Ep 194: Leaving a Legacy with Andrew Howell

Kids as young as five can potentially participate in some of these discussions. Of course, it needs to be age appropriate, but I, you know, I was brought in investment meetings and financial meetings at the age of 11. Now again told that I could ask questions, but basically just sit there and shut up.

Welcome to the Next Level Income show, where it's our goal to take your income, your investments and your life to the next level. I'm your host, Chris Larson. If you haven't yet, get a copy of our book for free at our website, nextlevelincome.com. that's www.nextlevelincome.com. just click on the book link and I'll even send you a copy if you put your address in. On today's show, we have Andrew Howe. Andrew is the co founding and managing partner of the Salt Lake city law firm York how for more than 21 years. Andrew's legal practice is focused exclusively in the areas of estate planning, asset protection planning, business structuring, tax planning, charitable giving, and its state administration. In 2022, your Cal was named one of Utah's 100 fastest growing companies, the only law firm in Utah to receive this award and selected as one of Utah's top workplaces. Voted by your CAL employees. You're in for a treat today. Most people look at the estate planning process and start with the how. How do you do it? What legal structures do you set up? Today, Andrew is going to talk about why. You should start with the why, and he's going to give you a process that you can use with your family. Andrew, welcome to the show.

Thanks for having me, Chris. Good to be here.

Yeah, absolutely. Last time you and I were together, we were chatting after the presentation that you did for the mastermind that I'm a part of. And I said, andrew, you gotta, you gotta be on the podcast. I know your partner David was on a couple years ago. He did a terrific job outlining some of the books that you guys have written. And, you know, I've been really impressed with what you guys have done with your firm. But we have a real treat for the audience today because you're really going to go through a framework that I think a lot of people that listen to this podcast are going to be able to apply. I, I know I gave you a quick intro here before we got started today. You mind sharing a little bit more about the back with your background as well as your practice?

Yeah, so my background is actually sort of what led us to write the books be and I'll, I'll Explain more when we kind of go through the presentation today. But you see why I. One of the biggest influences I had in my life was my maternal grandfather. His name was Max Lewis and he was a Harvard Law grad. And he really struggled in life because he started out with his dad being a fur trapper. He was born in rexburg, Idaho in 1918. And my great grandfather was a fur trapper and he worked really hard and got all the way to Harvard Law and was this very, very successful estate lawyer doing, doing what I do. I mean his clientele included Disney, Browning, you name it, and they worked with my grandpa. It was really this great. But he was this major influence with me and I always, I always knew actually that I was going to become a lawyer. I mean it's the family business. My dad was a lawyer, tax attorney. My grandpa, of course, my uncles are all attorneys. My aunt was a judge. I mean basically the only non attorney in our family is my sister. So you know, Thanksgiving, we're all arguing, thinking we're having a great time and.

She leaves the table in tears.

Right. So, but, so I sort of always knew that I was going to do, I debated and so forth in high school and college and it was okay. I, I mean I, I did a, I can debate if I need to, but I sort of didn't want to. I kind of wanted to practice in a non confrontational way. I love working with, you know, high net worth, high income earners and saving them in taxes. I mean I'm a tax attorney and I, I hate taxes. I think that's a good thing. Right. You ever work with the tax attorney that loves taxes? It's, it's the wrong attorney.

Yeah.

But you know, how do you use business structures and charitable organizations and things like that, the tax code and, and then, you know, preserving legacies and you know, how families can really do that foundational planning from you know, wills and trust all the way to high level legacy ideas and, and putting more of who a family is into their planning, which is, you know, where the books really center around and where our passion is in estate planning. And I think what makes us unique in, in, in the estate planning world.

Yeah, no, it does. And you know what I, what I really like is what you, is what you just mentioned, Andrew, is, is the legacy. I think one of the challenges that you know, a lot of individuals face today is, you know, whether they're, they're a high income like say doctor, surgeon or their business owner, you know, like myself, you know, you, you start from A humble area. You, you work hard and you struggle because you say, wait a minute. A lot of the things I learned by growing up in a fairly humble environment made me the person that I am today. And we were talking before the show about the Vanderbilts, which I think is going to come up again in your presentation. And, you know, I live just two miles from the Biltmore here in Asheville, North Carolina. I use, I use this and actually a chapter I wrote for a children's book, and it talks about how, you know, the Biltmores. I'm sorry, the Vanderbilts lost the majority of their wealth versus a family like the Rothschild. Rothschilds, with which had the, the Rothschilds rules. And I might. I think I'm adding an S from super. I think s there at some point. But, but what's the difference between those two families, Andrew?

Well, so, so. And it's a perfect example. And we will go into Vanderbilt. Cornelius Vanderbilt, when he died, was the wealthiest man on earth. I mean, his, his. I think, if I'm correct now, I'm not gonna have my slides in front of me that I'll pull up in a minute, but I think it was $185 billion was his equivalent net worth in today's dollars at the time of his passing. I mean, I mean, I guess maybe Elon Musk might pass him at this point in time, but, you know, for a long time, that's a tremendous amount of wealth. A hundred years later there, I mean, 30 years later, there wasn't one of them that was amongst the most wealthy in the country any longer. And a hundred years later, there was this reunion at Vanderb, and at least the podunk Vanderbilts that showed up, none of them were millionaires, right? So how does a wealth like that get wasted? And then you have Rothschild, on the other hand, and some people call this the Rockefeller method. It's not. It is the Rothschild method. Rothschild took his family completely different in, in Rothschild's idea, his family was a business. I was, however, callous. That might sound right, but mean, it's not necessarily callous when he thought of every member of that family as an asset. And what he wanted to do was to put an investment into those assets. And so he didn't just give all of his son's money, he made them all go out to some central locale within Europe and set up their own bank and he funded it and so forth. Right. He was providing flint and kindling against some stuff that we'll talk about today. But he took this different approach, which is we are going to teach somebody how to make their own money. Right? Teach them to fish, feed them for a lifetime. That old adage. But they didn't just talk about it, they lived it, and they still do. And, I mean, they're probably listening to us right now, and they're, you know, arguably by the by far the most wealthy family. When you combine their net worth, I think it's trillions of dollars. So it's just a different way to think.

Amazing. Yeah, and it's. It is amazing. And they use tools that, you know, some of the things we're going to talk about today, but a lot of the stuff is. Is private. Like, I don't. I don't think anybody really knows how much that family truly is worth. When you look at the private contracts and the real estate and the.

And I think they're just very happy about that. One of my favorite clients, he told me once, he said, andrew, it's not about being rich and famous, it's about being rich. Right? So it's like. I was like, like, you got it. It's exactly right. So.

All right, I'm gonna turn the podcast off. No more podcasts anymore. I don't know how famous I am with this podcast, but it's. Yeah, it's. It's all good. But we're doing it. We're doing it for a good cause. So we'll take. We'll take the little bit of fame that we're going to get from the podcast and, and help other people get rich with that.

I'm infamous, not famous, but anyway.

Well, you. So we don't do this a lot, but we've done it a couple times. But you're actually. If, if you're listening, please check out the links in the show notes because you can check out Andrew's presentation on YouTube. He's gonna, he's gonna put some really valuable information up today. So, Andrew, I'm going to turn the screen over to you here so you can. You can go ahead and share your slides. Slide deck. Today I'll do it.

All right.

As well.

Make sure you can let me know if you see that.

Absolutely, absolutely.

All right.

So.

Yeah, what I'm going to try to do today is, is summarize our book. Entrusted in 2015. We wrote this book. David and I had both come from different backgrounds, but to the same idea, which was how our colleagues were doing estate planning for their clients was just fundamentally flawed. And it, it lacked a whole bunch of personalization, and it resulted in Some of the things that we'll talk about today. And I kind of, I went to David and I said, look, let's, let's write a book about what we found our successful families have done in terms of successfully navigating wealth from one generation to the next and making sure that you don't lose motivation within beneficiaries.

Right.

Warren Buffett. Give your kids so much they can do anything, but not so much they can do nothing. Right. Those kind of ideas. And there really were some, some key principles that, that came to us that families that successfully do this adopted. And so that's what entrusted was meant to do, is to kind of go through those principles and give a roadmap for how families can start talking about these kind of things. And so that's what I was going to go through today.

Yeah. And, and by the way, I've read the book you guys sent. Actually sent me a copy here. It's fantastic. And again, we'll have the show notes in the show notes where you can get a copy here on your website as well.

You know, it's funny, when I wrote the book and David and I wrote the book, I. I thought for sure there was only going to be two people that read it. And one was going to be my mom, maybe, I don't know, I still don't know if she did. But the other one was going to be my high school English teacher because she couldn't believe I actually wrote a book instead of read a book like rattle actually write it, but I got it.

It's actually my book. I gotta send my book to my high school English teacher because that was my worst grade. And actually my college English teacher. Yeah, I gotta send it to her too. She would be shocked.

Well, it's actually had kind of a good response. It's all, you know, self published and so forth. And you never make money on a book. It's kind of an expensive calling card. We sold a lot and people read it and they kind of go, well, yeah, it kind of all makes sense. Right? You know, why didn't, why didn't, you know, why aren't we doing something like that more? And this is becoming a demand. I mean, clients are demanding this conversation with their advisors, from, you know, attorneys and CPAs to financial advisers, insurance agents, whoever. A client's coming in and saying, look, why do I want to buy a $5 million life insurance policy so my kids get $5 million of cash when I die. What is that going to do to them? Right? So everybody wants to have this conversation. It's a generational thing. So let's kind of go through a couple of things. But as I was mentioning when I, when I told my mom the book was published, in fact, I got to go back here. She couldn't, you know, she. She went and looked at it. Oh, I pulled up the wrong one. Anyway, there's a couple of other books out there that, that have our same name and Trusted, but they're a little bit on the raunchy side. So if anybody's looking for the book. Oh, yeah, there's like, even if you saw the.

My wife might have read. My wife read that one.

Well, you guys got the, the, the G rated version because I show the covers and it's like, you know, destiny novels or whatever. And so she calls me, she's like, andrew, I don't think this is your book. But anyway, pretty funny.

But she read it. She's like, but I read it anyway. So she read it. She read it.

Okay, so we always start this out with this French headline, okay? This was from a French newspaper in 1888, and it was announcing the death of Alfred Nobel. Alfred Nobel, Yeah, we all know him of the Nobel Peace Prizes and so forth, but he was actually the creator of dynamite, right? And what had happened is his brother had been killed earlier in a, you know, 20 years earlier in a nitroglycerin. Nitroglycerin accident. Nitroglycerin is this, you know, really combustible, you know, volatile thing. And so, so what Alfred had done is really worked hard to try to develop a much more stable form of nitroglycerin, which was wound up, you know, becoming dynamite. And dynamite, of course, is this tool that had been used for good or bad, right? It's been, of course, used to make roads and, you know, build tunnels and so forth. But as we all know, of course, landmines and blowing up people and killing people in wars. So the point of this, this headline by that French newspaper was that the merchant of death was now dead, right? Alfred Nobel, this person who had killed so so many people. The issue, though, was it wasn't Alfred that had died, it was his brother Ludwig that had actually passed away. So Alfred Nobel was one of these unique individuals that got to see what the world thought of him after they died, Right? Yeah, he didn't like it. I mean, he had this crisis of conscience, I think he called it that. He didn't want to be known as this merchant, but rather for something positive, right? And that's what led him to you know, create the. The Peace prizes, right? I mean, not just in terms of. Of peace. It's chemistry and physics and medicine, right? It's all of these areas where he wanted to take his fortune and leave it to promote those. Now, it's interesting if you look through the history of who's made the. The Peace prize, right? Some people that aren't so peaceful, but.

The point of it being some fall. Some fall on his prior years.

There you go. I mean, wanted to take his legacy, though, and do something different that was positive. And so with that kind of as a backdrop, I always. I always start off the presentation asking two questions. And, you know, a lot of times I don't think we want to waste time on it here, but maybe if you even want to pause the presentation at this point and answer these two questions literally, what is your net worth? Okay, Write it down. And what do you plan on leaving as an inheritance to your children or whoever your family is? And let me make that clear, the definition of family is so broad these days, and it can mean and encompass more distant relatives or, you know, friendships and affinities and things like that, right? Your friends or your family that you choose that kind of an ideal. But what do you plan on leaving that? And I bet when people hear me ask that question, money comes to. To mind, right? How much is your financial net worth? I would bet you wrote it down. Whatever I'm worth, I'm $10 million. I'm worth $5 million. I'm in debt, which the vast majority of the population are. So if anybody on this conversation, on the call is not in debt, if you add everything up and you have more assets than liabilities, you're well ahead.

Of the curve these days, graduations.

But we think about money. And, you know, I came into practicing law with this attitude that I did not want to have the nepotism that would come from my grandfather because, again, he was so well known in this area. It's a pretty small group when you kind of all know each other. And. And they knew. Definitely knew my grandpa. And I wanted. I started my own. I started at a different firm, but I had worked at my grandpa's law firm for years. I mean, he was one of these guys that was very active in my life, but I didn't get to spend my summers riding my bikes with my friends. I was at his law office gophering and doing anything that he wanted, really was. I hated him for it at the time. But I'll tell you what, it was an amazing experience But I saw him practice law, and I saw him practice law in a very different way than I started to see practice law. Practicing law. When I joined the largest law firm here in Salt Lake when I came out of law school, what he had taught me, in fact, I'll give you a story. There was a very wealthy man here in Utah. He's actually one of the guys that owns the Grand America, or he owned the Grand America. He owned Sinclair Oil. He was a Utah billionaire. And my grandpa represented him. And he came in for a meeting in my grandpa's office. And he was always great about including me, my grandpa. And he talked to this gentleman. His name is Earl Holding. And Earl, really nice man. And my grandpa said, hey, would you mind my grandson coming in and just watching, just us have a conversation. He's interested in estate planning. Would you mind it? Nero's like, no, you know, come on in. So I'm going in the. In the room, and my grandpa points his finger in my face. He says, you sit there and shut up. He kind of just wanted me to. To watch what was going on. And I just watched these two gentlemen have a conversation about this new asset that Earl holding had bought. Now, this asset was three miles of oceanfront just outside of Santa Barbara, California. And I mean in a significant asset. But I never once. I don't remember. I'm sure he did, but I don't remember my grandpa asking Earl how much the property was worth or whatever. What I remember is the very first question was, how does this fit into your goals? What is your structure? What are we doing with this? What is long term? And they just had conversation first, really trying to fetter out what they wanted. And as I came into practicing law, it just wasn't what I found was going on. In fact, when I started to practice, there were really three fundamental assumption assumptions that were pushed. In the law firm that I joined and in the estate group that I sort of joined, by the way, I had a fabulous mentor at that law firm as well. I always think mentors are so important in life. And I just had wonderful throughout my career.

But he was.

He was wonderful. But he also did kind of fall into this trap that most law firms and even financial advisors might do, which is a process. It almost feels like a mill. Right. Where you're running a client through this.

Yeah.

This process that. What you're telling them to do. Right. And really, it was under this assumption of three things. Number one, that a person's wealth can be summarized on a balance sheet. Right. I look At Chris Larson, I could say, hey, this is what you're worth, because I know what your bottom line is, which of course we know isn't necessarily the case. And I'll go into why. The other assumption in financial and tax planning is that if you're going to give some, well, giving even more is better, right? That there isn't this point in time where it might have a diminishing return. And then, you know, in our world, when I joined this law firm, it was totally pushed on us that we are the first people that somebody should talk to, an estate planning lawyer, and that we're the ones that are going direct the client where they needed to go. And as I, as I started to practice because I was just this young associate that didn't have any clout and how I had to do things, I, I really saw bad things happening. I mean, I would see families destroyed. We have this saying in the estate planning world that you never truly know a person to bear an inheritance with them. And I have seen the best families that I thought would sell through the death of a matriarch or a patriarch of the family seamless just decide that they're going to roll up their sleeves and fight and pay lawyers hundreds of thousands of dollars in legal fees. And you know, a lot of the cookie cutter estate plans don't make a lot of personalization and take into account the individual nature of the members of the family. I mean, it's almost discontinuing or discrediting their individuality. We'd see addictions fed, right? Because a lot of estate plans say that something happens to mom and dad when kids turn 25. We're going to distribute their share of the estate outright to them. And you know, I don't care what addiction you have, you name it, but if you have more money in the bank, that addiction is going to get worse. Yeah, we, we had, the other thing is, we had just beneficiaries, as we all know, totally stripped of purpose. Right. They didn't know what to do in the world. They couldn't find them their place. I think that my grandfather had this saying that I always loved that, that you, you have to have someone in your life to love to make this world, world worthwhile. You need to have, you need to have something to hope for and you need to have something to do. And these, these people that were coming and being fed with so much inheritance that was unfiltered and on, on directed really, they didn't have anything to do. So they start doing things they Might not be doing that, you know, of course diminishes the wealth. And it just led us to believe that. Of course, you know, as we all know, a person's wealth cannot simply be summarized on a sheet. Transferring some wealth might be good, but there is a point where it might be too much if it's unprepared wealth in terms of the beneficiary standpoint. And then the first place that you go should be an estate planner. Absolutely not. We're the contractors. Right. We're hired to build. You want us to build, but we need the blueprints. We need to know what that is first time. So again, let's go back and look at three of these assumptions. These three assumptions. This idea that your wealth can be determined on a balance sheet. And that just doesn't make sense to us. Right. I mean, I do. Okay. But I feel if I were to look at what my net worth is, it doesn't have any representation of the wealth that I can bring to this world and specifically even to my own family. It used to be more. It was a. It was a human capital, in essence idea. Yeah. Maybe it's the money in your bank, maybe it's how many goats you had, but you were pass on to your children experience and skills and ability and knowledge and narrative wisdom. I mean, 5,000 years ago was written in the town that your responsibility in life to your children is to give them three things. Number one is God's word. Number two is skills and abilities. And number three, which is how to swim. Now, of course, that's. It means something different. Right. It means how to make it in their own. In their own world. And you know, was that.

And that was Hebrew, right?

Yeah, the Talmud.

Yeah, yeah. Which it's. Yeah. Which it has. Obviously that has different meanings.

Yeah. And it changed somewhere time around the Industrial Revolution where. Where families started to be able to build financial assets. Because I think we as human, human beings have this innate searching for safety. Okay. And you think about our grandparents or maybe even great grandparents at this point in time. You know, when they went through the Great Depression, that was a lot different than us going through the Great Recession. Right. When we went through the Great Recession, we were all unhappy, but they weren't eating, and so they didn't have financial assets to be able to really gather assets and so forth. So they come out of it and they're now able to feed their families and they have money in the bank. And again, another saying that I love, grandpa, is that money isn't everything, but it certainly quiets the nerves. So what happened to do. What happened is all estate planners started to take this focus that, you know, the give the better or the more the better. Now again, entrusted planning, kind of what we're talking about here takes much more of a holistic approach necessarily start with the documentation. We'll come into more on that there. But get first clear about what the family is really trying to pass on and what their definition of wealth is.

Love that.

All right, let's talk about the second assumption here, which is that if you give some, then giving even more is better. This is, you know, what we call linear relationship. And it's, it's actually pretty western culture type of an idea. I, trust me, I, I don't do yoga. I'd. I got dragged a bikram yoga or whatever one time.

Have you ever done yoga? Yeah. Oh, yeah, it's.

Oh my Lord. It was the worst experience I've ever had in my life. That flexible. It did not smell that good. But anyway. But this really is this western culture idea.

Ugly, ugly fat dudes aren't wearing enough clothes. It's like, what is happening? It's like, what. Where is this socially acceptable but here. Yeah, yeah.

No, what's funny is that we almost inherently know that this isn't the case and, and really when it. Wealth and its benefit.

That's a great slide.

Yeah, it's an inverted U curve. Right. In fact, in, in 1909 there was this great study in performance on sports. In fact, it's a fascinating study to read actually. But I'm a dork and I like reading stuff like that. So it was done these two psychologists, Robert Yerkesis and John Dodson. And I say Yerke's name, I think incorrectly, but it's, it's actually considered a law, which was. There is this diminishing return. And the idea was that, look, if you were a sport athlete and you didn't have any kind of pressure, there was no time clock there, no opponent whatever, there wasn't anything you were striving for. Your performance was not going to be better or not going to be as good as if you had some pressure, maybe even a lot of pressure. Right. They step up to that pressure, they perform better. But if there's too much pressure, it's going to go down. It's going to cause a lot in performance.

Yeah.

Another.

It's like, yeah, it's like, it's like the saying, hey, if you want something done, give it to somebody that's busy. But if, if they're too busy and they can't do anything, then that's not good either, right?

Exactly.

Yeah.

There's a diminishing return at some point in time. In fact, this is our favorite slide demonstrating this. You look at the. You know, the. I guess it's the Y axis. This is a. The length of time in which this specific event that we're talking about here asks. And then on the X axis. I could have that wrong again. I was a poly sci major, not a math major. We've got the dollar amount that you are spent on this particular item that you are hoping to intend to have this greater result. As you can see, the more you spend, the longer this event on. But at some point in time, it goes down. Any clue, Chris, on what that might be?

Oh, I have no idea.

It's an engagement ring. What do you spend on the engagement ring? The length of the marriage starts.

I get it now. I get it now.

I'm. Yeah, I spent more than 8,000 on. Well, at least that's. My wife thinks. Kubrick. Zirconian. No, it's not. But the idea.

Fake diamonds, man. Like, we got. We got. We got kind of screwed, right?

The lab diamonds. Holy. I know.

They're great. Yeah. Yeah. So we have to recalibrate that. How about that?

Yeah, there's another one. I love demonstrating this. Just that this is not a new idea. This is why, again, when people read our book, they're like, we knew that. But, yeah, Solomon in Proverbs 37 through 9. And also, I'm not a real religious guy, so these are, you know. But I do find religion and history fascinating, especially in terms of, you know, our cultures and how they've developed and our ethics and our values and so forth. But Solomon said, give me neither poverty nor rich, but only my daily bread. And the idea being that he saw having too much as being a negative thing, but also having too little. I mean, the modern way of thinking about it to get into this world. And if you're a business entrepreneur, if you're even a professional, if you want to be an investor in way. If you don't have anything, you can't even get in the game. But then our, you know, our children, if they have too much, they have no need to play. Right? So how do you. How do you give that idea of, you know, that. That Warren Buffett idea that they can do anything?

So why is this. Yeah, and I think, you know, isn't it, you know, kind of a derivative of that, Andrew, is people that, you know, People I've coached, people I've worked with, and I've experienced this myself. You get to a point where you're like, oh, my past, you know, passive income is greater than my expenses. I'm just going to retire. I'm not going to do anything. I really don't think that's what most people want. And it actually, it leads to this of identity, you know, retiring the quickest way to die.

It's I, I, I see correlated with it. I literally, I see people retire. I see people sell a company for gazillions of dollars, whatever, and they say, I'm going to not do a new company. Now, the vast majority or serial entrepreneurs, and they want to do new company and so forth. And I love that because they're going a thousand miles an hour. The worst ones are saying, hey, I'm going to go sit on a boat in the Bahamas, sip. Great. That sounds great. For about two weeks. What are you going to do after that? Right. So it's. No, I, I mean, I think that you've got to have again, something to do. Are you passionate about. I mean, I hope at some point in time I can practice law in a different way where I'm not grinding out hours and all that kind of stuff. Still going to be doing something. I promise you, because my wife will shoot me if I'm home all day.

Our wives can hang out because that's, yeah. She's like, you're never 10 years ago. She goes, you'll never retire. She goes, that's crazy. She was right. And she was right.

Well, here's our buddy that we were talking.

Yeah.

Cornelius. So Cornelius Vanderbilt, as I mentioned, was just.

I like Nobel's hair better, by the way.

Yeah, but can you imagine if this was your grandfather or something? I mean, no wonder you didn't want to talk to him and find out how he made all his money. He's not very approachable. He's like me. My wife tells me I have resting face. He kind of has resting bitch face.

But oh, yeah, for sure.

You know, he had, he had amassed the, the, this incredible amount of wealth. In fact, this stick of dynamite, I mean, if you've read the book, right. We use dynamite as analogy all the way through. But this stick of dynamite represents what the average inheritance is in America these days. It's a, it's $177,000. Now, of course, a lot of people don't get anything, and a lot of people get billions, but it averages out to 177. Excuse me, 177,000. So when Cornelian asked, as we mentioned earlier, it wasn't this amount of dynamite he passed on to his next generation. It was this amount, right, $185 billion. Just this tremendous amount of money. And again, just to highlight 30 years after he died. 30 years, that's just, it's the 90s, you guys. 30 years later, there was not one Vanderbilt that was amongst the wealthiest in the United States. Doesn't mean there weren't still millionaires, but there was not one of them in the top. And then a hundred years later, not one millionaire at that Podunk family reunion at Vanderbilt. I mean these guys were the, they were the Kardashians of that time. The difference is they didn't have the social media income. They just spent and spent and spent. And it was just, you know, really, one of the Vanderbilts actually has this quote of saying inherited wealth was a handicap to our true happiness. Okay. And they really felt that way because it just led them to do nothing and they had no purpose in life.

That's impressive to spend that much. That's a, that's a full time job in and of itself.

Can you imagine? I mean it was just, it was the spend thrift, it was the Dickinson thrift as that we all think about. All right, so changing tides. What if you look at it in another way and ra and focus on the financial assets, you focus on the human capital. And there's really two different cases here that I wanted to highlight. Number one, these, this couple, Elias and Flora was their name. And Elias was this really strict father. His occupation construction. And he was really active though with his son. And he would bring his son to construction sites and he would teach him about facades and architecture and so forth. Fortunately, due to financial issues, they had to move and they moved on to a farm. But it also allowed the, the child to fall in love with animals. And he really developed a penchant for art. Family didn't have any money, but they scrapped up what they could, sent him to art in classes in Chicago and just, you know, followed this passion and what he wanted to do and what his parents saw in him. Then following that up with this loan that he got from his brother Roy, he created Walt Disney. I mean and it's now Disney has some interesting things in the news lately. But the idea being he took this flame, right, this family experience that parents allowed him to, to, to have growing up and also his, his brother lending him the financial resources to be able to it. Another example, another couple, Paul and Clara they couldn't have kids and they were able to adopt a baby boy. And the, the deal with the adoptive mother adopting adoptive mother was had to provide this child with a college education and they said no problem. And I mean this was a while ago, so I don't know how the deal got done but they adopted, they and now Paul himself, the father had never graduated from high school. Very early on started working with his hands, was a car mechanic, a machinist, really hard worker, same deal. He would take his son to his jobs, he would, you know, teach him craftsmanship. They had work, you know, shops inside their barge and so forth and you know, really impressed upon him. Machinery and design allowed to continue to, you know, his nature. And his son started to take things apart and build them all together. But it led into this business that he wanted to create and they allowed the son to turn their garage into this factory and you know, it turned in to Apple. Right, Steve Jobs. And again, another really important lesson in terms of not just the financial assets being important, but putting that person under your wing and saying, look like grandpa did with me, you know, this is what he wants to do. He can get a flavor for how I do it. That mentorship I think is wonderful.

Are you a high income business owner or professional earning 2, 300,000 or even more a year but still feel like you're living paycheck to to paycheck? Are you comfortable working until you're 65 or 70 to retire or do you want to achieve p financial independence and live life on your own terms? You could join myself and Matt4 and learn how we both became financially dependent in our early 30s. We'll teach you how to make, keep and grow your money. Teaching you strategies to maximize your earnings, keep your income that you've earned through tax strategy and legal structures and ultimately teach you how to grow it by determining your personal investing strategy as well as teach you how to analyze investments so you can grow your passive income to the point to live life on your own terms. Our coaching clients reliably do this in seven years or less. To learn more, check out our coaching program at nextlevelincome.com forward/coaching. That's nextlevelincome.com forward/ coaching. Yeah, so, and it is a, it is interesting when you look at that, you know, Jobs and Zuckerberg and Dell, they, they didn't come from billionaire families, but they came from families of, of some means that gave them, you know, support. Which is I think a valuable lesson in all this.

Well, yeah, and Their families were. I mean, they didn't have a lot, but they worked hard to be able to create those benefits for, for their kids. And, you know, I, I feel like I. Not in anywhere kind of sense like that, but I try to do the same. I, I really treat my kids in a way that I believe in equality of opportunity, not quality of outcome. Right. Each of my kids do different things and take different paths in life. We were talking earlier, you've got boys that paid play travel lacrosse. I've got a son that plays travel hockey, and I spend a lot more on that kid than I do on my oldest, who is great kid, but he's not playing hockey anymore. He did for a little while. So the point is they can choose any path that they want, but I've got to, to, to treat them in a different way.

Yeah. Great.

Kate. Third, Third, misrepresentation is this idea that if you want to do this and do a planning like this, the first person you place or you start with is with an estate lawyer. And, and it's not the correct assumption. It's because we are fundamentally flawed. And we are taught this as estate lawyers through even law school and some of the estate planning classes that we take, but also as a young lawyer for, you know, seven years working as an associate in the law firm, you are definitely taught a process. And it's, it's in a couple of ways. First of all, as I was sort of alluding to earlier, what we're finding these days is most of our clients want to understand the why. Right. Why am I doing the trust, Andrew, that you're suggesting I do? Right. Simon Sinek, start with why. Why am I doing this planning? What am I hoping to accomplish? How does it benefit me and my family? And we're not set up to do that. We're. We're taught to start with the how.

Okay.

You need all these tools, wills and trusts and power of attorney documents and, and so forth. And yes, those things are important, but they come later after we have learned. Why are, is the family doing this? Because I've had plenty of families that say, look, I don't want to leave anything to my kids. I'm going to leave it all to charity. Now, I think that is a fundamentally flawed statement because what they're trying to do is say, look, I, I don't want my kids to get it because they didn't earn it. Right. Well, guess what? The cherry didn't earn it either. And what you're doing is you're giving, you're Basically transferring your stewardship away. You're saying other than me taking on this project of designing an estate plan that doesn't make my child feel entitled. I'm just going to shift all of my stewardship of my assets onto a charitable organization, the most efficient of which is 40% efficient, meaning 60% of every or 60 cent of every dollar you give to is overhead. 40% goes to the charitable purpose. The federal estate tax when you die is 40%. Right. So I don't understand that, but to me, that is what it is.

Well, and if I may, you know, if you, if you took it upon yourself to share the knowledge and some of your goals and, and, and the why and then ultimately the how with your children and help them do that, perhaps they could continue to grow that wealth and they could direct that towards, towards that charity which may have a bigger impact than, than you originally would have Anyway.

You have to open the doors. You have to open the doors. You know, we're, we're coming out of it, but there's really been two silent generations in our, in our world. I mean, certainly our grandparents, they were silent. They never talked about money. It was taboo. Our parents, the baby boomers, they were silent about money just because they didn't, they weren't really good with it.

Yeah.

And then so, so there really was this whole. You didn't talk about money. You've got to. We wrote article for Trust and estates magazine in 2017, I believe it was. And we we talked about what we see again and how fast can successfully navigate it. But from a, you know, the only people who read it are us nerd estate lawyers. But so for their perspective. Right. I'll never write one of these things again because you have to annotate it and took me back to high school and horrible. But anyway, one of the things that we found is one of the primary drivers of a fat successfully navigating the death of a mom or dad, whatever, meaning that they're still having Thanksgiving dinner with each other the next year is whether or not they knew to expect. Right. The doors were opened even if they were to expect nothing. Well, at least they know to go spit in mom and dad's grave. But they're not going to fight with each other. So opening the doors is a really big deal. So kind of going back to the problems and how our, our estate lawyers are trained on this. Right. We're tr. We're trained be asset focused. How much money do you have? You know, how much is it worth? What is the, the basis Inside of it, all of these things, it's driven. I'm throwing LLC at you, I'm throwing trusts at you. All of these kind of things, it's generic. And I can't tell you how many estate plans I review that don't look any different than the other one I just reviewed. The only thing that's changed is the name and the address and whatever, but it still passes the same way. There's no personal whatever and it's static. It hasn't changed. That same article I just mentioned, one of the other things we looked at is it had 18 years on average that somebody had looked at their estate planning. Even if they have done it, only 30% of the population ever does estate planning and it had been 18 years since they had reviewed it again. You think about it though, right? You have your first child, you do your estate plan, child leaves for school, you say, hey, maybe we need to update our estate planning. But it's yet 18 years, but it stays static.

And that. Yeah, that makes, that makes sense. Yeah.

And we just think with the why, which is again, what we see clients wanting. It's beneficiary focused. We have to. And you know, with all of my meetings I do with clients, the very first thing I make them start out with doing is telling me about their kids.

Right.

I don't want to just know how many kids you have and what age they are. I want to know who are. And this, you know, I want you to gloat, tell me the good, tell me the bad. I need to understand those things. And you know, these days, the nuclear family, two and a half, you know, kids, mom and dad and a dog doesn't exist. So you also have to look at blended families now in a much more greater way. So why is this important? Coming back to this, you know, Vanderbilt 185 trillion or billion dollars as we've talked through. Well, why this is important is over the next 50 years, I think is it could now be 40 years. It's, it's not that amount of money that's going to transfer from one generation to the next. It's 300 times that $55 trillion is going to change hands from one generation to the next in 40 years. And most of it is completely unharnessed. Right.

This is, I'm sorry, just, just to, just to pause for one second, Andrew. So that's how much is going to, over the next 40 years, is going.

To be over the next 40 years as one generation passes away. And as that those assets go to the next generation, $55 trillion completely, again, 70% of the plans being done and no kind of harness and you lose the power of all that wealth. Right. There's no purpose, there's no direction in what is ult to. So this is, again, you just, and.

You just said that baby boomers, you know, not great with money, and that's the majority of that money is coming from baby boomers passing on to millennials, which I know scares, scares a lot of people when they hear that.

Yep, yep. Now there's still, there's a, a presentation the other day because I have to do all this continuing education bs but anyway, I'll leave that between me and the commissioners, but. And they were talking about how much wealth is actually sitting out there. The amount of cash that is sitting in bank accounts right now because of all of money into the economy over the last few years. There's a significant amount of wealth that's going to transfer. So what David and I did is again, as I said earlier, identified sort of these seven principles that we truly have seen families embrace to successfully navigate this Another way that I explain it for clients, and David doesn't explain it this way, but I like it. This idea that most families are set up with mom and dad at the center, right? They're the nucleus. They hold everybody together and everybody's coming back to their house for Thanksgiving dinner and grandkids are radiating out and so forth. But what happens is when mom die, everybody just goes off in their own orbit, right? And people aren't talking and they're living all over the world. And how do we, how do we hold that together? So what we think you do is you replace mom and dad at the center of the family with the family purpose and the values of the family that are meaning to be the legacy. Now, when mom and dad die, that's still holding the family together. They were just an actor in it. So going back to these principles, let's, let's go through them. Principle number one, entrusted families know who they are and, and what they believe. Okay, this is going to the why, you know, what makes you unique? You know, why are we doing this? What makes you different? What's the Larson family different than the Howell family? You know, what are the values that make you tick? And you know, we have a number of processes for families to go through this, but this is where everybody needs to start. And that something I would bet 99% of the people that listen to this podcast won't be able to articulate. I mean, tell me what your top five core values are and you're not going to be able to do it, and what, what's important about.

And especially as a family, because I could tell you from my perspective, but, you know, my boys are 12 and almost 14, and from my perspective, you know, they should be involved in this as well and understand, you know, yeah.

Kids as young as five can potentially participate in some of these discussions. Of course, it needs to be age appropriate, but.

Right.

I, you know, I was brought in investment meetings and financial meetings at the age of 11, now again, told that I could ask questions, but basically just sit there and shut up. But, yeah, you're. What you're doing is you're immersing them into a world that they're not learning at school, or at least you should hope they're not learning at school. Right. But, you know, we, what we do here and over the last eight years since we wrote the book, we have a process for families to go through that clearly by each member of the family's core values, top five core values. And you might say, well, we're going to have the same five core values. And you're not there actually a 1 in 15 million chance you and I will have the same top five core values. And what's interesting about values is they're totally different, developed based upon your life experience. Like, as an example, one of my core values is honesty, which sounds really strange coming from a lawyer. I mean, it. Because somebody early on in our life was really dishonest with our family and it really caused issues that were so, you know, sometimes with today. And I just said, I'm never going to do that. I'm just going to be honest. I'm a straight shooter. It gets me in trouble all the time, especially in this politically correct environment when I'm sitting down and playing this in essence game. It's online and so forth, but the results come out and I enter. You know, we talked about it with my family. I'm telling kids about me. Honesty is important to me. Why? Because of this family lore, this life experience. This is what you need to know about your family, what had happened throughout our lives. And it also tells them why dad gets so pissed off when you lie to him. You wreck car. So what? I got insurance. You lie to me about it, we got problems. Right. So you go through that with all five of those core values, and then every member of the family, including spouses and children, do it themselves. And you each talk about that. And then as a collective family, you have your Five core values. Well, now you really know what makes you tick and what makes you unique. And you've identified what is something. The first identity of who you are as a family. I mean, in the old days, everybody did this. You'd sit around, you'd talk about family lore, you had family crests, you had family, you know, can't even work, statements and so forth of who you were. Right. And it's lost. Right. Everybody's on their devices these days and they don't talk anymore. All right. Oh, I skipped over a few. I hit the wrong button. Okay, let's go back. Okay. Number two. Entrusted families prepare the family for the wealth and not just the wealth for the family. And that's bass ackward that we're taught. Right?

Right.

I spend my entire day helping, helping families prepare that wealth to get transferred onto their kids. And how effort, how many days a year are the kids being educated? Okay. Now, of course they go to school. That should not be where education stops. Right. And they need to learn about the things that they're not being taught. And, you know, financial education, there's myriads of programs the country that kids can be introduced to to be, you know, at least enlightened about other things to do with their money and even simple things like budgeting, ever, however you want to view it, but include your kids in that. I also think travel is a form of education. I mean, every time I go somewhere, learn something new and you know, I also, every time I seem to go out of the country, I really love our country. But, you know, this is leadership program. We think that kids need to be leaders. I don't care mean that doesn't mean they have to be alphas, but they need to be leaders in. In the industries that they choose to do. We think they. That clear expectations need to be set. And there's really three expectations that any member of a family needs to know. They need to know what they expect.

Right.

What are the benefits of being part of the family? There should be. Right. My kids know that they can go up to our place in Montana and take their friends, have a good time and, you know, do all the dangerous stuff that we do up there and nobody's going to see him and so forth. That's a benefit from being part of our family. They need to. They cannot expect just because they're part of the family. Right. You're not going to get a free ride. You're going to be held accountable to do something in your own life and be productive. And however that looks in any kind of family dynamic dynamic. And they need to know what's expected of them that leads into them, what they can expect, what is expected of them. That we expect you to take school seriously. We expect you to get good grades. We, I mean, again, I, I think education is going to fundamentally change a whole lot over the next few years. But however you define that, you have to respect each individual member of the family because you will have kids that don't want to be entrepreneurs. Maybe they want to be artists. Maybe they want to pursue an NHL career like mice who was born to a dad that is 59 on a good day and a mom who's 5 4. So sorry, pal. I'm not sure about the genetics, but I hope for. But I want them to each pursue their passions. And you know, he's got a great group of guys he hangs out with and so forth. And then requiring accountability. And this is something that I think a lot of us fail to do these days at least. And I'm a victim of this or a criminal commit this crime as well. I don't do the best at holding my kids accountable. These are those expectations that we talked about. And, and, and how do you do that? All right, third, the third one. I got to make sure I don't choose the wrong one here. Okay, so this is where, where entrusted families, they maximize the positive benefits of wealth and then they, they minimize the negative effects. And this is all about.

I get that sweet spot, right?

The U curve. Exactly. It's where you say, hey, look, we have enough, right? My wife and I, I've worked hard, she worked hard. We want to enjoy our life.

Life.

So how do, when do we have enough that provides for ourself spouse and our kids? I still have two that are under the age of 18. How do we provide for our lifestyle? And what's the lifestyle that we want to live? We want to go on this trip, we want to do whatever again. We want to enjoy our hard work. That includes luxuries. I mean, I, I like cars and I like watches. That's what I like. My wife likes bag, but other than that, she's pretty frugal. But you like to have those things. They're fun. Come on. We want to have quality of life. But then what do you do with the rest after that? The money that's left over after you've met all of those, those hierarchies, what do you do with it? And you know, we see a lot of families just stash it away or invest it.

Great.

Not A problem with it. But we also think you should use it for that. Flint and Kim, that that's the, the money that you now take as a family. And you decide this becomes the family business, right. This is the Rothschild family because our needs met. What are we going to do with the rest? Not giving up control. Mom and dad, mom and mom, dad and dad, whatever. Again, family dynamic you're with, they're still always in control, right. They're still driving the horse. But you now bring the family together. Really important thing to do. And trusted families focus on the flint and kindling and not the fire. And the difference here is all estate planning to pass on the fire. We use this analogy in the book of, you know, you're sitting around a roaring fire and you know your kids eventually are going to go off, live their own life and would you, would you give them a burning log from your own fire. Fire and hope that they make it and didn't burn themselves and. Or would you just teach them how to build that fire on their own whenever they get to where they go.

To the teach Amanda Fish.

Yeah, exactly. Right. And so the flint, right, Is, is education again in all of its respects. I think that if you, I'm not making, making judgment here but like with Disney's dad, he recognized that he had this artistic talent and he fostered that life experiences, internships, I think, I think are huge ones. Mentorship, right. And, and not mentorships necessarily under you. You want your kids to be exposed to other competent people because they're gonna do it probably a different way. And I learned a lot from not working with my grandfather in, in terms of going into the firm that I did the kindling then, right. That's the place for that spark to land, you know, ignite and grow. And again, business loans, maybe it's additional education. You know, I want to graduated college, I want to now go to medical school, go to law school, don't go to law school. If anybody's listening to this, don't go to law school. But further mentorships and those kind of things. It's, it's when people begin talking about morpus based planning, we see them jump to this step up. This is where they want to start getting really specific about hey, you know, not going to give any money to my kids unless graduate from college or something like that, right. They start to be pretty dictatorial and you've got to be cautious of that because in our two examples, right, Disney and Steve Jobs, well it's really Steve Jobs and Bill Gates Neither one of them graduated from college. So, you know, if you say, hey, look, my kids don't get anything until they from college, those two guys would have gotten anything at all.

Well, and you, you just made a great point a few minutes ago, Andrew, which is we're going to see the educational landscape change radically over the next several years. I, I agree with that. No question. Because already seeing that the ROI on a average college education is negative. So, you know.

Yeah, My oldest is 18, he's a senior in high school and we were actually driving up to Montana and we were talking in. He doesn't want to be a doctor, he doesn't want to be a lawyer. Again, I don't really want him to be. And you know, that's the only reason, you know, need to go to college any longer. Right. Is if you're going to go get a higher degree.

And I mean, I, yeah, engineer.

I didn't have a lot of good arguments and so I basically said, well, when you come up with a good alternative, you let me know and then until you're going to college. So but anyway, because I don't think it's necessarily a bad thing.

Thing. Yeah, yeah, it's not a bad. Yeah, that's a good point. You know, it's not, but it's not the only way. Right. And it's. We should, we should at least be conscious of the cost and the benefit and, and what it is. Right. So great point.

Discipline 5 here is entrusted families are generous. Okay. Now generosity does not charity certainly can. Right. Depending upon what a family wants to do. But without question, all of these families have put something bigger than the family themselves above them. Right. A global thing that the family is going for collectively. The presentation Denver that we were at, we had the gentleman who talked about going down, I think it was South America. And that was a big passion of his family and building schools and doing some of those other kind of things and that they made that part of their overall planning that this is something that we want to continue on because it brings that family together. I, we had been introduced to this very wealthy family here in Salt Lake and they had sort of this program every year where they would donate about $10 million to the same five places, right, the University and Ballet west and all these places. But they had in the third generation grandchildren that were off the rocker, seven of them, just as bad as you can be. Substance abuse, failed marriages, you name it, it. So we went to the family and we said, look, you have $10 million of power. That is Just going out the door completely in harness. And instead, why don't you take this and put those seven delinquents in charge of it? Right? They get to decide what charities receive it, but they can't just name it willy nilly. They have to go meet with the director of the charities and be active in the company and so forth. And I wish all seven of them were more on the straight and narrow, but four of them are. I mean all, all four of them sit on the boards of their charities because they have something to do.

Right.

Someone to love, something to hope for and something to do.

Yeah, so help. Help pull them in the right direction.

Exactly. It's just a common connection. It creates greater collaboration and genuine gratitude. Now, I want to be conscious of time, Chris, so you have to direct me here. Typically what I'll. Well, let me get into this, this discipline. Six and seven.

Yeah, let's, let's wrap the last two up and then. Yeah, we'll go from there. There.

Okay. So entrusted families preserve and protect wealth. Now this is where the lawyer comes in, right? What kind of vehicles do we use to make sure that we can avoid probate and not pay estate taxes to the greatest degree and protect assets from creditors coming after them? Because we do live in the most litigious society in the world. So, you know, how do you use LLC and trusts and all those various vehicles to preserve and protect that wealth? Wealth. There's really three erosive effects that we see in wealth transfer. Meaning why does this shirt sleeves to shirt sleeves in three generation phenomena really exist? And number one, it's the division of the estate. You took a couple that's worth a hundred million dollars, let's say, and they have four children and those four children have four children who have four children. The time you get down to the great grandchild level alone, just from division of that hundred million dollar estate, everybody's getting $330,000 and you just cannot do with a $330,000 inheritance that you can do with $100 million inheritance. So how to make sure the family wealth is not necessarily fractionalized. Number of ways to do that in terms of estate plan, dealing with taxes. We do have tax that if you're too successful at the federal government and then sometimes at the state levels, there is going to be a tax opposed at your death as the assets go on to your beneficiaries. The federal government estate tax rate is 40%. Usually the state ones are a lot less than that. But 40% haircut as the assets Go on to your next generation. And then the third erosive effect is third party attacks and mismanagement. And how do you make sure the assets aren't taken by a divorcing spouse of your child? Whatever. A bunch of different ways to do that. All right. This is actually, I think, probably the most difficult to help clients with. And it's this idea that these families develop a dynamic family. Okay, Meaning when mom and dad are no longer calling the shots, who's now going to do it? Because is it going to be everybody? I mean, first of all, I think there's four questions that need to be asked there. Number one, what is going to be governed? Governed. Okay. What is going to be part of that? After we identified on the U curve that Flint and Kindling amount, that's going to be the amount that the family is going to govern. Right. Beyond that, all that stuff that my wife and I need and want, no gets to tell me what to do with that. But the rest of it, what are we going to govern?

Right.

Then they have to decide how are they going to act. Right. This is sort of the idea of moving from a monarchy, which a lot of families are set up right now, to more of a representative republic, right, where we're all going to have a work. Now, it doesn't mean they have to have total say. But how is that?

You didn't say democracy.

Andrew did not say democracy. Nope, I did not. No. Now the third one is you have to decide who's going to serve. And this is a difficult for one. And who's going to participate because not all kids are going to be equal in terms of their even desire to participate, maybe their ability to participate. There could be again, drug dependency issues that a lot of time happen with affluent clients. And, you know, nobody going through something like that is going to want to participate in any kind of family guidance, nor would you necessarily want them to. So you kind of have to take that soul searching and say, look, can somebody on the family actually do this? And if cannot look for alternatives? You know, there's private trust companies and so forth that can be created to help the family through this. Not necessarily a huge fan of that beyond what we're talking about today, but definitely something that needs to be identified. You also need to be able to recognize none of us have a crystal ball, looks out 50 years from now and cry and can determine what the world's going to look like economically from the family dynamic standpoint. So your structure in terms of your governance has to be flexible and it has to provide for future generations to be able to participate in setting up those guidelines. So. And that's a really difficult thing for families to start getting involved in. Now, this is normally, Chris, where I would go into how it's done, how we put it all together. And, you know, I just want to be conscious of your time, know that you were thinking like 45 minutes, and I'm probably well beyond that by now.

Yeah, this has been fantastic. But I think if, if people are interested in learning more about how to put all this together, Andrew, I think it'd be terrific to, to share contact information with your website. They can get a copy of your book read through that. What is the best way to do that? We're going to have all these links in the show notes as well.

Yeah, so the, that first slide which had andrew.com is direct email. An even better one is Team Andrew Cowell dot com, which is a horribly corny email address, but it goes to assistance and forth. And that's the best one. You know, what I always like to do is, you know, somebody that comes from, you know, a referral from you, Chris. I'll just do an hour at least, sort of introductory meeting with a client. Just see, you know, get to know them, what they're trying to build, what they're trying to understand. And so go.

Yeah, wonderful. Well, Andrew, this has been awesome. Again, I think there's. There's so many people that listen to the show that are trying to figure this out. And having somebody that takes a different direction starts with the why, as you mentioned, as Simon sic does, and then figuring out the how after that is the best way to do it. Thank you so much for sharing all this with our audience today.

Yeah, really appreciate you having me. It's been an honor. Take care.

Thank you. Hey, Chris, here again. I hope you found this episode valuable. Now I have one more thing to give to you. We have a page for my coaching clients where you can get a free copy of my book as well as much more from previous guests on the show. Just check out nextlevelincome.com coaching to get a free copy of my book, audiobook and much more. I'll send you a copy of my book and cover all the shipping costs as a thank you for listening to the podcast. Also, please like share and take just 90 seconds to give us a rating on Apple Podcasts.