of things about political and diplomatic processes.

The plan is more, I guess I’d say it’s more aspirational than operational. So the good news is the Israeli government agreed to it. We’ll see what Hamas does. My own guess is at some point,

There’ll be all sorts of hiccups in implementation. And probably early next year, in the spring or so, I expect Bibi Netanyahu will call for new elections. He’s got to do it within the next 12, 13 months. He’ll choose an opportune moment. The fact that he’s gotten this plan put forward, which is quite sensitive, shall we say, to Israeli interests, and he’s agreed to it, puts him in a very good position.

So either Hamas…capitulates or Israel’s given a green light to continue the war from the United States. So I think, my own view is this plan in its current form will not reach fruition to say the least. And at some point sooner rather than later, we’ll probably have Israeli elections, possibly as soon as six, seven, eight months from now.

CHINA AND INDAFrazer Rice (09:48.392)
Got it. So it would be geopolitically crazy not to talk about the two most populous nations in China and India. I know they got together with Russia in the room as well to maybe to broadcast their sort of emergent standing in the world. Is there anything we should be watching on that front besides sort of the obvious in terms of how they deal with themselves and how they deal with US Foreign Policy, especially in a tariff environment?

US FOREIGN POLICY: INDIARichard Haass (10:16.279)

Couple things come to mind, in terms of India.

I think it’s fair to accuse the administration of diplomatic malpractice. The U.S.-Indian relationship has been carefully nurtured over the last few decades by Republican and Democratic presidents alike. It made sense economically. India is the world’s largest country. It’s probably, the fifth largest economy, but it’s going to grow by any measure. Strategically, it’s a real concern for China.

So the idea that we’ve slapped these heavy tariffs on India and pushed them and China’s direction seems to me to make little sense. And don’t get me wrong, I’m not happy with India buying oil from Russia. India’s long bought its arms from Russia, but this hostility towards India just makes no sense. And this embrace of Pakistan, again, what’s Pakistan? A country of 1 6th, 1 7th the population of India. It’s got a long association with terrorism.

The army, shall we say, has disproportionate power. I don’t understand this fondness for Pakistan and this distancing from India. So I think this is one of those head shakers. In terms of the Indians showing up at the powwow in China, yeah, it was a sign that the Indians are alienated. Now they did leave before the military parade. But again, I think it’s India in some ways.

Re-embracing its tradition of a kind of strategic independence, something that it had during the Cold War, even though it tilted towards the Soviet Union. And I think it was the Indians’ of pushing back against US Foreign Policy, saying, we have options. If you Americans are going to treat us badly, we can lower the temperature with China, which is not in our strategic advantage. We want China to have to think about India.

So that’s just at the moment drifting in a kind of bad place in India. We have what, it’s the 50 % tariffs, which again, it’s not that India isn’t protectionist it is, but this is not the way to deal with it. This is not the way to reach a point where India becomes much more open to American exports.

US FOREIGN POLICY: CHINARichard Haass (12:12.398)

In terms of China, again, President Trump and Xi Jinping are gonna meet in less than a month in South Korea on the margins of the APEC meetings.

There’s talk about a summit in China sometime in 2026. And I think the real question is not just what happens economically, what is it the United States and China can agree to, but also what happens geopolitically. And to what extent is it a narrow economics conversation, or to what extent is there a grand bargain in which there’s some trading off, if you will, between geopolitics and economics.

What a lot of people in the strategic world are worried about is that China gives us some of what we want economically, and we give them some of what they want strategically. And that gets into the question of the South China Sea and even more Taiwan. I don’t know. But this is an administration that has consistently put what it sees to be the country’s economic interests before its strategic interests.

And so I can’t rule that out, that that might be the approach. I’m not going to say, I’m not going to rule it in. But I think this meeting in October and then the meeting sometime next year, the summit sometime next year, could go in any number of directions. the meantime, though, I think China has pushed back successfully against American tariffs with their cutting off of exports of rare earth minerals. It’s interesting that we tariffed India, but not China, over purchases of Russian oil. So stay tuned. But I think China has considerable leverage in things like agricultural exports, as your listeners will know.

Essentially the Argentines, the Brazilians and others are benefiting and American soybean farmers are paying an enormous price. The Chinese essentially are saying, you want to play a bit of economic warfare. Well, two can play that game. And by the way, we might be at least as good, if not better than you, at playing it.

US Foreign Policy: NepalFrazer Rice (14:36.148)
Quick flashpoint question about Nepal, which I thought was sort of an under-reported story and how basically the leadership there was in a sense overthrown. And you have that happening right in the middle of India, Pakistan, China right there. there anything, it’s tough for me to tell whether that’s a contagion that’s been closed off or whether that’s something that just bears further monitoring.

Richard Haass (15:01.324)

I mean, I go on at great length, except I don’t know enough to go on at great length. So I haven’t seen a lot, but what I don’t know, to be honest, is whether the fact I haven’t seen anything after the initial few days of reports, whether that shows a lack of media access and interest or that things have seriously or fundamentally calmed. Sorry, I just don’t know. I don’t know how to interpret the lack of news coming from there.

US FOREIGN POLICY’S IMPACT ON THE US ECONOMY Frazer Rice (15:29.086)
Got it. So let’s move stateside for a second. It’s the economy, stupid. That’s what they all tell us. And it’s actually, in my opinion, probably very true. Trump’s tariffs have now had a set of months to bed in, and it’s had its different issues related to sort of geopolitical relationships.

It’s unclear to me whether we can really sort of take any solace from it other than a high stock market. But even that scares me a little bit. What do you think about in terms of the economy and how the US is set up both for everybody sort of individually who are citizens here, but then geopolitically and otherwise as we look forward to things like the midterm elections and other phenomenon.

TARIFFS AS AN ARM OF US FOREIGN POLCIYRichard Haass (16:15.286)

Sure. You wrapped around six questions into that one, my friend. Look, I think the tariffs, they’ve certainly hurt us geopolitically because a lot of them are against allies. And we’ve essentially said being an ally doesn’t insulate you, whether you’re Europeans or the Indians or Japanese or what have you.

So I think they’ve had a strategic impact of weakening a lot of our relationships. Economically, we’re still in the phase of seeing the effects, but I think the preliminary effects are increasingly apparent. They’re inflationary, they have slowed growth, and they have led to a bit of job loss. So I think that’s the, but this is a work in progress, and my sense is that’ll get worse and it works against what the administration wants, which is for the Fed to dramatically lower rates.

On one hand, the slowing growth does, it reinforces the desire to lower rates, but obviously the inflationary impact works against it. This is an article of faith, not analysis for this president. So I’m on the skeptical side. It will raise some money, maybe a couple of hundred billion a year. in terms of added revenues. But the real question is whether how it nets out. If the economy slows and there’s less growth, then that’s going to hurt us on balance because the IRS, the extent that still in a position to take in revenues, reduce the effectiveness there, will have less to work with. The economy will just be smaller.

Richard Haass (18:04.16)

I think on balance both strategically and economically, the tariffs are unfortunate. They’re ill-advised. But like I said, it’s an article of faith for this president. It’s the centerpiece of a lot of his economic program, even if it works against some of what he wants to see. And I do think politically it hurts him. You see the numbers in the economy.

Look, Joe Biden and Kamala Harris, essentially what led to their defeat, as much as anything, was the cost of living. And, you know, people get reminded of higher prices several times a day. I think it will hurt the Trump presidency as well, both in terms of food prices, which are pretty robust, or in terms of mortgage rates not going down much.

So I think this will politically be a… net loss for them plus with specific constituencies I already mentioned certain farmers who live by exports they’re to be they’re they’re they’re furious they are they have been they they have been made you know what they’re paying an enormous price for this policy they didn’t realize they were voting for.

US FOREIGN POLICY AND THE ECONOMY CONTINUEDFrazer Rice (19:06.057)
Right. The other part that scares me a little bit is if you subscribe to the notion that AI is going to lead to productivity gains, that could lead to unemployment in pockets that people didn’t expect. In Midtown, if have whole bunch of guys in vests walking around that suddenly don’t have cushy jobs anymore because they’ve been replaced by GPT-5 and all that, that’s not great either.

Richard Haass (19:27.118)
Yeah.

Richard Haass (19:37.999)
That’s happening and it’s gonna happen more. And I think it’s inevitable. It’s gonna affect white collar and not just blue collar. People who have incurred serious debt to go to a fancy four year school. And they’re gonna have a lot of debt and not a lot of jobs. Look, I don’t think we’re ready for that. For the hit it’s gonna take on jobs.

We haven’t really begun this conversation in this country about a safety net for people who, for long-term unemployment, for people who had never had jobs. It’s one thing to get unemployment insurance for a limited period after you’ve been laid off. What if you can’t get that first job? These are, I just don’t think we’re, as a society, as a polity, to get political science here for a moment, we are not positioned to have that conversation yet. And whether we’re talking about universal basic income.

Whether we’re talking about lifelong education and re-skilling and re-tooling opportunities and so forth. So the question is, how do we deal with this? What is the responsibility of the state? To what extent do we condition the various types of economic support on certain willingness of the individual to do certain things? We haven’t begun that conversation, but we’re going to have it.

I don’t know when, whether it’s in a year or two years or three years.

I don’t know if it’ll happen before 2026, but do I think it’ll happen by 2028? Yeah, I do. I actually think that that will be one of the conversations that will, whoever the candidates are in 2028 for the presidency and for Congress, this is gonna figure significantly in the public, if you will, in the political marketplace.

2026 ELECTIONSFrazer Rice (21:27.728)
We painted a pretty gloomy picture for Trump in his sort of era here. And in many ways, I feel like he’s trying to run out the clock before 2026 in the midterms, where if the House switches over, I think a lot of what he’s trying to do slows down to a crawl. But the Democrats themselves are not creating or taking advantage of the conditions they inherited.

I spoke, or I didn’t speak, I was at an event where NY1 was talking about the mayor’s race in New York and Mondami and sort of the progressive element in the Democratic Party having a big impact on what’s happening here in New York City. I guess just from a broader question, how do you see the Democrats lining up for 2026 in something that seems to me to be very winnable, but at the same time, they seem to not lose an opportunity to lose an opportunity?

DEMOCRATSRichard Haass (22:25.006)

I have a couple of reactions. One is you can’t speak of the Democrats when it comes to 2026 because they don’t have a candidate. What they have is 435 candidates for the House and 33, 34 candidates for the Senate. And I don’t know how many governors. It’s decentralized. So the Democrats are going to be all over the place. From center left to center to far left to Democratic socialists like the likely next mayor of New York. So.

They’ll be all over the place. And all politics is local. Some will win and all that. But I don’t know what kind of clarity politically will emerge from it all. I also think there’s some big questions, it’s awkward to talk about, how the administration will try to shape the environment so the Democrats don’t emerge with control of the House.

I don’t think there’s much chance, there’s some, but not much chance they could regain the Senate, but the House is paper thin margin. This administration clearly, strongly does not want the Democrats to take control of the House of Representatives, given the subpoena power, the hearing power, and all that, what would accrue. So the question is, what lengths will the administration go to to see that that doesn’t happen? We’re already seeing what you might call aggressive gerrymandering.

You had the president just recently talk about the deployment of American military in many cities and so forth. I think the jury’s out on what’s gonna happen in this country over the next 13 months. I’m not predicting what will happen.

I’m simply saying I’m not confident that I can sit here and tell you what will be the run-up to the elections in… in 13 months. But I do believe this administration will go to great lengths to see that the Democrats do not gain control of the House of Representatives. I can’t talk about 2028 yet.

There the Democrats will have a representative. Someone will ultimately win the party’s nomination. And I don’t know if it’s somebody of the center, the center left, or the progressive left, the far left.

REPUBLICANSRichard Haass (24:45.998)

And on the Republican side, I don’t know if you essentially, could have everything from the President running for a third term, if that’s even a possibility, to Vice President Vance essentially representing what he would do is represent a de facto or effective third term of President Trump, whether you might have a Nikki Haley or Glenn Youngkin or somebody like that who might represent a little bit of a correction. I don’t know.

Again, a week’s a long time in politics. We’re now talking, we’re two years away from the beginning of the primary season. So we’ll probably have six more conversations, you and I, before then. So we can revisit that. I think we’ve got to get through this November, which is the mayoral election, a couple of gubernatorial elections in New Jersey, I think Virginia, and so forth. We’ll see what signs they tell us about disaffection over the economy and over other issues.

Frazer Rice (25:21.492)
Ha!

POLITICAL INDICATORS TO WATCHRichard Haass (25:41.643)

Then I think the next big political, well two things, one will be Supreme Court decisions on such things as the power to enact tariffs and post tariffs and how the court decides and how the administration reacts to those decisions. And then I think the other big thing will be the run up to the midterms, among other things again, the use of National Guard, military and so forth and how that all plays out.

I would just say, this is largely a business audience. The range of potential futures over the next, what, 13 months is much larger than we’re used to. Now, investors used to live in a world where the range of possibilities was pretty circumscribed. We were maybe playing between the 50 yard line and the 40 yard line on whatever side of the field the occupant of the Oval Office came from.

Well, now we’re playing on a much wider playing field. Now, we’re not playing within a span of 10 yards. We might be playing within a span of 30 or 40, 50 yards. So, to stretch the metaphor, and I can use football metaphors this week, because the Giants finally won a game the other day, that I think the range of possibilities is much greater.

There’s the two parts of our conversation, to use my two favorite words, home and away, given my substack, I think the range of possible outcomes, both domestically and internationally now, is far greater than we’re used to.

We’re all…trained to operate in a world where you get up in the morning and you can make a large number of pretty big but safe assumptions, I think that world is probably gone for the foreseeable future. And that we’ve now got to operate in a world where both domestically and internationally, we don’t have that luxury of making confident assumptions or predictions.

THE EROSION OF CIVICSFrazer Rice (27:33.041)
I recommend your book on the Bill of Rights and Obligations. Emphasis on obligations because people forget the concept of dutt. What do you think about the American electorate and the citizenship? My personal thought on it is that I feel like people are really in it for themselves a lot and that the idea of contributing back to the society and the politics, the confidence in the institutions and the trust is in a weird place right now and something that needs some emphasis. You’ve written a book on it that I love. I’m interested in your opinion on it right now. Many of us are fatigued over the last six months to a year.

THE BILL OF OBLIGATIONSRichard Haass (28:16.366)

Well, thank you. Yeah, I wrote the Bill of Obligations because I’m worried. And I feel a sense of urgency. Here we are. We’re less than a year away from the 250th anniversary of this experiment. And coming back to what we just talking about, it’s hard to feel sanguine, shall we say, about our prospects. I’m not defeatist. I’m not negative. But I’m worried, which gives me a sense of urgency. But, we don’t teach civics or foreign policy in a lot of our schools or if we do teach it, we don’t teach it well.

It’s become harder to operate a democracy given how we fund our politics, given social media and cable and radio. you know, go on and on. We began the conversation by talking about the Ryder Cup behavior. There’s things that are amiss, I would simply say, in American society. Things have gotten coarsened. They’ve gotten rougher.

There’s fewer norms that are recognized and respected. So we’re on the brink of yet another shutdown in America, in Congress, what’s gonna happen there. And regardless of what happens this time, there’ll be a next time. We’ve been unable to deal at all with a deficit that’s what, north of 37 trillion.

So, American politics are not working terribly well. I think American citizens are not informed enough or active enough right now. So, yeah, again, we can analyze how we got to where we are, but it’s a worrisome situation. I don’t know if it constitutes a crisis, but probably you could make the argument that it… does, we had about a third of the eligible voters didn’t bother to vote in the last presidential election.

I would think upwards of 40, 45 % of eligible voters at least won’t vote in the midterms. So we’ve got a problem with civic participation. We’ve got a problem with civic knowledge about what people are learning and where they get their information from. TikTok, I know this comes as a great shock to you. No matter who owns it. TIkTok is not a reliable source of information for citizens about their democracy or the issues of the day. So yeah, I mean, I think this is a testing period for American democracy and what we’re seeing in Washington is in some ways a reflection of that

Frazer Rice (31:09.48)
Great stuff. Richard, how do listeners and watchers now find you and find out more about US foreign policy?

Richard Haass (31:14.68)

Well, they can find me on Substack. I publish a weekly newsletter called Home and Away, where I talk about, as the title suggests, things domestic and things international. I try to throw in just a little bit of golf and sports so people don’t get too depressed when they read what I have to say. And I do a lot of media. They can find me there, whether it’s on Morning Joe or some… this shows in you were kind enough to mention my last book, The Bill of Obligations.

I’d for more people to read it, particularly in the run up to, again, July 4th, 2026. This is a time for Americans to reacquaint themselves with the DNA, shall we say, of our political system, of our democracy, which has served us pretty well for two and a half centuries. And if we’re lucky, we’ll continue to.

Frazer Rice (31:48.233)
Me too. Thank you.

Richard Haass (32:10.969)
Thank you, sir. Good to see you.

Frazer Rice (32:13.087)
Likewise!

RICHARD HAASS AND US FOREIGN POLICY LINKSRICHARD HAASS SUBSTACK “HOME AND AWAY” ON US FOREIGN POLICY

Listen to my first interview with Richard Haass on US Foreign Policy

READ THIS FREE PREVIEW OF RICHARD’s “THE BILL OF OBLIGATIONS“

Council on Foreign Relations on US Foreign Policy

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/US FOREIGN POLICY

View Details

In this conversation on “TAX ALPHA”, Frazer Rice and BRENT SULLIVAN (of TAX ALPHA INSIDER) delve into the complexities of tax awareness in investing, focusing on capital gains, income tax, and various strategies for tax efficiency. They discuss the importance of tax loss harvesting, the challenges of managing concentrated portfolios, and the implications of estate planning. The conversation emphasizes the need for advisors and trustees to understand these strategies to optimize tax outcomes for their clients.

https://youtu.be/pCIXFq4YoS0Outline of Tax AlphaQuick Overview of Tax Rates* Ordinary vs Capital Gain (Usually Income vs Asset based taxation) * Short Term vs Long Term (Long Term Treatment) * (we’ll talk about Estate Later) * Federal vs State (Can be important!) * Netting Losses/Deductions vs Gains and Income * Owning assets Taxable vs Non-Taxable vehicles

https://open.spotify.com/episode/3uL924aOlPd2hgmC9s7KCI?si=hBS09OKDTd-uHhT8PAj7aATax Alpha in stock investing (Universe)* Long Only + Concentrated Positions - Timing – Getting LT Capital Gain treatment - Basis – increasing basis * Exchange / 351 Funds to defer and diversify * Dramatic foreshadowing with step-up later in estate context * Blind Trusts for political appointees + Diversified Positions - Passive (Lower Cost, acceptable returns, “lower risk/tracking error”) - Active (Now frowned upon – except in the after tax world w/ TLH) + Deferral Carve-Outs like QOZ’s * Tax Lost Harvesting + Owning an index vs owning a sample of the index + Buying Coke and selling pepsi + Wash Rules + Loss Carry Forwards + Capital Losses / Not Ordiany Losses * Amplified Tax Loss Harvesting + Own the sample of Index AND + Borrow off those holdings to create long and short positions to generate capital losses while having beta of 1

Trends:* Pre-Liquidity Event planning + Storing Losses for the bulky sale + Timing the event(s) to have the losses line up with the gains * Pre-Diversification planning * Pre Death Planning + Integrating the Estate Planning with the Income/ Cap Gains Planning - Step-Up - Avoiding Estate Tax, But Prolonging the Cap Gains Tax exposure (and concentration risk?) - Grantor Tax status and he swap power - How does turbo charged loss creation look in an estate environment? - Trustee/ Executor and Fiduciary / Beneficiary risk issues * Vehicle evolution + Funds + SMA’s + 351 and other ETF vehicles (+/-‘s) + PPLI,PPVA

How did you develop this expertise?

How do we find you?

Transcript of Tax AlphaFrazer Rice (00:01.122)
Welcome aboard, Brent.

Brent Sullivan (00:03.035)
Well, happy to be here, Fraser.

Frazer Rice (00:04.558)
It’s fun to chat in person. I’ve been following it to call a blog I don’t think gives it the proper respect because I think you’re uncovering a lot of great information for advisors like me and wealthy people and other people generally speaking in terms of Really getting going on the tax alpha end of it Let’s start a little bit with some basics because I think you know for someone new to the concept of Being particularly tax aware in terms of investing taxes can be, they’re more than just income tax, that’s for sure. How do you think about it? How do you get your framework around what people are trying to avoid when they’re dealing with their investable portfolios?

Brent Sullivan (00:45.723)
Yeah, I mean, there are really just a couple of different ways to break it down, but I probably start with the concept of a capital gain as a distinct thing from income tax. so capital gains come in really like four different flavors.

There’s short-term capital gains, short-term capital losses, and then long-term capital gains, long-term capital losses. And then these things are different if you have collectibles or other types of instruments too. But the point is here that you’ve got those four quadrants that you’re always sort of operating in.

And I think that’s where the management and the prowess around portfolio design, execution, that’s where all of that really comes into play. And the final point I’d make about capital gains versus income is that capital gains is really a planning opportunity. Income is gonna come at you and there’s really not much you can do about it. Strong caveat to that. But capital gains are really about timing. You can accelerate losses, you can defer gains.

Frazer Rice (01:37.929)
Right.

Brent Sullivan (01:45.079)
And that’s really the beginning of the conversation when I’m talking with advisors about this usually. I operate in B2B space, I’m not retail facing. And usually that’s where the planning conversation starts.

Frazer Rice (01:57.655)
So as you sort of step back and help people think about the tax planning aspect of it, for advisors generally speaking, they’re very interested not only in the investment perspective, but the structuring of wealth such that they’re taking advantage of what they can and mitigating that which is destructive, but otherwise not really something they can avoid.

If we settle in a little bit on the investment piece a little bit, what is the universe that we’re looking in in terms of how people allocate their portfolios?

Brent Sullivan (02:33.22)
Well, mean, so probably I’d say the hot topic in tax management nowadays is really getting the portfolio to be more equity like. And so the reason or part of the motivation for more equity like exposure is to utilize to the extent possible the planning opportunity of capital gains, realization and acceleration and things like that. So that’s that’s probably the core concept. The biggest chunk of the investable portfolio. The idea is to make it more equity like.

And then the planning opportunities sort of expand beyond the core portfolio. That’s in, you know, how can we align total diversified exposure across the right types of investment accounts? In your space, it starts to get really interesting.

You know, I say your space, like in a state planning world, it starts to get, you know, the idea of asset location, putting the stocks, you know, in the high growth portfolios or tax exempt portfolios, depending on the profile.

Frazer Rice (03:17.228)
Sure.

Brent Sullivan (03:26.458)
Putting the bonds in tax advantaged accounts or tax exempt accounts, again, depending on the profile. All of that is like, these are like really crisp, interesting planning questions that do not have crisp answers. And I think that’s where the planning opportunity really emerges.

Frazer Rice (03:42.668)
We talk a little bit about asset location. The investment vehicles we’ll talk about shortly and some of the things that can happen to turn the dials on that front. But in terms of location in whether ERISA accounts or life insurance or trusts or things like that, as people are trying to get their arms around the matrix, as you called it, and certainly with the capital gains and short and long, there’s almost a matrix of different things you can think about in terms of the tools in your toolkit. How do you get your arms around that if you’re new to the space or otherwise trying to really provide subtle advice as opposed to maybe speculative advice?

Brent Sullivan (04:23.214)
Yeah, I mean, I think that the first step is really trying to understand how each investment decision impacts not just the current investment returns, but also future investment returns, after-tax returns, pre-liquidation, post-liquidation, but then also estate considerations, like are you choosing the right vehicle if you’re trying to isolate or exclude assets from the estate? Do you want to keep a strategy on for multi-generations? Is it private? Public? Is it liquid? Iliquid?

Inflation protected? All this kind of stuff. You have to realize that every single investment decision involves or impacts this really complex ecosystem. It’s super interesting, but I think like first order decision is like how much of a thing should I own? That is just like the tip of the iceberg. And I would say that’s where 99 % of like the financial media focuses. You how should I invest a million dollars now? It’s like, no, boy. Like there’s so much more ground to cover that could make portfolios resilient today, but also with multi-generation in mind.

Frazer Rice (05:29.835)
As I like to say, trying to get past the two dimensions that most people are normally thinking about in terms of the X and Y of income and capital gains and then sort of layering on asset allocation to be responsible on that front, but then add the Z axis of the estate planning, really kind of years 10, 15, 20, and then going beyond your use of the assets to different constituencies that are going to benefit from it later.

Brent Sullivan (05:55.365)
I mean, I get so excited when I think about the opportunities in this space because they’re so messy and bespoke. And I say messy in a good way. These are real problems that planners have an opportunity to step in and address for high net worth folks. really, down market, I don’t say down market in a pejorative sense, but mean, in down market too, there are really opportunities for planners to step in and add meaningful value and like again, I am an observer of this industry.

I’m an independent tax analyst, which means that I don’t have a stake in the game. I don’t, I’m not trying to sell anyone’s product. So I just get to see the opportunities that planners have when they’re engaging with, with clients at all wealth levels. And again, like to your point, yeah, multi-generation is super exciting. It’s so messy and interesting.

Frazer Rice (06:43.755)
As we look at it here, the one unifying theme is most people don’t want to pay taxes if they don’t have to. success really does come down to what do you get to keep at the end of the day from the fruits of your labor or your investment. Without that unifying principle, then we’re sort of grasping at straws I guess.

Let’s start with the simplest sort of tools that we have in the toolbox. And this is gonna combine a little bit of investment vehicle and tax awareness in the long only space? What are the things that you’re thinking about in terms of the tools that a lot of people have access to, but maybe not have the tax awareness that we think is a good idea to think about?

Brent Sullivan (07:27.332)
Well, mean, the easiest thing or probably the highest level thing is just asset allocation specifically. And so that’s just like at the very, very simplest level that would be, you know, how much of your portfolio is allocated to growth assets like stocks versus how much of your portfolio is allocated to fixed income assets or something fixed income like like bonds.

That’s the first decision you need to make. It already has tax implications attached to it. And the first tax implication is are we dealing with the character of capital gains in the equity sleeve and we’re dealing with income in the fixed income sleeve. Okay, you already have like made tax decisions at that point.

So should you be augmenting portfolio allocation to make sure that your after-tax results are more favorable? Now again, to my earlier point, this is where more equity-like exposure starts to come into the fold. We haven’t even layered in any complex products or anything yet.

We’re still just talking about stocks and bonds. But then if we’re expanding beyond those core allocation decisions away from stocks and bonds and we’re adding different types of accounts. Again, like you said earlier, ERISA, other qualified accounts, IRAs, whatever it might be. Now we have an extra lever to pull.

Okay, great, maybe we should be putting all those bonds in the advantaged accounts such that we’re not realizing income or such that we’re not paying income tax and experiencing tax drag like on an annual basis. So that we can expand even beyond that and we can start thinking about planning around accelerating losses and deferring capital gains.

If we start matching those income or we start matching those assets, tax assets, probably through something like tax loss harvesting as a trick, and we’re matching that with capital gains liabilities that we’re expecting either through routine portfolio management or through an exit, we can start matching these things and really pushing out tax into further and further years.

And that’s really the planning opportunity there. And again, there’s plenty more we can do beyond that. But I think the basic tools, again, allocation and then location. And then if you want to get into the portfolio itself, there are specific products that might be able to dial in those concepts even a level further. I’m talking about things like no dividend ETFs to the extent that’s relevant and attractive to the investor.

Brent Sullivan (09:47.567)
And then there are other things now, interesting happening in fixed income. Okay, are there ways to defer the income such that, and to have it have a capital gains treatment instead of ordinary income? That’s probably, you know, those three tiers again, allocation, location, and then investment selection in the portfolios themselves, very powerful right off the bat. And again, we haven’t even done anything complex yet.

Frazer Rice (10:08.115)
So let’s dive into the complex. Tax loss harvesting, is really kind of the bell of the ball right now in the investment community and getting talked about on many fronts. Talk a little bit about the concept there of what it is to generate losses while maintaining the character of an investment profile that you think is appropriate for a client.

Brent Sullivan (10:28.91)
Well, OK, so let’s say that we’ve got a portfolio that’s 80-20 stocks and bonds. Let’s set aside the bonds for now. Let’s just focus on the stocks. So the stocks have capital gains treatment as an investment asset class.

And what that means is that as the portfolio is oscillating around its cost basis, right? So you buy the portfolio, you buy an asset for $100, and it appreciates above the $100 to $110. You’re in capital gains territory, unrealized capital gains.

If it trends below the cost basis, you’re in capital loss territory. And so the portfolio is bouncing around that critical number, the cost basis. If it’s below the cost basis, you have the opportunity to liquidate that asset, capture that tax loss, and then reinvest in something that is not exactly the same, but is similar in risk profile. Similar is the key word, not substantially identical.

And the idea is that you’ve captured this tax asset sits on your household balance sheet and it can be unlocked and utilized when you realize capital gains somewhere else, again, in the entire household portfolio, as long as it’s still within the estate.

That’s really the strategy there is to capture those tax losses and then to use them to offset gains that might be occurring elsewhere in the portfolio just through routine portfolio management, but it also might be through tax inefficient vehicles like managed futures.

It could be from some income program, again, capital in nature, not income. And those are really the opportunities that are immediately present through tax loss harvesting.

Frazer Rice (12:06.92)
One of the things I think is important is that typically most people say, oh, if you’re taking losses, is my portfolio going down? The reason why this is appealing is that, you know, instead of having one index that represents a particular, say the SP 500, you’re investing generally in a basket of stocks that is Sam is a sampling of the S and P 500, which allows you to take advantage of the oscillation while maintaining the investment characteristics of the larger S and P 500 index.

Did I square that correctly?

Brent Sullivan (12:38.224)
Yeah, 100%. Yeah, that’s it. I mean, so you’ve got S &P 500 exposure or Russell 1000, Russell 3000 exposure. And then what you’re referring to is really the granularity of individual holdings. And so you can imagine, if I hold one ETF and it’s oscillating around the cost basis, well, that these oscillations occur with much more violence and interest if the portfolio holds individual positions. The idea is that as those individual positions dip below cost basis, you sell them.

You reinvest in something not substantially identical but economically similar such that you maintain the same exposure. So you’re still getting the benefit of appreciation in the portfolio and the same risk reward characteristics. But now you’ve got these tax assets sitting on your household balance sheet.

Frazer Rice (13:26.123)
Now, one thing that’s sort of popped up as a product enhancement in this type of scenario is the idea of embedding short and long term overlays on top of this tax loss harvesting so that you can get the notional value beyond what’s being invested and generate more losses in addition to having your exposure to the underlying investment. Maybe talk about that a little bit for the listeners.

Brent Sullivan (13:55.995)
Yeah, I would say probably the white hot topic in core portfolio management nowadays is exactly what you said, Frazier. It’s adding additional margin or it’s adding a margin to the portfolio and then complementing that margin with short positions. Just to give it like a simple example, suppose that we have simplest possible example is probably imagine you have an S &P 500 ETF. Okay. Start with that as your core allocation and then you borrow against that

ETF, you use that ETF as margin and you add more long exposure. And so the long exposure, let’s assume that it adds another 100 % to the portfolio. So you started with $100, now your portfolio is $200 gross. And then you complement that extra margin long with shorts, and you do them the same as the margin.

You have $100 core portfolio, $100 margin extension, $100 short exposure and the idea is that the long Margin and the shorts are market neutral such that the manager who’s handling this is really interested in relative value between the two So your gross exposure in that case would be 100 margin 100 core 100 short for 300 gross exposure But your net exposure is just that 100 and the again those those extensions are market neutral ideally such that we’re capturing relative value.

That’s the pre-tax alpha argument. And then there’s a post-tax alpha argument where it’s like, there’s a lot of interesting opportunities to accelerate capital loss realization in the longs the shorts, depending on how violent the market is that you’re.

Frazer Rice (15:41.069)
That it’s one of the things that for the mad scientists among us, you can turn the dials and if you want something different than market neutral, i.e. you’re willing to take a little bit more risk on that front in the theory that you’re able to maybe generate some more alpha by in a sense just being a little bit more aggressive on the risk side of the investment.

Then you’re able to dial in a little bit more return while going for it on the tax loss generation end of things as well. We’re seeing that with different clients here. where the market neutral is very interesting and as part of a core allocation, a good idea.

Then they’re willing to listen to the manager underneath and say, might be an area where your prowess might be rewarded in a way that helps us on a pre-tax and a post-tax scenario.

Brent Sullivan (16:33.628)
Yeah, 100%. Yeah, I mean, so that’s probably the first order concern is always like, hey, does this investment make sense? Does it add, you know, maybe additional diversification principles, maybe, you know, whatever it might be, maybe pre-tax alpha generation. Like, that’s the first order concern.

Does this make sense? And then once you’ve broken through or confirm that barrier, because you’re going to expose the portfolio to additional tracking error, that is to say difference between the portfolio performance and the underlying benchmark, these extensions have risk attached to them.

If you’ve confirmed that it’s worth taking that additional risk and paying financing costs and whatnot, and all that is not free, then if all that makes sense, then finally you can say, actually there’s a lot of really great post-tax opportunities here too. And this really comes, let me just give you a quick flavor of it because it’s interesting.

On the long side, this is just as if you had injected a bunch of cash into the portfolio. And so from my earlier example

That’s just like you had reset the cost basis high again. So what that means is that the portfolio is pretty close to cost basis. Again, it’s oscillating around that really critical number. If the long extension dips below the cost basis, you can harvest those losses. That’s interesting, maybe even intuitive to some folks out there who are used to sort of direct indexing, typical tax loss harvesting. But on the short side, it’s really much more interesting.

Essentially, your shorts are a bet against the market. Okay, so if the market keeps going up, there’s almost always, nearly always, I don’t wanna say it’s not unlimited, it’s not in perpetuity, but almost always, there’s an opportunity to capture losses on the short side.

So this one’s quite simple to understand, it’s technically complex, but the idea is if the market’s going up, you have losses. Now that’s totally different than a long only mandate where if the market’s going up long enough, you sort of run out of losses, you run out of basis to mine.

If you think about it as like a little gold pile that you’re working into to try to extract tax assets, that disappears over time. Long short extensions reinvigorate that possibility, I don’t know, say almost in perpetuity, almost, heavy asterisk there.

Frazer Rice (18:44.068)
That’s right. No guarantees or anything like that. The asterisk is in bold and underlined. So we’ve been talking a little bit about really in a sense diversified portfolios and allocating in that world. If we get into the concentrated portfolios, many people build wealth.

They work at Google. People sell a business. They do something like that and they have or they have a business that haven’t sold it yet, but their wealth is concentrated in one thing or the other.

What is the universe around that to help sort of a tax-efficient component of either disposition or otherwise planning so that capital gains tax is as low as possible and it can get to the next generation or elsewhere in a more efficient way.

Brent Sullivan (19:28.634)
Well, let’s start with the long short as a solution in that specific case, because this is a very popular topic. It’s also, advisors are very interested in it because I think, because they’re getting inbound from clients who are just like, hey, I’ve got this really gnarly situation.

I’m holding, like you said, too much Google or I’m about to exit. So what can we do here? And I think this is really where the planning opportunity steps in. So if we assume.

Frazer Rice (19:35.299)
Mm-hmm.

Brent Sullivan (19:55.397)
Let’s assume that the investor is holding a publicly traded large cap stock just for simplicity. Let’s assume that we’re going to consider long short extensions around that concentrated position as a means to diversify, to de-risk over time.

The way that that works is the investor would contribute, let’s say their Google shares into a portfolio margin account. And the portfolio margin account just essentially uses risk-based criteria to be able to dial up the leverage pretty aggressively on the margin and short sides.

So the investor contributes the Google to a portfolio margin account and then uses, the manager uses the Google as collateral to again add that margin position on top and then shorts a complimentary portfolio to maintain that market neutral exposure.

Okay, so you’re getting that pre-tax alpha that is helpful for, know, always pre-tax alpha never hurts. But what’s actually happening is that, or what’s really happening in compliment to the pre-tax alpha is that you’ve got a lot of loss realization.

As you’re realizing capital losses, you are using those capital losses to offset capital gains as you wind down the concentrated position. Depending on the amount of leverage that you’re using in this portfolio, you can really exit the position tax neutral. That would be the objective. This is again, deferral, not avoidance. It’s deferral. You’re eventually pay the tax. Another strong asterisk!

The idea is that you want to try to execute this position tax neutral and you can do so if you’ve not already realized the gains that the typical timeline with a heavily leveraged portfolio, something like two years to exit tax neutral from that concentrated position. And if you’re uncomfortable with really, really high amounts of leverage, then you can do it something like in five years.

Frazer Rice (21:45.115)
I mean for people who are thinking long term, two to five years is much more palatable than say the standard where you have this big bulky position and you’ve got, let’s say you came in at 200,000 and it’s worth a million, and you’re saying, gosh, how do I get from here to there? That’s a meaningful sort of absorption of time to get you into a diversified place.

Brent Sullivan (22:09.562)
So that is really the critical point that you’re making. Like what is a graceful way to get from A to B? So it’s like, do you know what you want? Do you know what B is? What’s your ideal state that you want to gracefully transition into?

So if your initial state is concentrated stock and you’re like, wow, my ideal state is Russell 1000 diversification. I still want to upside exposure, but I just want to not be so idiosyncratically concentrated. Okay, cool.

Frazer Rice (22:23.81)
Mm-hmm.

Brent Sullivan (22:38.128)
What’s the most graceful way to get from A to B? And there are a bunch of different methods. Long, short, just a direct extension over a concentrated position will allow you to gracefully transition from A to B.

Now, there are other tools too in the concentrated toolkit. Probably the simplest is, of course, just to sell it. You could just exit the position instantly. Now, is obvious ramifications, tax ramifications.

Frazer Rice (23:03.788)
Simple, graceful.

Brent Sullivan (23:05.264)
Not graceful, know, yeah, yeah, it’s like yeah, it gets yeah, it gets gnarly now that makes sense for some folks though You know just be done with it, you know, let’s transition. Let’s diversify instantly.

You know, there are other tools there to like an exchange fund depends on the capacity the fun depends on the underlying characteristics of the name but probably for your audience I think it’s worth having the variable prepaid forward on their radar and so variable prepaid forward achieves a couple different objectives.

First, the way that it works is you’ve got a concentrated position and then you can imagine a cap and a floor placed on that concentrated position and then a loan granted against that collared position.

Then the loan is usually something like 75 to 90 % of the notional value of the position. So again, you contribute $100 worth of Google put on the variable prepaid forward. This requires an ISDA, it’s a very complex arrangement, but you put on the variable prepaid forward and then the loan that you’re granted against those $100 would be something like, again, $75 to $90.

What you do with those proceeds is you put them into a diversification program. And nowadays, ideally, that diversification program includes loss harvesting potential such that when the variable prepaid forward matures, you’re able to match losses from the diversification program with gains from winding down the isolated position.

You also retain the optionality to extend the variable prepaid forward. So again, like Frazer, just to your exact point, it’s just like, how do you get from A to B in the most graceful ways? There is just like the whole toolkit to get this done thoughtfully.

Frazer Rice (24:46.506)
Well, one of the things that, you know, if you start talking about the estate tax perspective, one of the tools is the step up in basis when you die. And so for some people who are willing to absorb that concentration risk, sometimes it’s worth holding onto those shares. if the idea is that you’re thinking long-term enough to pass them on to somebody else, you end up getting a step up in basis. Your estate does when those shares, when you pass away and then that capital gains part goes away. Now you have to net that against the estate tax. Fortunately, we have large exemptions in place, but that’s another tool in the toolkit that we think about.

Brent Sullivan (25:23.984)
It’s insanely valuable from a planning perspective. I think you could educate me a little bit here, from the on community property states, you’re going to get spousal step up. tell me about that, because that does come up with some regularity.

Frazer Rice (25:31.84)
Sure. Well, a lot of times you have to be careful in terms of how these are owned so that you don’t get half of it split and half of it not. Essentially there are some States that allow community property to be co-mingled into a trust so that you get the step up immediately.

That deserves its own episode on its own probably. we’ll dive in. We’re going to, dramatic foreshadowing for our listeners, we’ll probably have a separate estate planning one, but

Yeah, no, that’s a big deal where you have to really understand the characterization of the features there of ownership so that you’re not splitting one and not the other if it’s owned jointly.

Brent Sullivan (26:20.794)
Yeah, that’s a fascinating topic. That’s a real planning opportunity in community properties states. There are other solutions too we could get into another time. But just suffice it to say that like the planning opportunities here, this is really the work of an advisor, I feel. It’s not investment selection.

I mean, to a certain extent, it’s investment selection, but it’s design, it’s thoughtful planning, it’s accelerating losses, deferring gains, optimizing gains, using tax as a risk mitigation device. That’s probably a little complex, but this is the work of a thoughtful advisor.

Frazer Rice (26:52.288)
No question about it the it just to get back into the estate planning world even though it just said we’re going to hit the pause button on that one of one of the main things that that in terms of getting things out of one’s estate the the basis carries over and so when you’re doing planning to get away from the estate tax oftentimes you’re not necessarily going to avoid the capital gains tax if you go sort of the simple route

There’s the concept of a grantor tax status where sort of dialing up good estate planning is having the grantor or the donor of the assets into the irrevocable trust pay the taxes on that and that’s done by keeping a set of powers that makes it an incomplete gift.

One of the things that we talked about I think in a different vein was the idea of in a sense having your cake and eating it too where if a grantor is able to put low basis assets into an irrevocable trust for and or maybe low basis and then they grow later so that the growth happens out of the estate maintain the power to substitute those assets which is that’s the real juice here uh… and then be able to substitute those assets that correct fair market and provable valuations through uh… through a firm uh… you know valuation firm.

To substitute it with something like cash that has a high basis so that when you substitute, you’ve gotten the value out of your estate, but then you get the low basis back into your estate so that you can take advantage of the step up later when you pass away.

Is that something that’s come across your desk? I’m sure when people are looking at everything from low basis of stock to companies to so on. We’re seeing it as well where people are saying, okay, you know, what are the best assets to put into these vehicles short and long term so that we try to avoid as much of the different types of taxes that are out there.

Brent Sullivan (28:58.084)
Well, I’m pleased to say that this is definitely a fringe topic. So yes, it comes up for sure, specifically swap power. as deep as we want to go on this, Frazer, we’re more or less bringing what some folks, I think, in estate planning would consider routine practice, where we would be shedding light on it.

Because I think these opportunities are interesting, but I think are rarely discussed out in public. So I mean, that’s really the opportunity for us to create some really interesting knowledge sharing just for the community of listeners or both for my readers. I think this area is, it’s in its nascency if we’re talking about concentrated positions from a public exposure standpoint.

Frazer Rice (29:41.886)
One other thing to put a pin on so we can maybe discuss it and we’re now we’ve now created a whole new podcast not just different episodes but we’re seeing a lot of interest in private placement life insurance and private placement variable annuities really more as a location device in terms of allowing tax-free growth because these is this is life insurance

But then when it’s stitched together with the estate planning component, because oftentimes life insurance is bought in order to match up with the liability of an estate tax. so when someone dies, it’s there. and PPLI is something that we’re seeing a lot more interest in because as a vehicle for owning alternative assets, which are usually high, high, highly taxable, either from an income or otherwise component, why not own it in a vehicle that kills two birds with one stone?

You avoid the taxes on the sort of income and capital gains basis, but then you also get good estate tax treatment if you’re able to own it that way.

Brent Sullivan (30:42.67)
Yeah, totally. I mean, yeah, you’re going to educate me on all that stuff. I mean, that’s that’s one step beyond what I normally encounter, even though I’ve got the PPLI books sitting on my desk over there.

Frazer Rice (30:52.564)
It changes hourly because it’s becoming more more popular as we get going. the, you know, as we sort of, I don’t know if we want to wind down here quite yet, but the one thing that’s interesting here is we get to a, for people who are operating in that estate world with where executors and trustees and people who have what I call fiduciary with a “Capital F” types of roles.

Do you get people asking you, know, what do I have to think about? If I’m an individual owning it, that’s one thing because those people are responsible for their own investments. I maybe they’re getting help from an advisor and there’s some back and forth on that, but the concepts are sort of limited to that person or that generation.

So you start going to the world where you have to probate in a state or then manage a trust with these types of concepts. To me, the functions are important because you’re not only managing assets, like when things go wrong, you’re personally responsible.

And that to me is, think, some of an area where we’re to have to discuss even further what we’re doing here because not having a really steady hand on the wheel and understanding what’s happening underneath all of this.

If you don’t take advantage of these things, not only from an investment perspective, but a tax perspective, that people can come back at you later and that can get ugly. As an example, if you’re in a long short situation and someone passes away, in my mind, you want to wind that down as fast as possible because you don’t want liability to … all of a sudden balloon on you and then all of a sudden the beneficiaries of these states say well why didn’t you wind this down?

Brent Sullivan (32:45.034)
I think that’s one of the most interesting planning opportunities that I’m getting into the weeds in now. And so that’s like, know, just stepping all the way back. If we’ve got a portfolio again, that’s got margin extension and shorts, those are liabilities like on the household balance sheet or on the estate.

Then the typical default behavior is that the estate has to settle all liabilities. Now, of course, if you don’t want to settle the liabilities, you want to exclude these assets from the estate using some vehicle. There’s multiple options. Could be a trust, could be an LLC, family limited partnership, a bunch of different solutions to ensuring continuity if that is the family’s priority. But then to your point, and it’s such a good one, it’s just like, if you do want to use a vehicle that requires a trustee, does the trustee know what’s going on here?

Do they understand that there’s an alpha model and that the alpha model introduces tracking error into the family circumstances and that the portfolio has leverage attached to it?

Now here’s an analogous case here, which might be real estate, The entire balance sheet of the asset passes. I think this is a very common situation in estate planning. Is that a suitable analogy for what’s happening with long short mandates? That investors want to keep on for decades?

There are reasons for doing that, by the way. I mean, part of the reason is that they just want to keep the alpha exposure. Like, hey, this thing is great. I love this relative value. It’s market neutral.

Cool, like let’s keep this going. Another thing is that if the assets are in the estate and someone passes. We’re going to settle and if we have unused capital losses, they essentially evaporate. They don’t pass on. Okay. But if these assets are excluded from the estate, those losses are part of the balance sheet. They just like keep on, they can be continually used by future generations. There are a lot of just different interesting concerns here. To your earlier point, are trustees familiar with what’s going on? Maybe this is actually all routine and I’m just not privy to that, but I think, yeah, I mean.

Frazer Rice (34:51.417)
I’ll tell you right now it’s not. The whole body of law has evolved that way so that there’s a concept called directed trusts. The functions are bifurcated. the mailbox admin component can be one person or one institution. The distribution decisions can be more family oriented, et cetera.

That can be a group of people or an institution. And then the investment part, that can be a different group of people or an institution. a lot of people got frustrated with the idea of having a bank sort of taking control of all that.

Their gut instinct is going to be to diversify because they don’t want to take any investment risk because if something goes wrong, it’s going to be the, you know, the beneficiary on one hand 25 years from now who sues and says, well, you know, why did you do that? In a more familial situation.

The trust law has really, in a sense, stepped ahead of some of these concepts, probably really to deal with the real estate wealth that you were describing before. These new tax alpha strategies are becoming much, much more of an asset and much more of a short and long-term asset that A, have to be taken seriously, and then B, I think have to be managed much more adroitly than I think the typical trustee can deal with.

Brent Sullivan (36:08.388)
Yeah, especially when talking about nuanced expressions of planning. When we’re talking about utilizing these losses very deliberately for a specific purpose. Whether it’s for the trust itself. Because the trust is a taxpayer, it’s got compressed brackets, all of that is a planning opportunity. How is a trustee gonna handle all that? That seems nuanced to me, but it also seems like there’s incentive, I guess, at that point for the… The assets to pass to the heirs like almost as soon as possible for the trustee to mitigate liability. Is is my understanding right there? mean, like.

Frazer Rice (36:46.373)
So the short answer is yes. I mean, if you’re a trustee, you’re set up to be investing as prudently as possible. The real leap forward in the last five years, is these tax tools have become so powerful so quickly. Prudence now has to be looked at on a pre-tax investment perspective and a post-tax perspective.

Then the other sort of component of that is if you’re the trustee of a limited vehicle, just a trust. Whereas you’re advising a whole family and sort of going in between individual ownership and trustee ownership. Pre estate and post estate and things like that. It’s not fair to take somebody to task for that. Especially if they’re the trustee of a specific trust from a pure legal perspective.

I see a big thing coming down the pike. Someday where someone said, the trustee did not take advantage of the tools that were available to us. And we had a tax bill that we shouldn’t have paid. whether shouldn’t, shouldn’t’s doing a lot of work there. And there’s probably going to be a 95 page brief describing the underpinnings of shouldn’t.

But that’s something that I think modern trustees, especially in the directed world. Modern investment directors of these trusts are going to have to really understand well. I think they understand that well in the real estate sense. All the 1031 exchange things have become sort of fait accompli knowledge for people who own that.

These new tax rules on the investment side are going to be important to digest and understand. Both from a strict trustee in the trustee role, but the advisors that are advising.

Brent Sullivan (38:40.496)
I mean, you made this incredible point. The power of these strategies is that it gives additional planning flexibility to advisors. And now you’re saying, OK, trustees also have this additional flexibility. Are they going to be taken to task for not prudently administering the “tax assets” that are sitting on the trust balance sheet now?

That’s a really interesting concept. It’s sort of like if we zoom out we’re saying like these products are actually quite powerful. It’s funny to think about somebody being held accountable for not exercising or using them to their full potential. And that’s an interesting wrinkle, but it’s suffice it to say investors are, I think, well served by these products.

I don’t want to go too far there, but I want to say that these are planning capabilities. These are important arrows in the quiver.

Frazer Rice (39:13.945)
No question.

Brent Sullivan (39:39.894)
They have a suitable profile for an investment household. And I think in certain circumstances, they are just incredibly useful planning devices, especially multi-generation.

Frazer Rice (39:53.518)
Question. Let’s stop there because I think we could go on for four hours. Frankly I need to get my research hat on to know what I’m talking about for four hours. What a treat and Brent how do we how do people get a hold of your blog? How do they find you and stay in touch with your work?

Brent Sullivan (40:14.004)
I’m sorry, I’m very obnoxiously on LinkedIn all the time. This makes some folks shame on us. We’re on the cringe platform, but just having a ball there, it’s fun. But yeah, LinkedIn, you can just search for me, just Brent Sullivan. And then my blog is taxalfainsider.com.

And I’m in market three times a week. So new stuff, and this is usually expert interviews. It’s oftentimes really, I think, some novel research on

Frazer Rice (40:17.527)
Me too.

Frazer Rice (40:23.158)
Exactly.

Brent Sullivan (40:43.95)
These issues specifically. I’m really talking about core portfolio management and nowadays spending a lot more time in estate investigations. So this is highly relevant for me anyway. You can find me at TaxAlphaInsider.com.

Frazer Rice (40:55.563)
Well, and for listeners and watchers on the show, I highly endorse it. learn a lot every time it pops up.I’s got a nice little dose of humor attached to it too, so it’s a lot of fun to read.

Brent Sullivan (41:08.304)
Yeah, mean, you know, we’ve got to keep it light, serious. I mean, this work is deadly serious. We need a refresher every once in a while, just because it’s, yeah, because it’s hard work.

Frazer Rice (41:20.153)
No question. Brent, thanks for being on.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/Further Reading on the Wealth Tax

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In this conversation, Frazer Rice and PAUL HOOD delve into the evolving role of trustees, particularly in the context of Delaware’s new Well-Being Trust Statute. They discuss the broader responsibilities of trustees beyond mere asset management, emphasizing the importance of understanding beneficiaries’ needs and the implications of well-being provisions. The dialogue highlights the challenges trustees face in balancing the interests of multiple beneficiaries, the potential liabilities associated with well-being services, and the necessity of having clear processes in place. The conversation concludes with reflections on the complexities of trust management and the importance of careful drafting in trust documents.

https://youtu.be/9LFt6HsjpWMhttps://open.spotify.com/episode/4uqhoeXtfaIIWLbKhd62ej?si=nDTf-09bRSWjT0O_YKX49gTakeaways* Trustees have a broader role than just managing assets. * The well-being statute in Delaware is an opt-in provision. * Balancing the needs of multiple beneficiaries is challenging. * A clear process is essential for trustees to navigate their duties. * Well-being provisions can complicate traditional trust structures. * Trustees must be cautious about the liabilities they assume. * Decanting trusts can lead to unintended consequences. * The intent of the settlor is paramount in trust management. * Trustees should document their decision-making processes. * Effective communication with beneficiaries is crucial.

Sound bites“I would never opt into 3345.”
“Decanting is not that easy.”

Well Being Trust Chapters00:00 Understanding the Role of Trustees
04:45 The Concept of Well-Being in Trusts
10:33 Balancing Beneficiary Needs
17:53 Navigating Well-Being Responsibilities
24:30 Challenges and Considerations in Trust Management

Well Being Trust TranscriptFrazer Rice (00:01.078)
Welcome aboard, Pop.

Paul Hood (00:02.648)
Great to be with you today.

Frazer Rice (00:04.598)
The Delaware legislature has tried to give us some new tools to give us a holistic approach to planning for trustees and for beneficiaries. Help us sort of think through first from a function perspective what trustees do. I always thought of it as, you know, they held assets for the benefit of beneficiaries and then with that they have to administer them, they have to invest them, and then they have to distribute them. Have we got that about right?

Paul Hood (00:35.34)
Well, I’ve always had a broader view of trustees. Jay Hughes, a good friend and fellow pilgrim in this field, he talks about the trustee as a persons with confidence and like a trainer, an elder, and for a lot of beneficiaries, and I believe trustees, especially in discretionary trusts,

The trustee needs to be that. There needs to be some attention to the person of the beneficiary, not just the finances. Send us a budget. The distributions committee who’s in secret will meet, and we’ll decide how much we’ll give you.

Well, I think a trustee’s duty is broader than that. Or let’s say this, you can meet the minimum requirements of being a trustee by doing what you said, but I think the very, very best trustees are persons with confidence.

Frazer Rice (01:41.17)
I agree with that. The problem is identifying the people who mix the temperament and the talent and then paying for them. So to that end, with those different functions, the world of bifurcation came about. Directed trustees where people got to be good at certain things. Maybe you had a good investment person, you had someone who was with the family who understood the dynamics from a distribution standpoint.

and then the administrative side making sure the I’s are dotted and the T’s are crossed as far as the administration’s concern. How do you view that in the evolution of the trustee function?

Paul Hood (02:17.612)
Well, it’s interesting because I haven’t been in practice.

since well the 20th anniversary of Hurricane Katrina is August 29th of this year. My life changed that day. I didn’t know it but it did. And I left Louisiana. So I haven’t practiced law in 20 years but I remember the directed trust percolating up and it was driven by the investments. People wanted the bank trust or the institutional trustees but they hated their investment performance.

So the compromise was, okay, we’ll reduce our duties because the bugaboo was always whether it was a proper delegation of investment authority. The trustee could still be held liable for what if the court thought it was an improper delegation, okay, or oversight of the delegation.

They started out investing right, but then they got real heavy in crypto and foreign flips. you can go there. So we’ll take fewer basis points, but we don’t have the liability for that. That liability is not delegated. We have segregated it. But enter the Wellbeing Trust, and this is only true in Delaware in the Wellbeing Trust statute because it’s an opt-in. Once you opt-in, you are required, the trustee and all the advisors are required to perform that those well-being, provide those well-being services. Now the question is who is responsible for providing them.

Frazer Rice (04:16.891)
Let’s step back for a second. The well-being provision, which is designed to give the trustee the tool to promote, improve, advance the well-being of the beneficiaries, which I think we can agree is a good thing in concept. What do we think of well-being as being? How is it defined? And what part of the function is it taking from the trustee’s perspective?

Paul Hood (04:45.228)
Well, I’m going to default back to, I think it was Potter Stewart who said he knows pornography when he sees it. I think that’s the same with well-being. I think things are either obviously well-being related and are not. And there’s a continuum of them. But the whole concept, I think it’s just pretty much to promote the betterment, the improvement and the just the the maintenance personal maintenance of a trustee i mean of a a beneficiary

Frazer Rice (05:26.269)
So how do you think about it from a trustee’s perspective when there are multiple beneficiaries and maybe the wellbeing for one is not the wellbeing for another? Very often a trustee has to balance a lot of different equities and I don’t mean that from a stock perspective, sort of taking care of one possibly at the expense of the other with the trust’s assets. How does the new statute in Delaware address that?

Paul Hood (05:54.222)
Well, and you raise an excellent point. what you said, you were talking about equities, okay? What it really is, is the trustees duties. And the big one is the duty of impartiality. And arguably, the 3345 statute, and I’ll call it that, that’s the wellbeing statute. That’s the opt-in. They have another one and it is to provide, it’s an immediate power. It was added to 3325 as number 32 in the Delaware trust code.

And it allows almost the same things. It empowers trustees, now not the advisors. It doesn’t say anything about the advisors in that statute. Whereas 3345 includes, and remember in Delaware an advisor is like the trust protector and the administrative trustee, that kind of thing.

They call them advisors. I don’t favor that language because I believe that they should all be fiduciaries. So I call them trustees because I think in the end they’re going to be held, especially if they’re professionals, they’re going to be held to that standard as it is. But that statute was immediate when the law went into effect. So they’re authorized to provide those services now.

For me, would provide, I would never opt into that statute. Because why do you want to take on a mandatory duty that’s unclear?

Frazer Rice (07:30.12)
That’s it.

Frazer Rice (07:34.908)
Yeah, it sounds like a Roach Motel where you get in but you can’t leave. That’s right. That’s right. So if you were to encounter one of these trusts in the wild and you’ve got multiple beneficiaries, but let’s say three, one of them needs a lot of help. Another one could use the help and then the other one is completely self-sufficient. How do you…

Paul Hood (07:40.35)
Eagles Hotel, California. You can check out anytime you like, but you can never leave.

Frazer Rice (08:02.693)
sort of build a process around that so that you are being impartial but you are invariably taking away from potentially the corpus of the trust in order to effectuate different goals as they develop for these beneficiaries.

Paul Hood (08:16.782)
Well, it obviously starts with the settlors intent. And it’s the settlors intent first as set forth in the instrument. However, because this is not a court case where you’re construing, because I I used be an expert witness, know, construing, you know, problematic clauses in operating agreements, trusts, wills, whatever.

You, you, you, you construe that including more information you investigate. The trustee, let’s look more, because you look at the language and well it would authorize it here, but let me find out a little bit more. If the settlor is still alive, I would at a minimum also talk to the settlor, okay?

Also, if he or she is not still alive or sentient, I would investigate. I would talk to other people. I would make that into a process so that when you’re questioned down the road, here’s my process. Anytime you have a process, you’re better off.

When all that planning was done in 2012, you know, and we filed more gift tax returns. I was the only guy in the country saying, don’t. put your marginal wealth clients into anything big, irrevocable. I said, because I think this is gonna work itself out. And for six hours, I was wrong on January the 1st, 2013, but there were lawsuits.

And Jackson versus Colon was one of the cases and poor Colon, the lawyer got sued. because he didn’t have a process for evaluating whether his client had put too much or had retained sufficient assets after they did this planning. So it’s all about a process in the end. So instrument, settlor, and I would investigate and I would wrap it up into a process that was documented.

Frazer Rice (10:36.848)
So if I’m a clever beneficiary, I look at something like this and maybe if there is a HEMS standard, which made it imprudent maybe for the trustee to disperse assets to me, I might go to a wellbeing component of a trust and say, well, you know, maybe this is something that I could petition the trustee for assets. Is that an area of concern for you or is this something where those are two different things entirely and therefore not particularly related.

Paul Hood (11:10.998)
I think the latter. Well, first of all, obviously every beneficiary trustee relationship is different. And it’s governed first by the trust instrument. What is the beneficiary entitled to from a standpoint of distributions?

You know, do they get an annuity? Do they get a unit trust amount? Do they get fiduciary accounting income? Are they only a discretionary beneficiary of principal and or income? You have to look at all of that. So if it’s something that isn’t covered, well then, you know, the answer’s probably no. Because while I think that the well-being provisions are similar to him’s, they’re not identical. And that would concern me. And that’s if I was drafting it.

I would not allow the trustee if it was subject to a HEM standard. And I’m not a big fan of HEM standards. I think they expose you to asset protection, problems. There a lot of things. And I’m just not a fan of it. I like wholly discretionary trusts or unit trust, annuity trust distributions. Easy or hard.

That kind of thing. for me, the well, and particularly if it’s an interested trustee, I would define it so it cannot, whatever wellbeing power is exercised stops at the Hems line, the Hems County line. It cannot cross over because then you’ve got a state, know, of course, if there is a state tax problem.

Frazer Rice (13:08.216)
Right. No, and to that end, you know, I was thinking about this as we were sort of leading up to this today. And, you know, from a prenuptial planning standpoint, I would think the well-being clause would frustrate sort of prenuptial planning with regard to the assets of that particular trust, because a good family lawyer would take a look at that and say, well, you yes, there may be discretionary elements that the trustee has, but overall of the well-being sort of transports not only to you, but maybe the rest of your family slash kids, that that should be part of negotiation in a divorce settlement. Is that something that’s popped into your head or am I fantasizing poorly?

Paul Hood (13:50.386)
Doesn’t that undercut the holy discretionary nature of the trust? And I don’t see how it doesn’t. Do you?

Frazer Rice (14:28.612)
No, it’s mandatory, it’s “shall” versus “may”, those two words are important. They’re important in other parts of law too.

Paul Hood (14:39.278)
Well, and the statute uses, the statute uses shall.

Frazer Rice (14:44.078)
Yeah, well, I agree with you then. it’s mandatory, mandatory does a lot of things to the word discretion for a trustee’s perspective. So point taken to be sure.

Paul Hood (14:53.23)
Well, I can tell you this. If I was running a Delaware trust company today, first thing I would do is I would never opt in to 3345. Not until the legislature fixes a few things.

The directed trust, sure that whoever clarifying who’s responsible. So if you have an administrative trustee and a distribution trustee and an investment trustee, investment trustee is probably not gonna be involved, okay?

It’s going to be one or the other two. And it’s going to depend on what the service is and how it’s treated. If it’s treated as distribution, would argue that the distribution advisor is the one who has the duty and the liability. But their statute right now does not protect, or at least the 3345 statute, does not protect those in that bifurcated

All we did when we started the whole idea of this type of trust is to basically segregate because trusts are the bifurcation of legal and equitable title. Beneficiaries have equitable title, the trustees have legal title and the duties. And we’ve just subdivided

legal title and those duties. But in the statute they all seem to get melded back together, commingled in a way. So I would not if for a directed trust there’s no way I mean the trust instrument would have to be so beefed up to make sure that was clear that despite what the statute says here’s here’s what our deal is but I’d feel better if they changed the statute.

Frazer Rice (16:55.331)
So it is a practical matter. Anybody who takes these roles on, takes on, know, with great power comes great responsibility, as Ben Parker told Peter Parker. You get these incredible amounts of power and responsibility and therefore liability. is a practical matter if someone has to, has to, mandatorily deal with

the well-being component here, whether as a distribution advisor or as a full trustee. How do you get around that? mean, how do know that you’re picking the right advisors or not subjecting beneficiaries to the drug addiction industrial complex or the psychological industrial complex? And maybe a better way to put it is if you get going and you’ve made a mistake, how do you fix it or…

Can you turn it off later if the problem is solved but you have a mandatory duty for well-being?

Paul Hood (18:01.782)
Well, and that’s a great question. And your comment about the addiction complex, I call most treatment programs 28-day spin cycles. And that’s why the rate of success is so little and so low. So I get that. Yeah, how do you turn it off? And what do you do if a beneficiary says no thank you?

Frazer Rice (18:16.033)
You

Frazer Rice (18:32.216)
Yeah, that’s a good question too. I was just gonna say…

Paul Hood (18:34.796)
Well, I’ll give you another one. I’ll give you another question. What if five years from now you’ve opted in and a beneficiary says, you know, I’ve been damaged because you should have provided me this service three years ago and I’m going to sue you or try to remove you for breach of your duty to provide those services because you didn’t guess right.

Frazer Rice (19:01.291)
Right.

Paul Hood (19:01.516)
And I think that gets to where, I think that gets to your concern about all this. How’s the trustee gonna know, right?

Frazer Rice (19:08.95)
Well, and you know, knew or should have known that, you what happens if the beneficiary lies to you, which happens in tough situations like that. It’s just a brutal one. I look at that and say that, you know, when, that function is melded with larger funding and distribution functions, I, I come to the conclusion, okay, why wouldn’t, why wouldn’t you have a separate trust if the grantor wants to

Paul Hood (19:17.814)
lot of

Frazer Rice (19:38.699)
provide for the wellbeing, why wouldn’t you endow, let’s call it a self-improvement trust or something like that with extremely limited functions and distributions and segregated from the bulkier assets so that you aren’t mixing those functions and creating a real quagmire for the trustee to navigate, you know, when they’re worried about selling the company on one hand and then taking care of this on the other.

Is this too many functions delineated in the setting that we’re providing here?

Paul Hood (20:14.402)
Well, I just did a webinar for Lionbird with Jocelyn Borowski from Duane Morris. She has written about well being trusts. She and her partners and firm worked in the committee drafting. I think Todd Flubacher was on that committee. That is, she made that point.

that you either could call out a part of a trust that is limited to the wellbeing or you create sort of a sidecar wellbeing trust. And I think that’s a good idea. One thing we did not get to, and I didn’t, and it really slipped my mind to ask, are

Trustee and you’re obviously much closer to Delaware than me sitting over here in Michigan and close to Motor City. Are trustees doing anything about this? Are they implementing these types of programs?

Frazer Rice (21:19.655)
From my perspective, yes. IThey have asked the trustees to fund or take assets and fund a variety of things, whether health or beneficiary education programs, governance programs, things like that. The short answer is yes, I think that happens all the time. I think they folded that into some of the distribution provisions.

I if I haven’t seen this specifically, but if I were a good trustee, I’d want a note signed by the various beneficiaries that are participating in this saying that we’re doing this to provide an improvement in this or that. We’re doing it in a way meant to further family goals and sort of set out by the grant or somewhere. But I don’t know of any.

corporate trustees that are doing this other than maybe as an add-on service that is separate and apart from their trustee function, which I bet they probably take great pains to put up firewalls so that the decision-making on the fiduciary side is a little bit different from the service provision on some other side.

Paul Hood (22:31.176)
I think that’s probably right. Again, right now, if I was a Delaware trustee, it would be no opt-ins and by no, even if you wanted to opt in, never, never, never on a directed trust, which now most trusts are. You know, about almost 30 years ago,

Frazer Rice (22:53.12)
Sure.

Paul Hood (23:00.474)
I spoke to a national group of trustees of a bank that is no longer here. And I told them, if y’all make the mistake of going to 1-800-TRUSTEE and quit making the hard decisions, you’re going to go the way of the dodo bird. There about 400 of them in the room. And they looked at me like deer in the headlights.

And I was right about them because that’s essentially what they went to and then they went down. So, and this is a big national bank. it’s, is, this is, these are the times that tri fiduciary souls and, and,

Frazer Rice (23:49.749)
at fiduciary insurance providers too. I’m sure.

Paul Hood (23:53.678)
Well, that’s exactly right. And you had mentioned about could you, you know, could you.

get out of it, could you change it? Well, one obvious way is a non-judicial settlement agreement. We all get together and we force King John to sign the Magna Carta on Runnymede. We go from there, but I can see accountings going forward. When they ask you to sign off, there’s gonna be a wellbeing accounting.

And it’s going to include things like, okay, here’s the services we provided. Here’s the values, blah, blah. And that’s all the services we believe you need. And if you need something else, you need to let us know. I’d try to flip as much of it back on the beneficiaries as I could.

Frazer Rice (24:51.141)
and when you open up the idea of qualitative benchmarking to the trustee function, if I’m wandering into a trustee situation personally, I’d be going, no thanks. Hence the term qualitative. There’s no amount of money you can pay me to guess whether someone will sue me 15 years from now.

Paul Hood (25:04.438)
Right, right, right, because you can’t quantify your risk.

Paul Hood (25:18.892)
Well, you’re exactly right. And I think that’s where they ultimately are going. I don’t know, because I haven’t been able to investigate and Columbo the information out yet. Because I will go back and pardon me, one more question for you. What I want to know is why…

did they, what prompted them to think they had to act then with a quickly enacted law? And my suspicion is the big banks, they all have their upper end concierge service. I Wells Fargo’s Abbott Downing, know, Ascent, I think is US bank.

And those groups, Merrill has their own, those groups have PhDs in family psychology and wealth psychology and everything else. They’re providing those services now to their people. And I think the Delaware trustees want to make sure they don’t miss out on that train. But with that comes a lot of liability, as you said.

Frazer Rice (26:35.029)
Yeah, and also they had to find a way to pay for it. Those services aren’t cheap. Those people are expensive. And invariably, the trust tends to be a pot of money to compensate for that and maybe the only pot of money. And if it’s unclear whether that’s an allowable distribution, mean, that to me, I agree with you, that’s probably part of the reason they did it.

I think there’s a good reason they did it, which is ultimately providing another tool in the toolkit for the trustee to help with the long-term wellbeing of the beneficiaries. We’ve gone through a lot of different references before. The road to hell is paved with good intentions here. I think we’ll probably agree that there might be some better precision with the drafting here that could make this a better tool for everyone involved.

Paul Hood (27:29.326)
Well, I will tell you another area that and Jocelyn agreed with me on this. If you read the unit, the Delaware’s version of the old UPIA. because Umifa replaced it. Okay. If you look at their law, it’s unclear where to charge those well-being payments, whether they’re deductions or distributions .

If you look at the new Umifa, they charge 100 % to principal for those services. Jocelyn said under Delaware law right now (and this is something she agreed that they needed to change) those services are all 100 % chargeable to principal under current Delaware law. So that’s another area they need to change.

Frazer Rice (28:28.659)
Crazy stuff.

Paul Hood (28:28.81)
You did let me also go back to something that you mentioned about turning it off. Okay well obviously besides the NJSA that we talked about there’s also the possibility people say just decant it out. Well be careful before you decant because people are getting bad news.

in state fiduciary, I’ve seen 18 adverse decisions in the last three years in state fiduciary duty actions. And they’ve involved more than just the trustee. A lawyer in an Illinois case got zapped by his malpractice carrier in a decanting.

They said it was an intentional tort and excluded from coverage. Another lawyer got disciplined for an improper decanting. People are saying, this is easy. Just pour the bottle in, new trust. It’s not that easy.

Frazer Rice (29:24.391)
Yikes.

Frazer Rice (29:39.059)
Perhaps for the unwary. Paul, great stuff. Let’s pause there because we can probably go on for two more hours. How do people find you and your writings?

Paul Hood (29:48.318)
well, have a lot of webinars and articles at lineburgservices.com. My website, paulhoodservices.com has a lot of my latest articles, as well as some, real interesting checklist, one of the best client development tools that I’ve ever seen and I developed it and I bet it’s for free on my website is my buy sell options grid. And there’s a lot of other stuff there. My email is Paul at Paulhoodservices.com. I get questions from people mostly all over the country, but occasionally from foreign countries. And so, and I’m, you I always respond.

Frazer Rice (30:30.803)
Great stuff and go Tigers. Go G-E-A-U-X.

Further Information on the Delaware Well Being Trust StatuteTodd Flubacher Article

INDIVIDUAL TRUSTEESHIP

Keywords

trustees, well-being, Delaware trust code, beneficiary needs, fiduciary duties, trust management, directed trusts, trust responsibilities, estate planning, trust law

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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We go inside the the enormity, complication, and notoriety of the BEZOS PRE-NUP AGREEMENT with divorce attorney, MARILYN CHINITZ of BLANK ROME.

https://youtu.be/nMMp6He056Yhttps://open.spotify.com/episode/39KMPMRhwGfYbdZVMJHEan?si=36c5c8a927bf4a6fOutline of the ISSUES INSIDE the BEZOS PRE-NUP * General Concepts * What happens without a pre-nup? * Process for disclosing assets * Previous marriages and those pre/post-nups? * Community vs Equitable Distribution (Does the Pre-Nup contract this away?) * Separate property * Outside trusts? Estate Planning? * Pre-nup vs ultra high net worth pre-nup * Financial Considerations (and Complication) * Non-Financial- NDA, media activity, scope of negotiations, data and tech issues * Let’s go through the General Fact Pattern * High Profile * Asymmetric Net Worths * Kids? * Which state is used for choice of law? Portability? * How do you make sure this has teeth? (Coercion penalties) * Spousal support / alimony? * Escalator or sunset clauses? * Disqualifying or “infidelity” or “weight gain” clauses? * What happens if children? * Other constituencies – charities, businesses, political causes etc * Integration with estate documents, life insurance, other vehicles * Is there a check-in every five years? * What else can we learn from what is inside the Bezos Pre-Nup?

Transcript Frazer Rice (00:02.07) – Inside the Bezos Pre-Nup

Welcome aboard, Marilyn.

Marilyn Chinitz (00:04.088)

Thank you, really nice to be here and nice to talk to you about what’s inside the Bezos Pre-Nup.

Frazer Rice (00:07.541)

We sort of regaled ourselves with a mutual friend and we’re already, I feel like we’re already related. That’s right. So we’re going to talk a little bit about probably one of the highest profile marriages in the world that just happened with the Bezos Sanchez union and get inside the Bezos pre-Nup. But for just for a little bit here, let’s talk about what happens in a sort of family law divorce setting.

Marilyn Chinitz (00:13.39)

Your best and glorious buddies are ready.

Frazer Rice (00:35.232)

With general concepts because we’re going to be diving into some specifics with the case study here. What happens when something goes wrong and we have a divorce that happens without a prenup?

Marilyn Chinitz (00:46.734)

So it depends what state you’re in. If you’re in a state like New York, then we have equitable distribution laws. If you’re in a state like community property in California, then those laws are very different. So if you have no prenup, and a lot of people don’t because they start their marriage with very little assets, and everything that you acquired during your marriage is now subject to a division.

Frazer Rice (00:49.569)

Of course.

Marilyn Chinitz (01:15.918)

And what happens is you start to trace the assets and you look at, what do I have? You look at homes that you purchase, real estate that you purchase, stocks, securities that you purchased. It doesn’t matter in whose name the asset is held. It’s a marital asset if it was acquired during the marriage and it was not gifted or inherited.

If you come into the marriage with assets and you have no prenuptial agreement and you keep those separate property assets clean, and I’ll explain what that means. When they go up in value because you actively caused their appreciation, they may be subject to a marital claim, the appreciation aspect. If you… have an asset that went up in value because of passive reasons and you kept that asset separate, it will remain separate property. So let’s talk about an example. If I owned a building before I got married and that building was worth five million dollars and then I get married and years later I get divorced, that building is now worth twenty million dollars.

It appreciated by 15 million. Did it appreciate because of market fluctuation, because the market went up, real estate did better? Or did it appreciate in value because I managed it, I collected the rent, I made sure the repairs were done, I made renovations to the building, and therefore it went up in value. If it went up in value during the marriage because I actively did something,

I renovated, I took care of the building, I managed the building. That appreciation from five million to 20 million is gonna be considered marital. Then the question is, what percentage does the other spouse get? Do they get 10 % of the appreciation or 50 % of the appreciation? If that asset went up because of market fluctuation, I sat back, I did nothing, the market went sky high.

Marilyn Chinitz (03:38.905)

Then that property will remain separate property and the appreciation is separate. So you have to look at those different factors. But other than that, if you come into the marriage with no assets and you create a marital estate and you have no pre-nup, that marital estate is going to be divided. Now the question is, how is it going to be divided? If you’re in an equitable distribution state,

Frazer Rice (04:04.907)

Right.

Marilyn Chinitz (04:08.718)

What does that mean? It means what a particular judge feels in a particular courtroom on a particular day. What does equitable mean? It’s completely subjective. So did the other spouse take care of two, three children while you were managing that property? Did the other spouse work but supported you? Or did the other spouse do their own thing and had no real contribution? It’s very fact specific.

And if you can show that the spouse really contributed in a meaningful way while you were running your business or running your properties, I took care of the children, I took care of the home, I took care of you, then the court is likely to give you a more substantial percentage interest of that appreciation. And in New York, for example, equitable, and then we’ll talk about community, California, for example, generally,

Bank accounts, retirement accounts, stock security accounts are going to be divided pretty much 50-50. Where the court will not give 50-50 is if it’s a business. And then the court can go anywhere from 10%, 15%, 20%, up to maybe 40 % in unusual cases. What do those cases look like? They work together in the business.

They took care of things together. It’s very unusual for a court to give 40 % interest to the non-working spouse unless they were really actively involved in the business. Now, conversely, take California, which is a community property. When you get married and you acquire property in California, that’s 50-50 off the bat. Now, why does that become really important?

We’re seeing a lot of cases where people have really created a lot of wealth in their marriage and they are correctly and smartly putting some of that wealth into trust. They’re gifting it to a trust for their children. New York, for example, is a title state. A title state means if I own the asset during my marriage, I can sell it, I can gift it, I can do whatever I want with it.

Marilyn Chinitz (06:33.718)

As long as there’s no divorce. If you are in a community property state, you can’t do that because that person, that spouse already owns 50%. It’s almost jointly owned. So you can’t give away a marital asset unless you consult with me, your spouse, unless you ask me, is it okay? So in New York, if I wanted to take an asset,

an interest that I own during the marriage, it’s a marital asset, but because there’s no divorce, there’s nothing that prohibits me, I gift it to a trust, I have the right to do that. In California, I may not have the right to do that unless I got my spouse’s consent. So, number one, what’s critically important is you need to know what the laws are in the different states. Now,

Sometimes people get married. They get married in New York. They enter into a prenuptial agreement in New York. But now they move to California that has very different laws. And if they thought they were going to move to California, then you want to make sure as a New York lawyer to advise the client, we need to engage California counsel. We need to find out what their laws are so that your prenup is portable, it could be enforced in a different jurisdiction.

Frazer Rice (08:03.559)
So choice of law, obviously very important. Then I would say sort of the process and hygiene around using assets and deciding what happens jointly versus what stays separate is something that’s important to manage going forward. How do you think about that with clients?

Marilyn Chinitz (08:20.346)
So, I mean, interestingly enough, when I do a, let’s talk about prenups for a minute. Because when I do a prenup for a client, we have a check-in every year. We go to lunch. We talk about what changes, what’s going on. Does the agreement need to be modified? So many times people will sign a prenuptial agreement, they put it away, they don’t even know where they put it. And 20 years later, sadly, somebody triggered.

the terms of that agreement. Now they pull it out and they go, my God, everything’s changed. When we signed that agreement, he was only worth X amount. He’s now 20 times wealthier, but I didn’t increase anything. That’s not fair.

If the agreement is…an agreement that you entered into with the advice of counsel. If the agreement had full financial disclosure, if the agreement was negotiated, if you had your own counsel, etc., all the bells and whistles, it may be an unfair agreement, but it’s going to be enforceable unless it is unconscionable. So what does unconscionable mean? Unconscionable means shocking to the conscience.

So I represented, and I could say it because it was in the media, Liba Icahn, married to Carl Icahn. And he had a prenuptial agreement prepared, and she signed it. Years later, he decided he wanted a divorce. And she argued to the court, I was not her first lawyer. I was not her second lawyer, I was her third lawyer. And I’ll tell you why that was important.

She argued to the court that the agreement is unconscionable. He’s now worth several billions of dollars, and all I got was X amount of dollars. That’s unconscionable shocking to the conscience. And the court, lower court said, well, I’m sorry. That’s a lot of money for most people. And by the way, in the statement of net worth, there’s a notation that there’s a diamond emerald necklace worth

Frazer Rice (10:23.239)
A lot!.

Marilyn Chinitz (10:42.56)
A million and a half dollars. So coupled with that, there’s nothing unconscionable about your agreement. Now, it was appealed, but the more important thing is that the court said the following. You are barred by the statute of limitations to set aside the agreement. So years ago, you had six years to set aside a contract. Now, if you’re happily married,

You’re not going to wake up and go, hmm, honey, it’s six years. I got to set aside that agreement. You don’t do that. And so finally, a judge in New York County, Phyllis Gangel-Jacob, wrote a decision that said, wait a minute, that’s unfair. We’re going to toll the statute. Because people, they’re happily married, they’re not going to wake up and say, I’ve got to change the agreement.

Frazer Rice (11:34.961)
Right.

Marilyn Chinitz (11:35.151)
You’re going to toll the statue until there’s a triggering event. And then you have six years to set it aside. Now you would think a seasoned lawyer would know that we talked about knowing the law in different states. You’ve got to know the law in your own state. So in New York County, the first department, Phyllis Gangel Jacobs said, toll the statue.

That would have meant that Mrs. Icahn would not have been barred by the Statue of Limitation. She could have brought her case to set aside the agreement. In Westchester County, that’s the second department, they had a totally different law. They went by a six-year Statue of Limitation.

So had her lawyer made inquiry about how that…ruling how the statute of limitation works in the different departments, they would have probably started the action in New York County because they owned a home in New York, not just in Westchester. So when we were chit chatting before we went on, I said to you, it’s all about being in the right hands. You can’t be sloppy in this business. It’s too complicated. It’s too detailed.

You’ve got to have an attorney who really goes out of their way to find out what’s the best jurisdiction, what are the different rules, what are the different laws. I had a client in Hong Kong and she would have jurisdiction in New York or Hong Kong. We then retained Hong Kong Council to find out what would be the benefit if we brought the action there versus here.

I had a similar situation a year ago where I had a client who had jurisdiction in Germany and jurisdiction in New York. That was critical because her husband came from a very wealthy family and there was a lot of separate property. In New York had she brought the action, the court would have said separate property, you don’t get any portion of it. It’s remained intact, no commingling, no transmutation. That’s his. In Germany, they throw everything into the pot. So I called German council and I said to her, you need to go and pursue this in Germany. It was the best decision because in Germany, she had the access to all the assets.

Frazer Rice (14:04.732)
Again, it’s so hyper-specific. You’ve got to know, as you said, not only the state, but in the state, how things work. Whenever I wouldn’t go as far as to say I advise, I really more issue spot. I had a friend of mine, it wasn’t a client, but basically New York, Florida, Dallas, Texas, and then got married in Ireland. I said, you’ve got a lot of things to work out here because I’m not sure which one’s the best.

Marilyn Chinitz (14:11.416)
Correct.
Yeah.

Frazer Rice (14:32.63)
And it turned out to be a good thing for him five years later on when it didn’t work. And he ended up using Florida for whatever reason that was the one to choose. So let’s apply.

Marilyn Chinitz (14:44.654)
You reminded me of something that I did want to bring up because it’s very interesting. So a lot of people will get married and they’ll have these big weddings and big affairs and invitations and come to our wedding and it’s a destination wedding and there is all the bells and whistles. But what happens if you didn’t have somebody to really officiate the wedding? It was someone who just signed up with a website.

Marilyn Chinitz (15:12.556)
What happens if you did not get the marriage license? And we’re seeing a lot of cases like that, where people thought they were married and they’re not married.

Frazer Rice (15:24.008)
Those technicalities could just cave your knee in.

Marilyn Chinitz (15:26.348)
Right. that’s right. So then you look fact specific. Well, let’s see what they did inside the Bezos Pre-Nup. Let’s see how they held themselves out. So it is so many complexities. And that’s why it’s really important that you need to have an attorney who’s in the know who asked you these questions.

Frazer Rice (15:42.747)
So let’s apply some of these concepts that are inside the Bezos Pre-Nup. First of all, high profile. So I imagine in the prenup that you’ve got not only the financial, which has its own elements to it, but the non-financial, the NDAs, media activity, what the scope of negotiations are, even so far as the things like data and tech issues and privacy. How do you think about that in those big high profile cases?

Marilyn Chinitz (16:08.782)
I will tell you, I was in Italy at the time they got married in Italy. And it was like on every station in Italian, but it didn’t matter. was all you’re doing is looking at all these beautiful people and beautiful dresses. And it was very elaborate. The thing that I found very interesting is what happened before the wedding? So what happened before the wedding is Bezos, I think, sold

Frazer Rice (16:14.2)
Right.

Marilyn Chinitz (16:37.294)
Over three million Amazon shares, generate about $700 million. Was that used for the wedding or as a gift or whatever? But I thought that was an interesting fact. So when you have a prenup like their prenup, number one, it was negotiated over a very extended period of time. And it was viewed not by one lawyer, not by two lawyers, by a team of

Frazer Rice (17:02.797)Whole fleets!

Marilyn Chinitz (17:05.966)
Trust and estate lawyers, tax lawyers, real estate lawyers. This was structured as if it was a business merger. And it was carefully structured to withstand any kind of scrutiny, because there’s a lot at stake, obviously. He had already gone through a divorce where there was no prenup. And that resulted in a $38 billion award to the wife.

I think that was great. because she started the company with him. But now you have a different situation where he had this massive wealth long before he got married. Amazon stock, Blue Origin, Washington Post, real estate, and the future appreciation of those assets, just to name a few. There’s a lot to protect here. And so clearly, there’s going to be a massive amount of financial disclosure.

Because every prenup has to be accompanied by full financial disclosure. You can’t wave something when you don’t know what you’re waving to.

Frazer Rice (18:13.657)
Question. So, Lauren Sanchez gets a book of his finances that’s two feet thick minimum. At what point, the detail can be overwhelming and the marriage may not have ever happened if there was, let’s call it complete understanding of his financial situation. At what point do you sort of say, okay, here’s generally what we think he’s worth and therefore that number underpins?

Marilyn Chinitz (18:41.868)
Well, here’s how you do it. It’s not that complicated. It’s called a title agreement. Everything’s in my name is going to be mine. Anything in your name, Lauren, will be yours. What will be marital is what we put in joint names. It’s very clean way of keeping it.

So if he buys interest in future companies and private investments, properties, et cetera, and he puts it in his name, then under that title agreement, it’s his. It doesn’t get sloppy. If she purchases something, it’s in her name, it’s hers. If they purchase something together and they put it in joint names, it will be a marital. But he may say, I put in some separate property. I get that back off the top, it comes to me.

Frazer Rice (19:32.706)
So once we get that in place, the idea of if something were to go wrong five or 10 or 20 years from now, the concept of alimony or spousal income or any other sort of payout, how does that happen in the negotiation?

Marilyn Chinitz (19:51.159) Inside the Bezos Pre-Nup
So, you know, you have to look at, let’s put it this way, if Lauren Sanchez is gonna walk away with $400 million, she’s not getting support, right? That’s obvious. And we know she’s not walking away with $20 million. You could have in the agreement that for every year that we’re married, I give you a million dollars, that’s your separate property, you do whatever you want with it. That’s not an uncommon situation for very wealthy people.

But what he wants to do is to make sure in the agreement that she does have wealth so that it’s a fair agreement and that he does create marital wealth that they end up sharing. So I’m sure some of the houses and I believe that they already have homes that are in joint names under the agreement will probably be a marital asset. So off the bat she’s probably going to end up with a significant amount of wealth.

If this marriage lasts a long time, do they put in a sunset clause? Most likely not. know, sunset clauses can be very dangerous and clearly under the law, he’s entitled to all the separate property because he earned it long before he ever met her. So I don’t expect that there is a sunset clause in there. But let’s face it, you can gift your spouse whatever you want.

But it doesn’t have to be in the agreement. So if he is so happy and the marriage is fantastic and they live a very long time, he may never look at this agreement and he may give her a substantial amount of assets jointly or in her name and make it very, very fair. What happens though, a prenup is not only what happens in the event of divorce, it’s also what happens in the event of a death in an intact marriage.

I’m sure that he wants to fully protect her. If they’re not divorced and God forbid he dies and it’s an intact marriage, there could be a marital trust that’s set up, you know, that has $200 million or $400 million or more. She gets the interest on that so that she’s well taken care of for the rest of her life. And, and, you know, everybody says that he’s an incredibly kind, generous person.

Marilyn Chinitz (22:18.156)
I’m sure he’s also made provisions for her children inside the Bezos pre-nup and estate planning.

Frazer Rice (22:21.111)
How does this integrate with the other pre or post-nup or the divorce settlement with the first wife and then with those estate planning documents? That to me, you’ve got a conference room with the marital family law attorneys, the estate planning attorneys, her attorneys. How does everybody stay organized on that front?

Marilyn Chinitz (22:45.774)
So it’s something that we do all the time and you separate it out. Look, there’s a lot of issues that get involved in these kind of agreements and settlements and as I said, a business merger. There are tax issues, right? So if he gifted her anything before marriage, that’s a taxable gift. So…

The estate lawyers know that nothing should be given to her until after their marriage. And then these trusts are very sophisticated. And you separate out what’s trust related. When you put assets into a trust, they’re no longer part of the marital estate. They now belong to a separate entity. And so these trust and estate lawyers carefully craft trust that are going to accomplish different things.

One, could be to take care of a spouse’s health, education, welfare. One could be to distribute property or principal. It’s not uncommon. It’s very common when there are agreements like this that you have people who are of extraordinary wealth.

Mackenzie, the prior wife, has nothing to do with this at all because she got her Amazon shares. And I’m sure those shares now are worth probably $180 or $200 or $300 million because they’ve gone up. But the first wife issue, there’s no issue. If you got $38 million, you’re not a support candidate. He doesn’t have to consider it that. So this is really being looked at as if there are no other factors involved.

But this is probably why the negotiation of this agreement took place over a long period of time.

Frazer Rice (24:44.802)
For the some further down the pike certainly not at the Bezos level but let’s say at the high net worth level where you’ve got outside trusts that you that you don’t have ready access to there’s a trustee that can make payments at a discretionary basis. Do you have to be careful as far as how you receive money that’s distributed from a trust so it doesn’t get tainted ultimately. The other spouse if they’re divorcing that that’s not part of, you know, maybe a standard of living that they’d become accustomed to.

Marilyn Chinitz (25:18.836) INSIDE THE BEZOS PRE-NUP
That’s a very, very good question. So I’ll give you an example.

Joe and Mary marry. Mary comes from a wealthy family. Her family set up a trust and put $20 million in that trust for her, for her benefit. And during the marriage, he made a lot of money.

Marilyn Chinitz (25:42.2)
I’m sorry. During the marriage, he made a lot of money. They lived a good lifestyle. Her parents would on occasion distribute money to her. But it was a discretionary distribution. 20 years later, they divorced. And he said, I don’t want to pay you any support. We’ll divide up the assets, but you get no support. And the reason why you get no support is you’ve been getting distributions from your parents. That’s more than enough to take care of your expenses. And she said,

That’s not fair. It’s discretionary. I don’t know when my parents are going to distribute. I can’t force them to distribute. And therefore, I’m asking the court for support. Well, the court agreed with her. The court said it’s a discretionary trust. And therefore, we can’t she can’t bank on when she’s going to get it because she may not get it. You must pay support. So the court will look at again, fact specific.

Are they discretionary or are non-discretionary? If she was getting distributions on a regular basis, the court would impute that, its income to her, they would consider those distributions because they’re non-discretionary. She’s getting them, she could rely upon them. She could use it to pay her own expenses and her own support.

Frazer Rice (27:08.766)
Is it good hygiene, I guess, to have it go into an account in her name as opposed to a joint account?

Marilyn Chinitz (27:16.842)
If you want, well see, you’re raising really good questions. Here’s why. If you want something to be separate property because of the gift of an asset, if you put it into joint names once you get it, you’ve now commingled it. You transmuted what was separate and you’ve now made it marital. So if you get a distribution from a trust or a gift,

You’re going to have to put that in a separate account in your name only. And let’s say you buy stocks and your husband works for Morgan Stanley. And he says, well, wait a minute. I can trade that account for you. I’ll make it go up in value. Once he does that, he’s actively contributing to the appreciation. He will now have a claim. I caused that account to go from 800,000 to 5 million. I want a piece of the appreciation.

So when I said to you earlier, I meet with clients a year later, and it’s really to say, keep your assets separate. Do not commingle them. If you did, then you may have lost them. What does the financial circumstance look like now? People can amend a prenup. They can enter into a postnup. But you’ve got to look at the agreement to know what you signed. If you look too late, it may be too late.

Frazer Rice (28:41.63)
So I hate to wind down on this because we’ve gone through and there is a ton of unbelievable information here. Most of us do not have the Bezos Sanchez wealth, not only the asymmetry, but the size that we’re talking about here. What are some good lessons for people to take away? Either going ahead and marrying or if circumstances changed after the marriage?

Marilyn Chinitz (29:07.63)

So I think there’s so much wealth of information out there. I think number one if you are I Think prenups are great. First of all, why because you learn about the other person’s or or debt So a lot of times people live a very lavish lifestyle. They have a beautiful apartment. But you don’t know if there’s a mortgage on that apartment. They have a beautiful home in the Hamptons but is at their home. They drive a fancy car, but is there dead on it.

So when you enter into a prenup, you have to make full financial disclosure and all you find out, wait a minute, I thought you own that apartment. You don’t own that apartment? Or you bought that? Did you borrow against it and it’s all debt? Or you owe this to your former spouse? And now all of a sudden you’re finding out the full picture.

You can make a decision, yes I want to marry that person, but you’re in the no. Being in the no is important on every scale. So if you’re to enter into a prenuptial agreement, number one, you want to get the best attorney, and you need to know and have the time to really negotiate the terms, you have to understand what do I want to accomplish? Do I want to create a marital estate? I recognize you came into the marriage, let’s keep that separate. I agree to that.

But anything that we build together, I want that marital. You take the time to negotiate. You don’t rush into it. Never sign an agreement given to you on the heels of a marriage. Do not feel pressure. You’re not doing yourself a service at all. So having good counsel, financial people, a good team of professionals, I find is super, super helpful. And then in terms of…

What happens after marriage? Again, stay in the know. Don’t tell me that you didn’t know that there was a mortgage on your house. That he refinanced three times and you signed the documents and you have no equity in the home. So ask your spouse, tell me what’s going on. Sit down every year.

Marilyn Chinitz (31:30.146) (INSIDE THE BEZOS PRE-NUP)
Can we look together and figure out what we have because if God forbid something happens to you I want to make sure the children and I are okay. Can we go and meet with a trust and a state attorney because we need to understand in case anything happens how do we set things up. If you just close your eyes and you bury yourself you’ve buried all the information and who wants to do that in life. I think no one should be afraid to ask questions nobody should be if you are then you’re in the wrong marriage.

But you have every right to know, what do we have?

What kind of debt do we have? How would we pay this off? How are we protecting ourselves in the event something happens? Should we get life insurance? Should we put some assets in trust so that it grows in the trust tax free? There are important decisions to make in marriage, just like there are important decisions to make in business. You don’t enter into a business transaction and sit back and hope everything goes well. You are a part of things and make decisions.

And that’s what you have to do in your marriage.

Frazer Rice (32:35.876)
Great stuff. Marilyn, how do our listeners slash watchers find you?

Marilyn Chinitz (32:39.51)
So I am a partner at BlankRome, B-L-A-N-K-R-O-M-E. I’m in the matrimonial department. If you go on the website, you’ll see my name, my email, my phone number. And it was pleasure talking to you. Ask great questions.

Frazer Rice (32:54.268) Inside the Bezos Pre-Nup
Likewise, thank you.

Other Resources Related to Pre-Nup Planning and Inside the BEZOS Pre-NupLINKEDIN

FORTUNE ON INSIDE THE BEZOS PRE NUP

PAST EPISODE: ULTRA-HIGH NET WORTH DIVORCE WITH BROOKE SUMMERHILL

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/https://www.northcarolinadivorcelawyersblog.com/billionaire-vows-what-jeff-bezos-prenup-teaches-us-about-high-stakes-marriage-planning/Inside the Bezos Pre-Nup

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NICK MAGGIULLI, successful author of “Just Keep Buying” has a new book out called “THE WEALTH LADDER.” It’s a well done framework on how one’s relationship with money has to change as they move up the different strata of money and spending. We get into the book, how major life changes can shape our views, and the writing process.

https://youtu.be/pFmWTHlPTUYhttps://www.amazon.com/Wealth-Ladder-Proven-Strategies-Financial-ebook/dp/B0DKMPFTR3/OUTLINE* What does this book seek to accomplish? * How was the experience different from the last book? * Surprises in your findings? * Has getting engaged and married change your lens on any of these topics?

THE SIX LEVELS OF THE WEALTH LADDER * Level 1: Less Than $10,000 * Level 2: $10,000 – $100,000 * Level 3: $100,000- $1M * Level 4: $1M-$10M * Level 5: $10M-$100M * Level 6: $100M and beyond

TRANSCRIPTFrazer Rice (00:02.178)
Welcome aboard, Nick.

Nick Maggiulli (00:04.138)
Thanks for having me back, Frazer. Appreciate it.

Frazer Rice (00:04.911)
Easy to have you back and congratulations on two fronts. You just got married and you’ve also in a sense given birth to a new publication here. Tell us about the last few months and what it’s been like.

Nick Maggiulli (00:14.41)

It’s just been very busy, lots of things. We were doing wedding planning. We got engaged late last year and so wedding planning did that, had a few small celebrations. And now it’s book launch time. We’re delaying our honeymoon until the end of August because the book’s coming out now and the book’s out, so going from there. So it’s been fun.

Frazer Rice (00:38.094)
Big things happen in three, so it’s all coming together in a couple of months there. So I’ve been watching this book getting written over the course of last, I guess, two years now. What was the gist of the book for the audience here? What got you into the wealth ladder concept, having written Just Keep Buying?

Nick Maggiulli (00:41.374)
Yeah. So the gist of the book is that your financial strategy needs to change over time. I think it’s very easy to get caught in a certain set of habits and you can follow those to their logical conclusion. But if you’re trying to kind of go to the next level, so to speak, as I say in the wealth ladder, you might need to change your strategy. And there’s a ton of examples of this and it really depends where you want to go, how much wealth you want to accumulate, etc. Knowing all those things will help you better determine which strategy you should follow. That’s the high level of the wealth ladder.

Frazer Rice (01:30.574)
So as you were sort of getting into the research on it and you take a lot from your personal experiences, you’ve moved up the wealth ladder and have had to have a little self-discovery on that. What would have been the interesting findings in your own experience and in the research that you’ve had and maybe things that were surprising?

Nick Maggiulli (01:51.338) the Origins of the Wealth LadderI think this is something that I’m hoping a lot of people who have built wealth have come to the same conclusions, which is like as you build more wealth and have more money, like money doesn’t mean the same thing to you anymore. It doesn’t have the same value. Like I remember still being a, you know, semi-broke college student, you know, and then being a, you know, semi-broke just graduated college student, just started earning money and stuff. And I remember not wanting to pay for a beer at a festival because it was $9. And now that beer is probably 15 or 20 bucks.

But at the time I was like, this is crazy. I can’t pay for this. But looking back now, it was because I just didn’t have a lot of money and I was trying to be very careful about my spending today. Looking back, if I had known everything I know now, I’d be like, I can, I can buy the beer. I’ll be okay. Right. I don’t have to sneak these little mini liquor bottles and all the crazy stuff I used to do. Right. That’s like an example of like over time, just money changes.

Because of that, you’re like, yeah, I shouldn’t have been as, you know, I shouldn’t have cut back as much when I was younger. also just how you view it. I view it more as a tool now and less from like as a scarce resource. Like it’s a tool I can use to do things. I can help my family with it or travel with it. I can donate.

There’s all sorts of different things you can do with your money. And I think seeing it as a tool is really the important part. And lastly, it’s just how like the amount of money I need to change my lifestyle just keeps getting bigger and bigger. Right. We’re like, you know, ten thousand dollars back when I was 22 would have been like, wow, that’s like a ton of safety. I wouldn’t worry as much about money.

Today, $10,000 just doesn’t mean as much as it used to. And so it’s great. would still be, used, hand me a $10,000 check. That’s great. I’d be happy, but not even close to as happy or wouldn’t have as, as big of an impact on my life as it would have when I was 23. Right. I think everyone understands that, you know, what’s $10,000 to someone with a million. It’s not as big of a deal compared to someone with close to nothing. And so, yeah.

Frazer Rice (03:36.14)
Yeah, one of the things that, you know, as was reading the book, super interesting is the idea that as you move up the wealth ladder and more and more people become involved and are part of your responsibility umbrella in many ways. And it gets back to something I wrote in mind where I talk about how the liabilities increase geometrically even though the assets may increase linearly. Is there a process around when you start thinking less about yourself and wealth than you start thinking about a family unit and then… intergenerationally and beyond. It’s something that I think gets lost in many times in the sort of the financial planning shuffle, but it’s something that I think your book covers well.

Nick Maggiulli (04:23.454)
Yeah, I think the big error that people make in that front is thinking too much about the monetary and the financial piece of that and not the non-financial piece of it. So it’s like, Hey, my gosh, I accumulated, say $20 million and I’m going to have this for three generations and I’m planning this and I’ve trust and all this stuff. And you can set up all these structures and do everything perfectly right. But if you don’t have the right relationship with your kids, if you guys don’t have a shared set of values to build off of going forward,

It’s going to derail as soon as you’re gone because you know, maybe they’re just following your wishes while you’re here and as soon as you’ve passed, how do you know that those things are going to live on? You don’t at all, right?

At the end of the day, I think what’s more important is having a stronger relationship with your children so that you can talk about these things and listen to them, get their feedback and then plan your money more together instead of just doing it completely on your own and trying to create this control beyond the grave, right? And I think that’s what can create other issues within the family.

It’s the thing that people overlook because I think everyone’s just like, if I just get the wealth and it’ll last. And I don’t think the second part is true unless you have the value set up. You’ve thought about all these other things that people tend to overlook.

Frazer Rice (05:35.883) the Wealth Ladder and Couples
Joelle and Doug Bonaparte have come out with a book about wealth and marriage and money and you’re going through it right now having just been married. What’s been sort of the first takeaway in getting married and sort of the principles of the wealth ladder? And I guess another different way of asking that is how do you merge your way of thinking about these wealth concepts with what your wife is thinking about?

It’s not pinning you down specifically, you’ve been buried above. But at the same time, I’m sure you saw that where when you’re merging different views on wealth and as you sort of put a timeframe and a ladder frame to it, what have you found interesting in your research on

Nick Maggiulli (06:22.25)
Yeah, so I haven’t done too much research on couples in particular. I can tell you that my wife and I are very aligned on a of our finances. She’s actually more frugal than I am. I try and I even use, you she’s read the book at this point, right? Cause I, you know, I was writing in and I gave it to her.

Frazer Rice (06:34.526)
You forced her!

Nick Maggiulli (06:51.69)

Yeah. And for no, she wants, she wanted to read it on her own. So she wrote like a EPUB version of it and read it and stuff. She really enjoyed it. But I think for her, like she still has trouble spending money. And so I like came up with this spending framework using the 0.01 % rule, which is like, Hey, take your net worth multiplied by point zero one percent or divide by 10,000. It’s the same thing.

That’s the amount of money that your wealth is like generating daily in like a very conservative sense. Right. If you point zero one percent do that, you know, let’s say 365 days in a row. That’s about three point seven percent a year. It’s a very conservative return. And so if we assume that like you could spend that in theory every day and it’s like a trivial amount of money to you

So she’ll be like, oh, I don’t know if I want to spend 50 bucks on this thing. I’m like, baby, our net worth is over 500 K. So we don’t need to worry about that. Right. Because at 500 K, the point zero one percent rule would say you’re spending about 50 bucks a day on these like marginal purchases. So I’m trying to get her to not think through that. like, yes, obviously, your spending depends on your income. That’s obvious. But I think the marginal spending decision, hey, can I afford this thing? I like to think of it using this spending rule because it does scale very well with wealth. Right. And so

I have these six levels of the Wealth Ladder and I can walk through those and then talk through the spending real quick. So level one is less than $10,000 in net worth. Level two is 10,000 to $100,000. Level three is a hundred thousand to a million. That’s like your typical middle class level four is 1 million to 10 million level five is 10 million to a hundred million. And finally level six is over a hundred million dollars.

When you apply this to the 0.01 % rule, that means, you know, let’s say you’re in level two, that marginal decision when you divide by 10,000 is going to be between $1 at the beginning of level two up to $10 by the end of level two. So I call that grocery freedom. Like when you’re at the grocery store and you’re trying to decide which brand of an item to get like eggs or cage free eggs, the difference in cost is going to be somewhere between one to $10, right? It’s a small difference. Level three, which is a hundred thousand to a million dollars in wealth. When you use the 0.01 % rule that ends up being 10 to a hundred dollars in the marginal spending decision.

So I call level three restaurant freedom because when you’re at a restaurant, when you’re deciding which item to purchase, the difference in the cost could be anywhere between you, let’s say 10 up to let’s say a hundred dollars at the extreme. If you’re getting like a nice steak versus, you know, just a, you know, a salad or something that’s much cheaper. And so you start thinking through this stuff and that rule I found is very helpful for spending. Lastly, in terms of how my wife and I do our finances, actually wrote a blog post about this recently. We kind of have a joint account where all our income and expenses go into.

Nick Maggiulli (09:11.644)
And then I’m sorry, all of our income goes into all of our expenses come out. And then if there’s like, if I’m assuming we’re, know, earning more than we’re spending. our, you know, there’s a growing balance in that account over time. We will then do like quarterly. We’ll take a distribution. We’ll say, Hey, okay. We have an extra 20 grand in the account. Okay.

You take 10, I take 10 and we take that as just like almost like a. dividend payment to ourselves, right? And then we do it again for another quarter and we’ll keep doing that. and obviously if we need to, let’s say we need to buy a house, then we need to take our, from our separate assets and we put money back into the joint account to buy something. So if we, we need to put down a hundred K on a home.

Okay. She puts in 50, I put in 50 and then we, know, into the joint and then we buy from there. So that’s just, it’s a simple, very easy way of doing it. It allows for separate assets throughout the marriage and it also, so can kind of have your own assets. At the same time, there is this joint component, is like everything’s pro rata in terms of income and expense splitting.

Frazer Rice (10:02.633)
uh… i’d really like to get the point of one percent rules of the general framework uh… great little rule from one of the things that you know as i get older uh… i i have a greater appreciation for cash and having comfort in the cash balance and is as you move up the ladder even for people who get in the ten million hundred million and center and certainly not that but the uh… would like to be but uh… not quite there

That cash component, which in some ways, there’s a comfort and safety aspect to it. It stitches interestingly with your last book where if you can keep buying assets that accumulate produce income over the course of time, that that’s a good outcome too. What did you think about in terms of that? Did that come across your authorship while you were going through?

Nick Maggiulli (10:55.508) on the Rungs of the Wealth Ladder
In general, like the whole idea of the Wealth Ladder is that every level has a different strategy you can focus on. And so in level three, the love, the strategy I talk about, and once again, level three is a hundred thousand to a million dollars in wealth, which is about 40 % of us households. I consider that like the middle class in the United States, that wealth level, the strategy there is just keep buying.

Right. The strategy for that is that book basically. And because it’s like every, you know, if I say, if I want to get from level three to level four, what do I need to do? You need to keep investing in income producing assets and just give it enough time. And, know, in theory, if you do that and you do it for, you know, 30, 40 years, you should be able to get into a million to 10 million. And of course that’s not going to be true of everyone.

Some people need to raise their income to make sure they can save enough to do that. But that’s a part of that. And so when I was thinking about. you know, income producing assets, all those types of things. It’s really a flywheel up the Wealth Ladder because the more income you have, it’s usually easier to save.

Then you can take that money and invest it in income producing assets, which create even more income, which makes it even easier to save. And so like you end up getting this flywheel where the amount of income in each wealth level just keeps kicking up. Like in level four, the median household incomes about $200,000 in level five, it’s closer to $750,000, which is, know, once again, level five is 10 million to 100 million. And by the time you’re in level six, which is over a hundred million in net worth, the median household income is $4.3 million annual income.

You can see like from 200 to 750 to 4.3 million, there’s just these massive jumps in income. And a lot of that is due to wealth, right? Once you have wealth, that wealth is usually kicking off income for you. And so it makes it a lot easier.

Frazer Rice (12:32.056)
The as you get up the ladder here and I guess this is some of the, know, where my day job kicks in and you have to start thinking about the spending that goes beyond you, beyond your family. And you’re worried about different constituencies, whether it’s charitable or generation two or three or even four. That the flywheel for income also turns into a flywheel for expense in many ways. And this is something that it’s easy to.

It’s easy to observe, sometimes different to experience. What did you see on that front when you were talking to various experts in that world and how people handle it?

Nick Maggiulli (13:14.004)
So I don’t know too much about generational planning and I didn’t focus on it too much in the book. I talked about it briefly but once again I focused on the non-financial aspects because thinking through the finances of a multi-tier strategy it’s not my area of expertise like a multi-generational like approach. I have no idea how you would even structure that. can start guessing at that but it’s not something that I’ve done for a long time or anything like that. So I didn’t focus on it too much. The one thing I did think it’s easy to overlook as I said earlier is

You’re probably not. need to make sure that the, you could set all that stuff up, but if you don’t have the right conversations and the right relationships with those family members, it’s very likely going to fail. Right. And so I think as much as I care about the math and the structures and all those things, which I don’t have the expertise in the other piece is like, wow. You need to think through how you actually approach this from a personal standpoint. Like how do you approach this with your children?

How do you how do they all make sure that we’re all on the same page and everyone feels like it’s fair you know and your will and you know the trust you set up etc. So when I’m thinking through that I am thinking through the non-financial piece because I think it’s the most overlooked right like you can pay someone if you’re if you’re in level five you can pay someone to do all the other hard stuff like all that expertise stuff that that the person in level five may not have any expertise and you can pay people to do that right.

The thing you can’t pay someone to do is to get your relationship with your children correct. That’s on you, right? So when I’m writing the book, I’m saying, what are the things that the person in level five actually need to do? They need to do this because the other pieces can be paid for. This piece can’t be paid for and that’s the difficulty.

Frazer Rice (14:50.758)
You know as I tell people that you know there are a lot of smart people that can help you get through the tax and finance and legal and all that that that’s beside the point but the communication aspect if you don’t get that right your your house is on us on a rickety foundation.

You know I to sort of flesh out the point a little bit differently I’m now in sort of a world where you know when people come to me asking my advice on this stuff yeah there’s the blocking and tackling but it’s really a citizenship exercise it’s defining the terms under which you living within the family and with living underneath all of these resources what are the rights and obligations that come with it.

Without a real firm understanding of what that looks like you know the rest of it, it’ll be in place and it’ll give you a chance of maintaining things from one generation to the next but It’s certainly not going to solve for everything and it probably won’t be flexible enough to deal with life as it intervenes and causes people to veer off in different directions.

Nick Maggiulli (15:55.604)
Yeah, that’s very true. so once again, it’s always difficult, even when the communication is set up properly, like things come up, the future’s hard to predict, like bad luck happens to people, right? All sorts of things can happen that derail these generational wealth planning ideas and concepts. But. At end of the day, you gotta just try your best and hope for it. And then once again, by the time you’re gone, you’re not gonna know the result anyways. It’s one of these, like you just imagine, you imagine all this stuff and it like doesn’t really matter. You’re gonna pass one day and that’s the end of it, right?

Frazer Rice (16:18.35)
Right. I was recently been dealing with a trust that was set up so long ago. was essentially electricity was recent. The airplane was recent. There’s no way any of the things that we worry about and stew over were even contemplated in terms of the different levels of spending, the different risks that were out there. so you do the best you can with what you’ve got.

The difference between this book and Just Keep Buying: was there any difference in writing it and the publishing process we talked about a little bit that was a little bit different? maybe take us through what it was like getting off the post high and I would describe it as sort of a nice slow burn in terms of sales with Just Keep Buying and how that fed into finding the topic that you were interested in and then getting through the process of doing it.

Nick Maggiulli (17:25.034) on The Wealth Ladder
Yeah, so we just keep buying the writing process was, you know, 70% old blog posts that I stitched together. I created a structure and then kind of cleaned it up a little bit with the wealth flatter. It was based on a blog post I did in December 2019, but I had to take this one little, know, I spent five to 10 hours on this one blog post and then I had to take it and expand it and just dig deep onto every single sub concept and come up with new concepts and really clarify.

A lot of my ideas. I remember when I posted the Wealth Ladder blog post in December 2019. It was on the front page of hacker news for like eight hours, which is like crazy. And so I read every comment in there. People had all these comments about the post. this post doesn’t address this doesn’t do this. I addressed every single one of those in the book. I went through every comment and I addressed all of them. So if someone’s going to read this book, they never heard the idea was like kind of getting a site. It was getting a insight into the hive mind.

What do people think about this. Someone’s going to start reading this and say, wait, what about this? keep reading. It’s addressed. It’s going to come up later in the chapter. Right. And so all those types of things, I think that for me was very helpful because it gave me this insight of like, Hey, here’s the pushback I’m going to get. As soon as I address it in the text, people are like, wow, this person thought this through. And it’s like, I tried to do my best with that.

So in terms of the Wealth Ladder writing process, they both took about the same amount of time to write. obviously the wealth letter is far more new material. Like I would say it’s like, you know, 70 to 80 % new material and the old blog post that became it was like you know 20 percent of it if that and then I expanded from there so I’d it’s mostly new material versus my old book was you know mostly old blog post and so that’s the big difference here in terms of the writing process I still think

Even though this was new material, I had done it before. So I kind of know how to write a book. You know, the most important thing is the beginning and just getting the structure set up. And once you have the structure, the writing is not as difficult. As long as you know kind of what you want to say roughly in these chapter, the writing isn’t the hard part. The hard part is, in my opinion, is the structure. Right. And I think that’s where a lot of books go wrong because they just put a bunch of stuff together. They don’t think about the structure and that structure is the planning. It’s like the plot of the book in some ways. And so that is very important. And I think it’s probably the most important thing when writing.

Frazer Rice (19:31.237)
I’m fascinated that the Wealth Ladder Reddit subheadings and so on where people went in and had the different questions for you almost, you workshopped it before you even workshopped it. And also you almost had a focus group in place to kind of help steer it correctly. When you were doing Just Keep Buying, you didn’t have any of that really. We were just sort of writing and some things were popular and some weren’t and you sort of picked and choose between them.

Nick Maggiulli (20:01.298)
Yeah, it was more like that. And so I did have some feedback from people telling me about different ideas and different things. So there was some but it was more just like what I remembered I didn’t have. I can still go right now. I can search it on hacker news find that article click on it and go and see every single Comment that’s ever been posted on it, right? Patrick O’Shaughnessy said something or he talked to someone on one of his podcasts one time. He said a lot of things that succeed usually succeed like right out the gate.

That’s not true of everything. Some things take a very long time. Compounding all the stuff, but you get like a, an insight that this could succeed, right? There’s always a possibility. Usually get some feedback. The fact that this blog post did so well said, Hey, there’s something more here.

I would have written it sooner, but just given the timing of everything I started writing, just keep buying in 2021. So I had to kind of go through that cycle, let that play out. And then I said, Hey, In late 23, I was like, I need to start thinking about the next book. I started thinking through that. Go through the agent process, talk to the publishers, et cetera, and go from there. It all worked out in the end. I had let that process kind of finish before I could get back to the wealth ladder. That’s when I knew I was going to write it.

After I wrote Just Keep Binding, I knew I was going to write this book. I just didn’t know when or when the timing was right. And late 23 was the time to start. And I had the manuscript done by August, by October. I didn’t really start writing it until really April ish I kind of had just ideas But then we signed the contract in April and then I really started writing in April and got it done by October. So

Frazer Rice (21:28.727)
Sometimes being obligated by a piece of paper like that can create focus for you. Those people who are writers out there, just keep buying with one publisher and wealth ladders with a different one. There’s pluses and minuses with everything. Was there anything particularly helpful about the new publisher? That sort of helped get things pushed forward or create some focus where maybe…

Nick Maggiulli (21:32.233)
Yeah. Mm-hmm.

Frazer Rice (21:57.876)
You didn’t have the same type of thing with just keep buying.

Nick Maggiulli (22:02.026)
I think the there’s two things that a bigger publisher can offer you. One is money, obviously, like pay upfront, like nothing against Harriman, but they just have a different model. And the second is they’re just, they have a bigger marketing. They have like, you, have a publicist now I have a specific publicist for me, right? There’s a marketing person I work with, right? The design team, it’s everyone’s just hot.

Like this, if I had self published the Wealth Ladder, I wouldn’t have a cover this good. And I’m not just saying that, like people have told me like, my God, that’s a great cover. There’s six wealth levels or six, you know, everything kind of just fits very nicely. And so I wouldn’t have been able to come up with this stuff on my own. And of course we went through rounds with the cover and this and that, and I, you know, went back and forth and they came up with this. said, wow, this is great. I love this idea. Let’s kind of keep expanding on it. And so that’s an example where if I went self published or something, it just wouldn’t have come out as good. And so I think there are times in working with a publishing house.

There’s just a like a higher quality unless you know a good designer a good editor a good like you can go down the line unless you know all these people already you kind of want to go with a publishing house because they have this expertise and if it’s not I just want to focus on writing and doing the best writing I can do and like let the rest of the stuff up to the publishing house. That’s my goal. And so whatever I’m that may change in the future. I may not use a big publisher again. I’m not sure. I got to see how this does how the marketing does like all those different things or what’s really important to me.

Frazer Rice (23:19.244)
Cool. So, we’ll wind down here. The book launches when?

Nick Maggiulli (23:25.228)
July 22nd. So by the time this comes out it will be out. It should be out now. So

Frazer Rice (23:30.253)
be more thrilled for you on that front. Between that and the day job, what’s next? Being married, you’ve got a lot on your plate. You’ve got the next probably six plus months framed out in terms of making this a big success. Have you got any other projects in mind?

Nick Maggiulli (23:49.322)
I don’t have anything framed up for this. It’s like, let it release and see what happens. See what opportunities come up, which ones don’t, et cetera, and go from there. Next big thing, I mean, next big thing in my life is probably gonna be me, you know, if God willing having a child. hen that’s gonna happen, who knows? We have to kind of wait and go through that process. but yeah, so that’s about it. I don’t have any other big plans. Just kind of doing my thing, staying with Ritholtz, promoting this book. We’ll kind of see where it goes from there. It’s hard to know the future. Yeah.

Frazer Rice (24:15.98)
Well, I’m ecstatic for you, And we need to get dinner shortly. those, Wealth Ladder is here. And I got to read it and watch it through its gestation period. So it’s been a lot of fun and I’m thrilled that it’s coming out. Nick, how do people find the book Wealth Ladder? I assume it’s on all major platforms, that type of thing.

Nick Maggiulli (24:19.27)
I appreciate it, Frazer. Yeah, Amazon Barnes and Noble, Target bookshop.org anywhere you can everywhere books are sold. You’ll find it.

Frazer Rice (24:45.384)
and how do people find your blog?

Nick Maggiulli (24:48.162)
Ofdollarsanddata.com. You can also follow me at Twitter slash X at dollars and data. I’m also on LinkedIn at Nick Maggiulli or on Instagram at Nick Maggiulli. So, and I respond to every DM. So you have a question, feel free to send one to me. I may be a little delayed because this week is launch week. Whenever it just depending when you get to me, I can, I will definitely try and respond.

Frazer Rice (25:06.762)
Put up a big sign when you go on your honeymoon so you can enjoy that please. Nick, thanks for being on. I appreciate it.

Nick Maggiulli (25:10.492)
Yeah, of course I will. Something of that nature. Thanks for watching.

HEAR MY INTERVIEW WITH NICK FROM HIS FIRST BOOK: JUST KEEP BUYING.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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The Business of Estate Planning is in the midst of a revolution- or is it? BRANDON RAINS discusses advising clients responsibly, profitability, and the “firm of the future.”

https://youtu.be/a7VdZvrH9LIBRANDON RAINS from the Denver-based Rains Law Firm and I discuss estate planning in an era of artificial intelligence, scalability, the democratization of advice being delivered by non-lawyers and the fun and games that exist when people die and plans go into action.

https://open.spotify.com/episode/6FeR3ACd8vXVkKyMZODnlu?si=Q0XrGGMRR92usDUiKcsT9gOutline for the BUSINESS OF ESTATE PLANNING* What is involved with the process of educating/advising a person or family ? * Good judgement, discretion, and experience is something worth paying for * What does drafting and implementing involve? * The benefits of “Professional Liability” and experience * The intersection with technology / AI / drafting tools * The dangers of DIY * How to be a good client and get to adult conversations sooner * Puttng thought into staffing important roles (and backups) * Ongoing maintenance / administration

Transcript Frazer Rice (00:02.954)
I’m Frazer Rice. Today we have Brandon Rains. He is a practitioner in Colorado and owns his law firm in Denver. We’re going to talk a little bit about the business of estate planning and what it’s like to have an ongoing profitable enterprise when trying to help people arrange their affairs and do the right thing as far as advising. Brandon, welcome aboard.

Brandon Rains (00:22.222)

Thanks, Frazer. Pleasure to be here.

Frazer Rice (00:23.926)

So we’ve had a nice back and forth on the topic and maybe tell us a little bit about your practice generally and what you do, who your ideal client is, and then we can go into why we think it’s important to get paid for this type of advice.

Brandon Rains (00:42.254)

I my own firm about nine years ago, the Raines Law Firm, very originally and imaginatively named. I was leaving my previous firm, was interviewing with a bunch of other attorneys trying to find a good landing spot, and it just kind of hit home to me through those conversations and kind of debriefing with my mentor that they’re lots of times the state planning attorneys interact with their clients in the same way, generally speaking across the board.

In some of those aspects, just not necessarily how I’m wired as a person, not that it’s necessarily better or worse or anything like that. I just felt that there might be more space and to kind of throw my elbows around within my own firm to kind of figure out what that could look like for me and serve clients in the best way possible. so started from scratch and still here and alive and kicking.

Frazer Rice (01:38.028)

So one of the things that I think is interesting is, I talk to people all the time and they indicate that they don’t understand the process of drafting and implementing and what does a lawyer actually do in putting together in a state plan? Take us through little bit about the process of advising and educating a client to help them understand what they’re identifying as far as an issue is concerned and then solving it.

Brandon Rains (02:04.942)

Well, I mean, think some of it is some of that answer is kind of what you would expect, right, which is asking good questions and listening. Beyond that, I think a lot of attorneys are going to be really different. I know that some attorneys that I’ve talked to, they have very strong feelings about our role to make recommendations, sometimes even tell the client what’s best for them or not. I think there are some situations where that makes sense.

Again, it’s even though that’s not how I go about it, I think that they have, there’s some good sense there too. Some, think there’s a lot of decisions that can be personal that the client is best positioned to make those decisions of. so for me personally, kind of shy away from making recommendations for the most part, helping them have the information and advice and counsel that they’re looking for, for them to decide what’s best for them and their family. That’s kind of the tack that I take.

For other attorneys, I know that they have stronger feelings. It’s like, we are not going to do this. This is not a good option. This is, you know, the best ones might say that and then explain why. But generally speaking, walking the clients through the decision-making process, I think offering that advice, being able to explain things in layman’s terms is so incredibly vital and important.

Throwing… Legal jargon in our world doesn’t really offer too much help to people. They’re just going to end up just dazed and confused and going along with whatever you say because they don’t understand any better.

I think deep down at the end of the day, that’s not really anything that what anybody wants. then, you know, understanding the questions that we’re asking, the decisions that we’re guiding our clients through is vital. as I understand, we’re gonna be talking even more about later on the benefits of working with an attorney as opposed to other options out there.

But I think it’s kind of touching on that. And then on the back office side, you know, there’s over the last 10, 15 years, the growth of centralized drafting software programs has proliferated.

Brandon Rains (04:31.982)

Whereas before each firm would have their own templates and Word documents, copy, replace, copy, paste, and replace, and stuff like that. I know that there still some firms that still prefer to do it that way. But third party companies providing the forms that company, that attorneys or their staff use.has kind of proliferated.

I personally am in that camp just being able to learn from hundreds or thousands of other attorneys and their experiences and the process of keeping those documents up to date with legal changes. It’s a lot easier with something like that. But sometimes that sense of ownership of those documents is lessened when someone else has prepared them and updating them and maintaining them.

Sometimes it’s easy to take it for granted. But the process of drafting, the basic principles of drafting of legal advice are the same, really is we need to match the language that we prepare for our clients to their goals and their vision, their hopes, their dreams, their concerns. We really kind of capture all of that in the legal documents and do it in a way that’s understandable and ultimately is going to be effective after our clients have passed away.

Then of course, walking clients through them and explaining it in the hopes that maybe a week or two after they’ve signed their documents, they might remember a thing or two of what they’ve been fighting.

Frazer Rice (06:14.719) on the business of estate planning

Always a challenge. One of the things I tell people is that you’re hiring an attorney to help you out on these situations because you’re going through it something that’s very complicated and opaque with huge ramifications for your life and after your life.

With this being usually the first and only time that they’re dealing with that, it’s helpful to have a very well-equipped sherpa to help you along that journey. But then you’re also paying for the good judgment, the discretion and the experience that working with hundreds of other situations brings to bear to the instant case. describe that experience for me.

You came from another firm, you decided to go this route and maybe a case study or something like that where a client really was able to find benefit from your having dealt with something similarly that occurred in your past experience.

Brandon Rains (07:17.196)

Yeah, I mean it’s you know there’s so many examples, but so it’s interesting how often clients come in. Like even just this morning, had a client, a couple come in, we had an initial meeting and kind of partway through that conversation, I was like, hey, do you have any questions for me in any way?

It was kind of towards the beginning of the meeting a little bit. They were like, we don’t even know, we don’t know. We don’t even have the knowledge base to be able to ask you any questions in the first place.

It’s like, okay, that’s fair. And so sometimes that’s just subject matter knowledge that is really helpful. I think a lot of times when couples and families benefit from our, to use your terms, your good judgment, discretion, and experience, we see that a lot when clients are making decisions.

So it’s what makes sense, know, it’s, it’s, especially when children are struggling, right? I had some clients that I was meeting with earlier this week. We were helping them make decisions one of their one of their children is Just an amazing go-getter and the other one is struggling and so we had a real conversation about whether or not they should give money to their son or actually skip their son and go with give it to their grandson or granddaughter or whoever it was right, but just skipping that generation and walking them through that decision making process.

Because some people, for example, think they don’t realize all the options regarding distributions to their loved ones. think it’s just everything. The only option they have is outright distributions, which is giving it to them all at once. Well, I don’t trust my child to give them everything all at once for drug addictions, manipulation, their spendthrift, whatever. So I just need to disinherit them. Sometimes clients have legitimately, literally come in with that mentality.

When we talk to them and help them understand that there are more options than that to spread those distributions out over time and protect from those potential bad situations. That burden is just completely lifted off of their shoulders. It’s like, okay, I can give them money, but I can give it to them in a way that is best setting them up for success with some protections, with some guideposts, guidelines with some restraints because we think that’s really what their life and situation calls for.

I’m gonna kind of draw an analogy here and I like yours with a sherpa, right? Where, you know, you can go on a, you can climb Mount Everest on your own or you can climb Mount Everest, you know, with a sherpa or you can climb it with a group.

Right? You can kind of imagine the different levels of success there. The analogy that I tend to draw, unfortunately, Harkins is back to school time, but that was kind of the thing that came to me. Working with an attorney is like working, is taking a test with the teacher sitting right there beside you explaining the principles, reviewing the question, helping you understand the answers, and helping to quote unquote make sure that you get 100 % on that test, right?

That’s what like working with an attorney can be like. Whereas doing it on your own is, you know, and I know that we’ve talked about to kind of talking about this with do it yourself options for estate planning.

It’s like just taking the test on your own. Maybe open book, right, because Google kind of serves that purpose. But there’s no outside eyes. There’s no like true explanations. And if you’ve done any search on Google, you know it’s not that hard to find contradictory information.

I’ve had clients come in with wrong understanding based off of Google. Now the tough part about is taking a test on your own. I don’t know about you, Frazier, but I always got 100 % on my tests until I got my grade back.

And that’s the tough part. What’s especially hard with estate planning is you don’t get the grade back on your tests until after you’ve passed. There’s no extra credit. The grade is final. And you have to live with that. so there’s… Yeah,

Frazer Rice (11:44.049)

Yeah or others have to live with it even worse.

Brandon Rains (12:09.618)

You’re right, better said, right? Others have to live with that. And so it’s, you know, there’s something to be said about that. And there’s also a rise in, with companies that are DIY, they’re kind of talking to the financial advisors.

There’s a big trend there of financial advisors walking their clients through the business of the estate planning process. setting aside any contentions or conversations about unauthorized practice of law and stuff like that.

To go back to the teacher analogy, that’s like asking someone two or three years in school ahead of you for help, maybe like a tutoring type of a situation, but they’re ultimately still a student. They might have more experience than you, they might know more than you, but they don’t necessarily have the education. the hundreds of clients of qualifications, they don’t quite have that teacher certification, right, that has gone to school specifically for that, have been vetted and licensed by the state.

There’s still a difference there. And I think there’s some real unforeseen or easily missed pitfalls with a, I’m gonna rely on a mentor type of a mentality rather than turning to a teacher. Now, of course, a mentor or a tutor or a fellow student may or may not have to pay for that, right?

Obviously they’re gonna be paid less, because they don’t have the education, they don’t have the certification, stuff like that, than working with a teacher.

But the teacher is the one who wrote the test, right? Who has studied the test, who has studied for… hours and hours and hours, the subject matter that goes into the knowledge, there’s still a real substantive difference there that kind of puts you and your loved ones in the best position to succeed, right, which is really where it is.

Frazer Rice (14:20.987)

To stretch that analogy further, I sit in the financial advisor role, at the multifamily office level, thinking about these issues. I have my thoughts and experiences and comments. It would not really occur to me NOT to use a lawyer. To take your analogy a bit further, having the teacher with you taking the test, but also having the mentor with you taking the test.

Brandon Rains (14:47.245) on the business of estate planningYeah.

Frazer Rice (14:49.295)

That is better if there are really sort of qualitative aspects that need to be dealt with. Issues like: choice of trustee, do I favor one child over another? There may not be an exactly right answer. However, there can be a best answer through consensus building amongst three thoughtful people. One who’s extremely interested in it, and then the people who are sort of supporting of that.

That joint approach to the business of estate planning I like that a lot better than the DIY. Equipping the client with digital tools to make a go of it themselves, and hope it turns out okay. Then maybe get a legal imprint or legal ratification elsewhere that isn’t really based on a relationship. I think ultimately people are looking for interactivity and they want that relationship. trend-wise,

I think that’s going to argue for, certainly at some level. A return to in-person meetings and some more tactile interactions between client and advisor. Those team aspects are going to be that much more important in getting to the right result.

Brandon Rains (16:12.448)I would agree with that. Some of my favorite meetings are… client, attorney, financial advisor, potentially accountant, all involved, right? Because we’re all addressing the subject matter from different angles, right? It’s when you get the tutor replacing the teacher, right? To kind of keep it industry agnostic, right?

Whether that’s a financial advisor who’s trying to replace the estate planning attorney. Or the estate planning attorney who’s trying to place the financial advisor. That’s when you start running into, in my opinion at least, when you start running into different issues, right? You’re losing a team member. You’re getting people where it’s not their 24-7 type of a day job, right?

But they believe that they can still do that, right? They can fill both roles or three roles or whatever. In my experience, that can run into issues. But yeah, multiple professionals addressing those conversations

Frazer Rice (17:14.189)That’s because…

Brandon Rains (17:19.248)
those questions from their respective angles. It’s almost like the sum is greater than its parts, is my experience in those meetings add exponential value added rather than just purely linear. It’s an awesome dynamic.

Frazer Rice (17:37.859)
Exactly. think the other part too is that, you know, whereas we used to have to defend against the absence of information, I worry about the noise and the fact that, and I think the advisors can be affected by the noise too. And to have a couple of people surrounding the problem, I think mitigates that risk, doesn’t eliminate it, but to sort of have a back and forth and be able to make sure that the right course is brainstormed, workshopped, and then defended before being implemented, think that leads to a good result at the end of the day.

Brandon Rains (18:15.95)Yeah, 100 % agree.

Frazer Rice (18:17.773)It’s one of these things where that’s a lot of people and many times charging hourly or charging flat rates or things like that. People look at that and say, my gosh, I just wanted to get my estate plan done and get something in place. And now you’re telling me I’ve got expensive people on the hook to try to get this going. Part of me sort of says, look, there’s two levels of planning here. You have what you need to get done so that you’re not running naked through the park uh… and then then there is the deeper thoughtful estate planning, you’re trying to deal with taxes and creditors or things like that. How do you think about it in terms of the value added when when being in front of a client

Brandon Rains (19:09.19)I think in a lot of ways it’s, you know, the biggest benefit of working with an attorney is the advice and the counsel and the experience, right? At this point… I haven’t done necessarily a count, but somewhere between 750 and a thousand different clients in the last decade, right?

You combine that with just the knowledge that I’ve gained through studying, continuing education and stuff like that. It’s hard to replicate that from anybody else, right? Just as if I were trying to step into your shoes, it would take me 20-30 years to be able to fill in your shoes, right?

Because that’s how long you’ve been doing this for. I think that’s something that we as professionals, especially over the last, don’t know, during this time from the information age and generative AI is going to be making it a really interesting thing for us to think about is how well do we explain the value that we bring to our clients and the families that we work with.

For me, it’s the advice and counsel, the insights, the experience of this is what other people have decided. This is how I’ve seen this work out. And being able to take these abstract legal principles or even these experiences from other families, there’s always that question, I think, at the back of clients’ minds of like, okay, how is this going to impact my family? Whether it’s from a tax perspective, a control and access to assets perspective. What about family relationships perspective?

Brandon Rains (20:57.006)

Is this gonna help? What am I going to do? Is it gonna help them interact with these assets that we’re passing on to them in an appropriate way? Are they gonna interact with the world and with each other in a positive, constructive way?

All of those things that we can do that I try to bring to the table as an estate planning attorney is to help them understand how these theoretical or not their experience can play out in their own family. Because that’s really what they’re looking for.

They’re looking for clarity, they’re looking for comfort. Really the only benefit that clients get through their own estate plan is peace of mind. And so try to help them understand. The only way they can get peace of mind is not by, I would argue, true peace of mind is not just by making a decision.

By making a well-informed, well-advised, well-counseled decision, taking all these different data points and being able to apply it to their own family, their own relationships, their own personality traits, their own characters, and the people that are involved, and to be able to say, okay, this is what I think is how people are going to engage with and interact with the estate plan with each other and by extension the world around them after they receive the distribution. So to me that’s the real crux of any value add for me at least.

Frazer Rice (22:30.163)One of the things that people ask about is the analog world of estate planning and the new digital tools. Are they going to intersect? I use AI frequently. A variety of other tools help game out scenarios, look at documents, to do all sorts of things.

I don’t think what we’re talking about is that the exclusion of technology, because I think technology is going to get us to have what I would describe as more adult discussions quicker. I’m wondering how your experience with technology so far, you talked about it a little bit about, you know, sort of having drafting capabilities and so on. Where do you see that going?

Brandon Rains (23:13.74)Yeah, that’s a great question. I think a lot of estate planning attorneys use technology more than people might realize. There’s a difference between technology in the back office and technology on the client facing experience, right? There’s a difference there. Conversations with an attorney is human, right? I would say that’s not even analog, that’s human. And that’s something that…

If AI ever replicates a human conversation, like really truly, that we as professionals can have and be just as accurate or more accurate with that advice, which is a whole different, that’s not as much of a given as we might like to think, then we’re all in trouble.

But I think what technology does for the business of estate planning, and I’ve noticed with my own practice. Leveraging technology to create systems and processes to delegate to communicate within our internal team and know document sharing with a client or whatever that looks like that allows us to be more efficient to be able to focus on the unique and individual circumstances of our client.

The business of estate planning is getting to those adult conversations faster. It also allows us to spend more time with those adult conversations too. I think part of that dynamic is already here.

Now looking towards the future, it’s really, really interesting. I don’t play around with AI a ton, I’ll have to admit that. But what they think AI can do could be pretty awesome to leverage, right?

Earlier this week, I got an introduction from a financial advisor to a client. The financial advisor used an AI-based estate planning review software program to review the estate plan. And ultimately, the financial advisor and the client had different feelings about the quality of the estate plan. The client thought it was great. The financial advisor was like, hey, this isn’t all that great. And the financial advisor sent me the estate plan and their AI-driven review.

Brandon Rains (25:39.63)And with the in those, this is actually the first time that ever had ever done this. What I found with the AI was both a positive and a negative. So in one particular aspect is what really stood out to me.

I won’t bore your listening audience with the details. However, just with one aspect of it as an example, I felt like when I was reviewing it. I felt like it maybe overstated the strength of some of that planning that was in the document. It might have missed the mark as well a little bit.

Because it used a very specific phrase with this issue, I was looking for it. And one of my complaints about this document was the organization was a little funky. Any attorney is gonna take some time to look through a document that they hadn’t noticed.

But because it…I was looking in this one spot for this phrase that this planning structure implied. My first thought for several minutes was, AI got it wrong. I was like, there’s not this planning at all. It’s something else. Since I looked at it, I’d seen it on the AI, I said, let’s just keep on looking through. I hadn’t gone all the way through the document yet, but it wasn’t in that spot.

Lo and behold, that phrase was like dozens of pages later. I was like, oh, okay, you weren’t wrong, AI, this is great. There were a couple of places where I felt like it had overstated some of the protections. Because the AI had noticed it and picked it up in one spot at a disconnected location, it actually helped me find it.

I can go back to the client. This is the type of planning- rather than me saying, you know, you have this other different type of planning. Then they’re like, well, wait a second. So I thought our attorney said we had this and it turns out that they are right.

I was wrong. And that would just make me look like an idiot. Right. So that’s kind of, think where AI is right now, right? People say, you know, trust, but verify or don’t trust, but verify. That’s what it kind of seems like to me is where AI is. how effective it’s going to be.

I talking with another attorney just this week on the business of estate planning. He was like, AI is as dumb as it ever is going to be, is right now. I think that AI is going to impact the legal staff. It could potentially replace legal staff sooner that it will replace the attorney. Whether that’s AI-voiced phone calls or AI-driven emails. or AI might become an integral part of drafting where it can take your notes from the meeting and you organize it in a certain way and you train the AI on how to read your notes and it’ll draft your document, right?

It could get you that rough draft where before it might take you 20, 30 minutes, two hours, three hours, depending on your internal systems and processes to get to that same point, right?

So, should it ever get to the point of replacing legal advice? I might be biased. I don’t think it should. But I think it will certainly have the capability. It’s there to augment and make bigger what we bring to the table, I think is where AI is at its best place. If it’s used to replace us, then we’re running into issues because AI has shown that it hallucinates quite a bit.

I guess that’s the official term for creating stuff out of thin air or lying. There are attorneys that have been sanctioned because of inappropriate reliance on AI and replacing legal research and legal drafting. It’s not there yet. I don’t know if it’ll ever get there, but augmenting it and saving time and streamlining processes.

Frazer Rice (29:41.758)Right.

Brandon Rains (29:59.384)To me is the thing that makes the most sense because then again, to use your phrase, gets us to those adult conversations faster. It gives us more time to spend on those adult conversations.

Frazer Rice (30:12.696) on the Business of Estate PlanningGood stuff. Brandon, how do listeners find you?

Brandon Rains (30:17.708) on the Business of Estate PlanningYeah, so the website is rains-law.com. Rains is R-A-I-N-S spelled just like the weather. Or they can reach out to me directly. So, Brannon, just normal spelling, B-R-A-N-D-O-N at rains-law.com. Great ways.

Frazer Rice (30:32.818) on the Business of Estate PlanningWe will revisit the business of estate planning going forward. We can talk about lots of different issues for hours. Maybe we’ll put a pin in this for now and have episode two, three, four, etc. as we go forward. Thank you for being on.

Brandon Rains (30:50.766) on the Business of Estate PlanningThank you for Frazer, appreciate it.

THREE ESTATE PLANNING MISTAKES

GENE HACKMAN’S ESTATE PLANNING

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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“IS THE CIO DRAGGING DOWN THE FAMILY OFFICE’S PERFORMANCE? (And What Can You Do About It?)” with R. ADAM SMITH.

https://open.spotify.com/episode/1Cl26HkpjZBnovg3zumuBx?si=0c7e252e629d4603https://youtu.be/p3VtFCVpp8oThe Family Office CIO job involves a delicate high wire act. The position can be the fraught intersection of:

• Asset Allocation (& collision of “endowment” vs “family adjacent” strategy)
• Cash Management
• Deal Sourcer/Vetter
• Club Deal Gatekeeper
• Risk & FOMO mitigater
• Overall One-Man Band

R. ADAM SMITH advises families around deal and investment structure via RAS CAPITAL PARTNERS. We discuss the evolving CIO in family offices, Our discussion addresses the importance of expectation-setting on both sides. We get into what the families can do to understand their own needs (and why they might be the problem!). The goal is to help both sides unlock potential and get out of the way of performance.

Adam Smith’s Background (2–3 min)* Adam gives a brief personal background and current work with family offices * Set up the problem: Many family offices operate with misaligned or underperforming CIO structures * Mention growing tension between opportunistic deal flow vs. structured allocation frameworks

CIO Dragging: Defining the“Non-Functioning CIO” (3–4 min)* Describe what a non-functioning or misaligned CIO looks like in a family office * Common traits: reactive, relationship-driven over process-driven, lacking risk discipline * The consequences: inconsistent returns, governance confusion, lack of accountability

Deal-Driven vs. Allocation-Based Models (4–5 min)* Explain the difference between a deal-centric CIO vs. one focused on institutional-style allocation * Why the dealmaker mindset often prevails in emerging family offices * Tradeoffs: speed and access vs. diversification, scalability, and defensibility * Challenges when there’s no clear investment policy statement (IPS)

Why Do Families Tolerate This? (2–3 min)* Emotional and trust-based dynamics—families often default to familiarity over structure * Over-indexing on “access” as value * Underestimating the long-term risks of ad hoc strategies

What CIO Institutionalization Looks Like (3–4 min)* What a functional, institutional CIO framework looks like (clear mandate, reporting, delegation, rebalancing discipline) * Role of governance in supporting this structure * When and how to make the transition—triggers and best practices

Cultural and Generational Resistance (2–3 min)* Why some families resist institutionalization * How generational shifts are challenging legacy CIO models * Importance of aligning values and objectives—not just tactics

Closing Thoughts THE CIO DRAGGING ON THE FAMILY OFFICE PERFORMANCE (2 min)* Tie back to broader themes of sustainability, legacy, and governance in family offices * Call to action: revisit your CIO model—does it reflect your goals or just your past? * Emphasize the importance of aligning investment leadership with broader family vision

Other CIO Dragging Considerations-Do the staffing and comp models adequately align the employer and employee?

What does a successful structure look like and how much does it cost?

What dos a minimum structure look like and how much does it cost?

Are CIO’s under resourced and put in a failing position?

How does career risk factor into CIO decision-making?

Does the threat to the family’s relevance in decision-making risk factor into this?

How much time is wasted doing “pretend” work to maintain access to other family offices deals?

Do you measure investment adjacency to the family specialty and how should that affect the evaluation of the CIO’s performance?

What happens when a deal-centric CIO is thrust into an asset class that is out of their expertise?

What is the benchmark performance for a FO CIO these days?

On the ESG, DEI, impact and philanthropy front, are these buckets in an overall allocation (sometimes where younger generations can be brought along?) or are you seeing FO’s incorporating the values metric in the overall allocation? Is there a trend to think of family offices as useful for one generation and then to have them split up?

BRIAN ADAMS ON FAMILY OFFICE RECRUITING

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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https://youtu.be/UizVi4fJzPs?si=MeLp0txegEzBkVLlCIVIC ENGAGEMENT: The Secret to Revitalizing Communities- this is how we improve our neighborhoods. It’s a great way to teach the next generation about citizenship and how to be a part of something bigger than themselves.

But what is involved in getting involved? Politics has an ugly reputation. How does one participate, get meaningful results, and keep ones sanity?

Friend of the show, BLAIR DUQUESNAY, takes us through her experience navigating levee governance and politics in her hometown of New Orleans after Hurricane Katrina. She explains why civic activity is important to her and the example she wants to set for others. It’s a great example of citizenship that we can all learn from.

https://open.spotify.com/episode/3BjQeTf3nz5mgt6UD2pgpy?si=ntfqCSR1S2aCQvmVxSNQoASummary In this conversation, Frazer Rice and Blair discuss the importance of community engagement and civic responsibility, particularly in the context of New Orleans post-Hurricane Katrina. Blair shares her journey into civic activism, the challenges faced in flood protection governance, and the grassroots efforts to raise awareness and advocate for reforms. They emphasize the significance of being informed and active citizens, the lessons learned from local democracy, and the need for ongoing engagement in community issues.

Takeaways* Civic engagement is crucial for community well-being. * Personal experiences shape one’s commitment to volunteerism. * Grassroots advocacy can influence local governance. * Awareness of local issues is essential for effective activism. * Democracy requires active participation from citizens. * Building relationships with elected officials is important. * Researching issues enhances advocacy effectiveness. * Community coalitions can broaden outreach efforts. * Caring about local issues is a fundamental aspect of citizenship. * Voting is a critical component of civic responsibility.

The Secret to Sound Bites“We’re all just humans in this process.”
“It’s important to research the issues.”
“You have to vote to have a voice.”

Civic Engagement Chapters00:00 Community Engagement and Civic Responsibility
05:59 Political Challenges in Flood Management
12:11 Lessons in Local Democracy?

TitlesReinvigorating Our Communities
Navigating Governance After Hurricane Katrina

Other CIVIC ENGAGEMENT EPISODEShttps://frazerrice.com/civics/WHAT IS CIVICS?

https://frazerrice.com/all-the-presidents-money/

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/Keywordscommunity engagement, civic responsibility, Hurricane Katrina, governance reforms, flood protection, grassroots advocacy, local democracy, civic engagement, informed citizen, activism, belle curve, blair duquesnay, ritholtz wealth, next capital, next vantage, frazer rice

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The massive costs of caregiving can be a big surprise to most people. It is an expensive undertaking in the best of circumstances and can be a full time job. BETH PINSKER, a columnist at Marketwatch and the author of the new book, “My Mother’s Money- A Finanical Guide to Caregiving” takes us through her experience. There are many great tips to help get support for this difficult experience.

https://youtu.be/WNYLOR_Pvw8?si=8dS2LPG3vfe1FWIXhttps://www.amazon.com/My-Mothers-Money-Financial-Caregiving-ebook/dp/B0DW3RLJSF/https://open.spotify.com/episode/120pb9198YPecMzPir7RyC?si=mqlnY7XmRA-gtRzfJemq_wOutline* 00:00 Introduction to Caregiving and Aging * 02:15 The Importance of Planning Ahead * 08:28 Navigating Legal and Financial Caregiving * 10:33 Understanding the Emotional and Physical Toll * 14:29 Making Informed Decisions for Loved Ones * 19:40 Financial Planning for End-of-Life Care * 25:28 Essential Documents and Digital Access

TranscriptIntroduction to Caregiving and AgingFrazer Rice (00:04)
This is a real treat for me in the sense that I have had personal experience around this. Your book, which we’ll get into in just a second, is going to be coming out in November. I think it’s going to be an important resource for pretty much anyone who has ⁓ any exposure to aging or anything like that or any sort of caregiving. Give us a little bit of a sense of the timing of the book first and we’ll get that out of the way, far away.

Beth Pinsker (00:35)
Great, you know what, we’re all in this together and nobody’s gonna escape any of this. You will either need to care for somebody or you’re gonna need to be cared for yourself at some point in time. Like it’s inescapable. you ⁓ know, we’re all, we all need this information.

The reason I put it together was because I couldn’t find it out there when I went looking for it. When my mom got sick, there wasn’t a resource that told me how to deal with the things that I had to deal with. Being a CFP and being a retirement columnist and a journalist, I got the caregiving information. Then I wanted to put it out there for other people to benefit from it so they could plan a little bit better or get through whatever they were stuck in the middle of.

I pulled together a bunch of columns I had written and brought in them out. I interviewed a lot of people, like almost 100 people, especially for this book. Over the years as a journalist, I’ve interviewed probably, you a thousand people about, you know, planning and estate planning and all of that stuff that goes into it. This book is coming out November 4th from a Penguin Random House imprint. You can pre-order it on bethpinsker.com or through the publishers portal. Hopefully you’ll see it everywhere and every bookstore you go to.

Frazer Rice (01:51)
One of the concepts of the book that I think is vital is that it’s important to have these steps. This caregiving analysis, this process established while everyone is at least a little bit on the top of their game. That you’re not making decisions under maximum stress, either emotional, financial or otherwise. Maybe take us through a little bit about how you came to that realization and how you articulated that.

The Importance of Planning Ahead for CaregivingBeth Pinsker (02:06)

Yeah, so I got a call from my mom ⁓ one day. You know, she’s perfectly fine, 76 year old, and she’s like, I’m gonna have surgery. It’s gonna be a big one. I’m gonna get my back operated on so that I can continue to walk. She really wanted to be able to walk and she was losing her abilities.

The thing we need, we needed two things. We needed a power of attorney for ⁓ financial needs and a healthcare proxy because she was going to be incapacitated for a certain amount of time. We didn’t know how much and we needed those documents. If we would not have had those documents, my life would have been an utter disaster. It was already really hard with those documents, but without them, I would have had to go to court.

I would have like not been able to do anything. I would have had to pay her mortgage out of my funds, I would have had to pay the caregivers out of my own funds. I would have been locked out of her life and locked out of making decisions for her and I would have had to, you know, get a lawyer and, you know, that cost about $18,000, right? So instead we had forms that said I could act on her behalf and she got them as part of her estate plan.

The equation I put in the book is you can get those documents for free or you can pay $18,000 to go to court. Like that’s the position that people are in before something bad happens. Like, do you want to just spend 10 minutes and get a power of attorney and healthcare proxy? Or do you want to go to court and spend months and agony and lots of money?

So, you know, if you put it that way and you explain to people why and show them how hard it is to not have those documents, I’m hoping it will spark a discussion that somebody in the family will say, hey,

Does mom have those documents and does dad have those documents? Does Aunt Sue have those documents? We really need to get those and do it. Everybody over the age of 18, so don’t send a kid off to college without them. My son turned 18 and he needed some minor surgery before he went off to college.

Printing out documents and marched him down to the notary and got those signed for him. He’s like there was no way I was gonna have him do even a minor surgery where he wasn’t even gonna be really fully under and Was gonna come home the same day I wasn’t gonna let him do that without having some sort of paperwork in place because he’s 18. He’s a legal adult You know

Frazer Rice (04:46)
I mean, everything related to the Terry Schaivo case to situations where decisions for accidents that happen abroad and so on to not have those documents in place is a disaster waiting to happen as you described.

One thing that I’ve gotten from my experience is that it’s important to not only keep them reviewed to make sure that people are in place, et cetera, but also to have them just generally updated. I’ve found that hospitals and medical practices sometimes say, you know what, this is more than five years old. We’re not going to respect it.

Beth Pinsker (05:22)
Yeah.

Frazer Rice (05:23)
Was that any part of your experience or have you heard about that from anyone?

Beth Pinsker (05:26)
Absolutely, because ⁓ people move, right? And so my mom and dad had their estate plan done in Pennsylvania. ⁓ Then they retired and moved to New Jersey, primarily. So Pennsylvania and New Jersey have different rules. If they would have gotten sick in New Jersey and had a Pennsylvania power of attorney,

Frazer Rice (05:30)
Right. Mm-hmm. No question.

Beth Pinsker (05:47)
We would have had trouble. Then they packed up and moved to Florida. So if they would have gotten sick in a time period where I needed to take over for them and they still had their old documents, we would have been stuck. ⁓ As it was, my father died in 2018.

The first thing I did was have my mother redo her entire estate plan in Florida as a single adult, right? No longer, I give everything to my husband and my husband gives everything to me, ⁓ which they call sweetheart wills, which everybody in your audience already knows, but ⁓ if you’re watching and you don’t know, that’s what they call those. ⁓

Frazer Rice (06:18)
That’s right.

Beth Pinsker (06:25)
But so they had sweetheart wills and if something happened to one of them they said I give the power to the other in a power of attorney and my brother and I were named as you know successors. ⁓

But after my father died, those things are no longer any good, right? So my mom needed to update her plan and I was already a CFP and a retirement columnist by then. So she listened to me and she went and got all these documents done in Florida. And so when she got sick, it was within five years. ⁓ Nonetheless, I went to the bank with them and tried to get access to her bank account and they just look at me and they shook their heads.

They said, Nope, you need a court order. And I said, Nope, I don’t. I don’t need a court order. have valid paperwork. They said, Nope, you need a court order. We went back and forth like that in like, you know, for like 10 minutes. I knew what I was doing and I stood my ground, but I wonder how many people don’t ⁓ and go off and you panic. But I made, I stood my ground. made them, you know, let me talk to a customer service rep. made an appointment. I came back and they put the paperwork through, but I really had to like, ⁓ you know, hold a sit-in and refuse to leave.

Frazer Rice (07:42)
Gosh, the one of the things that that brings up, go in all sorts of directions on this. But the first one is that is the changing of planning once an event happens. And so when your father died and your mom was on her own and the characterization of the estate planning is different at that point, you know, it’s sort of take it’s taking one set of circumstances into account.

Well, those circumstances happened and now you have to prepare for the next tranche of life. both from a caregiving perspective and then from an estate planning perspective. It’s also, I think, a unique opportunity to sort of look in as you sort of diagnose too and understand who is actually making the decisions for people at this point because the dynamic is now completely different.

Navigating Legal and Financial CaregivingBeth Pinsker (08:28)

Yeah, no, my mom, you know, didn’t know a lot of this ⁓ stuff. And I think a lot of people don’t like in the process of writing this book. I got an edit note that was like, I didn’t know this, you know, and it was that when you have a couple and they’re both getting Social Security when one dies, you know, you go down to one Social Security income and you can can shift to the higher of those Social Security incomes. But people don’t realize that. And if they’re counting on paying bills with the two

Frazer Rice (08:49)
That’s right.

Beth Pinsker (08:58)
social security incomes, that’s a big shock to their financial system. And people like you, you’re surprised by what people don’t know. So if you’re a professional and you know that and don’t even think about it, but don’t understand that your clients don’t know that they’re preparing for a different financial situation than you’re helping them prepare for, right? They’re thinking they’re getting two checks ⁓ perpetually and they’re only going to get one and they need to plan differently. And so somebody along the way has to explain that to them so that they get an understanding of what their income will be if one of the couple goes. ⁓

Frazer Rice (09:36)
One of the things that I really liked about the book ⁓ is the concept of getting the caregiver, usually someone younger, one of the kids of the parent or someone like that, or sometimes it’s the spouse to the other spouse, then there may be an age, ⁓ sort of assymmetry on that front. But getting them used to the idea that caregiving is a full-time job with multi-faceted approaches to it.

We’ve already alluded to the sort of intersection with the banking system and the legal system and then the healthcare system, all of which is maddening in terms of detail and again, a full-time situation and then that doesn’t even get into the emotional and physical aspects of it. How did your experience shape that?

There are obviously plenty of surprises, probably many of them unpleasant around that. What happened on that front? And I’m sure that was a big part of the thrust of the book.

Understanding the Emotional and Physical TollBeth Pinsker (10:19)
Yeah. Okay. It was, and there’s a difference. I draw a line between medical caregiving, like physical caregiving, and the financial caregiving. And I’m purely focused on the financial caregiving. There’s a lot out there on the medical and the physical side, and even the emotional side of caregiving. ⁓ But those are things that you can actually pay other people to do. And it’s really hard to pay anybody else to do the financial caregiving part. Even a financial planner, even a manager.

Like you can hire people to do some of it, but ⁓ you know, like my mom was not gonna give her ATM card to just anybody, right? She certainly wasn’t gonna give it to a banking stranger or somebody she hired to be in that relationship. She wouldn’t trust them, especially if she was incapacitated. Certainly, she wasn’t gonna give it to one of the ladies who was helping her in the bathroom. so. That’s another thing.

Frazer Rice (11:16)
Sure. Or worse maybe she would have and that’s another problem that you have to insulate yourself against.

Beth Pinsker (11:33)

So, you know, for somebody, need somebody you trust who’s really on the ball to like, you know, have access to the bank account and the credit card and all of those things. And it goes way beyond that because when somebody’s in the hospital or sick or navigating, you know, the care infrastructure in the United States, you have to keep an eye on it because it’s just, it’s so complicated.

You have to be on site or visiting often or making spot visits or calling them in some capacity. They’re trying to move your parent. They’re trying to release your parent. Things need to be taken care of every single day. If you don’t check in on them, that person could be waiting in dirty bed clothing to be changed. And you don’t want that for your parent or any sick loved one.

Just the amount of mental energy and physical energy caregiving takes. I think I counted them up for the book. In eight months, I made eight trips back and forth from New York to Florida. Each of the trips was at least a week. Some of them were for multiple weeks, like three weeks. I made a trip, I was there for three weeks, because stuff kept happening and I kept having to stay.

My mom’s time was short because her illness got serious pretty quick, but it was a lot. I have a full-time job. I’ve got kids. I’m divorced. when I’m with my kids, it’s just me and I have a dog. People have stuff that they have to do in their regular lives.

It’s hard to add an entire other complicated human being on top of that. Mom’s coming home from the hospital. You got to go find a place, either a nursing home for her to go to, or you got to be at the house to accept the medical delivery. Somebody’s going to be there who’s responsible to sign for it. That can’t just be anybody, you know, like you need to be on top of those things.

Frazer Rice (13:39)
Well, and you’re fighting the caregiving business model in many ways. The healthcare business model is not an empathetic thing. Not only are you fighting that and all the different bureaucracy that accompanies it. There is so much mental energy to do what you described. To make sure that the aging process and the recovery or hospice process is done with the dignity that you want.

That is squarely at odds with what the healthcare system is wanting to do at that point. I tell anybody on that front to get ready to deal with this stuff. You’ve got to really swallow hard and get ready. It is going to be an emotional and energy tax that you may not have prepared for yet.

Making Informed Caregiving Decisions for Loved OnesBeth Pinsker (14:29)
Yeah. And you really need to know what caregiving that person wants. So that’s where a living will, ⁓ the healthcare proxy, the HIPAA permission, there are all sorts of ways to express that living will. There are these things called five wishes, which help you ⁓ say what you want in a more ⁓ common way instead of legalese.

But the living will is a legal document, right? Like you need that in order to be able to prove what your loved one wants or wanted if they can’t speak for themselves. ⁓ And you don’t want to be making that stuff up. You really need to like have a discussion about it.

I think that of all the things I went through taking care of my mom, knowing very clearly what she wanted was the only thing that brought me peace in the whole process is because I was there as a steward to take care of what she wanted. And if I didn’t know what that was, I would have driven myself crazy.

Like it’s too hard emotionally to try to make life or death decisions for somebody else, somebody you love, without knowing what they want. And, or especially if you’re going to go counter to their wishes, because that’ll blow up your whole brain. ⁓ But I knew what my mom wanted. I knew what her parameters were. I knew what she considered hopeless and how mostly how she didn’t want to live.

Without knowing those things.I would never have been able to make decisions, hard, hard end of life decisions, And you need them, not just verbally, but you need them on paper. You need both. And, you know, estate lawyers, God bless you, like all of you out there, like you help people get those things together and people need them. And I just wish more people had them because like, you know, I’ve, looked at all the stats for this book, right?

Perennially over decades, 60 to 70 percent of people do not have any documents in place for their incapacity or death. Like 30 percent of people in almost all surveys, 30 percent of people have a will of some sort. That’s not enough.

You need the capacity of documents. You need a living will. Like if you’re going to help, if you love people, like you have to put this stuff together for them. They have to know what you want. Um, and I, what my book tries to do is show people why, right?

Here’s my caregiving story of what I went through. Here’s when I needed this and that document. And finally, here’s what having that document meant I was able to do and able to feel and able to survive. Um, and here’s what having that document, not having that document would have done if I didn’t have it and here’s what it did to you know other families that I talked to.

You really have to understand that why and I think a lot of people don’t and I think that’s why they don’t get the documents done. That’s why when a lawyer hands them in a state planning binder and asks them to put information in it, it just sits on a shelf.

Frazer Rice (17:40)
It’s a huge mistake and all it takes is one time touching the stove like that and people understand right quick what it means to not have that in place. And when you don’t have documents in place, you’re stuck with the default rules that the government sets up for you and with the process that the government sets up for you, all of which is painful. And to not do that is to not get things in order.

It’s a small thing, ⁓ but it’s not a small thing. If you don’t do it, you’re setting up the people who are in charge of taking care of you or that you’re dealing with that just get raked over the coals with crazy.

Beth Pinsker (18:27)
Yeah, and it’s even more important, people think about that in terms of ⁓ state mandated succession, if you die without a will. ⁓ But after somebody dies, you have a lot of time, nothing’s gonna change in that situation.

When you’re incapacitated, there’s deadlines. If you don’t have access to certain things in a certain amount of time, like money for a mortgage payment or the ability to make medical decisions, even who can see you in the hospital if you’re divorced or if you’re in… There are people in this country who have family members who don’t agree with their lifestyle, say.

If you’re in a same-sex relationship, and you don’t have paperwork in place and your family swoops in and won’t let your partner in to see you, that’s still happening out there. And without legal paperwork, you can’t fight it. That’s just really sad. And I don’t want that to happen to anybody. So if you can reach some people with storytelling, that’s what I was hoping to do.

Frazer Rice (19:22)
One of the things that’s a little bit scary too is the numbers around all of this, where to me, one of the things that scares me going forward, country-wise or otherwise, is the amount that the costs of the last two years of life are and what they’re going to be. And the safety nets that are out there may or may not exist later on. They’re so poorly understood as to how to deal with them anyway. ⁓

Maybe take us through a little bit about what you found related to getting the dollars in order so that ⁓ those last two years, which are the most expensive years of life, usually even the last two months, ⁓ how that can creep up and really ⁓ create a situation.

Financial Planning for Caregiving and End-of-Life CareBeth Pinsker (20:12)
Ha. Yeah. Probably nothing made me crazier than, than hospice. Like I didn’t understand that hospice like wasn’t a place. I thought hospice was someplace that you went like, oh, when, when you’re at the end of life, they send you to hospice, right? Hospice is like, for the most part, just your house, you know, and they, they pay for some of the medical supplies and they, uh, you know, a nurse will come by. Um, but for the most part, you’re just like living your normal life until, you know, until it’s really, really close to the end.

I think a lot of people don’t understand that, you know, because like they go home and think they’re on hospice and then, you know, 18 months later, you know, they’re still footing the bill for all this care or somebody has to quit their job to stay home with them. And I didn’t understand any of that.

You know, my mom’s illness went really fast. So, we were in this hurry up offense, the whole hurry up defense for caregivng, I guess it is- I’m not good with sports, but we, you know, we were just running gun the whole time. It wasn’t until we got my mom home for hospice that, you know, we started to look at how long can we handle this.

We didn’t, you know, my mom didn’t have a terminal diagnosis. So it’s not like she had cancer and we knew how long it was going to be or something like that. We thought she was potentially gonna get better and she just wanted to go home so she went on hospice so she could go home with some support. We thought that we were gonna be in for a long haul- in Jimmy Carter land, where you’re just on hospice and when you go, you go. He was on hospice for more than a year.

Frazer Rice (21:49)
Right.

Beth Pinsker (22:07)
That happens to people, but not very often. We started to plan then. What we did, you know, I these formulas in my book. Which are standard financial planning formulas that you learn, you and that any CFP knows.

Mostly you have to plug them into software. The parameters and the Monte Carlo simulations get too complicated. It’s basically, you know, how much are you spending now? How much do you have? How long, ⁓ and then you plug it into a formula about how long is that going to last, right? If you have enough to last a significant amount of time, you need to factor in growth, right? So the money’s growing at the same time you’re spending it. So you can’t, it’s not just subtraction is the point I was trying to get along to people. If you’re spending $15,000 a month,

You have $100,000, it’s going to last a little bit longer than just, you know, taking $15,000 chunks out of it. If you’re lucky enough to have, you know, more than that, or the ability to sell a house or whatever, you have to factor all of those in.

So you have to make a plan. Okay, for the next six months, we’re going to spend down the savings, and that’ll get us to point B. Then after point B, we’re going to sell the house and you’re going to go to a nursing home. That’s going to be more expensive. but we’ll have the cash.

Then after that, you know, we’re gonna have to think about Medicaid or somebody in the family’s gonna have to put up some money to fund the cost. And then you’re sort of playing this like game of catch up the whole time. You know, is the person gonna stay alive for that length of time? You know, are they gonna need significantly more care as you’re going through those equations? Because you have to change them all the time. My mom started out with one set of aides who covered a 24 hour period. Every day, seven days a week.

But when she came home for hospice, one caregiver wasn’t gonna be enough, right? So we had based our whole budget on, you know, one caregiver at a time. They would do a 12 hour shift. Then the next one would come in and do a 12 hour shift. When she was home for hospice, we needed those shifts to overlap, because she couldn’t be left alone.

If the caregiver needed to go to the store or run to the pharmacy to get medicine or leave the room to go make dinner or whatever a normal life requires you to do, we were gonna need them to overlap a little bit.

That was more money, you know, and it lasted longer than we thought. So they were going to need vacations because they were getting burned out. Then you’re paying for a caregiver to go on vacation and then paying for a caregiver to cover for them. And the cost just, they’re just exponential. They’re just, it’s just so much money.

Frazer Rice (25:07)
It does not stop. As we wind down here, what are the top parts of the checklist that everyone should check off and make sure that they have in place? And I say that as a subtle jab to people to buy your book because that’s going to be, you know, the details underneath that checklist are going to be important.

Caregiving: Essential Documents and Digital AccessBeth Pinsker (25:28)
Yes, so you need to have the power of attorney and the healthcare proxy. You need to have access to the person’s phone. That means knowing their latest phone code. And also, I bring up a thing, I don’t know if, you know, this is some things people miss. Like, I don’t know everybody out there if they’ve done this.

If you named a legacy contact for your phone. that is like naming a beneficiary for your phone. And it’s really important because phones are hard to break into. And people ⁓ think that you know their phone code. Then they change it and they forget to write it down, especially old people. If you can’t get into the person’s phone, you’re kind of…

It’s as if you don’t even have power of attorney. You can’t two factor anything. ⁓ You don’t know anything about their life if you don’t have access to their phone. So you need those proper documents to do it legally. You need ⁓ access to their phone before and after death. ⁓ And you need some sort of will or trust or something to say end of life, ⁓ you know, cause power of attorney, a lot of people don’t know this either out there in the world.

Power of attorney stops when somebody dies, right? So you need something for after that point. So you need power of attorney and healthcare proxies up until the point somebody dies. And then you need whatever you’re gonna do for after. Whether that’s a will or a trust. It depends on your circumstances, but you need those documents and you need access to the person’s key,

Frazer Rice (26:45)
Sure does.

Beth Pinsker (27:06)
⁓ digital existence, which is their phone. With their phone you can mostly get their passwords. So it’s not important that they write everything down. Like my mom didn’t. My mom thought she did. My mom had an old check register. She wrote all the passwords to anything that she had a password to. I couldn’t make any sense of it whatsoever.

She thought she was so clever and so prepared. I literally couldn’t read her handwriting, had no idea what she was talking about. like it was written in scribbles and I couldn’t make sense of it. So I just went in and two-factor everything and overrode all our passwords and reset them. But that’s time consuming. Think if somebody had to go into your entire digital existence and reset all of your passwords.

ConclusionFrazer Rice (27:56)
If I’m doing it, it wouldn’t happen. I confused myself on that front.

So as we, what is the best way for people to get to the book? I know it’s coming out in November, but pre-sales are important. So everyone get out there and, and, and get it.

Beth Pinsker (28:09)
These titles are everything.

Bethpinsker.com and I write regularly for Market Watch. I’m a retirement columnist, so you can always find me out there on the internet, on social media. It’s just my name. All you have to do is search it and you can find it. I’m readily available on all channels.

Frazer Rice (28:28)
and title of the book.

Beth Pinsker (28:30)
My Mother’s Money, a Guide to Financial Caregiving, out November 4th from Crown Currency.

Frazer Rice (28:35)
Excellent. Beth, thanks so much for being on.

Beth Pinsker (28:37)
Thank you. ⁓

JENNY ROSELLE on Aging and Roles in Estate Planning

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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There are plenty of LESSONS FROM GENE HACKMAN’S ESTATE PLANNING.

https://youtu.be/HZI4oiP0ZtMIt’s a cautionary tale about managing changing circumstances. Proper implementation and monitoring has to be in place. Periodic reviews of the documents, asset titling, and staffing of the fiduciary roles are a must. Finally, understanding the family dynamics and desire for confidentiality are vital in putting the estate plan in place. The disposition of $80 million was at stake here.

LAWRENCE D MANDELKER, Partner at the NEW YORK OFFICE OF VENABLE, and I discussed the fact pattern, what could have been avoided, and points to take away in one’s own affairs.

https://open.spotify.com/episode/1ndlYCQRiAokJ4FyATL9TeTranscriptionFrazer Rice (00:02)
Welcome aboard, Larry. VENABLE ARTICLE ON GENE HACKMAN’S ESTATE

Lawrence D. Mandelker (00:04)
Thanks for having me, Frazer.

Frazer Rice (00:05)
This is, I wouldn’t say it’s fun talking about someone’s estate, but this one’s particularly interesting. We all remember Gene Hackman from Hoosiers and Superman and Mississippi Burning and all sorts of great movies. Unfortunately, his end was sad and as it turns out, Gene Hackman’s Estate was complicated and public. From a planning perspective, we can learn a lot. ⁓ Take us through a little bit about where where Gene’s estate kind of went from and ended up as far as a fact pattern.

Fact Pattern in Gene Hackman’s Estate PlanningLawrence D. Mandelker (00:37)
Sure. So, you know, the news sort of surprised all of us when we heard that he had died. And then over the next couple of days and weeks and even months, more more detail came out. And as you said, it was pretty disturbing. But it seems as though Gene Hackman was a very successful ⁓ actor and he engaged in estate planning.

Gene worked with attorneys, which is always a good thing to do it to work with people who are experts in the field And he had a you know a normal estate plan. He lived with his wife It seems like he had a little bit of a fractured family. It was not his first marriage. We learned after he signed his estate planning documents sort of things over the next 20 years sort of changed for him he He had some health issues.

He was suffering from advanced dementia at the time he died and as we know his wife died from a virus apparently a week before. Then as the details came out we learned that he had the advanced dementia. There was a fractured family the the wife and his kids did not get along so well. It’s unclear what the situation was with how much contact he did have with his children. But he had a will, he had signed it 20 years before he died. The facts changed. It looks like he hadn’t reviewed it in a while. His attorney died so we have a sad situation here.

Frazer Rice (02:12)
Many lessons to get from that. Let’s start with the first one. He definitely had ⁓ sort of dementia situations, cognitive dysfunction that eroded over the course of time. Maybe take us through a little bit about the scope of that issue. mean, it affects lots of people and a growing number every year and some things that should be in place because of that.

Lawrence D. Mandelker (02:38)
Yeah, you know, we all think we’ve got a lot of time and for someone who gets a diagnosis of dementia

It’s sort of a warning sign as soon as that happens that, you know, we never know when our time is going to come, but the dementia is sort of the warning. You know, maybe you’re entering the second half of the game or the fourth quarter of the game. So maybe you should start getting your affairs in order while you still can. So it’s a good ⁓ impetus to do that. You know, when we’re looking at estate planning, there’s, you you can do different types of estate planning, but really think about it as, you know, you can do it for yourself.

You can do it- your loved ones and then you know for depending on the nature of your assets you can do it for tax purposes but you know getting the the warning that you have dementia doesn’t mean that you can’t sign a will doesn’t mean you can’t do any estate planning it just means that you know you’re probably heading towards a situation where you are going to face you know a number of years during your life where you can’t make the same decisions on a daily basis for your own benefit that you can today.

And going back to that idea of the first level of estate planning is for yourself. So you want to make sure that you’ve put in place a plan of who’s going to make decisions for you when you can’t make those decisions, rather than having those people fighting amongst themselves to decide who’s going to do it. You’re empowered to do it yourself.

Standard DocumentsFrazer Rice (04:08)
Well, and it goes to goes so far as to reiterate the notion that you should review these things periodically. The idea of making decisions around health care, making decisions around financial ⁓ situations. We’re dealing with a sizable estate and to have that in a confused state, you know, someone’s health starts to decline. That’s a dangerous place to be.

Lawrence D. Mandelker (04:31)
Yeah, absolutely. mean, you’re at the very basic documents.

You want a healthcare proxy and a power of attorney. The healthcare proxy is going to name a healthcare agent to act for you to make your decisions when you can’t make them. And the power of attorney is going to name someone who can do anything that you can do by signing your name.

So they can sell your house, they can buy a house, they can take out a mortgage, they can buy stock, they can sign your tax return, they can pay your electricity bill. The people that you trust to do those important jobs may change over time. So when your kids are young and if you’ve got a teenage child, maybe you don’t trust them. But as they are in their 20s and 30s, and at that point when your kids are young, maybe you’re naming your siblings as these agents, or good friends, or trusted advisors, whether it’s your accountant or your attorney, people that you’ve known for a while whose judgment you trust.

But then when your children get older, that changes a little bit. Maybe now you start trusting your kids to do that. Your advisor is no longer working or you’ve moved on a different advisor. Maybe your siblings have their own health problems so they’re not able to do it. So it always changes and it’s always something that you don’t need to look at the documents every day. And I sort of tell my clients, know, keep the documents someplace where they will be found but not where you see them every day. ⁓

Frazer Rice (05:57)
Well, the backup to that is don’t leave it in a safety deposit box at a bank where necessarily the bank may have trouble getting to it if you don’t have those documents in place or they are in the vault.

Lawrence D. Mandelker (06:12)
Yeah, you know, that’s the thing that’s one of the first things you learn out of law school as a trust and estates attorney that you you need a court order to open in New York, at least you need a court order to open up a safe deposit box after someone died. So if the will is in there, you you’ve increased your complexity, you’ve increased your costs, you’ve increased your time just to get the will.

ImplementationFrazer Rice (06:32)
So let’s get back to the important notion of implementation and then the close cousin to that monitoring the estate plan as it goes forward. A lot of what’s going on in the Gene Hackman estate is going to be related to titling of assets and making sure that they are in the different entities that were set up, making sure the designations are in place, and then understanding that that is where that it follows the intent of Gene going forward. What do we learn on that from what we had here.

Lawrence D. Mandelker (07:04)
Sure, know, a lot of our clients come in, they sign the documents, and they think, wait a minute, I’m done, right? And, you know, sort of there’s a next step.

You want to make sure that you’ve implemented your plan. So that means you know if you have a revocable trust because you want to avoid probate Well, the assets have to be in the revocable trust You actually have to retitle your assets if you want to update your beneficiary Designations on your retirement accounts or on life insurance policies.

It’s not enough to just say you want to do it. You have to actually fill out the forms. You have to send them in. Practice pointer: you should follow up with the insurance company and get written confirmation that you’ve done it correctly. If you name three children and they only put down two, then they’re only going to pay it to two kids. You want to always check and recheck to confirm that everything that you’ve done.

Frazer Rice (07:58)
This was a case where sort of the way of going about it, where they “set it and forget it.” It really hurt things going forward.

Lawrence D. Mandelker (08:06)
Yeah, he signed his will and he didn’t review it, it seems like, for quite some time. So he named as a fiduciary, he names his attorney. And meanwhile, his attorney ⁓ predeceased him.

We don’t know if that was because maybe he lacked capacity to change those documents at the time the attorney predeceased or he just didn’t look at it. But in any event, if the attorney’s getting older or something’s happening, you you should know, you should constantly monitor.

If these are the people that you’re counting on to take care of you, then you want to make sure that they’re in a good position to do that.

Frazer Rice (08:42)
I tell people that it’s a good idea to have the people who staff the different roles in your estate plan be, as a rule of thumb, 10 years younger than you are. Maybe more, just so that you don’t have these types of issues.

Lawrence D. Mandelker (08:57)
Yeah, no, that’s a good rule of thumb. You usually don’t want someone older in the event that you really have nobody else. Or you have a small family or you don’t trust someone. Maybe the family dynamics is really shifting drastically. Then sometimes you’ll just name, maybe add an extra person in the hopes that, well, this person probably won’t act, but if something, you know, happens to me, you know, something surprising happens to me, then at least someone’s there to be able to name someone else to act. So yeah, naming younger people, naming more people is backups that’s always important.

Frazer Rice (09:33)
Well, and that was an unintended good thing that happened in this estate plan. It sounds like he had a second successor in place because the circumstances around the joint death were a little peculiar. So having someone else in place has helped a little bit in this situation.

Lawrence D. Mandelker (09:49)
Yeah, absolutely. It’s that second successor. So it’s not only your primary agent and a successor, but sometimes having that other successor. It’s contingencies. I we’re always worried about, you know, the fact when we draft documents, we always in part of our plan, try to figure out, OK, well, what happens in the family disaster situation? Right. You all you’re all on the plane going down to Disney World for a big family reunion and the plane goes down. Who, you know, who outside of the immediate family do you want to get the documents? But we’ve got it. We’ve got a plan for all contingencies.

ConfidentialityFrazer Rice (10:20)
One of the things that’s sad about Gene Hackman’s Estate is that it’s being played out in the public. hear about estate planning in People Magazine is not exactly something we expect. But the fact of the matter is that this is sort of played out publicly when in many cases I’m sure that Gene didn’t intend for that to happen. Maybe talk a little bit about the privacy and the confidentiality issues that are at play here.

Lawrence D. Mandelker (10:43)
Sure, so your will is your will and it’s just a document until it actually gets probated, which means the court goes in and stamps it as being an official document. But for that process to happen, you have to go to court, you have to file the will in court, and that means it becomes part of the public record.

And whenever there’s a celebrity death, sort of a week or two weeks afterwards, the will comes out. It’s always in a newspaper or magazine. I represent highly visible people, They don’t want that. That’s their personal issues. Gene Hackman lived a quiet life. I don’t think he wanted people to know what his relationship was with his family, et cetera- or how he wanted his estate distributed.

Now, one thing that he did do was he used a revocable trust. A revocable trust is also sometimes referred to as a will substitute. That does not get probated. So that does not become part of the public record.

Where it says that his assets go into a revocable trust It doesn’t mean that it didn’t that he didn’t leave it for his kids or he didn’t leave it to charity.We just don’t know and, frankly, it’s none of our business.

No, you know, we don’t we don’t need to know how much money he had. or what he did with his money You don’t know what he spent it on on a daily basis. As someone who represents highly visible people athletes entertainers, they don’t want you know. They’ve got enough publicity. They want a little bit of privacy and we should all sort of give them that.

Frazer Rice (12:18)
No question. I imagine that’s why Gene kept a low profile, especially in the later stages of his life. He wanted to be remembered, I think, for his acting career and the legacy he left behind. Not the final years and the way he lived that.

Lawrence D. Mandelker (12:37)
Right, absolutely. ⁓ I wouldn’t want my neighbors to know what I’m doing with my money. I don’t deserve to know what they are. these people just have a, maybe it’s a cooler job and it’s a more visible job, ⁓ but give them that common amount of decency.

Hidden Traps in Gene Hackman’s Estate PlanningFrazer Rice (12:50)
Right. Regarding, Gene Hackman’s Estate, one of the things that ⁓ I think is a real cautionary tale here is that sometimes the boilerplate in these documents is particularly important and the circumstances of Gene and his wife’s demise have created a little bit of ⁓ sort of a walk into the gray area of how things should be applied here. Maybe take us through that. ⁓ This involves sort of the timing of death and how that applies to the implementation of these different vehicles.

Lawrence D. Mandelker (13:29)
Sure, so when we say boilerplate, we’re kind of talking about the general language and the will. So when you have a will, talk… you know, when your client tells you what they want to do and we’re drafting their will to reflect their wishes, there’s certain provisions that we’ll always have in that will, you know, provisions on how the will is going to be administered, what laws are going to apply, things like that, tax provisions. So, you know, that’s really what we talk about as far as boilerplate.

The problem is that that boilerplate sometimes is more important than the actual dispositive provisions of the will. Those provisions that say 50 % goes to my son and 50 % goes to my daughter. Depending on how it’s administered, the 50 % could turn into something very different. This is a perfect example of that.

Gene survived his wife. His wife died and then a week later he died. Her will said if Gene survives me, if he’s alive when I’m dead then he gets the money. It goes to him. Later on, it said if he doesn’t survive me, if he’s not alive when I die, then the money goes to charity.

The document said, well, if Gene doesn’t survive by 90 days then it’s treated as if he pre-deceased her. That little provision rewrites the whole will. It’s done for the reason to make sure that if jean wasn’t around, if we died in a common accident and maybe I died.

We died in a car accident and I died on Monday and he you know survived for three days in the hospital You know, he really didn’t have time to change it. He didn’t benefit from it So I don’t necessarily want it to go to him. I want it go to who would have gone anyway. If he didn’t survive, so that’s the purpose of that type of provision.

But really it turns things on its heads. And I really think that the lesson from this is, especially for the do it yourselfers out there who go online and they try to copy a will and type in their name and say, this is the provisions. You don’t know what’s hidden in the, for computing purposes, you don’t know what’s hidden in the code, right? You don’t know what else is in there and what changes those could have on the of the document and the plan.

Frazer Rice (15:57)
Well, and to put numbers around this, depending on how this gets sort of, sort of disseminated and understood, this could be $80 million going to the heirs or $80 million going to charity. And with some, you can understand that some people are going to have some questions about that going forward. If you aren’t clear about what the intent is in your documents and making sure that that’s understood in that language.

Lawrence D. Mandelker (16:28)
Yeah, like I said earlier, these little provisions that you tend to gloss over can really change the entire estate plan. This is a swing of $80 million. That’s going to be a huge difference.

The Dangers of DIY-PlanningFrazer Rice (16:43)
For the do it yourselfers, I’m going to reiterate it because I think it’s important. Getting an estate plan document by auto generation is going to cause some issues around this. People put things in place where they don’t understand how the levers get pulled. The directions that an estate plan can go will frustrate intent.

So this is my little sort of bromide: if you are using those documents, it’s a good idea to have them go through a lawyer as well so you understand how each of the clauses can impact these types of situations.

Lawrence D. Mandelker (17:27)
Yeah, I mean, you know, I sometimes say that if you’re being responsible enough to do estate planning. You’re thinking ahead, you want to plan, you want to empower yourself, you want to take matters into your own hands so you get to decide who gets things and how it’s going to be done, then you really should go the next step to do it. Otherwise, you’re really taking a big risk. I could get behind the wheel of my car and blindfold myself and start driving to the store and I may make it. It may work out perfectly, but it’s not necessarily a good idea to do it, even if it works out.

Frazer Rice (18:01)
Well, and to go back to the other parts of the Gene Hackman Estate fact pattern here, number one, intent can shift. And if you get into places where capacity or dementia start coming into place, it’s important to review these things. And secondarily, you can even have the will or the revocable trust say what you want it to say. But if you don’t have that titling and designation of beneficiaries and various things line up with the document, your intent can get distorted quickly.

Lawrence D. Mandelker (18:29)
Right, you know what you know, but you don’t know what you don’t know. And that’s dangerous part.

Frazer Rice (18:34)
We can look into the crystal ball for people and take care of a bunch of risks, but certainly not all of them.

Lawrence D. Mandelker (18:41)
Right.

I think you brought up a very good point just now and thank you for raising it. There are certain things that are done when you sign a will. They can help support the will in case of a later challenge, especially if you have incapacity.

So when you’re dealing with an attorney in some states like New York, for instance, where I’m located. When an attorney supervises the execution of the will, there’s a legal presumption that it was executed correctly. When you bring the will to court to probate the will, you have to prove that it was executed correctly.

If you had an attorney supervise it, you don’t have to do that. Someone looking to object to a will, to contest it, and say that’s not a valid will. You’ve made their job infinitely harder by having an attorney supervise the execution.

Frazer Rice (19:37)
People are discovering, for instance, Aretha Franklin’s estate has this issue. Someone found another will in a couch somewhere.Tthey’re going to litigate as to whether that’s valid or not. You can reduce the stress on the executor. The ultimate heirs and family members will thank you if you tie this up in a nice bow ahead of time.

Lawrence D. Mandelker (20:00)
Absolutely. There’s a lot of things that go into the will execution ceremony, the meeting where you sign your will. There are a lot of things that go into the whole process of your estate planning. You have to deal with correspondence, deal with discussions that you have with your attorney. This is true especially for people that are concerned about having a will contest. There could be concerns about dementia and people saying maybe they didn’t understand the will. Working with someone well versed in what they need to prove the will execution is extremely, extremely important. Can’t be said enough.

Final Points- Lessons Learned in Gene Hackman’s Estate PlanningFrazer Rice (20:42)
Great stuff. Larry, any final points on Gene Hackman’s Estate?

Lawrence D. Mandelker (20:46)
Your estate doesn’t have to be the size of Gene Hackman’s estate. You should be take these steps, regardless of how large your estate is. You should be working with someone who’s well-versed. Who is going to give you the information that you need to effectuate your wishes.

Frazer Rice (21:02)
How do the listeners find you?

Lawrence D. Mandelker (21:05)
I am a partner in the New York office at Venable. They can email me at lmandelker at venable.com . More than happy to talk to anyone.

Frazer Rice (21:20)
I’ll have that in the show notes. Thanks so much for being on.

Lawrence D. Mandelker (21:23)
Thank you. I appreciate this.

Further LinksSome links related to lessons and Gene Hackman’s Estate

Preserving Legacies (And the Applicability to Gene Hackman’s Estate)

Three Estate Planning Mistakes (and Gene Hackman’s Estate)

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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US/UK TAX PLANNING with ALEX JONES, Partner at London Tax Firm, RAWLINSON-HUNTERhttps://youtu.be/UjgQRpfqJ-EThousands of Americans live and work in the UK and record numbers of them are applying for British citizenship. Planning for taxes for these folks has always been challenging, but in 2024, with the change in the non-DOM rules, it's gotten even more difficult. To help us understand what's happening here and to try to identify some of these issues is ALEX JONES. He's a partner at Rawlinson Hunter, the British tax firm. Enjoy.Outline00:00 Understanding UK Tax Law Changes for US Citizens07:00 Navigating Residency and Tax Implications11:49 Planning for Inheritance Tax and Trusts19:51 Pre-Immigration Tax Planning Strategies30:03 Managing Double Taxation and Tax Creditshttps://open.spotify.com/episode/4Hmqaalhjk3NklfMCWNd4X?si=8e45eac2d2f247ccTranscript of US/UK Tax PlanningFrazer Rice (00:04)Well, we have certainly had a lot of news with British tax law changing. And for those of us here in America who may or may not be part of getting to Europe in a major way and in the UK in a more permanent way, maybe give us a little overview of ⁓ A, what happened, but more specifically, how the UK thinks of US citizens, which can take different forms.Alex Jones (00:31)Let's start with the back end of that question, how we regard Americans. So from a tax point of view, clearly what we're really saying is how do we regard Americans who are exposed to UK taxes? And typically that means Americans who are here. Like most countries in the world, the UK will tax people on UK sources of income.If somebody has a trade or business operating in the United Kingdom, we're going to try and tax it whether they are here or not. But if the US individuals physically in the United Kingdom, then the UK is going to try and tax them in a number of different ways, which I'll talk about in a second. The pause is really just to emphasize the fact that they're American. So a US citizen or US green card holder is going to be US worldwide taxable, whether they live in America or not. So America is going to look at everything everywhere in an American way in dollars in a calendar year. And at exactly the same moment in time, albeit in the UK we have a different tax year end. Our year end is a rather crazy 5th of April year end. Exactly the same amount of time the UK is going to look at exactly that same person and say, hey, what are we going to tax? And so you're starting with the premise that both countries are fighting over who gets the tax first. And the first thing you have to do is look at the two sets of domestic legislation to see how to start, where the problems are, and then you start looking beyond that.In principle, the UK is going to tax people who are resident in the UK on worldwide income. So anything everywhere under UK rules, UK fiscal year, in sterling, et cetera, et cetera. And somebody who's not resident in the UK on UK-CITUS connected income only. However, the UK has long had a regime which has been known as the domicile regime or the remittance basis regime, which has been pretty well known internationally where we said,Look, if you don't originate from here, if you're a foreigner coming in for a period of time, could be indefinite, could be reasonably long, but not permanently, then we won't necessarily tax all things which are non-UK. We would tax things that you brought into the UK, remitted, but we wouldn't necessarily tax non-UK things that you didn't otherwise bring or use or benefit from in the United Kingdom.So the thing that changed in the budget that was announced at the end of October 2024 that largely came into force on the 6th of April 2025 is that we said, hey, this domicile regime, this remittance basis regime is kind of too beneficial to wealthy individuals. You have neighbors who are paying differential amounts of tax just because one person's kind of fore...

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JOHANNA DAVID, Adjunct Faculty Member at Hofstra Law School is with us to talk about three estate planning mistakes and how to avoid them.Johanna is a Trusts and Estates lawyer, and a partner at Forchelli, Deegan, and Terrana. She's also the adjunct professor of law at Hofstra University. We're going to talk a little bit about mistakes that we see in estate planning and the simple things you can do to keep them away from your situation. Enjoy.https://youtu.be/gD_d9J609VgThree Estate Planning Mistakes Chapters00:00 The Importance of Estate Planning09:47 Common Mistakes in Estate Planning19:54 Understanding Trusts and Their Benefits24:00 Navigating Elder Care and Estate PlanningOutline of "Three Estate Planning Mistakes"Frazer Rice (00:01)Welcome aboard, Joanna.Johanna C. David (00:03) -Three Difficult Planning Stories and What Can We Learn?Hi, thank you. Thank you so much for having me. I appreciate it.Frazer Rice (00:06)Well, happy to have you on because we are now, most people sort of put their estate planning off toward the end of the year, but I have a feeling given where the legislation is going, et cetera, that the crush is going to happen earlier than we think. In the meantime, you and I were talking beforehand about some mistakes that people make from an estate planning perspective and that they're very avoidable. I thought we'd take this opportunity to go into that a little bit.In your practice, maybe let's start with a couple of, or sort of the big ones that you see, ⁓ give us some ideas of some mistakes that people make that really should be avoidable.https://open.spotify.com/episode/57MMskGgp1P3fOVklGt090?si=ISap3Z_YSdqK_zg4-DlevwJohanna C. David (00:48) - Structure and Other Planning TacticsSure, absolutely. So the number one mistake that I think that people make is not having the proper estate planning documents. I see this happen time and time again. I don't know if it's because of the stigma. People are afraid to approach estate planning, right? Sometimes it makes your mortality very real. But the biggest estate planning mistake is not having the right documents.Everyone, everyone, I cannot stress, everyone needs to have at least a will, a power of attorney, and a healthcare proxy. And there are people that say, well, you know, I don't really have much, I don't need to do that, or ⁓ everything's gonna go directly to my husband and my children anyway. You know, that's how it works. But that's not exactly the case, right? You and I both know.So, especially if you have young children, young couples definitely want to have those things in place. You want to think about who is going to be the guardian for your child or your children if both of you pass away. And a lot of people don't think about that. And those only cause problems in the long run. I'll give you a quick example if we have time. But ⁓Frazer Rice (02:02)⁓ please do.Johanna C. David (02:03) - Long Term Planning Issues and Avoiding ProblemsI remember, this was several years ago. I must have just started practicing and I had been a young attorney. So it was about 15 years ago and a woman came into the office and she and the decedent had been living together for about 30 years. They held themselves out to be married. Now, Frazer, you and I both know that New York does not recognize common law marriage. Frazer Rice (02:30)This is true.Johanna C. David (02:32) - Correcting a Big Will MistakeShe was not aware of that. And so they were married for 30 years. Everything was in his name or excuse me, they were not married. They were together for 30 years, held themselves out to be married, not legally married. He owned the co-op apartment. Everything was in his name. Now he had a daughter from a previous marriage, legal marriage that was a strange.And you guessed it, our client did not get along with the daughter. So the father dies and guess who inherits the co-op that ...

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We're going to be talking about the current incoherent world of US ENERGY POLICY. ANNA KRAMER joins the podcast to help us get our arms around the future of energy in the United States. Anna is a reporter for NOTUS, a non-partisan longform journalism outlet. She has written a series of stories on the the disconnect and frustration around US Energy Policy and paths forward. We talk about: The chaotic policy at the federal level (and beyond) The huge cost overruns and administrative complexity The role of nuclear The increased energy demand in this country Finally, we muse about what can be done about it going forward.https://youtu.be/3k-N-AGTNfUOutlineSection 1: The US Energy Policy Transition: The Goals and the Problem. Discussing Brandon Shores Coal Plant and electricity prices in the Mid-Atlantic Region.https://www.notus.org/policy/biden-clean-energy-coal-maryland-brandon-shoreshttps://www.notus.org/policy/electricity-prices-spiking-biden-clean-energy-transitionhttps://www.notus.org/policy/nuclear-power-energy-crisis-costEvidence that the transition is happening. Electrifying = efficiency. Cheap wind and solar, look at the free markets in Texas — ballooning wind and solar thereThe reliability, capacity, and resource problem: Needing certain amounts of energy and voltages at all times of day. Leads to keeping coal plants online past scheduled retirement dates, plus spiking pricesHow much do emissions and climate change goals matter to the industry? What role does nuclear energy play?Section 2: Interconnection Queues and Permitting Reform. Bipartisan and Industry wish for Permitting Reform: Why is it so hard for US Energy Policy? https://www.notus.org/policy/permitting-reform-bill-manchin-environmentalistshttps://www.notus.org/policy/solar-farm-culture-war-biden-climate-changeSection 3: Trump’s US Energy Policy “dominance agenda” disappointing every part of the energy industry. Idea is not aligning with reality. DOGE cutting into the basic functions of energy governance.https://www.notus.org/policy/doge-cuts-trump-drill-baby-drillhttps://www.notus.org/policy/donald-trump-tariffs-trump-energy-agendaTranscriptFrazer Rice (00:01)Welcome aboard, Anna.Anna Kramer (00:03)Thanks for having me, really psyched.Frazer Rice (00:04)I went through a bunch of your articles covering the power industry and energy generation and a lot of things that are happening federally, state level, and it's going to be a lot to get our arms around, but you were the person to do it. So just generally speaking, we're at a point in time with energy and transition ⁓ that policy is moving. Maybe take us through a little bit about the goals and the problem we face.Anna Kramer (00:31)So there are sort of two, I would say, competing problems right now. ⁓ The first one is load growth, which means basically more demand on the electricity grid.And that is something that we haven't seen in this country in decades. for really around 2000 up until maybe a couple of years ago, energy demand on the grid has been fairly constant or even declining slightly. And the reason for that is that everything has become more efficient. Like every appliance you use, every light bulb, your car, everything that could possibly have a demand on the grid is more efficient than it used to be, which is awesome. There's a lot of wonderful benefits that we get from that, including the fact that for a long time utilities and transmission planners and states and the federal government have not really ever had to think about the grid or about like where you get your power aside from these sort of technical conversations that the average person doesn't really pay any attention to. That has really started to change as of the last few years. There's a large number of reasons for that. Basically for the first time in decades we have significant demand expecte...

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Family Office AI has become a dominant theme at the fancy dinners where families and their advisors chart a course to incorporate new technologies. As wealthy families grapple with the risks and opportunities of AI, institutional rigor and structure hasn't kept up with the often informal world of family offices. This is a mistake High end governance must play a part in the family office AI space.https://youtu.be/n_KHB_gOc9MWe're going to be talking to TIM PLUNKETT, who's the founder and managing partner of Plunkett PLLC. He advise families on structure, governance and the development of procedure around these exciting, but potentially dangerous concepts. We're going to be talking about best practices for family offices as they deal with the artificial intelligence theme.Family Office AI"When looking at AI adoption in family offices it is important to remain true to the culture, operations, reputation and underlying trust among those who built the Office in the first instance. Remain true to your principles and don't get distracted by the new toys." - Tim PlunkettFamily Office AI TranscriptFrazer Rice (00:01)Welcome aboard, Tim.Tim Plunkett (00:03)Hey Frasier, how are you doing? Thanks for having me.Frazer Rice (00:05)doing terrific. we're in the midst of Trump tariff season, so it's a little crazy, I'm sure for everybody. yeah. so why don't we, we're going to talk a little bit about family offices and artificial intelligence, which I think is a theme. both themes are, you know, big unto themselves, but how family offices integrate with the space. I think it's something where it's a, it's an area where family offices can be very informal and.Tim Plunkett (00:11)We're blessed.Frazer Rice (00:33)Getting some institutional rigor around them is important. And so to that end, you have a lot of broad experiences advising businesses from a governance perspective. Maybe describe your firm for a few minutes and what you do.Tim Plunkett (00:47)Sure, thanks again. I have three pillars in my firm. I can only do certain things well, so I try and limit what I do. My training is as a litigator, and so I consistently think of things always as having to explain them in front of a judge, which helps with a lot of risk, which goes along hand-in-hand with AI and governance.The second part is I've done a lot of government relations work, which is working across disciplines and organizations, trying to advocate for certain outcomes and create business environments that are efficient, compliant, ethical. Again, all that ties back to the same foundations in the world of AI. And the third component of it is, is obviously the AI work I do, which came out of working in data privacy and security over the last 10 years. The natural flow was to move towards this sector. And today my practice isMostly helping companies learn how to implement strategies that are fair, equitable, just, but also compliant with the laws and keeping in pace with the technological change, is really at breakneck speed and an incredible place to be right now in the world of opportunities in front of all of us. It's very exciting.Frazer Rice (01:57)So when you're canvassing companies and families that are invested in them, what are the use cases that you're seeing?Tim Plunkett (02:04)So use cases are, I mean, they're kind of all over the place. you look at in terms of how do you define the practices, have, there's operational use cases. so you have use cases that are like document intelligence and automation. Sometimes in places there's expense tracking and anomaly detection. There's dashboard creation for organizational purposes. You have investment use cases for deal sourcing. portfolio risk management, alternative data, source and analysis. You have governance use cases for succession planning, philanthropic impact analysis. So there's a lot of different cases that are out there.

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BARRY RITHOLTZ's new book "How Not to Invest" has received a warm reception. We talk about investing mistakes, the Trump Tariffs, and curating a good media diet.https://youtu.be/pS4f45v2iRkhttps://www.amazon.com/dp/1804091197/"How Not To Invest" TranscriptFrazer Rice (00:03)Welcome aboard, Barry.Barry (00:04)Well, thanks so much for having me, Frasier.Frazer Rice (00:06)Well, we are recording in the midst of chaos and disorder. We're basically in day three, trading day three of the tariffs and trying to understand all of that. But back at the matter of hand, your new book, I read it really good. I thought it did a really good job of sort of colloquially putting some process and structure around not making bad investing decisions. Tell me a little bit about the impetus for the book.Barry (00:35)Sure, so the last book, Bailout Nation, was 15 years ago when I've had a lot of friends and family say, when's the next book coming? And, you know, I had a little, like, hey, that was kind of a slog, stuff blowing up and forcing me to rewrite entire sections of the book every time some new company went belly up. And I came home from Christmas break from vacation.You have that dead zone a few days before you're back in the office January 2nd. And I just started thumbing through some old quarterly calls for clients and research notes and market commentaries. You know, I had moved the blog from GeoCities in the nineties to Typepad in the two thousands to WordPress in the 2010s. And so I was looking at some of these old things and like, God, I never revisited this.This is such a great piece of research. I love this academic take on where alpha or even beta comes from. And I'm just kind of mulling it over. I start writing down chapter ideas on three by five cards like these. And I end up using this giant bulletin board on my wall. It just basically I start putting stuff up and I start rearranging them.And pretty soon it becomes obvious. Hey, these ideas, a lot of them are don'ts. Don't do this. Don't do that. Avoid this. Try not to make this bad mistake. And ultimately, I kind of came to the conclusion that, know, we've part of the reason I held off writing a book is there have been tens of thousands of investing books telling people what to do. And we're all pretty mediocre investors still.Maybe it might be useful if we learned what not to do and thus "how not to invest" was born.Frazer Rice (02:35)We found kind of an interesting crucible to test all of this with sort of Trump's tariff initiatives and a bunch of chaos on that front. As you think about what we're living in right now with uncertainty, whether manufactured or not, what are some of the top things that you think about that you tell people, your clients and otherwise?to keep in mind as we sort of weather this storm and try to learn a little bit about what the future is going to look like.Barry (03:06)Right. I had no idea what what the sequel would be named. Maybe it could be how not to run an economy or what we'll play with that. But so so what's happening these days are kind of fascinating because the first third of the book I spent a lot of time talking about how little we really know about about what's happening right now. And we learn even less about the future. And so ourFrazer Rice (03:12)HaBarry (03:34)A hot take on these things is maybe we shouldn't build portfolios based on having to predict where the economy is going to be, what the hot sector is going to be, where the hot geography is going to be, what the best companies are. Maybe we need to be a little more robust and capable of withstanding this. And the tariffs are a perfect example of how little we know. Look, the obvious examples of "How Not to Invest"Nobody had heading into 2020 in their year had forecast global pandemic that shuts the world's economy. And by the way, stocks go straight up. They just after a 34 percent crash,

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As the United States acclimates to the "flood the zone" governing style, reasoned discourse around civics has crumbled. https://youtu.be/ngx0GxJjmDMThere are many causes. Polarizing media, bombastic claims, and systematized gas-lighting on both sides have created one of the most toxic political environments since the Vietnam War. However, the absence of civics and good citizenship concepts have laid the groundwork for the hysterics of today.LINDSEY CORMACK has a way forward. She is the author of the book "How to Raise a Citizen "https://www.amazon.com/How-Raise-Citizen-Why-Its-ebook/dp/B0DBWYTXJ4/Outline:Why are Civics Important?Recent stats on the absence of civicsUnderstanding structuresUnderstanding the "why" of structures and civicsKnowing what the Constitution saysKnowing that the Constitution evolves tooUnderstanding federalismGovernment funding mechanismsCommunication- how to broach inflamed subjectsHow to raise the next generation What makes a good citizen? Going beyond jury duty and votingCivics and Active participationIntersection with wealthy multi-generational familiesJoint decision-malingBelieving in something greater than selfGuardrails of ideals melded with open-mindedness and curiosityRight holder vs Duty bearer (Rights come with obligations)Justice vs compliance Control vs graceRight and wrong in civicsContacting LindseyLinks: www.howtoraiseacitizen.comIG: @howtoraiseacitizenLindsay discussing civics on Errol Louis' YOU DECIDE PodcastThe Intersection of Civics, Money and PresidentsRights and Obligations with David Haass (Civics)BackgroundLINDSEY is an Associate Professor of Political Science at Stevens Institute of Technology. She is the former Director of the Diplomacy Lab. She is the secretary of community board 8 in Manhattan and the co-chair of the Street Life Committee. Lindsey is the creator of DCInbox, a comprehensive digital archive of Congress-to-constituent e-newsletters.  Finally, she is also the author of Congress and U.S. Veterans: From the GI Bill to the VA Crisis. Frazer's interest in citizenship and civics:You may be wondering why a show about wealth management (and beyond) would be interested in citizenship and civics.  In a nutshell, I get asked three times a day what can be done to raise responsible kids.  Because families (and the answers to those questions) are different. The answers should come from within, I ask what they (the parents or grandparents what think it takes to be a "good citizen."  The answer to that question can then lead into the discussions I need to have about stewardship and a variety of other concepts.Additionally, good civics is good business. Businesses ignore the politics around them at their own peril. Board dynamics are also the intersection of civics, joint decision-making and constituent accountability for businesses. Executives have to be good at this. The values that make people successful are also the ones that people want to pass down to their kidsPersonally, politics and civics are ingrained in me.  I majored inhHistory and political science major in college. I worked in many NYS campaigns, the NYS Department of Economic Development, and ran the Republican Party in Bedford, NY for a year. More recently, I was on the board of my co-op for 7 years and president of the NYC Estate Planning Council. Civics and participation are a big part of my worldview.TranscriptFrazer Rice (00:32.447)As we get acclimated to the new flood the zone component of politics, reason discourse has crumbled. And I think absence of civics in public life is the cause. Lindsay Cormack has a way forward and she's the author of How to Raise a Citizen. Welcome aboard, Lindsay.Lindsey Cormack (00:46.978)Thank you so much for having me. I'm excited to talk with you today.

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For those of us who live in New York, mass transit is the norm and traffic is a minor form of apocalypse. In response to this persistent issue, New York City implemented a new congestion pricing plan. https://youtu.be/TeObZEnjmv4?si=fQTxzRCe6b-sGH5FBesides the increased funds for badly-needed infrastructure improvements, the plan made other promises. These also include reduced commute times, better air-quality, and improved safety for all road users.https://www.amazon.com/Movement-Yorks-Long-Take-Streets-ebook/dp/B0CV9FNFWV/Because the sample size is small, it is an open question of whether congestion pricing has delivered? Can it deliver? And how did we get from the horse and buggy, to the street car, to the train and automobile-based system we have now? Will it apply to other cities in the U.S.? Nicole Gelinas and I took some time to trace New York's transportation history in her new book and analyze the prospects for congestion pricing's effectiveness going forward.(UPDATE: 20 minutes after we stopped recording on 2/19/25, President Trump announced that the U.S. Department of Transportation was pulling its approval of New York City's congestion pricing plan. Governor Holchul has met, apparently unsuccessfully, with President Trump on the topic. Litigation has already started. STAY TUNED.)NICOLE GELINAS, a Chartered Financial Analyst (CFA) charterholder, is a Manhattan Institute senior fellow and contributing editor to City Journal. She lives in New York City. She is the author of the recent book, Movement: New York's Long War to Take Back Its Streets From the Car.OutlineHow did you get interested in congestion pricing and the development of transportation in NYC?New York City's Transit HistoryWhat are some of the "tragedies" (Cross Bronx Expressway / death of streetcar) and "near misses" (The Saving of Washington Square Park and Grand Central Terminal) that we don't know about?How much credit or blame should we give Robert Moses?Congestion pricing- what is it trying to do (and is it trying to do too much)?As a revenue raiserTo reduce congestionHelp environmentQuality of LifeWhat are the early returns on its effectiveness?  (Anecdotally, to me it seems like it is having a positive congestion effect in Manhattan)  Uber/Taxis?  Notwithstanding these initiatives, what about these often empty cars?E-Bikes? Now that the city has addressed cars, what about the safety concerns of motorized bikes?How is the program affecting Westchester, Long Island, New Jersey and Connecticut?  As a result of these changes, has the air quality shown any improvement?Meanwhile, is London a Success?  Because of its heady reputation of being one of the most forward cities on congestion control, urban planners trot out London as an example for others. Is this warranted? (However, having been there in November, I thought the traffic was insane! )Did they do other things to screw up a good initiative?Congestion Pricing's Future (Before Trump's Involvement)I never met an automatic tax that a politician didn't see to expand and the tax is automatically going up by law, Regarding government's growing addiction to revenue,Will the program expand? Will the borders go north? Brooklyn? Queens?  Or can it go backward under Trump?Regardless, does the MTA have the will to cut costs?Notwithstanding the controversy, is there any political will to enhance safety?Wish list: What would be your favorite next NYC transportation initiative?If we want to learn more, what's the best way to get the book and keep track of your work?Further Details on NeW York's Congestion Pricing PlanTHE WEALTH TAXhttps://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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https://youtu.be/xNeFuqsU7A4Podcast TrailerWelcome to the "Wealth Actually" podcast trailer. I'm FRAZER RICE. After 170 episodes, I thought I'd check in to make sure that everyone understood what to expect from the show going forward, especially if you're new to it. For those newcomers, it was time for a quick podcast trailer.Ultimately, I'll be talking to a lot of different experts in their various fields. By day, I'm a chief operating officer / wealth strategist for large complicated families. This involves wealth management, tax, trustee issues, family dynamics, and the odd business succession story. I'm also a lawyer which means I'm interested in legal issues that surround these concepts. Finally, I enjoy politics and public policy. I grew up in it, and so I like to think about it and its interaction with my day job. Ultimately, this show is paired with a book called Wealth Actually, and the best way to reach me is via www.wealthactually.com. I hope this podcast trailer was helpful. I'm always looking to get it better. If you have guest ideas, topics to explore or or other ways to increase its reach, I'm happy to listen. Finally, if you have other shows that I think are worth experiencing, send them along.(For those repeat listeners, you will notice I changed the theme music too. It's a little more thunder, a lot less synthesizer. Let me know what you think of it.)Enjoy the show and be sure to like, subscribe, and share with your friends.More EpisodesFind more episodes in the podcast section HEREBookTo buy a copy of the book "Wealth, Actually", see the link below. (There is a great audiobook version that I just produced and is accessible on Amazon too)https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/Social MediaLinkedinTwitterIGBlueSky (NEW!)Podcast Trailer

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The Internal Revenue Service is a massive "Three Letter Agency." It's a bureau of the Department of the Treasury and (believe it or not) one of the world's most efficient tax administrators. In fiscal year 2020, the IRS collected almost $3.5 trillion in revenue and processed more than 240 million tax returns. It has over 90,000 employees. It is also about as popular as Communism and Dog Catchers with most people! This makes running this most public of organizations a challenge for garnering resources and maintaining safety, stability and confidence in the revenue collection that makes this country go.https://youtu.be/mXxwh0IR3IgCharles “Chuck” Rettig is a Shareholder at Chamberlain Hrdlicka in the Firm's Tax Controversy & Litigation practice and served as Commissioner of the Internal Revenue Service (IRS) from 2018 through 2022. He shares his experience with us and some pointers in dealing with the Service.How the IRS operates and its priorities:The volume of work and responsibility of the Internal Revenue ServiceThe structure of the agencyData Science is the FutureWhat it does that people may not be aware ofOther parts of the Treasury opine on tax policy, but the agency provides guidance on workabilityChuck as the Commissioner appeared before Congressional Committees 37 times in 4 years.Personality matters both internally and externallyThe Commissioner has an 11 person security detail and receives 3 credible death threats / week.What to expect in the next years:Legislative UncertaintyAdministrative ChallengesThe Service has almost 400 Million "clients" with huge disparities in sophisticationResources are always a struggle- getting bang for the buckPersonnel departures from the ServicePrediction: Increased aggressiveness at the state levelWhat best practices in front of the IRS look like.Setting up your affairs with a ling term strategy in mindInteracting with an Examiner Speed and HumanityThe 3 headed approach to family office planningHigh end advisory work with the T&E groupThe overall context in working with the structure and culture of the IRS - having a backdoor channelLitigation support for those situations that need it.LinksWith Kelley Miller: The IRS Audits You- What's Next?"Transcript of the Show https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/Frazer Rice (00:01)The IRS and taxation in general is in all sorts of tumult with the new administration. How to deal with the IRS, how to file your taxes, how to plan for things going forward. It's something to think about. We have Chuck Redig on and he is a terrific resource for all of our listeners. He's a shareholder at Chamberlain Herdlica. It is in the firm's tax controversy and litigation department.Frazer Rice (00:26)Most importantly, he served as commissioner of the IRS from 2018 through 2022. So we have a little inside baseball here on how the commission works and things to think about in your own practice. So Chuck, welcome aboard.Chuck Rettig (00:32)Thank you for having me. It's a privilege to be out.Frazer Rice (00:42)Well, it's a treat for us to have you and a real great opportunity. First and foremost, look, the three letters IRS are scary to just about anybody who comes in contact with them on a personal basis. Maybe break down a little bit how the IRS operates and what its priorities are.BackgroundChuck Rettig (01:01)Yeah, you know, when I went on board, somebody high up in Treasury, and I'm basically a kid from Los Angeles and Irish headquarters in Washington, D.C., and somebody from Treasury said to me, you know, congratulations, it's a Senate-confirmed position, and you are one of the five most powerful people in the United States, but you are absolutely the most hated. And I remember shaking his hand going, okay, thank you, you know,

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https://youtu.be/h1yo6l7V0YwPreserving legacies is about more than cataloging "stuff" and keeping a spreadsheet. Done well, it can provide the grounding for intergenerational communication, engagement with outside constituencies and, in certain cases, monetization. This involves a organized process:Preserving Legacies and CatalogingWith the horrible recent storm damage in North Carolina and Florida and the horrible Los Angeles wildfires, the cataloging process is on the forefront of many families' minds.Storytelling DevelopmentThe artifacts of a family can be the keystone of family narrative building and next-generation education. Fan/Constituency EngagementThe building of physical digital museums can be the centerpiece of engagement for internal and external constituencies. From extended families, to customers and extended fan-bases, advanced legacy preservation is more than just "stuff."Monetization In certain situations, these efforts can lead to new forms of business and monetization. For artists, authors and musicians, these museum efforts can add value to IP revenue streams and transactions.Preserving LegaciesWe talk about case studies with stars like Def Leppard, Chris Paul and Jon Bon Jovi. However, we also go through the importance of preserving legacies with families that aren't filling 50,000 person stadiums.We distinguish "Preserving Legacies" from Estate Settlement (where many families first begin this process). That said, this show pairs well with the Estate Settlement episode with Joel Schoenmeyer.BackgroundBRAD MINDICH is the Founder/CEO of Inveniem which is the leading archiving/fan engagement company that works directly with artists, estates, athletes, brands, and individual celebrities on finding, organizing, preserving, and monetizing their artifacts and history. INVENIUM, and its fan-facing brand Definitive Authentic’s, overarching message to its clients is Your Past Is Your Future® and this philosophy sets the tone for how the company holistically and strategically partners with its clients to both preserve and extend legacies and connect clients deeper with their fans. The company’s client list is confidential, but it includes some of the world’s most iconic creators.https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/https://bsky.app/profile/frazerrice.bsky.social/post/3lgul3z7nrs2ahttps://open.spotify.com/episode/0C9Bost6uihR1Pj8MnsppE?si=cbf4a554b9f04cfa

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Estate Settlement is one of the most feared parts of wealth transition. It is where trust and estate planning meet their first real test- usually when a will is put in front of the probate court system. JOEL SCHOENMEYER, Head of the Family Wealth Group at a Major Regional Bank joins us to discuss the ins and outs.https://youtu.be/OwepMwX0uao?si=YKevHbmDrtrRv12bWhat is Joel's background?I spent the first 15+ years of my career as a trusts and estates attorney. First at a few different law firms, including Sidley Austin – back when they had a T&E group. Then as a solo practitioner for more than a decade. In 2012 I made the transition to working for financial institutions, where I have held a number of roles:Legal department, in the trust counsel groupSenior Trust Advisor on an ultra-high net worth teamNational Head of Estate SettlementSenior Wealth Strategist in a multi-family office groupI’m now in charge of the Family Wealth group at Fifth Third, which is an offering for ultra-high net worth clients and families.Just broadly, can you explain what happens from a legal perspective when someone dies?Sure. First, a little terminology:“Estate settlement” is the overall process of wrapping up a deceased person’s affairs, a job that’s usually handled by an “executor”. That settlement process can include lots of different things, but it can be broken down into a few broad topics:Inventorying and collecting all assets;Identifying and then paying debts and expenses, including taxes (both final income taxes and, if the estate is large enough, estate taxes); andDistributing what remains according to the decedent’s estate plan (or if they didn’t have one, according to state law).“Probate” can be a part of estate settlement, and involves court supervision of the above process, to make sure that it is handled correctly. I spent some of my time as an attorney drafting Wills and Trusts. However, I spent even more time in court, dealing with probate issues (including litigation).We are going to be talking about messy estate settlement issues and how to avoid them. Why is this important?I will say that, throughout my career, I have met clients (or potential clients) who say, “I don’t care what happens when I die – that’s someone else’s problem.” However, most people do NOT want to cause problems for their loved ones. The death of a parent or spouse or sibling is difficult enough without having to figure out where their stuff is, or what they wanted to do with it.There’s also the positive aspect. You have family and friends – and possibly charities – that you hope will thrive after your passing. Why wouldn’t you want to set things up so that they actually get your hard- earned money? Do you want to have that money go to the IRS or some probate litigators?How should people start to think about their estate?I break the issues to consider down into four interconnected categories:AssetsDebts and expenses (including taxes)Personal RelationshipsEstate Plan (Will, Trust, etc.)One thing you will notice is that your estate plan is only one category here. A lot of people think that having a Will and/or Trust in place means that they are “done” with planning for their death. That’s just not true.So let’s start with assets in the estate settlement process. What is the big mistake people make with their assets in the context of planning for death?The main mistake is not paying attention to how your assets are titled. This is especially the case where people have an estate plan but then also have assets with a listed beneficiary, or assets owned jointly. For instance, I once handled an estate where the decedent’s Will gave away her interest in a home – but the decedent already owned the home in joint tenancy with her sister! As a result, the gift under her Will was ineffective (but the situation created a lot of litigation as well as conflict)...

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This week, "Wealth Actually" meets "THE SOUL OF WEALTH" as I speak with DR. DANIEL CROSBY, Ph.D. about his new book.https://www.amazon.com/Soul-Wealth-reflections-money-meaning-ebook/dp/B0CP625K99https://youtu.be/Y6dUcW_eQW4Outline (Soul of Wealth)-Behavioral Finance-Issues with the "research"-Building consensus around money decisions-How our brains trick us into faulty wealth processes-Teaching people to stretch the time horizon of their planningBiographyEducated at Brigham Young and Emory Universities, Dr. Daniel Crosby is a psychologist and behavioral finance expert who helps organizations understand the intersection of mind and markets.As a leading voice on the impact of behavioral finance, "The Soul of Wealth" isn't Daniel's only writing.Dr. Crosby's first book, Personal Benchmark: Integrating Behavioral Finance and Investment Management, was a New York Times bestseller. His second book, The Laws of Wealth, was named the best investment book of 2017 by the Axiom Business Book Awards and has been translated into Japanese, Chinese, Vietnamese and German. His latest work, The Behavioral Investor, is an in-depth look at how sociology, psychology and neurology all impact investment decision-making. Finally, Daniel publishes the highly respected Standard Deviations podcast- where you can find his personal thoughts on financial psychology and interviews with experts in the wealth management and psychology fields.Money - The Soul of WealthDaniel's book presents 50 short essays which explore what wealth really is and provides practical suggestions for how to change your thinking and your actions in small, powerful ways, for a wealthier life.Soul of Wealth Topics:How you spend your money reveals your values.That money can buy happiness if spent well.What makes a good financial plan.Why willpower is overrated.How to master delayed gratification for the ultimate wealth hack.Why anything worth doing carries some risk.Contacts:@DANIELCROSBY TWITTERSTANDARD DEVIATIONS PODCASTBehavioral Scientist, Brian Portnoy on the 100th Episode of "Wealth Actually"https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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Author and investment expert, JARED DILLIAN, joins the podcast for the second time to discuss his new collection of short stories, NIGHT MOVES. We talk about his talent for moving across formats and between fiction and non fiction. We go into the need for story-telling and the importance of holding an audience. Finally, we look for crossovers in his writing from his personal history, his move to South Carolina and his experiences in the Coast Guard and Lehman Brothers.https://www.amazon.com/Night-Moves-stories-Jared-Dillian-ebook/dp/B0DDLB49X1/"Night Moves" by Jared DillianFrom his military experience and investment experience to his DJ'ing prowess and obvious for multi-faceted talent for writing, Jared is a creator and a Renaissance Man- and a terrific, no nonsense person to speak with about the ins and outs of publishing.https://www.youtube.com/watch?v=c7pratxa3EYWriting across formats and how that led to NIGHT MOVES? Non fiction Novel Short story - is the format a challenge or an opportunity?Newsletter - The daily grind of the Daily DirtnapHow to move between the daily pressure of writing a newsletter to the longer form content in non-fiction?Then, how do you move to the character development and world-building involved with fiction?Themes in NIGHT MOVESSex, desperation, wistfullnessWriting in a women's voice (how do you get into that headspace?)What does research consist of for short stories?Genre Favorites?Where you end the story determines whether it’s a comedy or tragedyDo you start knowing where you want to end up?What does the format of a writing day look like?  Ie do the newsletters get in the way or help with other projects?Do you get stuck?  (Is there where it’s convenient to have the newsletters)Music and Writing- The Crossover into NIGHT MOVESDJ’ing composing - what are the similarities in that process?Any crossover to investing?Where do we find the book and how else can people keep track of JARED?JARED'S SUBSTACKDAILY DIRTNAPJared on "Wealth Actually" talking about his previous book, "NO WORRIES"https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/"Wealth Actually" by Frazer Rice

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"How to Retire" (by Christine Benz) deals with a concept full of fear, emotion, math and uncertainty: retirement.Even the wealthiest, who have a margin of safety, run into issues of purpose, time management and legacy. Layer onto that the risks of longevity, dementia, divorce, managing cash and investments in inflationary times, and navigating the byzantine health and elder care systems. No wonder "retirement" is a scary topic.Christine Benz' new book "How to Retire" is here to help get our arms around this topic. With 20 interviews with experts in the field, Christine has written a terrific reference for retirees to get their arms around this stage in life. Her book covers the numbers, the emotion and the structure for people entering the golden years.CHRISTINE BENZ is director of personal finance and retirement planning for Morningstar and senior columnist for Morningstar.com. In that role, she focuses on retirement and portfolio planning for individual investors. She also co-hosts a podcast for Morningstar, "The Long View", which features in-depth interviews with thought leaders in investing and personal finance.https://www.amazon.com/How-Retire-lessons-successful-retirement-ebook/dp/B0CP5X3TYK/How to Retire How to Retire with Christine BenzThe Numbers (Funding Retirement and Resilient Investing)The Transition to Retirement (AKA "The Countdown")With a plan in mind, what is the role a Dry Run with Retirement?The Buy-In: Getting consensus from spouses and family on what life will look likeThe First 2 years: The Importance of a Detailed CalendarHow Are You Going to Use the Time?Having entered the role of caregiving, retirement may be more of a "job" than you think"End of Life": When Should you Give up the Keys and Long Term Care with CAROLYN MCCLANAHANEstate Planning (with past "Wealth Actually" guest JENNY ROZELLE)With all of this frre time, how do spouses adjust to spending so much time together?https://www.youtube.com/watch?v=IN5C7Ko6XBYhttps://open.spotify.com/episode/50ZO3JLl4bAdf95b64UQIZ?si=XJEYU2h4ToG8rL_Qkou6eAhttps://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/Frazer Rice's "Wealth Actually"

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Sports media is decentralizing. However, "Sports Podcasts" are exploding in audience growth. Stephen A. Smith, Pat McAffe and Barstool Sports are household names. Legacy names, like ESPN, are figuring out how to hold on to their audiences and find new ways to expand them. Out of this high profile world, there are many lessons to learn in managing one's own career and how to harness the possibilities of media for your own businesses. BRAM WEINSTEIN (the "Voice of the Washington Commanders") is the founder of Ampire Media and can be heard weekdays from 3-6 PM EST on "The Bram Weinstein Show" on ESPN 630 DC. As part of his 24 year (and counting) on air career, he spent 7 years at ESPN mainly as an anchor of "Sportscenter" and has appeared on a  variety of programs including "Like it or Not" on Fox 5 in Washington DC, "The Bram Weinstein Show" on The Team 980, as well as analyst roles on NBC Sports Washington. When not performing, Bram produces for and consults with various content providers in traditional and new media for his firm AMPIRE MEDIA.We also get to nerd out a little on the Washington Commanders and their improbable fast start this year!https://open.spotify.com/episode/2rW0FF84wRQZ8O8qZEyptt?si=bc2c29518f96414eBram Weinstein "Voice of the Commanders" on Sports PodcastsBram Weinstein's Background - How did you get into broadcasting? Take us through the route with the career to get back to DC. What does a life in sports media look like?The arc of a broadcaster's career and the need to develop equity.https://youtu.be/OxKRSXB2lFI?si=OwyNPG2ZyrC0O3D_Bram Weinstein on Wealth ActuallySports Podcasts (and Beyond)AMPIRE MEDIA- Going from talent, to production, to ownership.Aggregating other voices.Where did the idea for the media company come from? Specific experience or advice that informed the project? Where do you see the path to profit coming from?Bridging Traditional Media and the Sports Podcast Business- How do you manage the time?What are your ultimate ambitions for Ampire?What have been the challenges so far?Lawyer in me asks how you stay in the good graces of everyone, contract and IP-wise?Has the attitude of the Sports Media Companies changed about "talents' other activities??Lessons from Sports Podcasts for other businesses in their marketing strategies.Joe Gibbs and the Washington RedskinsThe Washington Commanders (and their fast start!)Finally, I'm duty bound to ask some #Commanders questions. Having been a fan back in the glory days, what is your favorite memory or favorite player?There is so much new with the Commanders in the last two years: Owner, GM, Coach, QB, a lot of the roster! What does this season looks like with this "crazy good" start . . . and Jayden Daniels?Outro- Sports PodcastsHow do listeners find and support you.https://www.ampiremedia.com/AMPIRE on Youtube:https://youtu.be/8jmCnWViN0Y?si=mKy4NPASYiRKfLZ5MEDIA DISRUPTION and VENTURE CAPITALhttps://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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The pace, scale and sophistication of RIA marketing has accelerated into hyperspace in the last 10 years.There are new business models in wealth management and, thus, new voices and sources of trust.The speed of content creation and publishing is increasing- especially with newer artificial intelligence tools. Social media has made the scope and reach of marketing efforts enormous -- and required firms to be data scientists as much as financial advisers. Finally, where once the firm drove the branding in the RIA space, there appears to be a move back to the star system - where recognizable names create the light that attracts clients. Enter RICHARD HEFT, President of EXT MARKETING - His firm focuses on marketing for RIA's, asset managers, and other financial institutions.The development and execution of marketing strategies are accelerating well past the leadership of the typical RIA. They have to prove to the market that their inorganic growth efforts are real and sustainable in a crowded (and often bland and undifferentiated) space. Richard tells us what he is seeing in the RIA Marketing space.Background- What does EXT do?Richard HeftEXT MarketingWhat was the opportunity you saw?What is "Marketing" vs Marketing for Financial Institutions? vs. RIA Marketing?DifferencesRegulation Other cultural issuesWhere does RIA Marketing stop and PR start as part of larger strategy?How do you combat the "sea of sameness" and "Lowest common denominator" factors in RIA Marketing?Boats, Piers, Forests Couples at the BeachNew demographics, new ideasMeasurement - What does marketing success look like from the agency perspective?Is there a difference in the clients' perspective?How do you bridge that gap and make sure there is agreement on metrics?Digital - After putting strategy, into action, what is the importance of data integrity and maintenance?Having established a visibility strategy, how does one convert eyeballs to dollars? How do we get around the "consulting class" fluff?Success storiesThe new sophistication of the referrer and the consumer / client.https://open.spotify.com/episode/79qDVNuUC0ixgHJIIhVAyD?si=33170e765cc44bddThe art of segmentation? B2B vs B2COI B2B vs B2C?How much can (or what should) be outsourced to an agency vs hiring someone internally?The necessity of 3rd party credibility and how to get it (and get credit for it)"RIA Marketing" Trends going forward?Artificial Intelligence and other toolsSocial Media (How an UHNW adviser uses podcasts)Will there be a move away from referrals to "legitimate" digital lead generation? Where does traditional media fit in?https://www.youtube.com/watch?v=XuhdR2xJ0bw"RIA Marketing" with Richard HeftOutro:https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/"RIA Marketing" on Wealth Actually

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How have our Presidents’ money stories affected their lives and trajectories before, during, and after their terms? Have the Presidents’ finances affected policy? What stories do they teach the rest of us?

As we head into election season, MEGAN GORMAN has released a terrific book on US Presidents and their personal finances. She is a tax attorney and wealth manager – takes readers on a rollicking ride, full of history and personal finance lessons, to understand the intimate money stories of our most famous presidents in her highly anticipated new book, ALL THE PRESIDENTS’ MONEY: How the Men who Governed America Governed Their Money

Megan Gorman’s “All The Presidents’ Money”Megan has spent her career advising some of the wealthy. She parlayed her interest in history and politics with her career expertise to analyze our Presidents relationship with money. The stories of our Presidents’ personal finances not only give insight into their leadership style, but they teach lessons for the rest of us as well.

What inspired you to write about the US presidents’ relationship with money?Since I was six, I’ve always been obsessed with learning about the presidents. There’s an archetype that I was drawn to: a man from an ordinary background that through hard work and luck makes his way to the top. We have many presidential examples in our history: Lincoln, Eisenhower, Grant, Johnson, Truman, Ford, Reagan, and on. Could this same story happen now? Maybe, but it’s not as easy as it was before.

https://www.amazon.com/All-Presidents-Money-Governed-America-ebook/dp/B0D3T7TGMZ/Megan Gorman’s Presidents’ Relationship with MoneyHow did you approach researching the book, since financial details are often private? I usually started by reading a book on the president and looking for little items – education, jobs, homes – and then ferreting out primary source documents. But the most useful items are the letters. Letters were where a lot of financial discussions occurred, from Jefferson and his financial challenges to Harry Truman lamenting to his future wife about whether he will ever find financial success. The presidential libraries and museums’ archives were also unbelievable.

https://www.youtube.com/watch?v=rvMoUuruCzUDid you notice any common themes or patterns in the presidents’ financial behaviors and decision-making?A lot of bad financial decision making occurs when emotion controls the situation. For example, President George Washington asked James Monroe to go to France. Monroe agreed even though he had a substantial plantation at home that needed significant management. Monroe got to France and realized that to succeed, he needs gravitas. In 1790s France, that means having the right home to entertain in. So he went out and bought a house for the US with his own money – doesn’t ask permission and doesn’t think about the obligations back home. His salary doesn’t cover half of what he is spending. When Monroe’s appointment is over, he sells the house at a loss. Money is emotion – and managing it is very hard for all of us.

You write in All The Presidents’ Money that “wealth happens at the intersection of opportunity and discipline.” What do you mean?We talk a lot about financial literacy and having strong financial skills. But the truth is you could be the greatest budgeter in the world, but if you have no money coming in, it’s a moot point. Budgeting, risk tolerance, connecting with your future self – all of those things are the framework of finance – but you need your shot at wealth building, to put it in Hamilton parlance. You need to have the ability to make a living. If you have that, and you use financial literacy, you can build financial resilience. Sounds easy, but in the current stage we are in the US, it’s gotten a lot harder.

Several presidents had a strong aversion to debt. Do you think this is a valuable mindset for financial success?I completely agree with them. Debt isn’t something you want to have. It needs to be seen as a tool to get you to the next level with a focus on paying it off. Jerry Ford is always an interesting person when it comes to this. In her Oral Histories at the presidential library, his daughter Susan discusses how she would try to convince her dad that having a mortgage wasn’t that bad a thing – after all you got a tax deduction for it. Ford wouldn’t hear of it. He just abhorred debt. Working with wealthy individuals, most of them enjoy the day their mortgages are paid off. It’s a feeling of safety and security.

Thomas Jefferson struggled mightily with debt. What lessons can we learn from his financial missteps?One of the things I’ve learned through working with very successful people is that often the skills or personality traits that allow them to be successful can at times be a negative. Jefferson is like that. He’s a magical thinker. On one hand, he can draft huge philosophical ideas and make them understandable. Yet when we look at his financial ledgers, he’s avoidant and unable to be practical. Being good with money requires being grounded and having the ability to say no. He’s just unwilling to do it – even when it is too late and is about to lose everything.

What can we learn from Jefferson? The need to connect with your future self. What does your financial like look like 10-20-30 years from now? Are you living debt free? Are you able to travel and live comfortably in retirement? How much money do you want to have saved? When you have these visualizations, then you can start to put the discipline around your finances in terms of savings and budgeting.

What role does marriage play in the financial lives of presidents?A big one! Who you marry has a huge impact on your financial success in life. A lot of our most successful presidents married up financially, starting with Washington. Building strong finances is a team sport. If partners aren’t aligned, they might be working against each other. Warren Harding wasn’t a great president, but he was a great businessman. He and his wife Florence owned a newspaper. Florence ran the paper’s finances. Harding was better at editorial and advertising. Their skills were complementary, and as they built up the paper, they built up their wealth. If he had married a less financially savvy wife, he may not have been as successful.

What is the key to effective communication about money in relationships, and which presidents did it best?In All The Presidents’ Money, the key to effective communication about money in relationships is to make it a constant topic of conversation in a constructive manner. Whenever you read a letter between the Adams, they address each other “My Dearest Friend” – a rather romantic and loving way to start a letter. The tone allows the conversation to be friendly and constructive – rather than critical and dismissive – even when it’s about money.

Grant’s trust in the wrong business partners cost him dearly. What advice would you give about how to vet financial relationships?What made Grant great was a challenge when it came to managing money. He’s a little too trusting and takes people at their word. He’s like Bill Clinton in that sense. If anything, Grant should tap into the skills of another General President. Eisenhower was very good at looking at a situation and assessing risk. He learned from playing poker. Risk assessment allows you to consider different outcomes. The key is to ask a lot of questions. What happens if things go wrong? Is there a contingency plan? How to you protect your investment?

More on stewarding a FAMILY BUSINESS

The Obamas had significant student loan debt well into their 40s. Is college education still worth the cost?Maybe, but Americans need to be more strategic about education costs. When you look at Barack Obama, he wracked up a lot of the debt attending Harvard Law. He had a full ride to Northwestern. But Obama wanted to be president and he knew Harvard was a good way to go. Same thing with Bill Clinton – he had high aspirations, so taking loans to go to Yale Law was strategic.

But the cost of education has gotten so high that what’s really important is getting a degree at the lowest cost possible. Unless you have the finances to pay all cash for college, it is important to think about career path and if strategies like two years of community college followed by a transfer to college will result in less debt.

What was the most surprising thing you learned about the presidents’ financial lives while writing All The Presidents’ Money?They all worried about money – a lot! There are letters from different presidents over the course of their life where they question if they are doing the right thing with money. Harry Truman wrote his future wife in 1917 after losing a lot of money in the oil business, “I seem to have a grand and admirable ability for calling tails when heads come up. My luck should surely change. Sometime I should win.”

Then you have LBJ writing a friend about worrying about money – yet in the next breath he’s talking about buying an expensive suit. Clothing budget actually factors heavily. Martin Van Buren grew up poor but he adopted a fancy dress as a way to climb socio-economically. Coolidge was also always dressed to the nines which sticks out because he was so frugal.

In many ways, their money struggles humanize them. I found that many of the presidents I didn’t like politically, I enjoyed personally. That was one of the best parts, being nonpolitical.

Speaking of their finances, who is your favorite presidential role model in All The Presidents’ Money?George Washington was unbelievable with money. He’s very ambitious and not afraid to do the hard work to earn it. But he’s also a great budgeter. He had to be. Upon his father’s death, everything went to his brother Lawrence. There wasn’t money for George to go to college. But he’s a clever guy – he learned surveying from his neighbor and used the money to buy land. He’s also incredibly attractive and married a wealthy widow. Once he marries Martha Custis, he has not only his land, but her dowry land as well.

However, there is one area where Washington fails financially – and that is in terms of values and morals. Due to his use of slave labor, we have to really put an asterisk against his name. But when he dies, his estate is so large and complex, they actually publish a book on it. It takes 50 years for his estate to play out.

What one piece of financial advice would you give to President Biden? Kamala Harris? What about former President Trump?President Biden needs to slow down and defer to professional advice. He’s just a little messy and unsophisticated in his money. I’ll give you a present-day example. He made a loan to his siblings with some of the money he got from his book deal. This is very normal – we call them below market loans and we do them all the time with high-net-worth families. But what got him tripped up with Congress is that he didn’t follow the process correctly. He needed to have a demand note, an interest rate, a payment schedule, and he needed to report the interest. He didn’t do all of this – so it’s sloppy. Not illegal, just sloppy. He needs a strong finance person to help run his life.

President Trump is good with money, but at times – and I’m putting this mildly – he’s too aggressive. He would be more respected if he were more transparent about his finances. Most people won’t really understand his finances anyway. He’s in real estate. It’s a specialized part of the code.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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With the Supreme Court’s recent ruling in the Loper Bright Case, courts no longer have to defer to agency interpretations of ambiguous laws. This is a massive change in the way administrative law is practiced at the federal level. The Loper Bright Case touches almost every area regulated by the Untied States government.

Professor WILLIAM BUZBEE will help us understand the implications of the Loper Bright Case and what the world might look like going forward.

William W. Buzbee holds the inaugural Edward and Carole Walter Professor chair and is a Professor of Law at Georgetown University Law Center. He also serves as the Faculty Director of Georgetown Law’s Environmental Law & Policy Program. In his teaching and scholarship, he specializes in environmental law, legislation and regulation, and administrative law. Recent publications focus on climate regulation, deregulation and law governing agency policy change, and federalism. He also offers seminars on advanced environmental, regulatory, and constitutional law subjects, with his most recent seminar focused on “The Art of Regulatory War.”

OutlineQuick review of where administrative state fits within separation of powersWhat the world looked like with ChevronAs long as agencies pointed to statute (and notes), the coursts would give deferenceWhat does the Loper Bright Case do to that world?The Interaction with the “Corner Post” case and the “Major Questions Doctrine.”What is your best guess on how legislation gets implemented going forward?Can we count on Congress to up its game?Who stands to benefit / Who loses? Especially in the business / wealth / tax community?Official Rules vs sub-guidance?Venue of resolution- Administrative Actions vs “non expert” courts?Multiple rulings from different courts on same regulation?Additional Resources on the Loper Bright Case:The Loper Case and its Applicability to Wealth and Tax MattersMartin Shenkman on the applicability of the Loper Case on tax and wealth matters.

https://youtu.be/Q_qsitDSEVk?si=Q2nzUZm-HWIJcc8_Frazer Rice and William Buzbee discuss Loper Brighthttps://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/?ccs_id=51b8a163-e608-477d-9176-747616c0dda5

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Artificial intelligence is a charged term- one that has been around, but has taken on new meaning in the last couple of years. As the first crossovers of AI and HUMAN RESOURCES emerge, many issues are coming out. People are both excited and afraid of its implications.

• Employees and their managers are afraid of cultural and measurement shifts (and career arcs in general).
• Executives are worried about missing out on ways to increase the top and bottom line.
• Boards are concerned about threats to corporate strategy and new and unseen risks that could put the company (and them) on the front page of the Wall Street Journal

However, the news isn’t all scary and the world is not becoming Skynet yet!

SUSAN YOUNGBLOOD is an expert on the intersection of AI and Human Resources.

Equipped with broad executive experience and board expertise, she is the ideal person to help us get our arms around the AI/HR intersection at the employee, manager, executive and board level. I spoke with her on the conundrum that decision-makers face as technology and people collide.

SUSAN is a technology CHRO who has launched, acquired, and transformed companies at Fortune 50 and FTSE 100 companies such as IBM, BNY Mellon (BK), and London Stock Exchange Group (LSEG.L) as well as a tech startup,

As a leader in the HR field, Susan enabled high growth and faster time to market by navigating teams through the human capital agenda at critical inflection points:

• New company launches,
• Rapid scaling,
• M&A,
• Global expansion,
• Digital transformation, and
• Large-scale cost reduction.

Having dealt with company strategic issues, Susan has also managed global crises and assisted companies in mitigating extensive risks.

https://open.spotify.com/episode/092y3urUEfDav5JTaraAbI?si=2a6c0eb7905747c2Wealth Actually on Spotify Susan’s BackgroundAI and Human ResourcesHow are companies are leveraging AI today?When implementing AI, what are some of the risks companies take?What are some big mistakes companies have made with AI ?Proper governance: what should it look like within businesses?How are boards responding to the AI and Human Resources implications?Are the scary things about AI for workers?What are the implications for various types of workers: The General Workforce * Managers * Middle Managers * Executives*

With all of this worry, are there opportunities for the workforce?How do you prepare your workforce to embrace AI?https://youtu.be/HmdN8jL7iOY?si=ALUnFs0lbo0cV38xHow do we find Susan?SUSAN YOUNGBLOOD LINKEDIN

Additional Background on SusanSusan serves on the Board of Directors for Cornell University’s ILR school, is on
the Advisory Council for SUNY College of Optometry, and she is an angel investor. She
holds a bachelor’s degree in psychology from Vassar College and a Master of
Industrial and Labor Relations (MILR) degree from Cornell University, where she
was also the assistant coach of the women’s tennis team.

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“Empowered Entitlement” isn’t a buzzword yet in the lexicon of next-generation wealth education tools. But it well could be.

In an environment where productivity and drive is difficult to identify and develop, CHRISTIAN BROYHILL is using her psychology background and unique viewpoint to advise wealthy multi-generational families.

Christian’s willingness to lean into the inheritor’s financial reality (and trauma) distinguishes her from many in the “next-gen” field.

Christian’s background and the development of “Empowered Entitlement”THE 4TH GENERATION STORY

• A generation of inheritors that didn’t have to have a job
• An emphasis on the challenges that come with inheritors with resources, but no particular expectation
• Leaning into a loaded word

The evolution of Christian’s practice – what does it consist of? * The two pronged approach – Medicare clients and HNW. * Why continue to serve both? What are you learning? * What are the barriers to services for HNW individuals?

When someone comes to you, what are they trying to solve? * Christian’s experience with trauma patients that aren’t in the HNW world and how that impacts her work * Is your work preventative or crisis management? * Or both?

What is Empowered Entitlement? * What is Empowered Entitlement? * What are the strategies that you use with individuals and families? * How do you interact with the trustees / advisors / family members around them? * Once the immediate trauma is addressed, how do you develop the coping and resilience skills in people that never had them?

Is there a “done” moment with your clients? * How do you help clients use “empowered enititlement?” * What does a good structure for a client or family look like going forward? * How do they develop esteem and productivity (which sometimes can be at odds with family expectations)?

How do we find Christian?NEXT GEN JOURNEYS

CHRISTIAN BROYHILL ON LINKEDIN

More on Childhood Wealth Discussions

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“Family Office” recruiting is one of the most difficult subsets of wealth management.

Loaded with mystery and allure, many wealthy families want to “have” a family office. It’s a different story when the family has to determine the ROI of the project, lay out the costs and, ultimately, staff one. This is actual work.

Family offices are expensive and require deep strategic thought and long term purpose and budgeting by the family.

As we will learn here, family offices call for the identification, acquisition, and support of talent that is not readily available. This new talent can also be risky.

A new structure with new people subject large amounts of personal wealth into the domain of outsiders and public risk. Failure is often embarrassing (and expensive).

I went to a source with a unique viewpoint.

BRIAN C. ADAMS is a Principal at Mack International, a leading executive
search, and human capital consulting firm that serves the family
office/wealth management markets.

Along with his background in family office, Brian has co-founded two real estate private equity firms, Excelsior Capital and Priam Properties, and has assembled a portfolio of over $600 million in real estate assets.

Brian’s Background and Unique Path into Family Office RecruitingThe Nuts and BoltsSUCCESSION PLANNING AND NEXT GENERATION DEVELOPMENTTALENT IDENTIFICATION AND ACQUISITION/ STRATEGIES FOR RETAINING KEY TALENTCOMPETITIVE COMPENSATIONPACKAGES AND HOLISTIC COMPENSATION APPROACHESGLOBAL TRENDS THAT IMPACT THE FUTURE OF FAMILY ENTERPRISES How “fully formed*” is the vision for the office by the time they begin actually recruiting? * Is this coming from the lawyer? * The tax professional? * The banker? * Or from family office consultants?

What is the ROI on a family office? * Should it be a profit center? * A “break-even” cost of doing business? * A loss-leading accomodation?

Is the family driving the search or a consultant? * Do they often hire a CEO and they run the lower level searches? * How do you get a family to think about a family office’s linkage with (or separation from) a family business? * Should it be funded out of liquidity or operating cash?

Complications with Family Office Recruiting* What happens if the job mandate doesn’t feel right? How much are you dealing with the family and how much is it the consultant? Are the structures already built? * Eddie Marshall’s 3 x 3 rule “problem” for Family Offices: 3 years / Over 3M and you still don’t know what you have? LEARN MORE HERE * What are the real costs? * Do families understand the expense? * Who is developing the budget?

Threading a needle-* Identifying the talent and skills * Cultural Fit * Compensation terms – Salary vs Upside * The accounting spine VS “the guy to analyze deals” VS a large, full service situation * What happens if the fit is bad after 6 months?

Searches for new (de novo) family offices Turnover due to retirement vs, turnover due to cultural problemsSearches for executives vs. technicians* Do searches for positions ever include family members to engender competition * Private or Public Company Board experience – is a lack of it a red flag? * Technology building and security experience * Any major best practices (or worst) for families exploring which functions to internalize and which to outsource?

Family offices and the trends toward outsourcing and MFO’s* How does one deal with “scope creep”? * What if the family gets sick of the expense? * Do you look for other families to use services and share in the expense?

https://youtu.be/O3qFi0YhuFI?si=nu5iQJ_Hnuno0zjXHow To Find Brian Adams* BRIAN ADAMS LINKEDIN * BRIAN ADAMS MACK INTERNATIONAL

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PROPUBLICA has taken on the role abdicated by most mainstream news organizations. Its long form journalism, while controversial, takes on many special interests that escape public scrutiny.

While I often don’t agree with the slant that they take, ProPublica represents a new frontier for the fourth column.

Traditional news outlets make less and less business sense. I wanted to find out more about how long form journalism is going to work going forward and how it will apply to financial regulation.

So I spoke to JUSTIN ELLIOTT, an Investigative Reporter at ProPublica.

Justin has won the Gerald Loeb Award for business journalism, the Selden Ring Award for a series on the American Red Cross and, with the “Trump, Inc.” podcast team, a duPont-Columbia Award.

He co-wrote the story revealing tech mogul Peter Thiel’s multibillion-dollar Roth IRA which we talk about here.

Justin’s Path to ReportingThe Role of PROPUBLICA in Long Form Journalism* What are its origins? * What is its mandate? * How is it funded?

What is the Role of Journalism in (Re) Establishing Accountability in Society?What is Congress’ (and the other branches of government) role in fixing the issues that journalism uncovers?Peter Thiel’s $5 Billion Roth1. What happened? (How did Thiel get assets into a Roth IRA with a $2K cap?) 2. How did this work? (Funding a Roth IRA with low value Founders’ shares) 3. The “Law”, the Intent of the “Law” and the Variability around the “Law”? 4. Is this a valuation issue as much as a legal issue? 5. Is it wrong? 6. How should we correct a distortion like this? What’s next for Justin and ProPublica and how do we find him?2024 Election Coverage

Justin at ProPublica

Justin at Twitter

https://www.youtube.com/watch?v=f1YOe9GV0MYhttps://youtu.be/Ao33oyZJuC8https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQTBuy “Wealth Actually” Paperback, Kindle and Audio

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The intersection of Technology and Estate Planning is now a dominant talking point in the wealth management space. The pressure for advisors to deliver more client value is intense.

As the wealth management industry wrestles with establishing relevance, value, and control with the next generation, the emergence of Technology and Estate Planning to assist the advisor is a central theme in the RIA space and “Fintech.”

Combining centuries old “analog” concepts with new “digital” tools is the new silver bullet for reaching and keeping clients. Therein lies one of the biggest challenges in delivering this value. The formulation and communication of estate plans and wealth structures for clients and the next generation is tricky business.

It requires experienced practitioners and tools that streamline a labor intensive (and often unprofitable) process. Once the picture of one’s plan develops, it now requires ongoing maintenance and detailed administration as life marches on and risks and opportunities emerge.

I spoke with DAVID BARNARD to understand the state of the art in creating, presenting and managing personalized trust & estate strategies for complex clients with Luminary’s digital collaboration platform.

Technology and Estate Planning Issues* The challenges in visualizing complicated concepts, * Storytelling and the importance of communication in a world of numbers and graphs * Helping the advisor have equal footing with other professionals * The importance of collaboration (and not competition) with the legal and accounting world in providing coordinated advice * Staying on the safe side of unauthorized legal or accounting advice and broader staffing issues * The future of administrating wealth.

DAVID BARNARD is the CEO and Founder of Luminary- the winner of two awards at the 2024 Family Wealth Awards . He previously led private wealth management for AllianceBernstein, overseeing more than $100 billion in client assets, and has served multiple philanthropic organizations as a director or trustee.

Luminary’s website is here: https://www.withluminary.com

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Artificial intelligence and healthcare have been intertwined for a long time.

With the emergence of OpenAI and other Large Language Model platforms, we are on the forefront of more huge changes in the business of health care. The public has noticed.

Healthcare and elder issues are the major concerns for most families planning for their futures. Artificial intelligence has permanently changed the method and pace of research, the role of privacy, the choice and delivery of treatment, and the way people interact with the healthcare community.

To better understand these issues, I spoke with Chris Heye. who is working in the space.

BackgroundDr CHRIS HEYE is the CEO and Founder of both Whealthcare Solutions, Inc. and Whealthcare Planning LLC. He is a proven entrepreneur with extensive experience starting and growing technology companies. After confronting dementia in his own family and witnessing elder financial abuse in friends, Chris decided that older adults needed more protection.

Chris and I take a look at this intersection. The advances are exciting. Having surveying the landscape, we marvel at the leaps forward to come and worry about the issues that they create.

Artificial Intelligence and HealthcareAgainst that backdrop, we take on these questions:

• How is the intersection of artificial intelligence and healthcare changing medical research?
• Is artificial intelligence shifting the methodology and processes of healthcare and is it for the better?
• After sharing our experiences with dementia and loved ones, Chris and I wonder about the future of dementia management. Will the intersection assist patients with their day-to-day lives?
• Is artificial intelligence widening the gap between retirement, late stage health and death?
• Knowing the pernicious effect of ageism, can the financial planning industry properly account for the length and expense of elder living?
• What can we expect in the near future and what should we look out for?

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The transition of wealth between generations has put the spotlight squarely on fiduciary roles. With the rapid changes in the financial services space, directed trustees and independent administrative trust companies have exploded in popularity.

The Evolving World of Directed TrusteesMost advisors, wealth management firms, and clients under-appreciate the responsibility and risks of proper trusteeship.

They remember a culture and business model that existed decades ago.

These days, individuals trustees usually can’t handle the rigors of the job and law firms are leaving the space for liability reasons.

Finally, in an environment where clients want more flexibility and control, the large bank-owned trust departments provide a cumbersome experience and high turnover,

With this in mind, modern estate planning has unbundled traditional investment, administrative and distribution trustee roles. There is a huge appetite for jurisdictional planning and best-in-class providers.

With all of this change, it is confusing for the advisor to know who is responsible for what and how much it should cost.

The Problem for RIAsRIA’s do not have the resources to advise or service clients with this complexity. The administration and oversight of these structures is a distraction.

Building a trust company to solve this problem does not make business sense in a private equity-backed RIA aggregation environment.

Moreover, using conflicted trust providers is out of the question for fear of putting client relationships at risk.

An increasingly popular option for RIAs and wealthy families is the use of directed trustees and the independent administrative trust company.

CHRISTOPHER HOLTBY is a co-founder of an independent trust company that works specifically with wealth advisors and directed trustees.

Not only do we highlight the best practices for identifying and partnering with an administrative trustee, but we also discuss the typical workflow between an RIAs and directed trustees.

Chris’ Background with Directed TrusteesHow RIAs work with directed trustees and an independent trust company: 1/ What are the basic requirements of independent trust company?

2/ Accordingly, which “value adds” should RIA firms should look for?

3/ Are there key attributes to spot when deciding to work/partner with an independent trust company?

4/ Lastly, should you be aware of any “Gotchas” in the space?

How Do We Stay in Touch with Chris?WEALTH ADVISORS TRUST COMPANY

Video of the Podcast:https://www.youtube.com/watch?v=6YyqlULg1GA“Wealth Actually” is now on Video!https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT

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Richard Haass: Episode 152 – The World’s Hot SpotsDr. RICHARD HAASS takes us on a tour of The World’s Hot Spots. We also discuss the U.S. in 2024 and the concept of citizenship.

Richard is a veteran diplomat and respected scholar of international relations.

He is president emeritus of the Council on Foreign Relations after having served as the CFR’s president for twenty years.

Richard is also senior counselor with Centerview Partners, an international investment banking advisory firm. He appears frequently in the media and has authored several books on American Foreign Policy, Management and Democracy.

Richard Haass on the World’s Hot SpotsIsrael/Gaza/Middle East/Hamas/Hezbollah – What do the other oil-rich nations to the north think of these troubles? Even with outside pressure, is there a long term answer for this conflict?

Ukraine/Russia – Meanwhile, what does a Russia look like after Putin?

China/Taiwan/South China Seas – While Russia struggles, but progresses, with the Ukraine, has the U.S. calculus with China changed?

India – Because India now has the same population as China and growing economic power, is there an appetite for them to step up in world affairs?

Haiti – As a result of this month’s events and it’s long history of chaos, is Haiti a broken country?

Richard Haass on The United States in 2024With Trump vs Biden now a semi-official Rematch, what are you looking out for?

The Health of Economy – With statistics saying it’s healthy and people saying it doesn’t feel that way, who wins out?

Immigration – How did the U.S. get this so wrong?

As a result immigrations and the headlines around National Security and Foreign Policy, is this the election where the economy is not the decisive issue?

If the electorate looking inward this cycle, will this attitude have an impact on Tax Policy?

With both parties having lame ducks and shallow benches, what does the next administration look like as the head into midterms?

If the cult of personality begins to dissipate, what’s next?

Resultantly, is this a source of optimism that well get back into actual policy debates at the party level?

“The Bill of Obligations” and Citizenshiphttps://www.amazon.com/Bill-Obligations-Habits-Good-Citizens-ebook/dp/B0B8R2HJVJWhat prompted you to write about what it takes to be a good and productive citizen?

What are the 10 points of the Bill of Obligations?

-Be Informed
-Get Involved
-Stay Open to Compromise
-Remain Civil
-Reject Violence
-Value Norms
-Promote the Common Good
-Respect Government Service
-Support the Teaching of Civics
-Put Country First

Are there certain writers and publications you enjoy reading? Favorite books?

Final Questions With some of the big concepts laid out, what big concept out there keeps you up at night?

Lastly, with so much conflict around the globe, is there a big opportunity that you see that isn’t being noticed?

How do we find Richard’s writing and appearances?“HOME AND AWAY” ON SUBSTACK

RICHARD on TWITTER

COUNCIL ON FOREIGN RELATIONS

CENTERVIEW PARTNERS

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Episode 151 – MARK HOUSECryopreservation and wealth was once the purview of science fiction and Hollywood. Freezing one’s self to be revived in the future is not just something out of Issac Asimov book or a Ridley Scott movie. The science, estate planning, and economics of this “call option on immortality” are here right now.

There are legitimate and current issues with cryopreservation and wealth- fascinating ones at that! Science, estate planning, ethics, governance, economics and good old-fashioned drafting are in focus as I speak with Scottsdale-based attorney MARK HOUSE.

We’re going to get our arms around the misconceptions of the freezing process and what that means legally and practically. With that background, we’ll dive into the structuring and drafting considerations to effectuate this amazing concept. Finally, we have some fun by guessing at what the world may look like with revived citizens hundreds of years from now.

INTRODUCTIONBACKGROUND-How did Mark get into estate planning and how did he get into cryonics?

CRYONICS-Let’s define freezing “pre-death” vs “post-death.”

-Behind the Science: GREG FAHY’S WORK and BIO

-What is the legal and funding process?

ESTATE PLANNING AROUND CRYOPRESERVATION AND WEALTH -Usually when people die (and the being’s existence terminates), the assets transfer to beneficiaries. However, here something different happens.

-Is there a difference between being kept alive but in “suspended animation” and dying?

-Does having various features including DNA maps serve as the basis for a new being?

DIRECTED TRUSTS-Ownership in a trust should be able to provide the structure that allows the Grantor to be resuscitated when the science catches up.

-Trusts have a Grantor, Trustee, Corpus (literally in this case) and beneficiaries.

-Trustees must administer, invest and distribute.

-How does a directed trust allow the Grantor’s intent to persist?

TRUST REQUIREMENTS-Perpetuity and a Good Trust Protector Structure are vital.

-With that in place, trustees must have distribution flexibility and discretion around “beneficiary determination”

-Why is it important to have broad Trustee choice?

-If we’re making guesses about the future, why is nimble decision-making process around “science determinations” important?

-When talking about investment flexibility, is endowing a future being a “prudent investment’? If so, how does a trustee sign off on that?

CRYOPRESERVATION AND WEALTH ISSUES-Who pays the freezer? How much does this cost?

-Once we know that, how does the trust pay for it?

-When should a person use life insurance? When employed, does the presumption of death change anything?

-What happens if you run out of funds?

-Does it make sense to (also) endow the future persons’ lifestyle? If not, how will they function in the future?

-Should other the trust not include future beneficiaries to reduce a potential future conflict

-How do you staff this? (See here for an interview with Betsy Brown on Corporate Trustees designed to deal with tricky situations: https://frazerrice.com/ep-63-betsy-brown/)

-What if the individual or corporate trustees cease to exist? (Trust protector)

-Is there liability for the science committee if they unfreeze too soon? Can other beneficiaries then be added? Should they be?

-Are private trust companies common in these situations?

BEST PRACTICES AROUND CRYOPRESERVATION AND WEALTH-What’s the best way to get started?

OUTRO – How do listeners find Mark House?MARK HOUSE CONTACT INFORMATION

ARTICLE ON CRYONICS

TIM URBAN’S ARTICLE

OUR TRUST AND ESTATES PROFESSOR, JEFFERY PENNELL

Firms that do thisALCOR- https://www.alcor.org/

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Episode 150 DAVID LESPERANCE AND MELVIN WARSHAW

In this 150th Episode, we revisit the topic of citizenship and expatriation and try to answer the question, “Should I expatriate?.”

Establishing a life outside the friendly confines of the United States is a popular wealth conversation.. In the last few years, fueled by local dissatisfaction, political polarization, wealth divide animosity and positive “working abroad” experiences, “Expatriation” is now a big word in the cocktail party circuit. It’s a word that shouldn’t be taken lightly. Done correctly, it is a multi-year decision and planning process with significant consequences.

Long-time friend of the podcast, DAVID LESPERANCE and fellow cross-border tax expert, MELVIN WARSHAW, share their expertise on the three levels of “detachment” from the USA. They will set out the administrative and tax consequences of moving up the ladder of recission from the United States.

(David’s previous interview here EP-76 Citizenship Diversification)

What factors have caused a dramatic increase in Wealthy Families seeking second citizenships and residence as “Fire Insurance”? * Tax the Rich proposals, * Rising racism and anti-semitism, * political polarization, * mass shootings etc.

What are the tax consequences of being a United States citizen?

How does one obtain a second residence? What factors to consider?

How does one obtain a second citizenship? What factors to consider?

What are the types of “Fire Escape Plans”? (i.e. Go Bag option, American Living Abroad, Expatriation) What are the Tax consequences of leaving the United States vs a full “Expatriation”?

What are possible factors that may cause one to trigger their Fire Escape Plan? (SCOTUS decision in Moore, Election mayhem, natural disasters, election results etc.)

What is the impact on the US of Wealthy Americans triggering Fire Escape Plans?

Should I Expatriate?ContactDavid Lesperance on Linkedin

Melvin Warshaw on Linkedin

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Episode 148: Aon’s Latanya SimmonsAon’s LaTanya Simmons on Florida and California Property InsuranceThe challenging Florida and California property insurance environment is a huge topic of conversation. Anyone looking to insure a property knows that this has become tricky business in the last five years. Floods, hurricanes, wildfires and mold have are major problems for successful families’ homes. These and other conditions have driven up premiums if you can find insurance at all. Add into the mix the complexity around the liability and the long term viability of the insurers. It becomes obvious that you need an expert to help navigate these risks.

LATANYA SIMMONS is an Atlanta native and 2nd generation risk management professional. As the National Sports Practice Director and Private Risk Advisor with AON Private Risk Management, LaTanya provides expert personal property and casualty insurance advice and advocacy for successful individuals. executives, entrepreneurs, athletes, entertainers and family offices nationwide count among the people that she serves.

We discuss the Florida and California phenomenon and what she sees as the future of the property and casualty insurance market in the high net worth space.

The Florida and California Property Insurance ChallengeTell us what is going on in the Florida and California property insurance markets? What is the impact on customers?

Are Florida and California (and New York) just the beginning for the risk markets? What strategies should those and others contemplating moves or purchases in other states consider beforehand?

How has the insurance market changed over the last 5 years (and specifically in the last 2)? Where do you see it going?

Will states like Texas, Colorado and Georgia feel this?

Where do you identify the biggest insurance risks for highly successful individuals?How often should insurance policies and programs be reviewed, including the health of their insurer?

Many clients are high profile due to their or their family’s success and involvement in the community. This puts them in the spotlight often – in the news, on social media, front page of their company website.

What risks do higher profile people need to be thinking about?

What other guidance you can share for successful individuals and families when it comes to managing the risk around their homes, autos, collections, and other property?

Contact LaTanyaLaTanya Simmons LINKEDINAONOther “Wealth Actually” insurance discussions:

https://frazerrice.com/ep-106-ahmet-bidav/For More . . . https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/The new audio version is out now!

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EP-148LALIT PANDA on Optimizing Supply Chains in a Chaotic World and the Steps to Protect and Improve Company OperationsDefining the term “supply chain” and understanding what a company should control and what to outsource has never been more important to a business. Optimizing supply chains in a chaotic world is a huge challenge. Strategists at the executive and board level face:

• Major global flare ups that threaten inputs
• Huge pools of data to analyze, and
• Increased complexity of logistics as customer preferences develop (almost to the point of irrationality).

LALIT PANDA has spent his career safeguarding, managing, de-risking and optimizing supply chains. Having worked with major companies like Sony and Altria on these problems, he joins us today to discuss the challenges and opportunities of in today’s supply chain framework.

Lalit is an Operations and Technology executive with leadership experience across 7 different industries at companies of all sizes that were Public, PE and VC backed. As a Chief Operations Officer or a Chief Information/Digital Officer in global companies, he has led digital and operational transformations at scale.

Companies where he had roles range from large public companies like Sony and Altria to mid-size firms like Harman, Denon, Tronox etc. He has also been in late stage startups, ranging from consumer products to industrial chemicals and medical devices.

He is a blogger and thought leader on supply chain and digital transformation topics. These are increasingly important in a world of rapidly changing technology and geopolitical risks.

Latit holds degrees from Massachusetts Institute of Technology, Indian Institute of Management, Ahmedabad and the National Institute of Technology. Based in Princeton, he co-chairs the programs committee of the Private Directors Association NY/NJ and the Technology and Industrial SIGs of The Executive Forum.

IntroBackgroundSupply Chain DefinitionWhat is the definition of Development?

How do we categorize Planning, Sourcing, and Delivery?

What is the importance of Execution?

What goes into the Making of the Product?

Finally, what are the complications around the Delivery of the Product?

Traditional Notions and Recent ShocksWith Recent geopolitical impacts, how are companies mitigating risk?

What are the opportunities with recent Transportation advances?

Are companies taking advantage of recent Advances in information technology and logistics management (last mile)

What has been the impact of Covid / Work From Home (WFH)?

What do companies traditionally get wrong when optimizing supply chains in a chaotic world ?Where is Strategic Perspective (and Oversight)?

How can there be a Lack of Board Representation ?

Looking into your crystal ball- what are the ways to improve supply chains amidst instability?How do listeners find you?LALIT PANDA LINKEDIN

LALIT PANDA TWITTER – @latitpanda

PRIVATE DIRECTOR ASSOCIATION

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Episode 147DAVID WASSERMAN of the COOK POLITICAL REPORT on Analyzing the Crazy 2024 ElectionsHow should we be analyzing the crazy 2024 elections? Coming off of the Iowa Caucuses and with almost a week before the New Hampshire Primary, the United States is in full swing for one of the zaniest election cycles in memory.

With histrionics coming from both sides, it’s hard to separate the signal from the noise. The stakes for the 2024 election cycle couldn’t be higher, but the confusion and distrust around the process is at its all-time highs.

Enter David Wasserman.

David is Senior Editor & Elections Analyst for The Cook Political Report with Amy Walter.

Recognized as one of the nation’s top election forecasters, David leads the development of key data visualizations and new product development.

He manages CPR’s coverage of the US House of Representatives and redistricting developments.

Founded in 1984, The Cook Political Report provides analyses of Presidential, U.S. Senate, House and gubernatorial races. The New York Times has called the Report “a newsletter both parties regard as authoritative.”

Polling- ANALYZING THE CRAZY 2024 ELECTIONSPolling is an intimate look at the mindset of the population (or at least a certain part of it). However, it is far from a perfect science. What is involved in polling and what are the common poll limitations? Are there significant changes with technology in the way polling has been conducted or are the questions different?

The current state for the presidential candidates, congress and major state racesWhat are the things we should look for during primary season?

With that in mind, what are the battle ground states and counties?

How much does Gerrymandering fit into the outcome this cycle (NY case- especially with Congress)?

What are the Six States We Should Focus on?Arizona

Georgia

Nevada

Michigan

Pennsylvania

Wisconsin

Who are some of the Dark Horses?Against this backdrop, do you have any Crazy Predictions?To stay on top of this, where do we find David Wasserman?COOK REPORT WEBSITE

TWITTER (@redistrict)

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/NEW Audiobook version out now!

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Episode 146 – Roles and Responsibilities in Trust and Estate Documents with Jenny RozelleWhat if you are named in a will or a trust?In the world of estate planning, many people who are written into important roles don’t know they are mentioned in documents or what is expected of them. These roles can be a lot of work, thankless and carry significant liability.

What happens if you are part of someone’s estate plan? What If you are named in a will or trust?

JENNY ROZELLE helps us get a handle on the roles and responsibilities that are out there. Jenny is the founder and owner of the Indiana Estate and Elder Law. We talk about the role of executor, trustee and beneficiary and the pluses and minuses of each.

(More on being an individual trustee here: https://frazerrice.com/ep-75-marguerite-lorenz/)

Jenny’s BackgroundTermsExecutor -What does executing a will mean? How long does it take?
-What do executors have to do? Do I have to accept the role?
-What type of people are good with this?
-Are you paid?
-Are there risks (can people sue me)?
-Whom do you hire to help with this? (lawyer, accountant valuation expert)

Trustee-What does a trustee do? Administer/safeguard assets, invest assets, distribute assets
-What type of people are good with this?
-Are you paid? Are there risks (can people sue me)?
-Whom do you hire to help with this? (lawyer, accountant valuation expert)

Beneficiary-If I’m a beneficiary, what should I ask from the trustee?
-What provisions should I focus on? (Distributions (mandatory vs discretionary etc . . )
-When asking for something from the trust, what is a good process for that?
-Do I have recourse if I think things are being managed poorly?

Summary of other roles-Successor Executor
-Successor Trustee
-Trust Protector

How do we find Jenny?Firm: INDIANA ESTATE AND ELDER LAW

Twitter: JENNY ROZELLE (@jennyrozelle)

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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The municipal bond market has been long-prized as a stable, tax advantaged income generator for individuals,

After years of a low interest rate environment, the asset class is getting renewed attention . . . And it’s not just from investors! Tech disruptors are eyeing the space and they see a massive, disjointed uncoordinated market in need of modernization.

I spoke with STEPHEN WINTERSTEIN on the state of the municipal bond market. He has a 360 degree view of the muni bond space.

Steve is the Founder of SP Winterstein and Associates which advises dealers and buy-side firms on municipal fixed income data and technology procurement, vendor engagement, workflow, and market structure.

He has over 35 years experience in municipal SMA and mutual fund management, electronic trading, fintech. Most recently, he was head of municipal fixed income at MarketAxess and head of Capital Markets at Alphaledger.

We’ll tackle his view of thoughtful municipal fixed income management, the size, delivery and fractionalization of the market and the technological challenges faced.

Finally, we’ll get some input on where Steve thinks AI, Blockchain, LLM’s and some of the other buzzy words out there may have some real world impact on the asset class.

BackgroundTake us through your career . . . and your start in the Municipal Bond space

• Portfolio Manager – Meridian Asset Management
• Managing Director & Senior Vice President, Head of Municipal Fixed Income – PNC
• Head of Municipal Fixed Income Strategy & Research – Wilmington Trust
• Head of Municipal Fixed Income – MarketAxess
• Head of Capital Markets – Alphaledger
• Managing Partner – SP Winterstein & Associates, LLC

Investing Process* Discussing the two pillars of Muni Investing – Credit and Duration * Fallacy of being able to predict interest rates * Spending Calories on Credit Research * “Bus Map”- incorporating client input in the design/choice of investment constraints

The Municipal Bond Market* The Size of the Muni Market and the challenges that causes * The fractionalized nature of muni market * Typical means tf transacting * Brokerage vs SMA vs fund * Problems with indexing

Where can technology help?* Pipe-building, blockchain, AI review of docs, what else? * Where are the initiatives of improvement? What is holding things back? * In your mind What is the solvable low-hanging fruit? What isn’t?

Where does this help the municipality?

Where does this help the market participant?

Where does this help the investor?

Going ForwardWith interest rates normalizing- any glimpses into Steve’s crystal ball?

Getting rid of tax exemption solves the paradox of the heterogenous borrowing base (institutions of all flavors and sizes) and the homogenous lending base (individuals) by broadening the lending base. While removing the tax favored status would raise borrowing costs, it would improve liquidity – which problem do you want to solve in a world where infrastructure so desperately needs funding?

How do listeners reach out to you to find out more?STEPHEN WINTERSTEIN ON LINKEDIN

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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The CORPORATE TRANSPARENCY ACT is less than a month away from going live and the wealth management industry doesn’t seem to be too worried about it. That worries me because it affects at least 32 million entities according to FinCen- including most small businesses in this country. States like New York may be enacting laws to mirror the disclosure requirements at the state level. Non-compliance is expensive and could lead to jail. How to manage these reporting responsibilities is going to be a big issue in the wealth space.

I covered the general framework in June with attorney Stephen Liss here: EPISODE 134.

Today, we’re going to speak with friend of the podcast, JOHN WILLIAMS on the CTA and 2024. He is the President of the Williams Law Firm in Delaware and President of INCNOW.COM, a corporate formation firm.

We’re going to talk about taking on this responsibility as an advisor and what businesses (big and small) might expect in 2024 and beyond with this new mandate.

Corporate Transparency Act- A Quick Review1) Whom does it apply to and how big is this lift?
2) What needs to be reported? Do we know how at this point?
3) By whom exactly? Client? Advisor? Paralegal?
4) What is the timing for reporting? How long do you have to report changes? Can you correct mistakes?
5) What are the penalties for getting this wrong?

For Advisers, RIA’s, Lawyers, CPA’s and MFO’s6) How much time should compliance take?

• Who is responsible?
• Simple ownership (90min) vs complex ownership
• Change in ownership
• If something goes wrong, who is liable (i.e. who goes to jail)?
• Paralegal liability

7) What are best practices for compliance?

• For clients?
• For advisors suggesting entities?
• For Administrators?

8) Who should be in this business?

• Headcount?
• Is there liability insurance for advisors/admins?
• Are Law firms ready for this?
• RIA’s and MFO’s? CPA’s looking to “help”?

9) What is a realistic cost for this?

• Especially given ongoing service and liability?
• Will clients understand what they are paying for and why?
• Can this be AI’ed away?

10) How are you thinking about it (for your business)?

• Is it a profit center?
• Is this for the “Faint of heart” or the tourist?
• Is there a danger in treating this as an accommodation?

11) Practical questions-

• Who is a control officer? senior officers / directors / others (trustees)? An incorporator?
• Series LLC’s = multiple reports?
• Information sharing between FINCEN, IRS, DOJ others?
• Is Privacy over?
• Should everyone get a FINCEN number?
• Are we entering a new era of corporate governance and record keeping for clients and their businesses? (I.e. is corporate governance going to be a “real thing” going forward?)

How to Find John Williams and his firm.INCNOW.COM TWITTER

THE WILLIAMS LAW FIRM

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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While all families in the U.S. should have an estate plan, a comprehensive plan is particularly important when your family ties and assets span more than one country. Estate planning can be a challenging task for anyone, but add multiple citizenships and foreign assets into the mix, and it can become formidable. That said, failing to have a plan in place can leave your family at risk. To help us navigate these issues, we have estate planning attorney SHANNON MCNULTY with us to talk about how to protect your family when you cross borders.BiographyShannon McNulty is an estate planning attorney and Founder of THE VILLAGE LAW FIRM in New York City, She provides comprehensive tax and estate planning for New Yorkers and their families. Shannon has a particular focus on global families with young children.Shannon has earned the CFP® designation from the Certified Financial Planner Board of Standards. And she is on the Board of Directors of the Estate Planning Council of New York City (with me). Shannon is host of the GLOBAL VILLAGE LAW AND MONEY PODCAST- a resource to help foreign nationals make smart legal and financial decisions.OutlineTell us how you came to work with global families in your practice.Why is it so important to for global families to have an estate plan in place? What are the basic things that an estate plan for these families should address?Guardianship for kids; Arrange for the fast, easy transfer of your assets; Incapacity planning; Minimize taxesCan a parent designate a guardian for their children who does not live in the U.S.?What happens if no guardian is designated?Can you explain how to make sure your assets quickly go to the people who you want to have them if you pass away?If your kids are minors, who will manage the assets for them?What is incapacity planning? Why is it important?What do global families need to know about taxes in the estate planning context?ReviewBefore we finish, maybe you can give us a recap of the essential documents that global families living in the U.S. should have in place?Some comments on Shannon's Podcasthttps://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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JARED DILLIAN is one of the authentic unfiltered voices in finance and trading. He is also a true polymath.His newsletters include The Daily Dirtnap, a daily market newsletter for investment professionals, and We’re Gonna Get Those Bastards, which is about everything “depraved”, especially finance, culture, music and sex.  He has a new book coming out in early 2024 called “No Worries” which brings his unique perspective to personal finance topics with the goal of helping people reduce anxiety around the wealth building process.https://www.amazon.com/No-Worries-live-stress-financial-ebook/dp/B0BZZFQPBG/Back to the polymath part . . . In his spare time, Jared is a progressive house DJ, a short story writer, and speaks frequently on mental health issues at financial institutions.  It’s Jared’s ability to cultivate his creative side that sets him apart from the rest of the noise in the financial world.JARED'S BACKGROUND - Early Life and the Coast GuardLehman Brothers- The Experience and the Newsletter South CarolinaHOW DID JARED GET INTO THE WRITING? (HE STARTED EARLY!)THE NEWSLETTERS - THE DAILY DIRTNAP and THEN "BASTARDS"THE TWO RECENT BOOKS - WE"RE GONNA GET THOSE BASTARDShttps://www.amazon.com/Those-Bastards-essays-creativity-meaning-ebook/dp/B0BZST4Z5P/- NO WORRIES -HOW DOES WHAT YOU DO INVESTMENT-WISE CONTRAST WITH THE CONVENTIONAL WISDOM OUT THERE?TRADITONAL vs SOCIAL MEDIADJ / MUSIC / FICTION - HOW DO THESE ENDEAVORS HELP YOUR WRITING?WHAT ARE YOU WORRIED ABOUT CURRENTLY (MARKETS OR OTHERWISE?)HOW DO WE FIND JARED?WWW.JAREDDILLIAN.COMhttps://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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https://open.spotify.com/show/51hVAo0WB8Lp1ECeyCWZhC

"September 29, 1913: the steamship Dresden is halfway between Belgium and England. On board is one of the most famous men in the world, Rudolf Diesel, whose new internal combustion engine is on the verge of revolutionizing global industry forever. But Diesel never arrives at his destination. He vanishes during the night and headlines around the world wonder if it was an accident, suicide, or murder."

Author, DOUG BRUNT, takes us on a journey into the life of this modern day Tesla.

We talk about his latest book, "The Mysterious Case of Rudolf Diesel."

In this wide-ranging discussion, we get into the world of writing, the entrepreneurism of being an author, the differences between fiction and non-fiction and his "Dedicated" podcast with the leading lights in the publishing world.

It's a great listen for budding authors, readers and entrepreneurs.

https://www.amazon.com/Mysterious-Case-Rudolf-Diesel-Deception-ebook/dp/B0BV123PC8/ref=sr_1_2?crid=34B7KZ2Y3XBDE&keywords=doug+brunt&qid=1694454066&s=digital-text&sprefix=brunt+%2Cdigital-text%2C128&sr=1-2

Doug's Background

From Entrepreneur to Writer

Fiction to Non-Fiction-

What is different? How did you research the book?Whom do you lean on for advice/notes as you go through the process?

The Mysterious Case of Rudolf Diesel

What did you learn about the man in your research?The device to interject Rockefeller and Wilhelm for context Diesel's seismic impact- why has he been forgotten?

Where do you place him in the pantheon of inventors?

The Dedicated Podcast

What do you learn in those discussions?How do we keep track of your podcast?When does the book come out and where do we buy it?

THE MYSTERIOUS CASE OF RUDOLF DIESEL

DEDICATED PODCAST

https://open.spotify.com/show/30nZjASHZdffdfDanIaAgz

DOUG BRUNT TWITTER (@dougbrunt)

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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Philanthropy is one of the most important tools for families to strengthen their communities, establish their legacy and communicate their values - both inwardly and outwardly. What happens when the organizations that receive family resources don't fulfill the donor's intent? What if the charities mean well, but aren't effective? What if the charities use the resources for something else entirely? Well, these issues came up in a big way when the Robertson Family of A&P Supermarket fame disagreed with the way Princeton handled the proceeds of a $35 million gift. Author, DOUG WHITE is going to lay out the case, explain where it went wrong, and give us some lessons on how to avoid future quagmires around donor intent.

https://open.spotify.com/show/51hVAo0WB8Lp1ECeyCWZhC

DOUG WHITE, a long-time leader in the nation’s philanthropic community, is a 5-time author, teacher, and an advisor to nonprofit organizations and philanthropists. He is Co-Chair of the FoolProof Foundation’s Walter Cronkite Project Committee and a governing board member of the Secular Coalition of America.

He is the former director of Columbia University’s Master of Science in Fundraising Management program, where, in addition to his extensive management responsibilities, he taught board governance, ethics and fundraising. He is also the former academic director of New York University’s Heyman Center for Philanthropy and Fundraising. He has also been an advisor to BoardSource, the nation’s leading organization dedicated to “building exceptional nonprofit boards and inspiring board service.”

Doug has written five books:

“Wounded Charity” (Paragon House, 2019)

“Abusing Donor Intent” (Paragon House, 2014)

“The Nonprofit Challenge: Integrating Ethics into the Purpose and Promise of Our Nation’s Charities” (Palgrave Macmillan, 2010), 

“Charity on Trial: What You Need to Know Before You Give” (Barricade Books, 2007),

“The Art of Planned Giving: Understanding Donors and the Culture of Giving” (John Wiley & Sons, 1997)

His expertise includes fundraising strategy, board governance, improving organizational processes, and ethical decision-making.

Introduction and Doug's Background

The Role of Philanthropy

Help for Donors

Help for Charities

Donor Intent - The Robertson / Princeton Case

The Robertsons (Descendants of Charles and Marie Robertson)

Source of Wealth (A&P Supermarket Fortune)

The Desire to Build the Woodrow Wilson School After JFK in 1961

The Gift- $35 Million in 1961 (Robertson Foundation: > $900mm in 2008)

The Mistake in Structuring (and codifying) the Gift

Where did Princeton veer off course? Funds used for other purposes

The Conflict between Charity and Family when the Patriarch Died

The Expense ($45mm in legal fees by both sides!)

Princeton's Explanation:

Good practices for families making the gift (and monitoring it)

Establishing and Codifying Donor Intent

Balancing Rigidity and Flexibility around terms and uses of the gift

Drawing up a Binding Agreement

Communication (Oversight at the Charity and the Family)

Performance Metrics

Accountability Structures and Procedures

https://www.amazon.com/Abusing-Donor-Intent-Robertson-University/dp/1557789096

DOUG's CONTACT INFORMATION

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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This episode is a little different. I'm going to talk about the importance of balance and health. This time I'm the example. I'm hitting the half century mark this year. After 3 years of COVID disrepair and neglect, I knew I needed a change. In this episode, I'm going to describe those changes and what it's done for me.

I'll also be commenting on the significant gap between health, fitness and the wealth management industrial complex. In brief, I think the industry has a huge blind spot around the intersection of health and wealth and is dangerously ignorant about the widening time and expense divide between one's late career and death.

To help me make sense of this is, noted expert, Phil Pearlman. DR. PHIL PEARLMAN, is the founder of THE PEARL INSTITUTE. He is an expert in the areas of personal health, human change processes, and systems integration.

Phil and I didn't work together. However, I hope his unique perspective on balancing career, fitness, mental health and other facets help put my experience into context and give the audience some lessons from my journey.

About Phil

DR. PHIL PEARLMAN, is the founder of THE PEARL INSTITUTE. He is an expert in the areas of personal health, human change processes, and systems integration.

Phil is the author of The Primecuts Newsletter, which focuses on cultivating a healthy lifestyle, mindset, and identity through the powers of creativity, reinvention, and grit.

Phil is an advisor to and investor in social/digital media companies across stages of development. Previously, he served as CBO and CMO at Osprey Funds, EVP at Bank OZK, Executive Editor at Stocktwits, and Interactive Editor at Yahoo Finance.

Phil earned a doctor of psychology degree from Argosy University.

He lives with his wife and two boys in Montebello, New York.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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"Venture Capital" is a small subset of private equity surrounded in mystique and fable. In reality, the world of start-ups is filled with the highs and lows of hard work, loneliness, crushing disappointment and, sometimes, unbelievable success. The bold founders usually have a vision to disrupt the status quo and build a new world around that idea. The VC community is a unique culture that understands the founders' motivations. It provides the resources, support and discipline to help them prove their idea, grow, survive, adapt and thrive in the face of the longest odds. They say "it takes a village." In "Venture Capital", the hope is that these mavericks are surrounded by an ecosystem of investors that understand the disruption they feed and have the patience to let them manifest their vision.

JULIE FREDRICKSON is the Managing Partner of CHAOTIC CAPITAL. She will help us understand what it takes to survive and thrive in this space and skewer some sacred cows along the way.

Julie's Background

"I’m a founder with experience in retail and e-com businesses across all stages. I’ve raised from venture, PE, and crazy people. for everything from cosmetics to online advertising. A couple of my companies even exited and are still around.

My first company was Coutorture Media, a luxury affiliate publishing and e-commerce network acquired by Sugar Inc. I then founded playAPI, a developer tool kit and SaaS platform for digital brand marketers. Most recently I went physical with Stowaway Cosmetics a direct to consumer cosmetics brand, which is now part of WIN Brands Group."

Venture Capital Generally-

What does success of individual investment look like?What does success of portfolio look like?

Differentiation

1. Underwriting Businesses: Asset-Light & Equity-Efficient: "We focus on ventures fitting the VC mold, prioritizing scalable, asset-light companies that require minimal equity financing. Two of our most successful seed investments raised <$50 million to achieve unicorn status while earning hundreds of millions of dollars in revenue and tens of millions of dollars in profits per year."2. Founder's Unique Point Of Leverage: "Every successful startup has a unique point of leverage that allows them to gain escape velocity going from 0 to 1. We seek startups that possess a proprietary advantage such as 

Pre-existing customer relationships, 

Proprietary community driven distribution channels, or 

Innovative technology, to propel their initial growth and achieve escape velocity."

1. Resilient to Competition: "We invest in companies whose products and solutions would be painful for incumbents to replicate. We look for those that:

Cannibalize existing profit centers, 

Disintermediate legacy distribution models, or 

Require replatforming to create an insurmountable competitive edge."

1. "Avoiding Over-Complexity: Great startups must maintain maniacal focus while they scale.Acknowledging the high failure rate of startups, we steer clear of those with multiple dependencies, instead concentrating on businesses with a single, transformative opportunity for success"

CURRENT CONDITIONS

Raising Capital

Deploying Capital

Macro Environment and its effect on allocators - how much do you stay focused on your mission vs pay attention to what's happening in the world- how does that work

LIGHTNING ROUND QUESTIONS

First over the wall vs let others make rookie mistakes

Do you diversify investments around and idea?

How real is the East Coast / West Coast Capital Culture schism? International?

How do you avoid "Jangly key syndrome?"

Without giving away the secret sauce, how do you evaluate founders / leadership?

Any post-COVID lessons or trends to focus on? Location, WFH, trends in Gen-Z etc?) 

DISCLAIMER: THIS PODCAST IS FOR EDUCATIONAL PURPOSES AND DOES NOT REPRESENT AN ENDORSEMENT OF CHAOTIC CAPITAL AS AN INVESTMENT.

HOW DO WE STAY IN TOUCH?

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Real Estate investing is seen as the holy grail of passive income and wealth independence. One of the popular facets of real estate investing is the tax advantage that much of the IRS code provides to the owner/operator. High on the list of cocktail party chatter topics is the concept of COST SEGREGATION. It is a way to deconstruct the components of real estate developments, depreciate them faster than the normal life of a building and net the deductions against other income. To explain this concept, MITCHELL BALDRIDGE joins the podcast. The Texas-based CPA and CFP will take us through the ins and outs of Cost Segregation Studies and discuss the importance of solid bookkeeping and delegation for entrepreneurs and other business operators

Cost Segregation

-Describing the concept - accelerated depreciation and deductions-Potential benefits in numbers-Types of projects where it works (Who is it for?)-Process- getting study, dotting i's, building in documentation now and forward-Traps for the unwary- Sloppiness, Passive vs Active income, Full-Time Real Estate Occupation, -Recapture- what it is and how to manage it

Bookkeeping and Bulletproofing your Business for Future Sale

-Importance of dotting i's-Looking for tax savings-Delegating intensive work-Coordinating with advisors

https://www.betterbookkeeping.com/

How do we find you?

https://twitter.com/baldridgecpa

Links

https://www.recostseg.com/

https://baldridgefinancial.com/services/cost-segregation/

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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One of America's best (and most quotable) judges, Learned Hand said, "Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes."

What happens when the IRS disagrees with the way you’ve arranged your affairs?

What do you do when you receive “fan mail” from the IRS (or the State Taxing authority)

KELLEY C. MILLER, ACTEC Fellow and Partner at Reed Smith in Washington DC. helps us understand the process of an IRS audit, good practices in dealing with an audit, and some inside knowledge of how the process works at the the agency.

This episode is full of good information on an uncomfortable, but vital, topic for families that are pursuing complicated planning that may catch the attention of the taxman.

Background and Good Conduct Rules of Thumb

Be Honest

Be Prompt

Be Complete

Be Clear/Organized

Be Consistent and coordinated with other tax and gov’t authorities

Be Quick to Alert the IRS if issues come up

What is the IRS / State looking for?

In a word, UNDERPAYMENT . . . or "more revenue."

Listed Transactions (ex. syndicated conservation easements)

Unreported income

Mischaracterization of gain vs income

Filing status (ex. Domicile / Residence - esp. at state level) and Dependents

Itemized deductions (Business vs Personal)

Eligibility for credits / treatment

Sources of “referrals”:

Data (Demographics, Internal Data, HNW, UHNW patterns, Social Media, AI in the future?)

News,

Spouses,

Other Agencies (Corporate Transparency Act Implications)

Past conduct

How is the IRS to deal with? Other states?

They are professional and sophisticated but under-resourced

Whom are they looking for?

Improvements? Potential new staffing and technological investments

Is not incorporating your advice team ever a good idea?

Process

1) Open the Letter!  (Not a good time to stick your head in the sand)

Is it an audit or a request for additional information?

What person or entity is being audited?

What is the focus of the audit?

What documentation is being requested?

What kind of audit?

Correspondence Audit: The IRS requests additional information regarding a part of your tax return, such as receipts or canceled checks.

Office Audit: The IRS requests that you bring specific documentation into your local IRS office- the audit happens there.

Field Audit: An IRS agent shows up at your place of business to conduct a face-to-face audit.

Taxpayer Compliance Measurement Program Audit: The mother of all audits- one that requires full documentation down to birth certificates to test the Agency's scoring systems.

2) Notify the team and decide on the response strategy

Who is quarterbacking the response and the interaction?

Accountant / Attorney / Wealth Manager / COO

When should the tax preparer run things vs an attorney?

Do you need other expertise?

Should you have Attorney / Client Privilege? Very likely.

Who is compiling the information?

3) Responding to the request

You should respond to the IRS/State within 30 days of receipt

How should that occur?

Call / letter?

Crafting the response letter

Supplying the requested information

4) No Action or additional payment?

If it’s determined I owe more, what is the process of appeal?

What if I don’t have it?

Payment plans?

5) Closing the file

Documenting the outcome

Post-mortem –

What practices were audited?

Should we do anything different in tax planning

Any other storm clouds on the horizon?

Lessons Learned- Updating documentation and administration process going forward

How Do We Stay In Touch with Kelley?

KELLEY MILLER at REED SMITH

KELLEY MILLER on LINKEDIN

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQ...

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"Behavioral Finance" is all the rage.

BeFi (as the not-so-cool kids in the financial world call it) is the next phase in guiding individuals, teams, boards, companies, and leaders to better decision-making.

There is plenty of material telling us where people get it wrong. Even the best brains get deceived by a litany of behavioral biases. These biases cause people to fall off the track of economic rationality. However, even with all of these labels, there is little guidance on how to identify and use this context.

Until now . . .

PETER ATWATER argues in his new book "THE CONFIDENCE MAP" that there is a straight forward mental model.

https://www.amazon.com/Confidence-Map-Charting-Chaos-Clarity/dp/0593539559/

It can diagnose an individual's emotion and confidence, its directionality and its relationship to group and social mood.

Further, Peter asserts that people (and their advisors) can use this information to pull decision-makers out of the own limitations of their own silos.

People will be able to recognize what is occurring in their surroundings, mitigate risk and maximize opportunity. 

We'll discuss Peter's findings, the mental model he's developed and, finally, the process of writing the book. 

Outline

Quick background-

The Confidence Map- central tenet of the book

The context of one's place on the confidence map has as much to do with the decision making process as data and logic.

Rationale behind the book - what was the problem that you were seeing?

What was your research showing?

Examples

Johnson and Johnson Tylenol Case

Boeing 737 Dreamliner

Bud Light

Defining the axis-

Toggling between "Certainty and Control"

Toggling between "Confidence and vulnerability" (not price!  Are humans innumerate?)

Mapping human confidence (and using it in a forward looking manner)

Individuals and recognizing their own position in the chart

Leaders looking at group confidence and mood "at scale" to mark strategic shifts

Collective mood vs individual mood

Defining the group (which group is the individual following)

Recognizing where one is on the map personally vs the group vs the masses

Augmenting "behavioral finance"

Behavioral economics tries to give us the tools and bias catalogues of where human beings fall off the train of rationality

How do we think about the confidence map to help people predict (and avoid) their own frailties - especially around big decisions?

What is the "equipment" you need to use these tools effectively to help me to understand their decision contexts and make better decisions (potentially in times of maximum stress)? 

Is there a danger that this is giving a loaded gun to the financial services industrial complex?

What was the book writing process like?

Turning a box of ornaments into a Christmas Tree

Using a Coach

What were the struggles?

How do we stay in touch?

https://peteratwater.com/

Linkedin: Peter AtwaterTwitter: @peter_atwater

Amazon: THE CONFIDENCE MAP

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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The Corporate Transparency Act is legislation that is going to touch all high net worth clients in 2024.  This is like KYC procedures on steroids and investors need to be aware of it. Attorney, STEPHEN LISS helps us understand the scope of the developing new regime.

The financial reporting system currently makes it cumbersome for regulators and law enforcement to track the asset ownership and cash flows.  Lessons learned from the Panama Papers and Pandora Papers disclosures signaled the need for a change. 

Congress passed the CTA legislation in 2022 to combat money laundering, tax evasion and other illegalities.  After public input, final rules were recently promulgated. There are significant reporting responsibilities and criminal and financial penalties for non-compliance.

The impact of these initiatives takes hold in 2024- It’s becoming a point of emphasis for the legal, accounting and financial services communities.

It will be significant part of the estate planning process for HNW clients going forward.

With the expected “2026 avalanche of estate planning. Clients are in a for a surprising change in the standard procedures around standard techniques.

The concept of “Putting it in an LLC” or “putting it in a trust” is about to become more expensive, complicated and time-consuming- particularly in dealing with the law firms and especially financial institutions.

STEPHEN LISS is a partner at Dungey and Dougherty and is on the forefront of this legislation and its impact on clients. We’re going to talk about the scope of the CTA, it’s impact and why it’s important for HNW clients to start early and get ahead of these requirements when the planning avalanche comes.

Background

Congress enacted the Corporate Transparency Act (“CTA”) under the Fiscal Year 2021 National Defense Authorization Act on January 1, 2021.

The requirements of the CTA are being implemented “to help prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity, while minimizing the burden on reporting entities.” That said, even FinCEN acknowledges the enormous reporting burden imposed by the CTA, which it most recently estimated to be over 118 million hours in 2024, with an annual burden of over 18 million hours thereafter.

The CTA added 31 USC §5336 to the Bank Secrecy Act with the title, “Beneficial ownership information reporting requirements”. The CTA has three core elements:

Reports to FinCEN

The CTA requires certain entities (each a “reporting company”) to identify itself, its primary owners and officers (each a “beneficial owner”), and certain professionals who helped to form or register the reporting company (each a “company applicant”). The reporting company must then report to the Financial Crimes Enforcement Network (“FinCEN”) information sufficient to identify the reporting company, its beneficial owners, and any company applicants (“beneficial owner information” or “BOI”).

Control Access to Information

FinCEN will provide BOI to government regulatory and investigatory bodies, but it will not be made available to the general public. In addition, there are specific procedural requirements for government actors to access this information, along with civil and criminal penalties for improperly accessing or using such information.

Revised Due Diligence Requirements

The Secretary of the Treasury is required to revise Customer Due Diligence requirements for financial institutions to conform to the CTA, and account for the ability of financial institutions to access beneficial ownership information.

Outline

What is the Corporate Transparency Act?

The purpose of the Act is to

Set a clear federal standard for incorporation practices

Protect U.S. national security and commerce

Enhance national security, intelligence, and law enforcement efforts to combat money laundering, terrorism financing, and other illicit activities

Bring the U.

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State Estate Taxes - State Estate taxes can be a nasty surprise- especially with the disconnect between State and Federal Exclusions. Currently, the Federal Exemption stands at $12.92mm per person. 17 states have and estate or inheritance tax and it's often uncoupled from the Federal exemptions.In New York, the state estate tax exclusion stands at $6.58mm per person- and that exclusion isn't portable with a spouse. With state estate tax rates reaching 16%, this could lead to a potentially big number. However, planning around this tax can be complicated. Estate Planning Attorney, GEORGE BISCHOF is here to define the problem and the clients it affects, provide some context for planning and give us some ideas on how to deal with it. George is an Estate Planning Attorney here in New York City at the WILLS AND TRUSTS FIRM (https://thewillsfirm.com/). He focuses on clients between $4 and $20mm in net worth. Estate TaxFederal ($12,920,000 per person) vs NYS ($6,580,000 per person)Many New Yorkers can be caught in this than they thinkReal Estate can be a big issueLinkage to Gift Tax (NYS has no gift tax)Rates (40% Federal vs 16% State)NYS Cliff - Established in 2014105% Estate Tax Exclusion is where the cliff kicks in.Graduated Tax Calculation Goes back to dollar zero and can be a $250K+ mistakeCalculated on NYS propertyNYS has floated a longer phase-out range, no progress yetBeing a City vs State Resident is irrelevant (as opposed to an income tax situation)Portability – Yes: Federal, No: NYS (but, Credit Shelter Trusts can be a solution)Ways to reduce / maximizeUsing Charity and a drafting Santa Clause (a conditional formula bequest that leaves money to your preferred charity (or one chosen by your executor or trustee), but only if doing so will result in a higher after-tax estate for your beneficiaries).Changing your residence AND domicile (and cutting NY linkages!) - See an in depth discussion on this topic with attorney MARK KLEIN - (SNOWBIRD PLANNING EPISODE)Using Gifting to get "under the cliff amount" (but beware of 3 year look back).Moving wealth to non-NY jurisdiction Maximizing “portability” with Disclaimer or Credit Shelter Trust structuresDisclaimer language in wills and/or trustsMake sure you have an independent co-trustee  BONUS: I wrote about this topic back in 2019 and it gives some context around the planning. (The numbers have not been updated): https://frazerrice.com/blog/the-return-of-the-nys-estate-tax-cliff/ https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/ "Frazer Rice is an employee of Next Capital Management, LLC. This podcast is not investment, legal, or tax advice, nor does it reflect the opinions of Next Capital Management. Any opinions represented in the show are Frazer’s individually and not an endorsement of the guest. This podcast is for educational and entertainment purposes. It is neither investment, legal, nor tax advice and does not represent the opinions of any employers of the host or guest."

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Crisis Management in the Wealth SpaceLawyers, Accountants, Wealth Advisers and other advisers – are used to dealing with difficult situations all at the heart of their specialty.  But often, the advice the clients need goes past the wealth arena . . . . How do you help them when you hear situations like this?My son shows no drive and won’t get up from bed-My daughter is cutting herself-My brother just got his second DUI this year and is running the business into the ground-The trustee of my trust has missed filing taxes and is making mistakes-What do you do when you are the first point of contact, but out of your expertise?  What happens when the family is in crisis and devastating wealth impacts are in view?What happens when it’s not in your business model or expertise to deal with this part of the family’s issues? How do you do the right thing by your client and yourself?JANE MINTZ is the person to help us deal with this gaping hole in the wealth management industry.Jane is an internationally respected pioneer who has spent 20 years working with individuals and families around crises related to addictive illness, mental health, and life concerns. Best known for her work as a concierge strategist guiding clinically complex individuals and their families through extraordinary challenges, she is also a noted thought leader, industry consultant, educator, and speaker who has garnered international recognition. Jane has extensive experience working with family businesses and private family wealth offices so that the dysfunctions of today do not destroy the legacies of tomorrow.  Jane is a Licensed Professional Counselor with multiple dimension training credentials in high acuity clinical clients. She is a Laurel School graduate (Cleveland, OH) with degrees from Washington University (St. Louis, MO) and John Carroll University (Cleveland, OH). https://open.spotify.com/episode/6s4CX5W9qxMtXwRRbBOtUi?si=zvatryXoRUadZirFtJJO4wOutlineJane, in a couple of sentences, what do you do as Professional Counselor-How is your expertise applied to the wealth space? (Family Businesses and Wealth Offices/Trustees)CrisisWhat constitutes a crisis?What is the difference between a crisis and a mistake (or “growing pains”)?How does a financial advisor, coworker, wealth manager know when to intervene? What are we looking for signs and symptoms that someone needs help:  Misspending Not showing up for appointments Missed deadlines Disruption in workplace Missed work Inability to participate in large planning matters The Intersection of Being a "Fiduciary" and Getting a Client the Help They Need?What is a fiduciary relationship?  vs. Human Ethics?When do human ethics supersede fiduciary ethics?  How can a clinical strategist be a key collaborator in bridging the gap between the two?   What does a professional counselor do?  What happens when a client is introduced to to a Counselor?   What are reasonable expectations?  For the family? For the Adviser?What does progress look like?  How do you set up the structures for long term success?Where does the Adviser fit in that process?How do we stay in touch and how do listeners find you?JANEMINTZ.COMBooks Mentioned . . . .https://www.amazon.com/Four-Agreements-Practical-Personal-Freedom/dp/1878424319 "Frazer Rice is an employee of Next Capital Management, LLC.This podcast is not investment, legal, or tax advice, nor does it reflect the opinions of Next Capital Management.Any opinions represented in the show are Frazer’s individually and not an endorsement of the guest."https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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Why Do You Podcast? And How Does It Help in the Wealth/Law Space?Why do I do it?What’s involved?  How does it interact with your career? Should I do it? (YES- At least try it)How did you get started and how much does it cost?Do you make money on it?Is your ROI on the show different? Do you use it for research or marketing (or both)?Do you enjoy it?Two Advisor Podcast ExperiencesI thought I would have BRENT NELSON on the show, so we could trade our two podcasting experiences. Brent is the host of the successful and entertaining Wealth and Law podcast and heavily involved in the wealth management space.  This is his second visit to the Wealth Actually Podcast.He is an ACTEC Fellow and a partner of the Tucson-based RIMON LAW FIRM and focuses on international and domestic estate planning.For those curious about the world of podcasting and where it can fit into your business or practice, this should be a useful listen from two people who have done it. I liked the idea of two people, who have demanding day jobs, describing their podcasting experiences and how they make it fit within a demanding schedule- Why we did it?Why do we continue to do it?What do you listen to and what did you take for inspiration?What's your process?What started off poorly and has gotten better?How much time / resources / workflow does it take?What functions do you keep / what do you delegate?How do you measure success? How do you "monetize?" Business model? Advertising?What do you wish you had? Struggles with audience building-Weird stuff like music / disclaimers?The Wealth and Law Podcast:https://open.spotify.com/show/3bQK3jsLsacNqryQKQuSRGI am also adding this excellent primer on "HOW TO PODCAST" from my friend, Jason Cilo of Meeting House Productions- it goes into some depth on the "Who, What, Where, When, Why and How" of the process from a person who does an extremely professional job on his show. It is well researched and serves as an ode to his passions in the TV and Film world. Well worth the listen: FULL CAST AND CREW: HOW TO PODCASThttps://open.spotify.com/show/1UTZzSo2oPXBxn94UrIjO1Some of the Podcasts Mentioned:Errol Louis ("You Decide" NYS Political Podcast), Various Horror Podcasts, John Keim (Washington Commanders Beat Writer for ESPN), Full Cast and Crew, Infinite Loops, Penny Philips, Griffin Bridgers, Morgan Housel, Ritholtz Wealth's stable of podcasts, Invest Like the Best with Patrick O'Shaughnessy https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/"This podcast is for educational and entertainment purposes.It is neither investment, legal, nor tax advice and does not represent the opinions of the employers of the host or guest."

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In this episode, I recount my experience in taking the plunge and jumping from a stable, large bank job to swim in some different waters. "Funding the Pivot" was written a few years ago as I was doing the post-mortem on my post-book experience. I think the lessons I learned can help a lot of people. This format a bit of an experiment for me in non-interview podcasting- let me know what you think of it. The transcript of the essay is below- thanks for listening!Follow me on TWITTER LINKEDIN YOUTUBE and INSTAGRAM, Don't forget to SUBSCRIBE/like/rate the show and feel free to send along to your friends. https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/Funding The PivotWe live in a world where we are bombarded with advice to “follow your passion” and stories of people who wonder about the road not taken.  In fact, more people in their prime earning years are taking steps to fulfill their “dreams” before they reach the brass ring of retirement- a time normally associated with doing all of the things you didn’t have time to do.What happens when you aren’t close to retirement and want to make a career switch or start up a new business? What is realistic? How should you think about the risks so that you avoid a crippling financial decision?As clients and friends have come to me with this issue, I have taken my personal experience and some financial planning concepts to put structure around what can be a high risk, but high reward decision.The Assessment and the PlanMany of us daydream about a better tomorrow . . . better finances, more control of time, health and family happiness, a clearer path to professional or extracurricular achievement and establishing a legacy. These things don’t come without costs and the risk of failure. Therefore, you need a plan.The first step is to assess the situation at hand.Are you running from something or running to something?Do you have an idea that will change an industry (or the world)? Do you want to start a business (and the hell that being an entrepreneur can bring) or do you just want to enjoy the trappings of a well-oiled business machine (already put in place)?  For those making career decisions because of an unpleasant work environment, I would think twice about running headlong into entrepreneurism.  It is a long and lonely road.  You have to “really want it” and be prepared for sacrifice both personal and financial.  Can the same itches be scratched while being traditionally employed? If your current situation is dissatisfying, could the correct change be a move to a firm that is more in keeping with your goals and principles?I had a little of both in my life and used parts of the creative process, the entrepreneurial experience and a corporate situation to move my situation ahead.My situation at my previous employer was suffocating.  I enjoyed working with clients, solving problems, identifying opportunities and being relevant to successful people. However, while enjoying success, I was not participating in the equity or direction of the business and I was not developing.  My career trajectory was flattening and the principles by which I worked were shifted by new management priorities. It was time to go no matter what.I also had a nagging feeling that I had more to bring to my clients, my firm, the industry . . . and myself.  I became involved in podcasting and speaking- two things that I enjoyed.  On the strength of that and my extracurricular interest in writing screenplays and essays, I felt like I had a book in me.Change is good, right? Change brings growth. Generally speaking, that’s true, but change also occurs when you are laid off or when a company closes down. To that end, change is effective when you are the architect of the change. When you are driving new circumstances, you have more control over its effects. In my case, I spent a year writing the book,

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The FAMILY OFFICE – a term that is surrounded by mystique.It conjures notions of massive wealth, mahogany infused offices, private jets and money that has reached escape velocity. When one probes deeper, it connotes secrecy, exotic opportunities and risks, mixed with rigid control and discretion.But what is the reality behind the term “family office”?  At what level of wealth do families bring it all in house?  What functions do they actually perform?  How much do they cost?For families that are intrigued, what questions should they ask before going down that process and what should they focus on? We’re going to speak with EDWARD MARSHALL, Head of the Global Family Office at Dentons, the international law firm.  Ed has deep experience in the space and is a terrific starting point for families looking to engage the process of developing their own structure. Ed and his white papers and research can be found at DENTONS' site here: ED MARSHALL and his twitter account is here: ED MARSHALL TWITTER. A link is here for his informative book (with Bill Woodson): FAMILY OFFICES: A COMPREHENSIVE GUIDE FOR ADVISORS, PRACTITIONERS, AND STUDENTSHere are some of the areas we hit on:When a client comes to you looking for a family office, what problems are they trying to solve?What is your process for helping them define what they need?Why not outsource everything?How do you make this a digestible process?Build, Buy, or Partner?CostTalentConfidentialityRegulationScope CreepThe Rule of 3:It's could take 3 years to build It could costs $3 MillionYou will probably want to shut it down 3 times before it's up and runningBelow is a brief summary of the question and answer process from Dentons to help families get their bearings around the family office process:Focus areasGetting startedGeneral InvestingInvesting and owning real estateVenture capital and private equityThe Lender Management strategy (US-based family offices)TaxesLitigationOperations and governanceEmploymentImpact investing and philanthropyTrusts, estates and wealth preservationPublic policyRisks and threatsSpecialty areasGetting startedWhat experience do you have working with family offices and family businesses?Is your experience local, national or global?What are the legal services that you typically provide to family offices that look like ours?Does your experience with different family offices provide you with best practices that you can share with us?What are the key legal issues to consider before, during and after a liquidity event?Are all of your legal services billed hourly or can you deliver work on a flat-fee-per-project basis?How would you build a team to handle the legal and non-legal matters relating to my family office?Do you (or your firm) have access to a network of family office general counsels?Are the business entities currently affiliated with our family office optimally structured across all areas that we should consider, such as income tax, estate tax, securities regulation, privacy, etc.?What legal considerations and potential pitfalls exist with respect to embedded family offices (i.e., where employees of the family business perform the same function as a single-family office)?If members of the family are investing together and/or separately, what legal structuring should we consider?Would our family office benefit from a holding-company structure? Should one or more trusts own the family office legal entity? What is a family office management company? Should we consider using a holding company for our investments?What are the advantages and disadvantages of using a family limited liability company (FLLC) or a family limited partnership (FLP) in our family office or family business?How can we exercise optimal control of a family office or family busine...

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We are now into 2023 and it's turning into is a unique wealth planning environmentFamilies are dealing with volatility and depressed asset values. We have extremely generous Federal Estate Tax Exemption levels for the next couple of years (we think!)-Most intriguingly, we are witnessing rising interest rates which are bouncing hard off of generational interest rate low. Since interest rates are an important driver of many strategies, the effectiveness of many popular estate planning tools is up for review. Furthermore, some “out of season” techniques are getting a new look.To help survey the landscape is MATTHEW HOCHSTETLER. Matt is a Partner at David J Simmons and Associates which based in Canton, Ohio and Naples FLMatt is an ACTEC Fellow and well qualified to help us think about the current environmentWelcome Aboard Matthew-Matt's Background and PracticeThe Rising Interest Environment-What rate are we using?  AFR and 7520 RatesHow does it work?  Monthly reset?Where were we (From 2010 to 2021 historic lows that went under 1%) and where are we now (Near 6%)?Strategies for a low-interest-rate environmentLending to transfer wealth with little or no gift tax. The interest rate reflects the hurdle that appreciating assets must beat to be effective for some estate planning techniques to be effective.Intrafamily-loan Installment Sale to an Intentionally Defective Grantor Trust (IDGT)Grantor Retained Annuity Trust (GRAT) Charitable Lead Trust (CLT) Strategies for a high-interest-rate environmentYou may be able to capitalize on strategies whose benefits hinge on using higher interest rates to reduce the actuarial value of a taxable gift. The higher the rate, the more beneficial these strategies will be.Qualified Personal Residence Trust (QPRT): Charitable Remainder Trust (CRT): This is the reverse of a CLT; the grantor receives an annual payment from the CRT for a term of years, and charity receives whatever remains at the end of the term.Any other thoughts around planning in 2023 and 2024 with the sunset provisions looming at the end of 2025?Start Your Thinking Early!Law Firm and Valuation Firm Capacity may get stretched thin by 2025 as people delayIt is easier to top up previously implemented strategies than establish new ones on the fly.HOW DO WE STAY IN TOUCH?TWITTER: @MRHesqLINKEDINhttps://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/Frazer Rice is an employee of Next Capital Management, LLC.This podcast is not investment, legal, or tax advice, nor does it reflect the opinions of Next Capital Management.Any opinions represented in the show are Frazer’s individually and not an endorsement of the guest."This podcast is for educational and entertainment purposes.It is neither investment, legal, nor tax advice and does not represent the opinions of any employers of the host or guest.

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Casual investors understand that states approach taxation of its citizens differently and can have different approaches to raising revenue.However, in the last month, there has been a shift in the directionality of state tax policy.Seven states (including NY and CA) released aggressive (and interrelated) proposals to increase taxes.Some of these proposals center around forms of the controversial “wealth tax” – a tax that would raise revenue from unrealized gains.JARED WALCZAK will explore the new proposals, the likelihood of passage and their broader impact. Jared Walczak is Vice President of State Projects at the Tax Foundation. He is the lead researcher on the annual State Business Tax Climate Index and Location Matters, and has authored or coauthored tax reform guides on Alaska, Iowa, Kansas, Louisiana, Nevada, New  York, Pennsylvania, South Carolina, West Virginia, and Wisconsin. Jared’s work is regularly cited in The New York Times, The Wall Street Journal, The Washington Post, Los Angeles Times, Politico, AP, and many other prominent national and state outlets.He previously served as legislative director to a member of the Senate of Virginia and as policy director for a statewide campaign, and consulted on research and policy development for a number of candidates and elected officials.He has been recently quoted extensively on this topic in the Wall Street Journal, the New York Post, and MarketWatch.Trying to predict tax legislation can be folly.However, states are known to be the laboratory for broader national tax legislation.These state proposals can provide interesting data points on the mood of legislatures and the directionality of tax policy across the nation.It’s important to know about them. Enjoy the conversation with Jared Walczak.Jared's Background The Tax LandscapeContext around Income TaxesCapital Gains TaxesEstate Taxes Wealth TaxesState Taxes vs Federal Taxes"Raising Revenue" vs "Wealth Redistribution"What is new in 2023 that has 7 states looking to raise taxes?Which states are we looking at here?California Connecticut HawaiiIllinoisMaryland New YorkWashingtonWhat about the passage of Massachusetts' Millionaire Tax?What is the likelihood of passage?What does this tell us about the "Diverging Directionality" of State Tax Policy?Wealth taxes?We're already used to the concept of taxing unrealized gains with property taxes-Not popular- Haven't these been tried worldwide and often discarded?Administratively difficult?  Invest in valuation firms!Forced liquidations? Lower Business Valuations? Reduced Returns for Shareholders?Fairness?  Do you get a carry forward if there is a loss?Is the Wealth Tax Constitutional?  Is it a Taking?Is this a Business Climate to be Encouraged?Tax increase DirectionalityWhat do the tea leaves look like?What political points can be scored in such a divided environment?Any big crystal ball predictions here?How do we keep track of Jared and the Tax Foundation?JARED WALCZAKJARED'S WEALTH TAX ARTICLE@JaredWalczak ON TWITTERhttps://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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We are all familiar with the labyrinth of the healthcare system:  The paperwork, the confusion and the cost can be overwhelming. One of the blind spots in wealth management at all levels is the advice for the most significant liability most families will face: healthcare. I spoke to JOHN SAMUELS, founder of Better Health Advisors, to get smarter on the topic of how to better advise people around this thorny issue.For more than 20 years, JOHN served as a senior healthcare leader in top New York City hospitals, including Northwell Health and Mount Sinai Beth Israel.In 2016, John founded Better Health Advisors, an independent healthcare advisory firm, to share the expertise he developed as a healthcare insider with members of the public.He brings a unique viewpoint on the intersection between healthcare and wealth planning.After listening, I hope you better understand the landscape around helping families deal with this imprecise, paperwork heavy, massively expensive and emotionally taxing issue. OUTLINETalk about your background in emergency medicine and how that led to the founding of your companyWhy do you consider a person's health their greatest asset?Why is health management as important as wealth management Do wealthy people usually get better healthcare?What do you wish more people understood about the intersection of health and wealth?What are the biggest mistakes you see people make related to health care? In the United States, a healthcare crisis often comes with a big bill. What steps do you recommend people take to protect their wealth before an emergency arises?How is health insurance related to financial planning?Having health insurance options once you've sold or left a company in a W2 environmentBridging the gap to MedicareElder Care (and my rule of thumb of 1 Tuition / parent / year as a way to flesh out costs)Managing (or outsourcing) the paperworkFinding the right instiutions and the right people in the institutions to get the correct careWhat is the definition of "concierge medicine" How do you manage HIPAA and privacy concerns?How does one build a team of advisors to deal with the legal and financial impacts around these issues?The importance of having a centralized repository for one's medical information.HOW DO WE STAY IN TOUCH WITH JOHN?BETTER HEALTH ADVISORSJOHN SAMUELS LINKEDINHEALTH ADVICE RESOURCES FOR ADVISORSADVISOR ISSUE SPOTTING GUIDE HEALTH VS WEALTH FUNCTIONShttps://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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With the end of the year approaching, the focus of HNW and Family Office Space has turned to intergenerational planning.

One of the ideas on the minds of many families is providing for future generations.

It would be natural to make gifts to future generations to avoid the estate tax.

However, Congress figured that out and implemented the Generation Skipping Transfer Tax back in 1976.  It’s not easy to understand, implement or track especially across generations.

MICHAEL GROSSMAN is here to help us understand the GST,

Michael is Tax Manager/Fiduciary Specialist from the firm of Adelman Katz & Mond LLP (www.akmcpa.com)

He has Extensive experience working as a tax manager, fiduciary accountant and trust and estate administrator for the past 27 years and manages all aspects of ‘High Net Worth’ individuals and family tax issues.

The Background on the US Tax Regime:

What are ‘Lifetime Exemptions’

Income Tax vs Capital Gains Tax vs the Estate/Gift Tax vs GST

What is a ‘Taxable Gift’

What is a (GST) – Generation Skipping Transfer Tax?

Gift and GST – two separate lifetime exemptions

· 2022 Estate/Gift Lifetime Exemption - $12,060,000 per person ($24,120,000/couple)· 2022 GST Lifetime exemption - $12,060,000 per person ($24,120,000/couple)

GST – gifts to an individual vs. gifts to a trust· What is the difference between a ‘GST Trust’ and a ‘Non-GST Trust’· What happens when gifts are allocated to GST – or not

Annual Exclusions – One size does not fit all· Crummey Power· Annual exclusion for ‘Gift Tax’· Annual exclusion for ‘GST Tax’

Mistakes:

Not including or discussing gift to a Trust in overall estate plan· Conversations with family/trust and estate attorney

Direct vs. Indirect (GST) Gifts· What is the difference· Reporting difference on Gift Tax Return

Allocation of GST - Elections· Automatic Allocation· Opt in vs. Opt out

Annual Exclusions· Follow up and connect to item #6 above

Best Practices:

Be clear in understanding how the trust works· Does the gift made align with overall estate plan· Does it accomplish your goals

Make sure you discuss current and past gifts with attorney drafting trust· Review prior gift tax returns· Make sure preparer of gift tax return knows what they are doing

WAYS TO FIND MICHAEL GROSSMAN

Adelman Katz & Mond

mgrossman@akmcpa.com

**This podcast is not investment, legal, or tax advice, nor does it reflect the opinions of Next Capital Management.

Any opinions represented in the show are Frazer’s individually and not an endorsement of the guest.

This podcast is for educational and entertainment purposes.

It is neither investment, legal, nor tax advice and does not represent the opinions of any employers of the host or guest.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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Dating apps combine many controversial concepts: technology, sex, societal change, economic intrigue . . . and the law. We are in the early stages of understanding how dating apps are affecting the way people interact. Our legal system is just now grappling with how to deal with bad actors in a world where accountability is scarce. To lay the ground work on these concepts is Irina Manta.

IRINA D. MANTA is a Professor of Law and the Founding Director of the Center for Intellectual Property Law (CIPL) at the Maurice A. Deane School of Law at Hofstra University. Professor Manta's research spans legal issues involving intellectual property, torts, the Internet, privacy, national security, and immigration. A graduate of Yale Law School and Yale University, she co-hosts the dating podcast "Strangers on the Internet".

Dating apps- what is the problem?

A quick survey of the dating app scene: Hinge, Tinder, Bumble, Facebook?Bad incentives that apps send especially to men:  Technology and Incel culture . . . and scaleLegal problems - contract law, misrepresentation, privacy, torts etc . . . overlay of digital record-keeping on traditionally human interactionIntroducing accountability into the world of digital datingLegal and extralegal measures (including cultural changes) need to be put in place. Why hasn't the free market solved some of these issues?What are the collective action problems involved are? How (or who) should regulate this?How does this drive a law professor to write a book and have a podcast around this?

Outro- Strangers on the Internet Links:

PODCAST: https://shows.acast.com/strangers-on-the-internet/

IG: @swipestrangers

Twitter: @swipestrangers

Facebook: http://www.facebook.com/groups/strangersontheinternet/

LinkedIn: https://www.linkedin.com/company/strangers-on-the-internet/

Faculty Profile: https://law.hofstra.edu/irina-d-manta/

"Frazer Rice is an employee of Next Capital Management, LLC. This podcast is not investment, legal, or tax advice, nor does it reflect the opinions of Next Capital Management. Any opinions represented in the show are Frazer’s individually and not an endorsement of the guest. This podcast is for educational and entertainment purposes and does not represent the opinions of any employers of the host or guest.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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If you are a casual sports fan, the emergence of the Saudi-backed LIV Golf Tour and its enormous sums of money has been a major story. It has all the elements of a classic drama:

Famous Athletes Outsized PersonalitiesBig, almost infinite, moneyInternational IntrigueInternal workings and politics of powerful organizations

We are lucky to hear from Joe Ogilvie, a PGA Tour Player for 15 years, about the impact of LIV Golf on the PGA Tour and the golf world in general.

Based in Austin, TX, JOE OGILVIE is a former touring professional golfer with five professional wins including the 2007 U.S. Bank Championship. He was an All-American and All-ACC college golfer at Duke University where he majored in economics. Joe founded Ogilvie Capital in 2007, an investment advisory firm and later joined Wallace Capital Management as a long-only value manager in September 2014.

Joe is uniquely qualified to opine on the state of golf as we guess at its future. He also gives us some background on his development as a world class player and his transition to asset management in his 40's when he retired from touring. This podcast was a blast for me!

BACKGROUND

How did you find your way into golf?Describe the process of going from amateur to pro to PGA Tour Pro?What is the economic reality of getting to the PGAT and being a tour pro?With numerous high finishes and a win, what changes after that?With your deep background in economics and interest in business, what were you doing in parallel to your golf career?The role of Pro-Ams and having access to the best and brightest in all fieldsLearning from the best and using your alone time to maximum effect: "Don't Eat Dinner with Bad Putters."Transitioning from playing to investments full time and getting to Wallace CapitalHow did you make the decision and what were the steps?

LIV GOLF and the PGA TOUR

What is the state of the golf union as you see it?How does the "grow the game" sentiment work with the money flying around? Does the LIV pose a threat to the PGA with the young college talent?Is there room for common ground?Will the Official World Golf Rankings Points catch up?Where do you think this goes in five years?Has the sport really grappled with what a post-Tiger money environment looks like? Is there a "next Tiger?"If chairing the board of the PGA what big initiatives would you be thinking about? 

GOLF NERD-DOM

Take us through a couple of the important shots in your career- the chip-in on 16 at the US Bank OpenFavorite courses?  Maybe some under the radar ones?What are your thoughts on the explosion of length in the game?

JOE OGILVIE TWITTER: @OgilvieJ

*This podcast is for educational and entertainment purposes. Frazer Rice is an employee of Next Capital Management, LLC. This podcast is not investment, legal, or tax advice, nor does it reflect the opinions of Next Capital Management. Any opinions represented in the show are Frazer’s individually and not an endorsement of the guest.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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Private Jets are on the minds of all successful people.

The time savings, security, convenience and prestige appeal to the everyone.

However private aviation is so much more. It can be complicated and it’s definitely expensive.

To help us survey the issues around flying private, I spoke with DAVID CLARK.

David has developed expertise from over 30 years in the private aviation industry through several key roles working with international corporations and Family Offices.

He is the Principal of the Integris Aviation Consultancy

Fluent in Portuguese and English, he divides his time between North and South America working with Family Offices and flight departments

OUTLINE

What are some of the main reasons family offices choose to start using private aviation?

The Value of Time - and the appeal of Private Jets

What are the distinct options that exist for accessing private aviation? Break that down for us.

On Demand Charter

Jet Cards – package of hours

Fractional Ownership- depreciable asset

Whole Ownership- control; own or lease

What kind of methodology exists from a financial standpoint when it comes to private aviation? Walk me through that.

5K/Hr + taxes and fees

Jet card- 25, 50 or 100hr increments

Fractional Share- retail cost of plane divided by share

Whole Ownership- buy the whole thing

You talk about a best-practices approach a lot - what do you mean by that?

Over 60 yrs- lots of lessons, safety, operational, risk, financial- knowing how the industry workflows and "supply chains" work is key.

What is the state of the private aviation market today? Is this a good time to get in?

Covid lockdown

Opening up- boom – People discover how addictive it is.

The billionaires crack, kids go back to public school before going back to private-

Pilots?

What is the best advice you can give a family office wanting to use private aviation but don't know where to start?

Build a Team:

Avaition Consultant

Aviation Attorney

Tax

Technical

ESG

Security

**Disclosure: This podcast is for educational and entertainment purposes. It is neither investment, legal, nor tax advice and does not represent the opinions of the employers of the host or guest. Frazer Rice is an employee of Next Capital Management, LLC. This podcast is a property of Wealth Actually LLC and does not reflect the opinions of Next Capital Management. Any opinions represented in the show are Frazer’s individually and not an endorsement of the guest."

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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MARQUES OGDEN is a former NFL Lineman who has parlayed his football experience, lessons learned in the rise and fall of his construction company into a growing public speaking and media career. His podcast recently featured Brett Favre: PODCAST

We talk about his background, his playing days and his career path.

But we really focus on the perils of success, the importance of teamwork, delegation, and the power of persistence

Background

Identifying when you were great at footballPlaying with/ Identifying with your brother JonathanFrom Howard to the NFL

NFL experience- Jacksonville Jaguars

Toughest matchups

The biggest misconception people have about the NFL: "That it’s only physical- the mental importance can’t be overstated."

Transitioning out of NFL- how do you know when it’s time to hang it up?

Describing the difficulties- 6 months of partying

Running a business and challenges you faced-

Early success- the perils of ego

Trusting . . . but not verifying. How did you come out the other side?

"8 Figures to 8.25/hr"

The role the NFL played in getting back on his feet.What are the lessons you are teaching people?

Resilience, Teamwork, Persistence, Delegation

Story About The Greatness of Ray Lewis

Marques Ogden in Action

STAYING IN TOUCH: How do our listeners find you?

LINKTREE

https://marquesogden.com/

TWITTER

"GET AUTHENTIC WITH MARQUES OGDEN" PODCAST

https://www.amazon.com/Success-Cycle-Achieving-Goals-Business-ebook/dp/B081DC17D1/

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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It is a common saying that wealth in families is built and lost in three generations.However, this “shirtsleeves to shirtsleeves” phenomenon is on the minds of most wealthy families.There is constant demand for advice from families of wealth on how to raise productive and kind children.However, there is also a sentiment that the education and preparation of wealthy kids solely stays within the realm of money discussions OR that the interactions should only happen when older.That may not be the case- JEFF SAVLOV is here to talk about the benefits of having these discussions - many times earlier than people think is possible. Jeff is the Founder of Blum & Savlov, LLP He consults with business families, legacy wealth families and the advisors who serve them. He brings more than 30 years of unique experience in sales and marketing, business ownership including business succession within his own family, and family dynamics/psychological training.We will get into what he sees as the benefits of deep early involvement with kids and the establishment of a productive culture to help kids become productive, thoughtful and community oriented.

Outline

• Jeff's Background • So, raising kids in the context of family wealth is an area of particular interest? 5:25• Is your work about talking to kids about money at really young ages? • How has communication about family wealth changed over time? • I’ve often heard you talk about proactive and reactive in this context. Can you say more about these ideas? • How young can you start? 10:50• What are some practical tips for parents in this context? 14:00• Can you describe an ideal proactive situation you were involved in? 23:00• Do these ideas apply to poor and working-class folks? • Is it ever too late?27:45

How Do We Stay in Touch with Jeff?

JEFF SAVLOV

LINKEDIN

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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Golf legend, JAY SIGEL joins us on this episode of "Wealth Actually."

In United States Amateur Golf, there are three names: Bobby Jones, Tiger Woods and Jay Sigel. Jay is one of the most accomplished amateur golfers in American history.

After growing in Pennsylvania, Jay played his college golf at Wake Forest. Afterwards, he embarked on a successful career in insurance and focused on the amateur side of the game-And focus on it he did . . .

Jay won:

The US Amateur twice (Including his win at the Country Club in Brookline in 1982)The US Mid AmateurThe British Amateurand he played in 9 Walker Cups (captaining two of them).

Jay later turned professional at age 50 and played on the Senior tour where he won 10 times.

https://www.youtube.com/watch?v=5weEssiMjgM

While it’s an amazing story of golf accomplishment, many of the lessons from Jay’s life come from his insurance business, his lessons in mentorship from Arnold Palmer and Jack Nicklaus, his charity work and the importance of family.

Jay’s early golf and rise to prominence,

-Junior Golf-The role of Wake Forest-His arm injury, the decision to forgo professional golf and the economics of the Tour "back then"

The start and story of Jay’s successful insurance business in Pennsylvania

-The factors that went into his long-term success in business (and golf’s role in business)-The role of family-The decision to compete on the Senior Tour (and the role of Jack Nicklaus)-Winning as a pro

Jay’s charitable endeavors and what is happening now?

-THE JAY SIGEL INVITATIONALGolf questions

-What made Jay a terrific player?-Was anything missing?

-What is the difference between the top .01% and the top .0001%?-Mindset of Stroke vs Match Play

-The match with Rick Fehr at Brookline and the aftermath-The great players and lessons learned in Jay’s career

The State of the Game

-What he thinks of the state of the game after a whirlwind of news in the world of golf:-Impact of length and power on the game -How did Brookline hold up with the modern game?

How Do We Stay In Touch?

WWW.JAYSIGEL.COM

THE 2022 JAY SIGEL INVITATIONAL

Jay's Golf Resume

https://www.jaysigel.com/new-page

https://www.amateurgolf.com/golf-tournament-news/27871/Catching-up-with-Jay-Sigel

https://www.youtube.com/watch?v=yhLj8EMCok0

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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Two years after its onset, the world's response to the COVID-19 Pandemic will be generational event studied for years. It is a reminder that tail risk events happen more frequently than we think. Pandemics have been a feature (not a bug?) throughout the American experience. POLLY PRICE's new book sheds light on the US government's response to epidemics throughout history- with larger conclusions about COVID-19 and reforms needed for the next plague.

Polly J. Price is the Asa Griggs Candler Professor of Law and is also Professor of Global Health in the Rollins School of Public Health at Emory University. A public health law scholar as well as a legal historian and citizenship and immigration law expert, she has published, lectured, and taught widely about immigration and citizenship, public health law and regulatory policy, federalism, property rights, and the judiciary. (She also had the "joy" of having me in her Legal Methods class when I was at Emory Law!)

Her new book: PLAGUES IN THE NATION

https://www.amazon.com/Plagues-Nation-Epidemics-Shaped-America-ebook/dp/B09CD2WDFC/

A) Tell us about your background

B) What prompted you to write the book?

C) A quick rundown of America's Pandemic History

1 America’s First Plagues2 Yellow Fever and the Shotgun Quarantine3 Black Death on the West Coast4 The 1918 Great Influenza5  Confronting Tuberculosis6 The Fight Against Polio7 The AIDS Epidemic8 Ebola in Dallas9 A Coronavirus Pandemic

D) How do you evaluate America's efforts with COVID?

E) How did the speed of information affect efforts?  The Global nature of the spread?

F) Federalism-

What did we learn about the interaction between the Federal Government and State Government Responses?

F) What should we do differently?  What are the lessons learned?

G) How do we stay in touch?

PROF. POLLY PRICE's BIO

POLLY's TWITTER

PLAGUESINTHENATION.COM

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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Today, I have a challenging discussion with Dr. CHRIS HEYE, PhD, founder of WHEALTHCARE SOLUTIONS. We talk about the issues of older age on decision-making and how that affects an individual’s retirement. We go through data on aging and explore diminished mental capacity in detail.  Advisers will learn what to look out for in clients who may be suffering from cognitive decline or even Alzheimers disease, and what those advisers can do about it. Finally, we hear about the formation of Whealthcare Solutions and the data behind the firm.

Data on aging. (It's alarming)The expense and wealth redistribution taking place- with no signs of slowing down.The story of Whealthcare Solutions.Misperceptions of “diminished capacity.”The surprising peak age for financial decision-making.How does it affect advisers, and what can advisers do about it?Warning signs.

The Wealth Management Industry is in a new and brave world as the tools and thinking around asset management and financial planning may be straining to catch up with the new demographics of country.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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For advisers dealing with wealth management clients, cybersecurity is a necessary conversation. The wealthy are clamoring for digital protection. Advice on the defense against social media attacks, the selling of information on the Dark Web, online security breaches and asset theft are a part of the advice that most wealth management clients have come to expect from their advisors. How do you get your arms around this high stakes discussion?

Today I spoke with TOM RAGSDALE to find out more.

Tommy is an early team member at 360PRIVACY, a Nashville-based cybersecurity firm specializing in digital protection for high profile individuals, family offices and executives. He joined in February of 2021 after working in healthcare technology for four years. Prior to that, Tommy flew fighter jets in the United States Marine Corps. Tommy served as a Weapons and Tactics expert, a flight instructor, and led maintenance teams in combat.

He is on the literal front lines of the digital security war that clients are fighting everyday- whether they know it or not!

We talk about:

THREAT ASSESSMENT

Define Threat SurfaceIdentify VulnerabilitiesOverlay Threat Landscape

DIGITAL HARDENING

Privacy ProtectionsDevice HardeningDarkweb Solutions

THREAT RESPONSE

Breach AssistanceCyber EnhancementTailored Consulting

TYPES OF CLIENT

Family OfficesCorporate ExecutivesPublic Figures (and the balance between being "off the grid" and "out there")HNW and UHNW clients

Find 360 Privacy here:

360Privacy.io

TOM RAGSDALE LINKEDIN

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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The Wealth Management Industry is in the midst of massive demographic change. Business models are evolving, old entrants are retiring or merging, technology is leveling the playing field. As a result, clients are demanding more value and the industry is coping with a rapidly shifting landscape.

As "Wealth Management" clamors for direction, new expertise to manage this change is emerging. With us today is MATTHIAS KUHLMEY, Chief Development Officer at Hightower Advisors and the developer of the "Disruption in Wealth Management" Module for Columbia University's Wealth Management program.

Matthias Kuhlmey began his professional journey as a trained musician, landing somewhat fortuitously in the field of global finance where he has been active as an advisor, capital market expert, and corporate executive for the past 20+ years.

Whereas the origins of his two worlds cannot be more different. Matthias has been passionately exploring parallels, especially in observing how technology has been disrupting both industries. Lowering the barrier of entry, preparing the path for a creative (r)evolution.

Matthias is a thought-leading critic of socioeconomic affairs, C-Suite executive of one of the leading firms in the independent space for financial advice, and lecturer at Columbia School of Professional Studies in New York City.

Background

Overview

1. “Disruptive Trends in WM”

2. Big opportunity to define disruption in the context of WM (Music Industry as an example)

3. Ttrust and lack of trust in the system; emerging stores of value

4. The firm of the future; what to consider, trends to build on, etc.

Independent Movement Around the Registered Investment Advisor Space

-“Wire House” to Independence

-Regulatory and definition Clarity

-Transparency

-Client -centric

Digitization

-Movement away from vertical integration

-Firms now have access to best in breed technology through 3rd party sources

-Vendor selection and maintenance

-Tech as differentiator is now tech as equalizer

Product to Service Shift in Industry

-Move away from commoditized offerings

-Relationship oriented advice

-Shifting consumption models- the move to digital

-the importance of Shared mission

The Impact of Political Risk 

-Mitigating Store of Value Risk

-The Erosion of Trust of “free markets”

-The emergence if digital assets

Growth – Organic

-No one solution- but it must be process driven

-Value proposition must be overwhelmingly obvious

-Relationships must be monetizable

-Accountability driven

Growth – Inorganic

-Deal Activity has exploded

-Risks- integration

-Emphasis on culture and operations vs transaction

-Organizations must be prepared via network and hierarchy models

Future of Wealth

-Access to clients based on value proposition – necessitates specialization

-Talent pool incomplete- not diverse enough, not digital enough, not empathetic enough

-Women- a huge driver of change both as clients and industry leaders

-Meaning of money broader- aspirational sustainable, impact

-Corporate leadership needs new skills to lead the new type of worker and service client

-Economic incentive of workplace culture important but psychological safety is key

How Do We Stay In Touch?

https://www.linkedin.com/in/matthiaskuhlmey/

https://sps.columbia.edu/faculty/matthias-paul-kuhlmey

Recent publications:

o Succession: A Relevance Crisiso The Money (R)evolutiono The Values Dimension

Resources Columbia SPS:Master of Professional Studies In Wealth Management

https://www.amazon.

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SHELTON WILDER will be the first to tell you that the Los Angeles Residential Real Estate Market is no joke.  Building a successful practice in the space is hyper-competitive. The glitz and glamour portrayed on Bravo don't tell the story of struggle and heartbreak that exists in this world.

We’re going to cover the complexities of LA market and Shelton's marketing acumen- including the increased speed and professionalism required for modern high end real estate.,

However, the real story is Shelton’s persistence and ability to overcome adversity. We’ll talk about her coming back from her difficult experience on Shark Tank. That experience and struggles with other businesses inform her success today.  Finally, we are going to detail her ability to use persistence, family and the power of sobriety to enhance decision-making.

The Los Angeles Residential Real Estate Market

https://www.sothebysrealty.com/eng/los-angeles-real-estate/magazines/market

How you do you break it down?

What has been COVID's effect?

What is hot? What is not?

Background

Shelton's Journey from financial problems to success

Sobriety's role in your success

Finding your niche

Media-

Shark Tank “Failure to Success”

https://www.youtube.com/watch?v=AuQZvVSBpOg

Development of the Real Estate business

Use of media to promote your services . . .

IG is vital and much faster than typical glossies

HOW DO WE STAY IN TOUCH?

SHELTON WILDER'S WEBSITE

SHELTON WILDER"S INSTAGRAM

SHELTON WILDER'S YOUTUBE

https://twitter.com/SheltonWilder

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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Few investors become so well known that they earn a nickname.

BILL GROSS was known as the "Bond King.".

A natural polymath, Bill ascended to the throne with his novel total-return approach to managing bonds and his outsized personality.  He built the PIMCO empire through hard work, ingenuity and cult of personality.  Some say he lost the throne through a mixture of hubris, distraction and bad calls.

A new book by former Bloomberg reporter, MARY CHILDS, describes it all.

Now the reporter and host of NPR’s PLANET MONEY, Mary has written the book: “The Bond King: How One Man Made a Market, Built an Empire, and Lost it All.”  It's out now via Flatiron Books.

https://www.amazon.com/Bond-King-Market-Built-Empire/dp/1250120845

Mary’s Background

Where did the impetus to write the book come from?

Access to Bill Gross

What is he like?

"Making" the Bond Market-

Take us through his background

Duke, Navy, Card Counter, Stamp collector, Golfer, Provoker of neighbors

What was the sandbox he played in?

Not just using bonds, but options, futures and derivatives

Buy and Hold vs Total Return

What was going on around him?  (Milken- HY Bonds; Icahn and corporate raiders)

How did he use technology to amplify his edge?

Building the Empire

How did he hit scale?

How did his Macro bets work?

The 2008 bet

Pet theory was that his interest rate calls were inside information-

Once he had scale- how did he help bend the markets to his whim.

Losing it all

What happened?

2014 interaction with Mohamed El-Erian

80s bro culture catching up with him?

East Coast / West Coast?

Distractions?  Bad Habits?

In your final analysis , what do you think of him-

How do we keep track of Mary?

NPR PLANET MONEY

LINKEDIN

https://twitter.com/mdc

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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Generationally low interest rates, inflation, unthinkable geopolitical risks, the speed of information and the prevalence of noise challenge our long-held conventional wisdoms. Many investors are at a loss as to how to save and invest to meet their goals.

https://www.amazon.com/Just-Keep-Buying-Proven-Wealth/dp/0857199250/

Against that fearsome backdrop, Nick Maggiulli, joins us to talk about his book “Just Keep Buying” due out in April on Harriman House Publishing.

Nick is the creator of the successful OF DOLLARS AND DATA blog and is the Chief Operating Officer at RITHOLTZ WEALTH MANAGEMENT.  

His book challenges many widely-held investment beliefs, and recasts them with a data driven analysis for a modern investor.

Background-

The sequence that:

Got Nick to StanfordLed to the development of the blog / Nick's role at RWM

What problem did Nick want to solve with book?

Good slot to talk about your powerful introductionComfort with data to analyze “rules of thumb” and other bromides

The Decision to Analyze Saving vs Investing

The problems with saving adviceWhat did the data uncover?How does this relate to spending?The problems with investing adviceWhat is one of the typical sayings that the data doesn’t support“Just keep buying”How should investors reach “escape velocity” past their liabilities?The importance of time horizons and liquidity cushions

Cash Flow vs Asset Growth (strong personal balance sheet)

How do you think about investing to maximize one’s income vs the growth of the balance sheet?How do you get people’s brains/emotions out of the way of data driven choices?How do you think about guardrails or insurance around 1% events either in the market or personally?  Function of cash?  Allocation vs barbell approach?

We’re in the midst of a big market test right now . . . what Nick's advice for:

Current InvestorsNew Investors / When should parents get their kids involved?

https://www.youtube.com/watch?v=wjPxxUk8D_Y&t=4s

How do we buy the book?  How do we stay in touch?

BLOG: OF DOLLARS AND DATA

HARRIMAN HOUSE PUBLISHING

https://twitter.com/dollarsanddata

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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PERTH TOLLE: An Emerging Market Portfolio Manager with a unique methodology-

INTRODUCTION

Perth Tolle is the founder of the Life and Liberty Indexes and portfolio manager for the emerging market ETF with the ticker: FRDM

Perth was born in Beijing and moved to the United States at age 9. After college, she lived in Hong Kong for a year and significant experience in China

PERTH'S FREEDOM FACTOR PROCESS

As opposed to the blunt market cap approach to getting emerging market exposure, Perth built an index that sought leading indicators in countries that valued freedom and non-autocratic features.

Perth scores every country in the Emerging Market space across 79 categories. Of the 26 emerging-market countries, 11 make it onto Tolle’s index, including Taiwan, South Korea and Poland. 

Her exclusion of China and Russia in the portfolio have been huge calls.

We talk about her process and how she thinks about countries like Taiwan that score well but have invasion risk from less friendly neighbors.

Finally, we talk about the business of setting up a fund and competing against “the big boys.”

Disclaimer:  This is not investment advice – this is an interview with a  portfolio manager with a new way of thinking.

OUTLINE

-Emerging Markets- what is the scope of that world?-How does your fund differ from the others?-What are some of the freedom criteria?-Not having China and Russia must have been a boon recently-What happens if you are "right" about Taiwan, but its bigger neighbor does something that craters values?  Was Ukraine an example?The business of a fund . . . where are you now and what have been the highs and lows?

ESG IMPLICATIONS

HOW DO WE STAY IN TOUCH?

https://www.lifeandlibertyindexes.com/

https://freedometfs.com/

https://twitter.com/Perth_Tolle

https://www.linkedin.com/in/perth-tolle-7757b745/

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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Conservation Easements with MICHAEL ENGELHART

With Joe Biden's recent initiative to conserve nearly a third of US land by 2030, conservations easements have come back into the headlines.

According to the NCED Database, a conservation easement is a voluntary, legal agreement that permanently limits uses of the land in order to protect its conservation values.

Also known as a conservation restriction or conservation agreement, a conservation easement is one option to protect a property for future generations.

The government has supported the logic that donating productive land for environmental purposes is a worthy cause.  As a result, many taxable benefits can accrue to the donor.

However, the conservation easement is also rooted in controversy (and deep IRS scrutiny). Unscrupulous promoters have focused on the conservation easement and used unrealistic and unsupported valuations to sell these transactions tax breaks to high earners who are usually unrelated to the actual land. 

But has this IRS scrutiny killed the conservation easement? Is there room for a transaction with such a beneficial purpose?

To help us understand the current state of conservation easements, I spoke with MICHAEL ENGELHART. 

Based in Stamford, CT, Michael’s practice, works with high net worth clients and family office in the areas of in the areas of tax mitigation and insurance planning. His practice has been involved in many client land situations and he is an expert in the space.  

Outline

Definition of Conservation Easement

Why are they useful?

Where is it pointed in the law?

What makes it controversial?

Why is it a listed transaction?

Role of valuations

Role of formalities

What's the difference between a syndicated vs a direct easement?

Solar vs Mineral vs Golf Course/Real Estate Development /others?

Who is the ideal "client"?

How do they reach you to find out more?

Resources

MICHAEL ENGELHART LINKEDIN

HUMAN CAPITAL RISK MANAGEMENT ADVISORS

JOE BIDEN'S PUSH TO CONSERVE NEARLY 1/3 OF US LAND BY 2030

NATIONAL CONSERVATION EASEMENT DATABASE

https://www.conservationeasement.us/about/

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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International and Cross-Border Planning have been a major issues for high net worth clients for as long as there have been borders.  It's an enormous topic.

Jobs, new family situations and geopolitics often send people to different countries for different opportunities.  All of this can have tax implications around an estate plan . . .

Add in the complications of new asset classes and confusion around citizenship, residence and tax obligations. There is a lot to consider- especially for U.S. citizens with connectivity abroad.

Here to help us think about that is BRENT NELSON . . .

Brent is a Partner at the RIMON LAW FIRM in Tuscon, AZ and represents a variety of cross-border clients. 

He hosts the popular Wealth and Law Podcast, and co-edits the Arizona Estate Planning and Probate Handbook (Thomson Reuters),

He has been elected to or served as:

Fellow, The American College of Trust and Estate CounselChair of the Probate and Trust Section of the State Bar of Arizona

OUTLINE

-What constitutes cross-border planning?

-Common inbound issues?

-Common outbound issues?

-Use of trusts or other entities?

-Opportunities for advisers- helping advisors develop an ecosystem around complicated topics.

How Do We Stay in Touch With Brent?

BRENT NELSON

WEALTH AND LAW PODCAST

BRENT NELSON TWITTER

Here's a link to my appearance on Brent's podcast:

https://wealthandlaw.com/2022/02/16/preserving-generational-wealth/

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/