Finding the "Why" Behind Generational Wealth with David York
David York argues most estate plans fail because they just dump, defer, divide, and dissipate assets. Instead, clarify what your kids should know, cultivate purpose through the four P's, and adopt a stewardship mindset so wealth lasts. The Vanderbilts and Rockefellers show what happens when you don't.
Studies have shown that even among the wealthiest Americans who have access to, you know, the top investment advisors, accountants, attorneys, the average half life is eight years.
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 David York. David is an attorney and CPA who practices law in the area of estate planning with extensive experience in designing advanced strategies for high net worth clients. David has spoken to hundreds of public groups and professional organizations including the TEDx, Salt Lake City, Q Commons, the Hawaii Tax Institute, the Purposeful Planning Institute, Investments in Wealth Institute, on and on. David has also written three books in Entrusted, which I love, Riveted. And a new book, the Gift of Lift, which he is going to discuss on today's show. If you have questions about how to teach your children how to be wealthy, how to structure your estate so you can move that wealth into the future and have a bigger impact or just wonder, you know, what is it that I do next after I've done all this hard work in my life, you are not going to want to miss this episode. David, welcome to the show.
Hey, looking forward to it. Thank you so much for letting me have a chance to chat.
Yeah, well, I, you know, we got connected here, David, through some mutual friends and I had, I had a copy of your book and which I read, I loved it, passed it on to a friend Entrusted. That is because in the, in the intro I mentioned you've, you've written three books which I, which I'd love for you to share. So when, when your team reached out to me to, to have you on the Next Level Income show here, I was super excited because I love what you do. I used your techniques, your stories, your methods as my wife and I prepared our estate plan here over the past year. And now I'm super excited for you to share some of your knowledge and stories and things that you've learned over your long career in this space with our audience.
Yeah, no, I appreciate it. That's exactly why we wrote it. It's just to help people figure out a way to cast a vision for their wealth and its purpose.
Yeah. And you've been, now you've been in the space for 25 years. Is that right?
Yeah. So my background, I started, I was a cpa, then went to law school. And I came from a really technical background and very much that traditional model of estate planning. In the book, I referred to it as the 4D model. Right. Dump. I defer and dissipate. Right. We just. 99% of estate plans out there, take the assets, dump them down to the next generation, divide them up equally, try to defer any taxes, and dissipate the wealth. And one, it's an uncompelling model, especially to a lot of boomers. Xers who really want to think through intentionality with their wealth. But it also can be really destructive. And I saw that. I sought a lot of failed wealth transfer. I saw addictions fed. I saw air stripped of purpose. I saw assets dissipated. You know, the average American inheritance is consumed in 18 months.
Really?
Yeah. So what the average American inherits is on. And is on average gone in 18 months. And you say, okay, well, maybe that's true of the average American, but, you know, among the high net worth, you're gonna just continue to get wealthier and wealthier. And yet studies have shown that even among the wealthiest Americans who have access to the, you know, the top investment advisors, accountants, attorneys, the average half life is eight years.
So you're cutting the wealth in life in half every eight years?
Yeah, yeah. Statistically speaking, someone who inherits $20 million in one generation or 24 years, on average, there's about a million and a half left. And so, yeah, part of what I realized in going through this is that we're trying to create technical solutions to human issues, and we've just had it backwards.
Yeah, no, and I think, look, one of the stories that I love. So I live in Asheville, North Carolina, and we have the Biltmore. And I just finished writing a financial chapter for a children's book with a collaboration with a friend of mine. And in it, I used the Vanderbilt story to illustrate, you know, how you. You can fail if you don't teach your children the wealth. And, you know, I noticed you use that in one of your chapters as the example. And for those that don't know, Cornelius Vanderbilt was one of the wealthiest individuals and left a fortune of, I think it was about 2 billion in today's dollars to his son, who then approximately doubled it. And then. Do you mind kind of taking the story over from there? And.
Yeah, I mean, it's, it's really interesting. And, and it's an example of what you know, I say is a fundamental thing I've learned in 25 years of estate planning that is we value things based on what they cost us. And when something doesn't cost us anything, we just can't value it like something that comes with cost. And the Vanderbilt example is one of those, is that unfortunately, often in inherited wealth we don't have that cost, we don't have that pain associated with the accumulation of it. And so we just can't value it. And so yeah, they, there's a story that on the anniversary, 150th anniversary of Vanderbilt University, the, the Vanderbilt descendants came in the 1970s and there was not one single millionaire among the group. Now whether that's, you know, true or not, the reality is that wealth was dissipated and dissipated fairly quickly. In fact, Anderson Cooper is grandchild or great grandchild, you know, and he talks about having that they basically did not have anything and then started over.
Yeah. So the common, you mentioned that, you know, there, there can be destructive forces at play when you pass it on. I think kind of the converse story to that is, is the Rockefellers, right. Which have the Rockefeller rules. And you said maybe you could kind of illustrate, you know, what they did right versus what the Vanderbilts did wrong and how you kind of help teach kind of these same strategies to help people avoid making the same mistakes as the Vanderbilts did.
Yeah. You know, and that's something that I think is especially, can be especially difficult with a lot of high net worth clients who, you know, it's the paradox of wealth. How do we earn our wealth? Through hard work, risk, stress, sleepless nights, worry. Right. All those things. As a result, we really highly value what we have. But what does wealth help us avoid? Hard work, risk, stress, sleepless nights, worry. Right. So if we're not careful, the very thing that we use to create and to value our, is what wealth helps us to avoid. And so, you know, Malcolm Gladwell talks, he talks about what I, he calls terrible difficulties. Right. You know, those struggles. Yeah, those struggles and trials that we have. And the hard part is you don't want to create artificial pain. You know, you don't want to be the parent who says, look, there's a pile of rocks on the west side of the, of the, of our backyard. Move them all to the east and tomorrow I'll tell you what to do. Right. And move them back to the west side.
Oh man, I've already made a mistake then. I'm just kidding, I'm just kidding. No, I had my son, I Had one son dig the hole and the other fill it up. That's exactly.
Yeah, exactly. But I mean, I think that is, it is interesting because, you know, one of the things, again, that, that parents want to do is they want their kids to avoid some of the level of pain and suffering they went through. Yet most of us, you know, when we look back, well, while very few of us want to go through pain today, we can appreciate the transformation that occurs. Pain of yesterday. And so, you know, one of the things I try to strive or tell clients is let's focus on providing not necessarily equal fusions, equal allocations, but let's create equal opportunities. Let's. Let's focus on things that allow an engagement and investment part of the child so that they can bring that pain and cost and they can bring that value proposition. And then instead of this gun approach to wealth transfer, let's create more of a mine shaft. Let's, let's create opportunities and then allow successive generations to create their own wealth from the, from those opportunities. And in that regard, and I think that's what Rockefeller's other families, you know, the Rothschilds, there were others who provided opportunities, but, but not just to say, unearned, undirected wealth.
Right. Yeah. And I think, I love that you mentioned Malcolm Gladwell, because I was having a conversation with actually a friend's daughter who was, you know, now she is. She's either a PhD candidate or she's, she just graduated. So very intelligent individual. And we were talking actually at her sister's graduation from med school, so two very intelligent individuals. And we were talking about, you know, life and successes and different things. And she said, well, that's because you're like, you're lucky. You've, you've had, you know, luck. You're raised in great family in this. Well, my father died when I was five. And I remember reading Malcolm Gladwell's work and he was talking about children whose parents died, tended to go on to be more successful. And he listed presidents and CEOs and different things. And it, it hit me because this wasn't that long ago, because all these years I kind of wondered what kind of pushed me and drove me. And I brought that up to her. I said, well, is that, is that lucky that I face that? And she said, well, no, that's, that's, that's terrible. Like you would want, you wouldn't want anybody to face that. And my point to her was I said, sometimes our hardships are what make us great. And the question, you know, the struggle that, you know, we're talking about right now, David, is, you know, how do you give your children all, all of the opportunities that you didn't have with while still showing them how to appreciate it? And, you know, that's what, you know, I think, I think sports is a great thing for younger children because they have to develop that discipline. But what are some of the strategies that you help teach the families that you work with to pass on, you know, these habits, these, the learnings that the first generation in the family that created the wealth does pass down to the second generation so that they can perpetuate not only the wealth, but really the mindset, as you mentioned, to how to maintain and continue to grow the wealth and even more importantly, what they do with that.
Yeah, no, I think it's a great question. And I would say just at the outset, things I have to tell my clients, especially high net worth first generation wealth creators, is that you were lied to. You were told that if you accumulate a large amount of wealth, then you won't have a care worry in the world. You know, and it's not true. You know, it's a lie. It actually brings a huge level of responsibility and obligation. And you know, I tell clients, look, you can, it's easy to give your money away. It's not easy to give it away. Well, it's easy to do estate planning and wealth transfer. It's not easy to do it well. And so all of that hard work and effort to transfer well is going to take some hard work and effort. So you got to kind of have to realize that. And then the other thing. Absolutely. And then what I find for a large number of my clients is that they know how to become wealthy. They don't know how to be wealthy. And being wealthy is different than becoming wealthy, you know, and it comes with its own.
Yeah, being being wealthy is different than becoming wealthy.
Yeah. And a lot of clients, they feel a high level of success becoming wealthy. They feel a lot of being wealthy. They don't know what to do, what's expected of them, how they engage, how they talk to their kids, how they talk to their family, how they live. And it leads to a certain level of paralysis. And then what a lot of them do is they say, look, I'm failing at being wealthy, so I'm just going to go back and keep money that I'm good at and that I can do. And then they kind of ignore this issue that they have. And so the number one thing, and this doesn't matter your worth, but I do think it becomes even more important for higher net worth individuals. And that's this. Your children, I think from teenager up, they need to know the answer to three questions. Number one, what can I expect because I'm part of this family? Number two, what should I not expect simply because I'm part of this family? Number three, what's expected of me? And I will tell you this, in the vast majority, especially of high net worth families, kids don't know the answers.
To those three questions.
And so they live in this area of ambiguity. And the reason they don't know those is because the parents haven't come up with those. So you just have a. Yeah, yeah.
That'S fantastic one, yeah.
And so they just live in this area of ambiguity. And our brains aren't actually made for ambiguity. So what happens is the kids are going to make up a story that answers those three questions maybe right, maybe wrong. You know, I had a client, it was funny, he told me, he said, you know, my dad told me he didn't have any money, even though he did. And he said, you got to go out and make it in life. I'm not going to leave you anything. You got to go and you're responsible for yourself. He goes, so that's what I did. And so he goes, so that's what I'm telling my kids. We don't have any money, we don't have anything. And you got to go out and make it in life. And I said, well, that's great, but you live in a $7 million home. Like, I don't think the kids are buying it.
Right.
Yeah, the kids aren't buying that. Right. And so sometimes people like, I had a client who sold his business for, you know, eight figures, worked just night and day, and then he had this massive liquidity event and they were flying back to, to see family. His wife was from Europe and they were flying back there and his wife is like, whenever they've gone back, they'd always fly with flown coach, you know, last row of the plane, save the most money because he was just building and she was like, you think maybe we could fly like Comfort plus or, you know, heaven forbid, first class?
Not even first class. Yeah.
No, he's like, no, no, we can't let the kids know that we have any. Like, he was just totally, you know, he was so paralyzed by what to do and worrying about creating entitlement that he was trying to pretend be wealthy.
What a conflict, right? Yeah, that's got to be a tremendous internal conflict.
Exactly. And so I think going through the process with your spouse or, you know, if you're single, being able to answer those three questions for your kids.
Yeah.
Is one of the best you can do. And actually, it's a really empowering message because especially when you get to. Here's what, here's what you can expect if you go to school and help you with, with. With school. If you save up some money, we'll. We'll match some to help you buy a house. If you go work two years in an industry and you save up money and you want to, you want to start a business, we'll help you with that if you've got a good plan. But here's what we won't do. We're not going to go bail you out if you run up a bunch of debt. We're not going to. There's going to be a limit on how long you can go to school. We're not going to have a time. We're not going to have a Tommy Boyce sit if. Exactly. It is a great movie. They're called doctors. Right. So, you know, we, I, I think it actually allows kids to get out of that paralysis and parents. And then it creates a framework to have that. So that's the number one thing I tell clients. If, if you can't answer those three questions, then really, anything else we do from a planning perspective, you know, we're, we're dealing with. With issues.
Yeah. No, I think that's fantastic. What. And you mentioned, I think you said kind of starting it as teenagers. And this is, this is something that I often ask and I discuss it with friends because my, I have, I've. I have a particularly inquisitive younger son and I love it because he, he says things like, he's always. He's like, hey, how much, dad? How much did that house cost? He'll see a house for sale. How much is that house? And I'm like, well, he can look it up on the Internet. And like you said, David, if he asked me, hey, dad, how much was your car? I'm like, well, he now can go and Google it, right? So I told my wife, I'm like, I'm not going to hide that from them. He does ask things like, how much money do you make? How much money are we worth? Like what your net worth is? And he'll actually try to triangulate it too, being 10. So he does. And I'm like, well, I'm not going to tell you that. So I guess two part, you Know, two parts to that question, I guess. What is the right age to start having these and I mean more meaningful conversations like you're mentioning, not like, hey, this is a bank account type thing. And then what is the right amount of information to start with, you know, for, for let's, well, let's just use my soon to be 13 year old son, like what's, what's a good strategy at that age?
Yeah, and I think that is there's a difference between honesty and transparency. You know, and I think some clients, some clients feel like, well, if I'm going to be honest and I have to be fully transparent and you know, do I get the whole balance sheet out for the kids? No, that's not about what you're worth. It's about how did you earn what you have and what would it take for your child to do that same thing. And again, at the end of the day it's about a value proposition. That's one of the really big benefits of cost is it lets us measure out our own value on something. And so, you know, that said, I am a huge fan of, in age appropriate ways, really helping to prepare kids for wealth as opposed to just preparing wealth for kids. You know, I think Instead of the four Ds, dump, divide, defer and dissipate. I'm a fan of what I call the four P's Right purpose. Helping your kids understand who they are, what they value and what they believe. It's about perspective. I think it's really important not, you know, not to make, feel guilty for what they have. And I think sometimes there's, there's a level of guilt when you see the world, but just understand the fact that you can go into the kitchen, you can open a refrigerator and it's stock full of food. That's a fairly unique experience not just in the history of the world, but, but even in the United States, in the world today.
Yeah. Well stocked, healthy food. It's.
No, exactly, yeah. And then third is preparation. You know, I think we need to prepare kids. And then the fourth is participation. You know, um, I have a lot of clients who, they're worth eight, nine figures and their kids are working 10 hour, $10 an hour jobs at the mall because they're learning responsibility, accountability. And what parents say, look, is we'll help you go to school, we're not paying pizza and soda pop money and you can make those decisions and earn that. And so again that's age appropriate, but I think it's about, you know, honesty and when your Kid asks questions. And I think curiosity is great, but I think it always is important to go back to, you know, how were you able to acquire what you did and what did it cost? You know, what did it take in terms of time and effort and those kind of things? Again, what can they expect? And that's where I think having an integrated purpose for your wealth that leans through your planning makes the most sense to me.
Yeah, so let's talk about that. And then I also want to talk about your most recent book, because we started with Entrusted, which I read, which was your first book, and we had a quick conversation before the show about this. You said, and I love it, like Simon Sinek says, like, start with why. Can you talk a little bit about that philosophy and how that kind of undergirds this whole planning process?
Yeah, you know, unfortunately, I think so much about estate planning, when you. When you think about estate planning, and it's even true with financial planning or other things, is we think about what is estate planning or how do we do that? And I really think we need to start with the why and the who. You know, I was working, I was talking with a group of really successful entrepreneurs, and I asked them, I said, how many of you, you men and women, would equate the success of your business to your articles of incorporation? They all laughed. They're like, zero percent. We equate zero percent. I said, what made you successful? They said, well, it was one. We knew the problem that existed in the world or the need that was there, and we knew how, wanted to solve that and how we could be better at solving it than anyone else. And we surrounded ourselves with great people. I said, okay, well, did you need our incorporation? He said, yeah, we needed that. We needed all that stuff. We needed, you know, bylaws and stock ledgers and all that, but that's not what made us successful. And. And I think same is true with estate planning is we need to start with the. You need to start with the why of your wealth. And if we start with the premise that impact isn't optional, Everything that we do as people makes an impact. Everything we do with our. Our money and our wealth makes an impact. So if we start with that assumption, then the question is, okay, what impact do we want to have made? And I think sometimes, you know, another term for impact, it's a loaded word, but it's. I think it's equally fair, is legacy. Legacy is not optional. And so I think it starts with having that understanding of what legacy, what impact do I want My wealth to have and let the why I have the who. So I'll give you an example. I had a client who one time said, you know, I want to set up my estate plan so that, that my kids are graduating from high school. They don't get a penny for anything except for college until they graduate from college. I said, okay, let me ask you a question. Let's say you had two children. One child, super smart, hard working, entrepreneurial, but school wasn't their thing, but they love working with their hands. So they electrical contracting license and then they went and started their own electrical contracting business. They've got 10 employees, growing vibrant business. And I said, then you have another kid. They are so good at school. They've been there for the last nine years with no plans on ever leaving. I said, which kid would you rather have? And he goes, I'd rather have the electrician. He goes, quite frankly, I got some work I need done around the house. And I said, yeah. I said, because it's not that you, you don't actually value education. What you value is determination, productivity, wisdom, self reliance. And education is a great expression of that. But that's not the sum total of those values. So if we start with getting clarity on what you value, then our mantra is simple, resource what you value. So once you understand what you value.
I'm sorry, I got to pause there. Resource what you value. Yeah, I was in sales, I always used to say measure what matters and that's a great resource, what you value. Thank you.
Yeah, yeah. I think unfortunately in the world today, we don't have clarity in what we value. And one of the things I tell people is, look, you can value anything, can't value everything. And so part of what you need to understand about your values is it helps you create a framework for where you have those resources because they're limited, you know, I don't care how wealthy you are, you know, among my, my again, higher net worth clients, what they come to realize their most precious source is time. Right. And so many of us, the world will ask far more of us than our time, a lot. But we're all given this amount. And so once you understand that value proposition and you can articulate that, then you let that drive what you, where you engage your resources, your time, your talent, your treasure. Right, the three T's.
Yeah, I love it. I love it. So let's talk about what you called kind of the six year thought process behind your latest book, the gift of lift Daily.
Yeah. So it was born out just an Amazing experience. So I had the, I have the pleasure of working with Gail Miller, owner of the Utah Jazz. And.
Oh yeah.
So we were in the process of working on a trust that was designed to keep the team, make sure that in the future stayed in the state of Utah. If you've been to Utah, you know, we're a one horse town. Like it's, that's a big deal for us. We have that one professional sport. And so we were working on this trust and she was going to transfer that to make sure it stays here in the state. And in the midst of working on that, happened to ask her, I said, you know, how you feel about not owning the Jazz anymore? And she said, well, I don't own the Jazz. And now this is one of the smartest people I know. She's in, I mean, her ability in business and philanthropy, she is very sharp, you know, but at the same time, you know, the estate planner in me kicks in and I said, well, no, actually you do own the Jazz. And I'll never forget what she was doing. She put down the trust and she looked at me, she said, no, I'm a steward of the Jazz. And in that moment I saw something that transcended ownership. I think, you know, in the western world especially, you know, in capitalist model, we tend to think of ownership as the pinnacle. And yet here was someone who had transcended even the ownership of the asset. And you know, the unfortunate reality is most of the things we own turn on us and especially if we're not careful. And so what I, you know, it sent me on this long journey of trying to figure out, okay, what is a steward and how do you have that mindset. And what I came to realize is that a steward is someone who's fully invested in something bigger than themselves. So they have these twin poles of investment and transcendence. They are all in, but it's not about themselves, it's about something bigger. And so that's what the gift of lift is, is really just an exploration of this concept of stewardship. And again, yes, a billionaire can be a steward, but so can a stay at home parent, so can a teacher, so can business person running a business. Anyone can be a steward if you have that understanding of what's bigger than you and how are you going to with it?
No, I love that. And it's, I mean, look, the fact of the matter is, you know, we're, we're only here temporarily. You may, you just made the point that, you know, our, our greatest resource is time and you know, even, you know, it's like, even if we do own a piece of property, we still have to pay taxes on it and do these things. We're really, we really are. I think if you look at it that way, it really changes the way you look at things. And then also with that kind of extension of what happens after you're not there anymore, which is, which is tremendous.
Yeah.
David, you know, I've again, I've really, I've really enjoyed reading Entrusted. I'm looking forward to reading the Gift of Lyft. If the audience wants to get your books, if they want to see more about your firm, learn more about, you know, what you do, or even have questions about potentially working with you, what's the best way to find you and the resources that you have?
Yeah, it's davidryork.com I've got links to those resources. I've got articles that I've written. Also, there's a link I did a TED Talk on wealth. So, you know, it's 11 minutes and it just kind of gives you a different way of thinking about wealth. And then our law firm is yorkhowell.com and, you know, we do, we do estate planning and all those things, but always with a mind of why driving the how.
I love that. And I love, I love what you said as we talked about the rocket in the background with bringing technical solutions to these, you know, bigger, you know, problems that are human, human issues in doing that.
Yeah.
And kind of flipping, flipping the process around by driving that. So, David, it's been a wonderful conversation. I really appreciate everything you've shared with the audience today. Please, if you've been listening today, check out our website, nextlevelincome.com like and subscribe to the show. Also check out David's website, davidryork.com and we will have all this in the show notes as well.
Thanks, Chris.
Thank you. Hey, Chris, here again. I hope you found this episode valuable. Now I have one more thing to gift 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.
