Money Talk

Episode 23

Give it – When, How, and Who

Lawyers love family fights. Revenge is a dish best served by lawyers. In-laws don’t matter. Earning money is a bad drug. Farmers don’t know what they own. Plowing snow for $50,000. Ask a farmer how. Jack, the dog, picks winning stocks better than all financial advisors. Ed still doesn’t have a new car. Follow your passions.

Welcome to our listener-supported podcast, Money Talk, uncompromised absolute financial truths behind financial perceptions with host, Ed Sutkowski and Chuck LeFebvre. Let’s listen in.

Chuck LeFebvre: This is Chuck

Ed Sutkowski: I’m Ed.

Chuck: Today, once again we’re going to be talking about giving it away. This is really about how, when and to whom. Right, Ed?

Ed: Yes. You have accumulated it in theory. You have something left of the application of all these taxes, you now are looking at your plan and let’s assume we’re talking about three individuals with the assets of the following, one individual with $10 million or with husband and wife, 20 total, another 50 million, a hundred total and those that have more than 50. The issues are the same as I see it. We have a single individual with no descendants or a single individual with no descendants but nieces and nephews. We have married individuals and the problem there are the multiple marriages, my children, your children, and our children. Chuck, any experiences with that grouping? It sounds to me that multiple marriages and multiple children attract the greatest degree of revenue from the lawyer’s perspective.

Chuck: Yes, and the only thing that seems to limit the amount of revenue that the lawyers get from those families is the size of the estate. The families where you’re talking about children from various marriages, it is incredible how it is nearly universal that after one of those spouses passes away, that suddenly there are rifts that emerge in that family that no one thought existed prior to that death. It doesn’t seem to matter whether it’s a large estate or a small estate, there seems to be plenty of high emotion and desire to argue over whatever is there. The only reason you don’t see gigantic fights with small estates is because the assets aren’t there to pay the lawyers for the gigantic fights, but the parties definitely would be in for it if they could afford the fight. That is, I think, a very significant issue. That is probably one of the things, if there’s a handful of secrets here, that lawyers who practice in this area discover and tell their clients and the clients still don’t believe them, that’s got to be at the very top of the list.

Ed: I look at- I call the four horsemen in planning. We deal with fear, greed, the government, and revenge. We can focus on the government with tailoring transactions and gifts to avoid the imposition of attacks that otherwise can be avoided. In other words, I’m not talking about– Avoidance may not be the correct term, minimizing the impact of the tax. We’re going to be within the rules, but the rules are so complex and readily understood by those that do this goofy stuff every year, but the point is the revenge seems to be the one that attracts the greatest amount of legal expense. We don’t traffic into the divorce area, but I understand that my colleagues that do that tend to retire early. They seem to accumulate a fair amount of money. The smaller the estate, the greater the fights, but that’s for another day. A consistent strain, Chuck, I want to hear about your view in this, is with the exception, I’m talking about more than five decades of doing this, the consistent issue is I rarely see, only twice in 50 years, gifts to in-laws. In other words, sons-in-law or daughters-in-law. I don’t see it. I guess that’s just the way the world- you’re experienced along those lines.

Chuck: Yes. I have exactly the same experience, which is that in-laws are very, very rarely included and quite often a big motivator behind the structuring gifts to children is to protect that property, a post gift from being accessible to in-laws. It goes actually one step further than simply not giving gifts to in-laws. Typically there’s not necessarily an assumption, but at least a fear, one of your four horsemen, a fear that someday after I pass away, my daughter’s marriage is going to disintegrate and I just want to make sure that– Of course, the story is always, “We love having him in the family, but someday if something happens, she’s our daughter, and he is not.” There’s definitely that concern.

Ed: It’s both ways, it’s male, female to daughter. Blood relatives seem to carry the day and blood descendants and it’s strange. Perhaps that’s because of what’s going on in the world today. About half the people get married, get divorced, or the number of people that are simply cohabiting and not getting married. Why get married and why get frustrated? There’s that whole social-economic veil over this whole area, the philosophical issue, and you’re damned if you do and damned if you don’t in terms of recommendations. It’s a very difficult area to understand the motivation for these distributions and should we give it away?

Chuck: The other thing that’s worth mentioning here is that this idea of differentiating between blood relatives and those who are not, is even stronger when you’re talking about children and their relationship with their parents. A stepparent is a far more distant relative than a stepchild.

Ed: Yes.

Chuck: I would say, stepparents and stepchildren are more distant relatives typically than in-laws. That seems to be the hierarchy. Do you agree with that?

Ed: Yes. My experience is, shut up about that. Let the client speak and let the client dictate the other objectives. I’ve also noticed that if you just keep quiet, you’ll really know the intentions of the client just before the client leaves. Ready to open the door to leave the office, “Oh, by the way,” and you’d be surprised. “I have a child by a marriage I didn’t discuss,” or, “I have a child that was born out of wedlock,” or, “This guy’s on marijuana.” The art of lawyering is really the art of listening, I think. Observations, Chuck? I don’t know.

Chuck: No, I agree. I agree. I think that it’s interesting, every family’s different. Some people they come in, and really their primary concern is tax avoidance and tax minimization. Other people have very little concern for that and they are far more interested in the social dynamic of what occurs with their family after they pass away. I think the third dynamic here that we haven’t really touched on yet, is a concern, particularly when we start talking about the wealthier families but really I’ve noticed sometimes the family doesn’t even have to be all that wealthy for this concern to start slipping in there. It’s a concern for, “After I pass away, are my children and my grandchildren going to be responsible stewards of these assets and/or are my children or grandchildren going to be harmed by inheriting too much from me?” Have you noticed that, Ed?

Ed: Yes, I do. We’ll get into the range of using some of these examples of how much do you give and how much do you not give, the role of charity and the like. The issue is, I’d like to provide enough for these descendants or children, that’s a big issue, that is grandchildren and great-grandchildren, I want to provide enough for them that they can do what they want to do or are passionate about, but not do nothing. Big difference helped allow them to pursue their passion, art, writing, reading, teaching in the inner schools, but yet not enough that the child of the recipient to do nothing. That’s been my experience.

Chuck: I think that’s almost universal. It’s interesting because– I say this without really intending to argue the point. If you take a step back from our society for a second, you can imagine a world where that type of concern just didn’t weigh in at all. I mean you could imagine a world where someone could say, “I worked really hard and not only did I work hard, but I got lucky a few times along the way. Now I managed to really hit it big. I am very wealthy and very comfortable. The bonus here is that none of my children or grandchildren are going to have to work. That’s going to be my legacy as I’m going to give my children and grandchildren a life of leisure.” I’ll tell you what, you never hear someone say that.

Ed: I think it misses the point. The wealth accumulation process from the perspective I’ve enjoyed with these clients over, say, five decades is that the deprivation of the opportunity to pursue the process is a bad thing. In other words, the wealth accumulation process and whether it’s $1,000, $10,000, irrespective of the size, 10, 20, 50, 100 days, whatever it is, the process of earning the asset is something that is almost addictive and yet to deprive a descendant of that opportunity in the eyes of some that have accumulated wealth. “I want to avoid that. I want them to understand what it’s like to earn a buck.” Is that-

Chuck: Right. I think you misspoke when you said in the eyes of somebody because I think it’s in the eyes of every single one of them that I’ve met and people, again, regardless of the size of their estate, it seems to be a universally accepted norm is that people want their children to work hard. That’s what they want. They want their children to pursue economic security even in those situations where they have the ability to prevent that necessity.

Ed: That’s a function of the identity of the subject. Who are you talking to, are you talking to someone who has earned it or are you talking to someone second or third generation who has inherited it? I’m not confident that the second and third generation has that same view of the world. I do know that the entrepreneur does. “Hey, seven days a week, 12 hours a day, I want that kid to understand.” The world’s changed. You cannot transport those activities, post-depression activities to today, yet many folks think they can do that. How do you instill passion in the minds of a descendant? That’s a different issue. The beauty of what we do every day and I view it as a beautiful process is that the new educational opportunities that we receive. I take away from every client conference, “Well, yes, I hadn’t thought of that.” How they view the distribution of wealth and position of taxes, it’s a fascination. I wish I could do this all over again. Let’s focus on the nature of the assets for just a second. I’d like to talk about three different classes of assets. The close-held business organization, the entrepreneurs started making widgets from nothing, is now selling a million widgets a year, the farm owner, and then the individual who’s invested heavily in marketable securities. Let’s first talk about the close business owner. Your experiences there, Chuck?

Chuck: Yes, my experience there is that quite frequently those people, this is in pretty big contrast I think to the farmers, is that they are only interested in seeing that business continued by one of their descendants if the descendants have already shown a passion and are deeply involved in the business. If that’s not the case, then those folks are quite often seen to have- very readily are willing to see that business essentially being taken over and run by the people who have been there side by side with them and help build the business and are helping running it currently. The trick there seems to be, “How do I make sure that this business continues to operate on an ongoing basis and continues to be successful? Because I care about the business itself, I care about the employees, I care about the customers, I’ve devoted my life to these people. Yet I want the economic value of that to still stay within my family.” That’s the challenge that instills this with that particular estate plan. Is that kind of what you see too?

Ed: I see, aside from the ultimate destination of the asset, the friction that exists between the family members. Let’s assume we have five siblings and only is active in the business. The other four who’re all– Pete is active, he gets all this money, excessive compensation. You do need a compensation plan that rewards but doesn’t gift, compensation of the one family member that’s involved. Then control, who controls the destiny of the day-to-day operations from the board’s perspective or from the operational side? You’re given these interesting issues about who’s on first and “I am entitled more money because I gave up this opportunity to run the business”. Before you get to the destination ultimately, whether it’s an ESAP, whether it’s a transition to a private equity group and you fold in part of your investment and go forward, whether it’s so gigantic you take it public and have all kinds of shareholders, the interim solution, that’s where the psychology comes in and maybe that’s where you need a psychologist because how do you be fair? I’m not sure, but anyway, that’s the close business. Now let’s talk about farms for a second.

Chuck: Farmers, in some way, is a subset of a close business, but the social dynamic there seems to be different usually because there is a real attachment in many cases to the land itself and a desire to either one of two things. Either keep the ground in the family or at least to keep the ground as a farm. For instance, with people who don’t have children or other family members that they’re passing the farm property onto. Quite often, you see- this has been my experience, that you’ll see them want to engage in some type of charitable arrangement or trust arrangement. That ensures the continued operation of the farm as a farm and it’s almost like the farm itself is another member of the family that needs to be taken care of as part of the estate plan.

Ed: Two observations there, we have the tension among the siblings as the one individual is typical that stayed and handled the farms and was compensated, and farms don’t attract that much income. There’s no tax-qualified arrangement to speak of, IRA, pension plans, cash balance plans, all those arrangements that we’ve talked about before. Maybe that individual gave up the educational opportunity and is farming and now expects some kind of option to purchase this property at a discounted rate in theory. There’s a lot of tension there, but more importantly, I see this often, the tenant farmer with the surviving spouse. The rent relationship whether it’s cash, rent or crop-share or some combination, it’s very favorable for the tenant farmer because the tenant farmer almost feels like or the surviving spouse male or female, this tenant farmer is part of the family. So you see a discounted purchase price for that farm. Has that been your experience?

Chuck: Yes, and even when you don’t see a discounted purchase price, it is one of those things that frequently I find myself kind of disturbed by the nature that relationship with respect to the rent arrangement with the surviving spouse, where on the one hand, it’s a business relationship, but this reminds me quite often and this comment isn’t going to be all that fair to some of the tenant farmers out there. It reminds me, in many cases, to the relationship that people have with financial advisors where they’re in a business relationship, but it’s one where their counter party is constantly giving them social signals to think of them as a friend rather than a business relationship. The benefits of that friendship seemed to flow in only one direction. Maybe that’s not a fair comment, but it bothers me sometimes to see what appears to be taking advantage of someone who has just lost a spouse. It gets extremely disturbing when you start seeing these people show up in the estate planning or in discounted sales or in other types of transactions like that.

Ed: Well, I must tell you this morning, just this morning, I was looking at some statements for a surviving spouse. Not a wealthy individual, real nice lady, spouse of a craftsman. The annual fee, this is less than $700,000, is 1.7% of the assets.

Chuck: That’s an investment portfolio, right?

Ed: An investment portfolio that my dog Jack would have done as well of a job and picking out the stocks at this 1.7% when it should have been I would think zero. You go to Vanguard Dividend Growth, pick out the top three or four or five companies. They’re buying me a , but I couldn’t believe this and yes, oh, there’s something we bring to the table, the psychological opportunity to vent and to hold your hand. Well, that’s great, but she didn’t know that this was 1.7%. If I sound passionate about that, it’s simply because I am. That was this morning.

Chuck: You see this very similar sort of exploitation that I’ve seen where, for instance, you’ll have a surviving spouse dealing with the tenant farmer and the rent maybe is $30 or $40 per acre below the current market rate. When you bring that topic up, the comment is, “Oh, but he’s so nice to me. He mows the ditches near my house, and he’ll come and remove the snow from the driveway in the wintertime.” You think about, “Oh my gosh, what it would cost to simply have someone commercially come do those things for you compared to what you’re losing in rent.” Of course, he’s mowing your ditches and clearing off your driveway. It’s such a bargain for him. He doesn’t have anything to do in the winter anyway.

Ed: Chuck, you get to the issue of why does this occur? Whether it’s tenant farmers, closely held business organizations or the securities, it’s rampant. In my view, it’s the default to the truth. You see seek to establish a relationship and so you default, you assume that the third party that’s providing the services is truthful to you and you don’t examine beyond that relationship. “Client, look, this is the amount that you’re being paid,” and the typical answer is, just as you said, “Oh, they’re very nice to me.” Very nice to you?

Chuck: I do think that they’re– I want to be careful here that we’re not being too rough on some of these tenant farmers, I do think that what typically happens there is they start at a market rate and it just doesn’t go up when the market goes up. For some reason, that seems morally not to be in quite the same category as taking advantage of someone like- you see a lot of these investment advisors too, and yet still you find the amount of money that is involved can be so significant here, but it’s still as troublesome.

Ed: Well, it gets down to the default to the truth, but the identity of the provider. Neither of us wouldn’t have this day job activity, a profession, if you will, as a fiduciary. Let’s go through that for a second. A fiduciary is someone who must act in the best interest of the beneficiary. People will call themselves fiduciaries when in fact, they act in the best interest of themselves. That distinction between a fiduciary and non-fiduciary, would you care to expand on that, Chuck? It’s a very, very important distinction.

Chuck: Right. You see this in the investment world quite a bit where people will refer to themselves as a fiduciary meaning that a standard of care applies to them that is elevated versus a “stockbroker”. In other words, they are required to select investments in terms of the selection of the investments that they need to take into account the client’s best interest as opposed to selecting investments based on what will generate the greatest amount of commission. In that narrow context, they call themselves a fiduciary. Yet, with respect to the global nature of the relationship, they’re not really a fiduciary. They don’t really have any kind of legal obligation to essentially look out for the client’s best interests in a global sense. It’s just in that narrow sense with respect to selecting the investments that are going to be part of a portfolio. Legally, they’re speaking the truth there when they call themselves a fiduciary, but it’s not the same. As for instance, an accountant or an attorney or even the trustee of a trust or an executor of an estate serving as a fiduciary where there are some significant limitations on the ability to self-deal and the way that compensation is charged, regardless of any kind of concern raised by the client, that a true fiduciary, like an attorney, a trustee or an executor would be breaching their fiduciary duties by charging an unreasonably high fee, that simply is not the case when you’re talking about these so-called fiduciaries who are investment advisors. They just can’t drive commission. That’s very different and misleading.

Ed: Well, I see it crops up as to where’s the money being spent. Specifically, when you’re talking about a lawyer– By the way, I’m not confident that all lawyers do act like fiduciaries. We have any number of situations where there’s been conversion of client funds. I’m speaking of what is really the way it should be and not necessarily the way it is. There’s bad actors in every area. Having said that, it seems to me the disclosure of those fees is critical. Specific in the case of most lawyers, it’s time basis, their detailed time records that are given, but the problem there is the client pays the bill out of the client’s pocketbook, sees it. “I’m not sure there’s an event. Why did you charge me this for doing that?” Versus if it’s on a percentage for an investment advisor, whether it’s for a tenant farmer, the money is taken from the asset before it hits the pocketbook of the owner. It’s evident that- “Well, what’s the value for– What is your hourly rate? Why is your rate so high? What do you have to do? Well, my cousin has a lawyer that did this for less than that.” The point is, when you’re talking about qualitative value, you can’t measure it. The idea is, where’s the money being paid? Is it coming out of the account and you never touch it? Well, that’s okay. Whatever.

Chuck: Let me give you a very concrete example here. I just noticed this morning; I get this newsletter from a local financial institution. They were talking about how IRAs now exceed the total value of all IRAs in the United States ever since 2010. The value of the assets in IRAs have exceeded the value of all assets in employer-sponsored defined-contribution plans like 401(k) plans. What’s happened here is as people enter retirement age, that’s not because they made small contributions to the IRAs their entire working years, and then these IRAs grew to be these very significant values that you see today, what happened is the assets accumulated inside the employer-sponsored plans and then post-retirement people rolled them over into IRAs. Well, when I saw that, what occurred to me is, “Hey, wait a minute, how many of these people do you think rolled their fund outside of an employer-sponsored 401(k) plan into an IRA without being advised to do so by a person who stood to make some money off of that transaction?” My guess is that many of those people had some kind of a fee-based arrangement with the financial adviser who couldn’t charge a fee on the asset that were locked inside an employer-sponsored retirement plan. Keep in mind, inside that plan, there’s an investment committee who really are held to a fiduciary standard and have to select the investments that are available on that plan for the best interest of the plan participant and yet someone said, “How about you roll that out of the plan into an IRA and then I’ll charge you a fee to put you in investments that may or may not be as good.” It’s amazing how there’s more money in these IRAs that there are in these 401(k) plans. I have a very difficult time believing that that had universally been in the best interest of the people who did those rollovers and I think that they’ve been advised in many cases to do that by people who are telling them that in giving you this advice, I’m a fiduciary. It bothers me, Ed.

Ed: It should. My view, I try to express this in a very simple fashion, if it’s advertised, don’t eat it. If it’s a service, do you really need it? If it’s a new car, do you really need a new car?

Chuck: Well, Ed, you’re not someone to talk about cars.

Ed: Well, having said that, in my view, a new car displays an absence of passion for investing. Why would you buy a new car when you keep an old car, invest the difference? But that’s for another day. I think a disclaimer’s appropriate here, Chuck. We are not going to change the industry. If you will look at the Wall Street Journal, you will look at all the investment opportunities, your daily newspaper. Everyone wants to be your wealth manager, your wealth adviser, your certified financial planner. Why? Because it’s the most profitable, it’s the biggest rip off I’ve ever seen. Again, if it’s advertised, don’t use it. When you see all the magnificent wealth advisers doing all these things for the community, wait a minute, where did they get the money to do the advertising? They overcharged you. Now, we obviously come from a different perspective. I’m not suggesting that a lot of wealth transfer advisers or certified financial planners or whatever they are, send us a lot of business.

Chuck: Not after today.

Ed: I will tell you that, I’m very proud of this, it’s never been the case. That’s the role of the lawyer. The lawyers got to tell the client, “This is the upside, this is the downside, these are hidden charges. If you want to do it, that’s fine with me. I’m not going to be mad at you. That’s your decision but remember, now you understand the basis for your decision, and you know what’s going on. Are you going to get your car repaired without getting an estimate and shopping it? Are you going to buy a new car without shopping it?” People do not shop. “Who should be the tenant? What should be the charge? A realtor commission, is that the appropriate commission and what’d you do to earn it?” People wanted to fall to the truth and do not want to challenge their advisers. Whether it’s lawyers, doctors– That’s the way the world works. So, Ed, why don’t you just shut up and go back to writing poetry or whatever?

Chuck: Well, let me push back on one part of that which is that you said that’s the role of the lawyer. I think that that’s true that you and I do that, and some other lawyers do. I think that the vast majority of lawyers who are out there really don’t see that as their role and many accountants don’t see that as their roles, for the ones that do will often maybe be a little more or a little less willing to get cross-wised with an investment advisor who might be referring clients to them. I think the important message here is that people listening to this podcast need to look out for themselves. They need to ask critical questions and they need to do the numbers to the extent they can on their own and try to discern what’s in their best interest because they might not have someone who is both motivated to act in their best interest and simultaneously trained to be able to give them that advice. You probably need to be willing to do that on your own.

Ed: Watch out for the lawyer or the accountant that wants to handle your investments.

Chuck: Oh my gosh.

Ed: I view that as a terrible conflict. You’re looking at the tax returns every year and you’re saying to Pete and Alice and whomever, “Look, we have this arm that’ll handle your investments and we’ll give you the information.” Well, you show me an accountant that has managed assets, and I’ll show you an accountant that has accumulated no wealth on their own. I’ve seen very few accountants, very few- well, it’s financial advisors that do pretty well on their own. When you’re selecting a financial advisor, let’s see your balance sheet for the last three years, not income tax returns. Let’s see how you’ve done, and they’ll say it’s irrelevant. I’m not sure what– Do you ask a surgeon before you have some heart surgery, “Hey, Charlie, how many times have you done this?” Of course, you don’t. I’m sorry. Of course, you do in the surgery situation, but not in terms of a financial advisor. I’d like to turn to some of our joint experiences on the distribution of assets and ranging from, “I’m going to give it all to charity,” to, “I’m giving none to charity.” What do you encounter along those lines? You got some examples, Chuck?

Chuck: Well, I do encounter a fair amount of people who will say I want to give none to charity, even when that decision does involve incurring some significant taxes that could be avoided by incorporating some charitable giving into an estate plan. Yet, the numbers really don’t work for someone who’s not otherwise charitably inclined to give money to charity, just to avoid tax. You’ve got to have some kind of a passion there that drives the charitable gift. Then the tax benefits seem to boost that or maybe encourage a greater gift than what otherwise would be the case. It can never really be the sole motivation for someone who otherwise is not inclined. I really have not run across. At least none come to mind, in clients, who have simply said they want to give everything to charity, although I’ve had a few clients. This is, again, going back to some of these farmers and farm families that have made a very substantial- in some cases, the majority of their wealth, going into charitable trust type arrangements that are really designed to ensure that, for instance, a family farm remains as a family farm. I’m not sure if that really can be effective on a permanent basis to the degree that is desired by the folks who are trying to do that just because of the excise taxes that are involved in that kind of thing. But it seems like sometimes that is a very, very strong motivation to put some substantial wealth into some type of charitable vehicle when you’re talking about somebody who’s got a really strong connection to an asset and they want that asset preserved. Well, let me give you an example that maybe it’s a little contrary. I often see, I mean with the entrepreneur, the farmer, the very economically successful individual, I’m not talking about qualitative success. I’m talking about quantitative measurable profit and loss balance sheet economic success. The individual- I’m speaking of folks that are elder, that are attenuated, that are post 70 years old, typically husband and wife team, it is not unusual to provide for relatively nominal gifts to children, relatively nominal, a couple of million dollars let’s say, and in the scheme of things, a huge estate, and the balance outright to their private foundation. The foundation is designed to provide for those opportunities to people that couldn’t do otherwise. They don’t look for scholarships, build their names on buildings and the like. They just want to do some things for the world that has not been otherwise done. You’ll see that individual giving something to the children, but the bulk of the assets go to a foundation. Why? I don’t want to deprive those kids of the opportunity or grandchildren of earning it themselves. I want to take care of them to the extent they needed to prevail, but no, this has been a game for me, they don’t want to play the game. Then at the opposite end of the continuum, I want to give everything to those children, grandchildren, great-grandchildren, so they’ll remember me.

Chuck: Yes.

Ed: Are they going to remember you? Come on, Pete, they’re not going to– I wouldn’t say that, but the reality of it is, those great-grandchildren wouldn’t care anymore about you than does- maybe your dog Jack would care more about you than those– They don’t know you. They’ve got this wealth. They are going to do a good job with their lives perhaps. That’s my experience. You’re being deluded if you think that multiple generations will have respected you for what you’ve done. You’re the subject of the grand delusion.

Chuck: When I- and this is probably just colored by my own personal life story here, but it seems to me that by the time a person passes away, that whatever sort of work ethic or advantage in life or whatever they want to pass on to their children as a part of their estate plan, that that phase of the children’s life has already passed away. Then the relationship with the grandchildren is typically attenuated enough, that you’re not really going to have that kind of influence over them. An estate plan mechanism is just too crude of an instrument to really drive behavior in the way that people hope. In the discussions I’ve had with clients, where we get really philosophical about this, I think the more thoughtful ideas and the ones that have stuck with me are the people who say, “Look, what I’m really looking to do here is to make sure that my children have financial security. I’m giving them enough security that they are willing to take risks like I did when I was young. They’re willing to undertake risks and take on the risk of failure in the course of undertaking their own pursuits here. They don’t have to worry about financial devastation if they take on a project and they fail because I’m giving them a safety net.” Yet, that’s what it is, is a safety net and not simply a luxurious bed that they can just go lounge in for the rest of their life. The gift is designed to be substantial enough to provide that foundation and that safety net. Everything else is, the way I’ve raised my children, the part above that, my children are going to appreciate that going to charity as much as I do. That’s where the rest of it is going to go and my children are going to enjoy having the opportunity to supervise and have some involvement in the way those charitable funds are disposed of after I pass away.

Ed: Chuck-

Chuck: To me that seems like a strike a very– Probably not the right balance for every single person, but I have to say that that rings very true for me, as a good balance.

Ed: That gets back to the truism, enough so that they can pursue their passion, but not too much such that they can do nothing. That’s kind of the safety net approach. The takeaway or the lesson that I’ve learned, which I can’t believe is the lesson is that if you think economic incentives or disincentives can dictate acts or omissions of your descendants, alter their behavior, guess what? You’re wrong. Money doesn’t change attitudes and activities. That’s the way I see the world, Chuck. I don’t know. Do you have any concluding comments? It’s maybe a little too affirmative and bizarre and bottom line, but don’t delude yourself into thinking that you’re going to earn respect by transferring assets. The objects of your bounty are displayed, hopefully in two legs, walking around as good citizens, active and good people in the world. You’re not going to change that or you’re not going to cause a derelict to be a good person or you’re not going to cause a good person to be a derelict.

Chuck: Well, I have to say that we haven’t mentioned at all during this podcast, the state of the world at the time that we’re recording this, but something like 90% of the American population is under some kind of shelter-in-place order. There’s a lot of people who are spending more time with their families than in some cases they want to. In many cases, they’re discovering that they regret having that much time with their families, but in other cases, they’re discovering that they’ve been missing out on something. Maybe there’s a few entrepreneurs or future entrepreneurs listening, who are taking something of a pause right now in their economic activity, or at least a little slow down or having some forced immersion with family members. I would say, now is probably a good time to think about that social aspect. We’re talking about estate planning here and not how to tuck your kids into bed. ITo really start to think and take advantage of this time that’s been spent with people who maybe you’re spending a little more time with than you would have otherwise, and give some really close consideration to what you can learn about them now that will be useful later, when you’re trying to figure out what’s the best way to provide for them.

Ed: The bottom line is, in my world, I want to make sure that you can say the only regret that you have is that you have no regrets. With that note, I will sign off and hope to visit you, folks, next time, and stay safe.

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Episode 58

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