[0:00] Bruce Popper: The fear of financial loss brings people to the table, but the emotional side of estate planning is gonna drive just about every decision they make.
[0:09] Ryan Warwick: Yeah.
[0:09] Bruce Popper: "I don't want to pay any estate taxes whatsoever." Well, there's one simple way to do it, guaranteed. Leave what you can for free to your family, and give everything above that amount that the government would tax to charity.
[0:22] Ryan Warwick: Yeah.
[0:23] Bruce Popper: They have to imagine what their parent was thinking, and that goes back to the kid I was talking about early on where, "Oh, you put my inheritance in a trust 'cause you didn't trust me?" Imagine going through life thinking that, where the reality might have been, "I put it in there to protect you."
[0:38] Ryan Warwick: Mm-hmm.
[0:38] Bruce Popper: If we can get people to engage emotionally to help take care of other people, you will build the biggest, best beneficiaries possible. In every estate plan, if you look for the end in mind, and I'll have people argue with me right and left on this, peace of mind is the ultimate objective.
[0:57] Ryan Warwick: Looking outside of ourselves, how do we help others can create m- far more joy than how much of this estate am I gonna get, Bruce, right? So I can go buy a, a Ferrari.
[1:07] Bruce Popper: Yeah. That's right.
[1:08] Ryan Warwick: Welcome to the Worth Beyond Wealth podcast.
[1:11] Shannon Warwick: Where net worth meets personal worth. I'm Shannon.
[1:14] Ryan Warwick: I'm Ryan. We help families navigate the emotional, relational, and personal realities that money alone can't solve.
[1:21] Shannon Warwick: If you've built wealth but still wonder what it all means, or how to keep your family grounded while protecting your legacy, you're in the right place.
[1:28] Ryan Warwick: We sit down with experts, and with you, to talk identity, purpose, and connection beyond the balance sheet.
[1:35] Shannon Warwick: Because true wealth isn't measured in dollars. It's measured in the impact we make and the relationships we nurture.
[1:42] Ryan Warwick: So grab a seat-
[1:43] Shannon Warwick: Take a breath-
[1:44] Ryan Warwick: And let's redefine what it means-
[1:46] Shannon Warwick: To be truly wealthy together.
[1:48] Ryan Warwick: This is the Worth Beyond Wealth podcast.
[1:51] Shannon Warwick: Worth Beyond Wealth.
[1:51] Ryan Warwick: Well, I am, uh, so excited to have Bruce Popper here. Bruce is a, an absolute expert, a 40-year veteran in, in the, uh, space of estate planning, what we call advanced planning.
[2:03] Bruce Popper: To your point, I've been doing this for about 40 years. I- it's just been very gratifying to be able to be trusted as a team member, to be able to bring another level of specialization for planning, to be able to affect the client in areas that are not focused mainly on rate of return, which is how a lot of people attack this. Um, I'm, I am a certified financial planner, a chartered financial consultant, and accredited estate planner, and so that lets me touch different parts of the overall planning spectrum. And, uh, with that, I, I, I'll just say this.
[2:38] Bruce Popper: Every plan is different because the strategies are gonna be as unique as the individuals we're working with. So our toughest challenge really is to get into the mindset of the individual, figure out what they've got financially, and also what they want to do from a planning perspective, and then build out some type of picture, and then test it, and then execute on it if it's something that they want to follow through on.
[3:05] Ryan Warwick: Okay.
[3:07] Ryan Warwick: Um, so 40 years ago, is that about right?
[3:13] Bruce Popper: That's about right.
[3:15] Ryan Warwick: Was, uh, was the world of estate planning something you always wanted to do? Did... When, when you were little growing up in Miami, did, did you dream about being...
[3:24] Bruce Popper: Uh, did not.
[3:24] Ryan Warwick: Okay.
[3:25] Bruce Popper: No. Um,
[3:29] Bruce Popper: I had an interesting path.
[3:30] Ryan Warwick: Yeah.
[3:31] Bruce Popper: I got into the financial services business in 1985.
[3:35] Ryan Warwick: Yeah.
[3:35] Bruce Popper: So we're talking 40 years on the nose here. And back then, 401Ks were not mainstream like they are now. And so I liked the idea of talking to people about getting income tax deductions or not paying tax on money that they could set aside for themselves,
[3:55] Bruce Popper: invest it, watch it grow, and then at, in retirement, be able to access those dollars in what more than likely would be a lower income tax bracket. Uh, and so the middle market was not very familiar with 401K.
[4:10] Ryan Warwick: Right.
[4:11] Bruce Popper: And so I became a pest. I met a couple ERISA attorneys, and I was like the little kid, "Daddy, why is the sky blue? Why is the... Why are the plants green?" And everything. I asked everything I could possibly want to know about 401K, and I developed an expertise or let's just say a specialization at that stage in my career.
[4:29] Ryan Warwick: And, and the 401K came out, do you remember the year?
[4:33] Bruce Popper: It was before '85.
[4:35] Ryan Warwick: In the '70s or early '80s?
[4:37] Bruce Popper: I don't really remember.
[4:38] Ryan Warwick: Right around there.
[4:39] Bruce Popper: I, I, I'm not-
[4:40] Ryan Warwick: Yeah
[4:40] Bruce Popper: ... sure. But it was, it was not something everybody knew about, because that gave me an opportunity to be brought in to talk to different small to medium sized businesses about a, a benefit package they could bring to the table. Really, it didn't cost them much.
[4:57] Ryan Warwick: Yeah.
[4:58] Bruce Popper: And also allow the owners of the company to participate if they got enough participation from the rank and file employees. Back then, the estate tax exemption was $600,000, and here we're sitting at a number just under $14 million, so over the last 40 years there's been a big jump in, in the estate tax exemption. But-
[5:18] Ryan Warwick: And correct me if I'm wrong, in 1997 when I came into the industry, it was still $600,000.
[5:25] Bruce Popper: 600, or maybe it was starting to move up by $25,000 increments.
[5:28] Ryan Warwick: Yeah.
[5:28] Bruce Popper: And it wasn't until the Bush tax package, 2000, 2001, where it got stepped up to a million-
[5:34] Ryan Warwick: Mm-hmm
[5:34] Bruce Popper: ... and got on a different path.
[5:36] Ryan Warwick: Yeah.
[5:37] Bruce Popper: But I, I put a 401K in,
[5:41] Bruce Popper: uh, a law firm, and it was not a big law firm, and the senior partner and I developed a great friendship. Here he was in his 60s, here I was a young kid, but spending a lot of time with them. And one day at lunch he said, "Hey, just by the way, I'm worth X amount. Can you help me with my estate plan?"
[6:01] Ryan Warwick: Hmm.
[6:01] Bruce Popper: And of course, the automatic answer is, at that stage of your career, absolutely. And then you go figure out how to get it done, because the one thing you can't buy is trust.
[6:10] Ryan Warwick: Mm-hmm.
[6:11] Bruce Popper: And so once he asked me that, I knew he was saying, "I trust working with you. If you can help me, then-- And I'm gonna seek your guidance." So working through that process gave me a new level of excitement to be able to want to work with people that have means, that could not only affect their family in a certain way, but also affect others in a positive way too. And
[6:37] Bruce Popper: my
[6:39] Bruce Popper: most enjoyable part of my-- this business is being able to help
[6:46] Bruce Popper: others help others, if that makes sense. So I'm brought in by firms like yours to help other people.
[6:52] Ryan Warwick: Mm-hmm.
[6:53] Bruce Popper: And then when I'm working with them, I want to help them help others.
[6:57] Ryan Warwick: Yeah.
[6:57] Bruce Popper: Does that make sense?
[6:58] Ryan Warwick: Of course.
[6:59] Bruce Popper: Because that's gonna be their beneficiaries or it's gonna be other people they can affect in a positive way, their way. So I can get into that a little bit deeper later, but, uh-
[7:09] Ryan Warwick: Yeah. No, it makes complete sense. And, and we have to have absolute experts like you because the world has become so complex that none of us can be experts in everything. And, and each, to your point, each client has very unique situations and circumstances and goals and objectives that, um, you know, from one to the next, and even if they're of similar net worth.
[7:36] Bruce Popper: Yeah. Well, you've seen it. We, we can have-- we can line up eight or nine people with the same level of net worth, even in the same industry, same number of kids, and very similar ages, and if it-- uh, let's just say it's ten people, we may come out with six different plans, 'cause some people are gonna want the same thing. But you never know what's going on in their life until you dig. You could have child issues, you could have, uh, outside influences, you could have different religious beliefs, different educational, uh, overview on what you want to have accomplished for your kids, what you want to make available to them, what you want to expose them to.
[8:15] Ryan Warwick: And I think wealth
[8:19] Ryan Warwick: can mean different things. I mean, I, I certainly run into people who maybe in a very cursory sense have thought about it, but, um, haven't given it much consideration. Maybe they know about it. It's out there. Um, but I think there's still a ton of confusion. You know, I have, I have people who, you know, don't, don't understand that they can hand their kids a check for $100,000 if they need to without tax. Um, so...
[8:50] Bruce Popper: Well, I think it begins with, does the person feel like they're wealthy?
[8:55] Ryan Warwick: Mm-hmm.
[8:55] Bruce Popper: Sometimes they don't. And, and yeah, that, that line in the sand of, "I'm not wealthy, I am wealthy," is a moving line.
[9:04] Ryan Warwick: Mm-hmm.
[9:04] Bruce Popper: Some people worth $50 million, oddly enough, feel broke.
[9:08] Ryan Warwick: Mm-hmm.
[9:08] Bruce Popper: You know, and somebody worth 500 million might say, "Well, the 50 million guy should feel worth it." Who knows?
[9:16] Bruce Popper: I've had people that have a $100 million net worth that are concerned about long-term care expenses, and that, that could totally wipe out their overall estate.
[9:27] Bruce Popper: Most people that I've met know about estate planning. They don't know the details behind it. They don't know what it's gonna involve. Some of them have shied away from it because they feel that if they get involved, someone's gonna try to take wealth away from them today. And the reality is, they enjoy what they're doing to some degree, and they don't want to be separated from their net worth. So I've told people in the past, you know, in real estate, it tends to be the three words are location, location, location.
[9:59] Ryan Warwick: Yep.
[10:00] Bruce Popper: In the estate planning world, it tends to be control, control, control. And so when we can share with people that there are strategies that can be taken advantage of without them ceding control, without them losing the opportunity to move their assets around when they feel like the time is right, then they start opening back up to at least a conversational level and they're willing to learn. But I don't have people that just say to me, "Hey, I thought about estate planning. Can you help me?" Usually, the origination for somebody I'm meeting has been spoken to by somebody in, in your capacity, or they've visited with their CPA who says, "Hey, there might be some tax law changes based on what I know about your net worth." And not all CPAs know about net worth. They see income. Some know-
[10:51] Ryan Warwick: Yeah
[10:51] Bruce Popper: ... but not all of them do.
[10:52] Ryan Warwick: Yeah.
[10:53] Bruce Popper: Uh, the alarm can be rung from many different sources. So by the time I get with somebody, they've been spoken to prior.
[11:03] Ryan Warwick: Sure. Okay. And, and I know from some conversations we've had, sometimes that is-- can be a pretty cursory conversation that, that we may have had, so-
[11:14] Bruce Popper: Yeah
[11:14] Ryan Warwick: ... certainly, um, bringing you in to educate is, is, uh, at least common in, in our relationship. So probably for the listener, we should explain the current landscape and, uh, and so the, the answer of why, why do we do estate planning? What, what are the, the rules out there that, that create the need for, for doing anything?
[11:41] Bruce Popper: Okay. Well, just depending on who I'm talking to, I tell them, "You don't have to do anything," because there's a lot of times people never inherit a penny from anyone. There's no obligation on your part to pass forward anything that you've built or developed in the form of net worth, liquid assets, illiquid assets, business interests.
[12:03] Bruce Popper: But if you want to protect and preserve your wealth, that to me falls under-- even though it's under the estate planning umbrella, it's an asset protection planning conversation. Because when you're protecting assets, what you're trying to do is protect them from creditors and predators. But if the government taxes every dollar that you earn, aren't they like a creditor?
[12:26] Ryan Warwick: Mm-hmm.
[12:27] Bruce Popper: And when you die, if your net worth is over a certain level and they're gonna tax that,
[12:33] Bruce Popper: isn't that also a creditor? So if we're gonna protect your wealth,
[12:38] Bruce Popper: then from an estate planning perspective,
[12:43] Bruce Popper: we've got a certain amount of wealth we can move for free
[12:47] Bruce Popper: now or when you pass away, and that's a moving target.
[12:52] Bruce Popper: We can take advantage of other strategies that will allow us to stretch,
[12:59] Bruce Popper: uh, how much you can move for free. H- um, we can engage in strategies that will allow us to move significant wealth over time. That's where all the creativity to get to a certain objective is, is what are the tools that we're gonna use? And the answer is any estate planner that's jumping out there and is coming equipped with the wheelbarrow and dumps the wheelbarrow on the table and says, "Let's find the right tools for you," I think is going about it the wrong way. From my particular standpoint,
[13:33] Bruce Popper: the fear of loss, financial loss, brings people to the table. But my experience has been the emotional side of estate planning is gonna more than likely drive just about every decision they make.
[13:51] Bruce Popper: And some people might go, "What does that mean?" Well, let's just say that the-- somebody doesn't like the government. They don't want to pay extra taxes. One thing we learned a long time ago is just assume most people hate taxes and love their family. I can tell you that on the family side, you can't always assume that somebody loves their wife, but you can assume they love their kids, and you can also assume they probably adore their grandkids-
[14:17] Ryan Warwick: Mm-hmm
[14:17] Bruce Popper: ...u-until they tell you differently. So when it gets into the emotional side of the planning, the question is, how do we affect them, and how does that impact you during your lifetime? And then the tools to get the objectives down based on what they want to do start revealing themselves. And, and, um,
[14:41] Bruce Popper: f-for example, let's just say hypothetically, somebody says, "I don't want to pay any estate taxes whatsoever." And most people would say that.
[14:49] Ryan Warwick: Okay.
[14:50] Bruce Popper: Well, there's one simple way to do it, guaranteed. Leave what you can for free to your family and give everything above that amount that the government would tax to charity.
[15:01] Ryan Warwick: So this, this has always been an issue, meaning
[15:07] Ryan Warwick: parents with wealth have likely been worried that
[15:13] Ryan Warwick: the wealth, if given to their kids, will, will be a problem,
[15:18] Ryan Warwick: disincentive, you know, create a, a lack of work ethic or, or whatever. And of course, the age at which they receive that wealth has a big impact on, on the outcomes.
[15:30] Ryan Warwick: What, what are maybe some
[15:33] Ryan Warwick: situations you've seen that have gone really well, and are there some that have gone poorly? And,
[15:38] Ryan Warwick: and are you seeing a, a shift in one direction or another? Are you seeing more concern today that, that that is a problem, or...?
[15:48] Bruce Popper: Well, it's less. Still family specific, but just one of the things that, that I lean back on and I tell clients this all the time. Back when I first started,
[15:59] Bruce Popper: people were pretty much making outright gifts to their children. If they left assets in trust, trusts were not as sophisticated, that you couldn't break 'em up, the, the different duties, administrative investments. You couldn't break apart the duties of a trust company as well as you can today.
[16:21] Bruce Popper: So when, when people would take
[16:24] Bruce Popper: the inheritance of a child and leave it at a bank for inheritance purposes, it's to be overseen by the bank, a lot of times the bank would buy proprietary investments, and it would be hard to unwind, and it turned out to be punishment. So trusts when I started
[16:41] Bruce Popper: seemed to be, the beneficiaries would say, "If you're putting my wealth in a trust, it's 'cause you don't trust me."
[16:47] Ryan Warwick: Interesting.
[16:48] Bruce Popper: Which is interesting. Exactly.
[16:50] Ryan Warwick: Yeah.
[16:51] Bruce Popper: A-and it's a different mindset.
[16:54] Bruce Popper: Then the other, the other option was, "All right, we'll just give it to you outright," and then of course, that's not a controllable situation. You give people wealth outright, it can be commingled with a spouse. There's a high divorce rate out there. Money can be lost to a spouse. You get in a car wreck, uh, you know what? If the, the money's not protected, it could be sued away from you. I mean, it's kinda like free game.
[17:19] Ryan Warwick: Well, you, you mentioned it earlier. I mean, you, you said two of the words, creditor and predator.
[17:23] Bruce Popper: Right.
[17:23] Ryan Warwick: The, uh, the third we often say is themselves. You may have a, uh,
[17:29] Ryan Warwick: a better, uh, o-one that rhymes with creditor and predator, but, um, but, uh, it's-- I, I mean, those are the three big concerns, right? And so it's, it's creditors if, you know, lawsuit, um, a car crash happens and, or a business transaction or something and, and they can... Or the,
[17:52] Ryan Warwick: a, a predator spouse. Um, I mean, we've s-seen those situations happen.
[17:57] Bruce Popper: Yeah. So here, here was the step up in planning.
[18:01] Ryan Warwick: Yeah.
[18:01] Bruce Popper: Instead of leaving the assets outright- Back in the '90s, 2000s, and I see it today too,
[18:10] Bruce Popper: it was let's have a trust out there until you're educated enough to handle your own money. So the inheritance goes into a trust.
[18:19] Bruce Popper: You would have somebody else be the trustee, maybe even a financial institution or a financial institution and a family member together.
[18:29] Bruce Popper: And while you're young, in your 20s, the trust would distribute out i- income to you, maybe even principal for the phrases health, education, maintenance, and support. Uh, basically to maintain a standard of living, get you educated, get you going. And then at age 25 or 30, there would be an, a distribution of some level of principal, either 25% or 33% or something, to give that person a bite of the apple, knowing that the first time they get that, they're probably gonna make mistakes. Hoping they don't buy flat screen TVs for every one of their friends and pick-up trucks and run out of, of money. Pick-up trucks, that's the Texas part of me.
[19:09] Bruce Popper: Uh, and then they would receive income and principal for this health, education, maintenance, and support for another five years. Then they get another bite of the apple, and then when they'd hit the age of 35 or 40, they'd get a final bite of the apple. And a lot of times people would say, "Let's go 25 on the first bite, 25 on the second bite, and then 50 on the last one," because they ought to be educated enough and shouldn't be paying the price for making bad mistakes the whole way.
[19:37] Ryan Warwick: Sure.
[19:38] Bruce Popper: So it, it is a good educator. Uh, sometimes dependent on the, the parent, they might want the child to be a, a co-trustee so they can learn what that's all about. But when you have these distributions, you're really going back to the potential same problem you had before, which is as soon as the money comes out of the trust, it's no longer protected.
[20:00] Bruce Popper: It can be commingled. It can be sued away.
[20:03] Ryan Warwick: Mm-hmm.
[20:03] Bruce Popper: Even if the child handles it correctly.
[20:07] Bruce Popper: So nowadays,
[20:10] Bruce Popper: I tell clients, "Look, trust don't mean you don't trust somebody. Trusts are actually the preferred way to leave assets to somebody." And there's different laws and different jurisdictions state by state,
[20:22] Bruce Popper: but for example, there are some states that say you can be your own trustee, so you can be in charge. You can be your own beneficiary, so you're in charge of it,
[20:34] Bruce Popper: and you're also the beneficiary or the recipient of the money that's in there. And as long as the distribution the trustee's making to themselves is within what's called a certain standard, it's called an ascertainable standard, but that doesn't really matter, uh, for this discussion purposes, you can have full creditor protection rights.
[20:55] Bruce Popper: So when you think about it, would you rather inherit it where you have to worry about it or would you rather inherit it where basically you own a house, you've got the keys to the, to the front door, but your name's not on the mailbox?
[21:09] Ryan Warwick: It's fascinating. Um,
[21:11] Ryan Warwick: at least to me.
[21:14] Bruce Popper: Well, the sad thing is, you know, I used to get so excited about some of these strategies.
[21:18] Ryan Warwick: Yeah.
[21:19] Bruce Popper: And now they're commonplace when you're working with wealthy people.
[21:22] Ryan Warwick: Yeah.
[21:22] Bruce Popper: I know they're in my back pocket, but I've run into a lot of estate plans... Th- th- going back to what you said before, the origination of how people come to us, sometimes people have made a proposal to clients about estate planning strategies, and as you can already see, there's a lot of technicality that can go behind these. They can get overwhelmed. A lot of people just wanna know what time it is. They don't wanna know how the watch works.
[21:49] Ryan Warwick: Mm-hmm.
[21:49] Bruce Popper: But they just wanna know that they can move wealth and that they're gonna be in control of underlying assets and that how's it gonna impact my family, and is it really worth it?
[21:58] Ryan Warwick: Yeah.
[21:58] Bruce Popper: Or am I biting off something that's gonna be a lot of work? Do I have to stick a key into my estate plan, start it up every day and it become an annoyance?
[22:06] Ryan Warwick: We- we've named this podcast The Worth Beyond Wealth podcast. So the idea is, you know, wealth is one type of value, but there are so many other types of value and values.
[22:21] Ryan Warwick: So
[22:23] Ryan Warwick: how can the estate planning process when, when used effectively, or maybe how can the estate planning process when not used effectively or not done, create real worth or, or that worth beyond the dollars and cents for a family for generations? Um, does that question make sense?
[22:48] Bruce Popper: I think so.
[22:49] Ryan Warwick: Okay. Yeah.
[22:50] Bruce Popper: Uh, uh, the way I'm hearing it i- is probably gonna be different than the answer you're, you're looking for.
[22:56] Ryan Warwick: Yeah.
[22:56] Bruce Popper: What I'm hearing is, how do you problem avoid? Because, a- and that may not be where you're going, but to me, as long as there's a sense of fair play-
[23:06] Ryan Warwick: Mm-hmm
[23:07] Bruce Popper: ... people ought to feel grateful because nobody was treated superior to them. That's where I see things going bonkers. So when a client shares with us some things they want to do,
[23:23] Bruce Popper: we feel compelled to at least be able to say, "You know what? I've seen this movie multiple times, and there's few endings, but there might be a 70% chance that yours is gonna end this way." Nobody's gonna play judge and jury with the, with the plan and the objectives that you have. But we are gonna not remain silent, at least share some potential consequences that you may not intend to inflict on the family. Because after you're gone, that next generation is either living together or l- they're living against each other.
[23:55] Ryan Warwick: Mm-hmm.
[23:55] Bruce Popper: So let me just kind of throw out a couple things. A lot of times, uh, parents will say, "I want to treat all my kids equally."
[24:07] Bruce Popper: And
[24:08] Bruce Popper: that may be something they accomplish on the back end, but if one child was fed a lot more resources during their lifetimes and the others know about it, they would probably be looking for some type of equalization for that before there was going to be an equitable slice for everybody of what remains. In the absence of that, someone's gonna feel like somebody else got away with something or was treated
[24:36] Bruce Popper: f- far superior to what, what they got, and that's where things get a little bit goofy. Secondly,
[24:44] Bruce Popper: I've just got some rules that I will never recommend and, and here's one of them. I would never recommend that somebody put one sibling in charge of another sibling's inheritance.
[24:57] Bruce Popper: That can be opening up a potential for lawsuits, and it can certainly make for a very entertaining Thanksgiving dinner somewhere along the line. Unless, unless the-- you're putting somebody in charge of somebody else that has special needs.
[25:09] Ryan Warwick: Yep.
[25:11] Bruce Popper: But, and where I would go with this, a lot of times you'll see it, Mom and Dad doing the right thing say, "Here's our assets. We have liquidity, we have real estate, we have an operating business." And they say, "We want to treat the family equally. What do we do?" Well, you start looking at is there a golden goose in here? Because even if you, at the end of the day, slice that up and one kid gets the $10 million business, somebody else gets a $10 million portfolio, and somebody else gets a $10 million rental property, the business may be
[25:45] Bruce Popper: just the golden goose that just gives returns that are far superior to everything else, so they're not gonna feel like that's equitable.
[25:54] Bruce Popper: Although, the separation of assets may be best because one kid's in the business and the others aren't.
[26:01] Ryan Warwick: Right.
[26:02] Bruce Popper: So one thing we-
[26:03] Ryan Warwick: And the challenges that could pose if you just give everybody a third of the business is one person's in control, involved. The other people can't access cash flow. They, they can't sell it. I think-
[26:13] Bruce Popper: Let, let's, let's play, let's play this out-
[26:15] Ryan Warwick: Yeah
[26:15] Bruce Popper: ... because it gets to be entertaining.
[26:17] Ryan Warwick: Okay.
[26:17] Bruce Popper: So let's say one is in charge of the other one's inheritance because the other one inherited business ownership just like this one.
[26:24] Ryan Warwick: Yep.
[26:25] Bruce Popper: And let's say the person that, that has the control to run the company actually has control to run the company.
[26:33] Bruce Popper: So from that person's perspective, they may be in a position to make decisions on when they're gonna toggle on or toggle off distributions or dividends to the shareholders if it's a corporation. They're in control of income coming out that's shareable, and they may decide, "You know what? I'm not gonna share any this year."
[26:58] Bruce Popper: The person that's not getting-
[26:59] Ryan Warwick: But they could increase their salary, right?
[27:01] Bruce Popper: They could do that too.
[27:02] Ryan Warwick: Yeah.
[27:03] Bruce Popper: But they could have a different thought, which is, "I'm gonna expand the business, make it more valuable."
[27:10] Ryan Warwick: Sure.
[27:10] Bruce Popper: "And we have all these employees that are counting on us, and, and maybe we sell the business in the future. Maybe my son's coming up and he's gonna run it, but we're gonna use it for expansion." And he may be right. At the same time, the person that's not getting income may be saying, "Didn't you just get a new company truck? I mean, isn't there money that from there that you should have been distributing out to me?" And they start questioning the value because they're not seeing the value. And they would be right.
[27:39] Ryan Warwick: Mm-hmm.
[27:40] Bruce Popper: So you've got both sides of the coin. One of them may be just laying punishment on the other one-
[27:45] Ryan Warwick: Right
[27:46] Bruce Popper: ... by not making distributions. And so one thing that we've been,
[27:52] Bruce Popper: um, entertaining and dependent on the client and, and if we can put it together, is go ahead and leave the assets equally to all of them. A lot of people say, "Well, give somebody else cash and equalize," and that may be true, but you know what? At the date of death, when there's a business valuation done and the other assets are valued, you may still be, uh, out of balance. So if you leave all the assets equally to each other, but
[28:22] Bruce Popper: make provisions to where there can be a buy-sell agreement in between these people so the business owner can acquire the interest of the sibling that's not in the business or the sibling not in the business can, uh, basically have a put option, right? To go ahead and sell their piece off and the other person has to perform and buy it. They're equaling it out after the fact. They're just shifting assets around. And so if there was some liquidity and cash available that was gonna land in the lap of one, why not share that and the, the person that has the business interest can use that cash to buy the other one out?
[29:00] Ryan Warwick: Mm-hmm.
[29:00] Bruce Popper: That, to me, gets you to the most equitable place as long as you're capable of pulling that off. But no, never put one person in charge of the other person's inheritance because that's gonna blow it up. And there's, uh, one other piece to that too.
[29:17] Bruce Popper: Sometimes the family can be very loving. You could have an incredible management team and, and I've seen families where somebody's not in the business collecting consistent, repeatable cash flow. They're happy with it. The people that are running the business are happy with it as long as they can get paid fairly for showing up and dealing with employee problems along the way, which the one that's not in the business never has to deal with, right?
[29:42] Ryan Warwick: Mm-hmm.
[29:43] Bruce Popper: And things can just play out perfectly.
[29:48] Bruce Popper: So if those kids get along, where you could attract
[29:53] Bruce Popper: additional friction is from the spouse of the non-participant sibling. "Hey, how do you know you're being treated fairly? When's the last time you looked at the books? What's the matter with you? Your brother or your sister could be taking advantage of you. You need to go in there and just start checking it out and making sure all of it's fair. I'm your wife, these are your kids," or, "I'm your husband, these are your kids." And I'm not saying every-... spouse would be like that, but there's enough.
[30:22] Ryan Warwick: Sure.
[30:22] Bruce Popper: And when you start getting some, uh, gas thrown on a potential little smoldering flame, it can explode into something huge, even if there's nothing there. Best to cut bait-
[30:34] Ryan Warwick: Yes
[30:35] Bruce Popper: ... split them up, in my, my opinion.
[30:36] Ryan Warwick: Creates friction.
[30:37] Bruce Popper: Creates friction.
[30:38] Ryan Warwick: And then, and when we talk about, uh, creating worth beyond the wealth, I mean, the, the, the parents very likely never wanted this successful business to tear apart the family.
[30:51] Bruce Popper: Most of them haven't even thought about that piece.
[30:53] Ryan Warwick: Yeah.
[30:54] Bruce Popper: They just wanna treat the kids equally, and it's all gonna go in, but with-- they're all gonna get a piece.
[30:58] Ryan Warwick: Yeah.
[30:59] Bruce Popper: But without making provisions for buyouts,
[31:02] Bruce Popper: you, you may be leaving this in a, in a place where these kids are gonna have a wedge driven in between them. Not always, like I said, you see the end of this movie, maybe 70% chance it ends bad, 30% chance it ends good. The parent has to make that decision. But the other thing that i- is not talked about enough is when a parent is gone, and the plan unfolds, people are affected, and they can't get into the head of the person that created the plan, so they have to imagine what their parent was thinking.
[31:38] Ryan Warwick: Mm-hmm.
[31:39] Bruce Popper: And that goes back to the kid I was talking about early on, where, "Oh, you put my inheritance in a trust 'cause you didn't trust me?" Imagine going through life thinking that, where the reality might have been, "I put it in there to protect you."
[31:53] Ryan Warwick: Yeah.
[31:53] Bruce Popper: So we'll recommend that parents craft something called a letter from the heart, which is just an explanation, and these days you could just do it on, uh, do it on video-
[32:03] Ryan Warwick: Sure
[32:04] Bruce Popper: ... kinda like this.
[32:05] Ryan Warwick: Yeah.
[32:06] Bruce Popper: And be able to tell people why you did what you did, how important they are to you, and maybe they get a better understanding of the result that they're dealing with. That's disclosure. That could be, that could be bonding-
[32:19] Ryan Warwick: Yeah
[32:19] Bruce Popper: ... and building because then there's no animosity if they know what the truth is.
[32:24] Ryan Warwick: Yeah.
[32:25] Bruce Popper: Or-
[32:26] Ryan Warwick: Yeah. And, and, and I think that's,
[32:29] Ryan Warwick: that's an act of love. It, it's an act that takes some intention, some thought. Not everybody sits around and thinks about that. I mean, I, I would say nearly nobody thinks about that. They think about putting together an estate plan. They think about the tax, the legal consequences, the control, the, you know, who, who's going to get what. But, um, very, very few people think about that. And that intention is, uh, and, and you mentioned, uh, earlier really what we're working on to, to try to create discipline and intention around the family enterprise. You, you are, um, doing, i- implementing disciplines that, you know, those things would be done inside of a business, right? You wouldn't take actions and create succession plans without the interested parties knowing why things were done and putting in the protections and putting in probably the mechanisms to fund those, um, mechanisms, right? Like, like life insurance to fund a buyout.
[33:34] Bruce Popper: Yeah.
[33:34] Ryan Warwick: So the, uh, it seems like the earlier you start, the, the more time and thought, um,
[33:43] Ryan Warwick: just, just has the potential to create the worth so that people can see the act of love that, that it is.
[33:51] Bruce Popper: One thing that's always been a soft spot for our family are terminally ill children. We're supporters of St. Jude's. My daughter, when she was eight years old, lost her best friend to childhood leukemia. I mean, that, that... I- it still upsets me when I think about parents having to go through that, or you look at a child, and you just say, "You know what? Based on what the doctors are telling people, they're never gonna see their prom night."
[34:15] Ryan Warwick: Yeah.
[34:15] Bruce Popper: Why would I not wanna do something to make the remainder of their life better if I have the resources to do so? And
[34:24] Bruce Popper: if we can get people
[34:27] Bruce Popper: to engage emotionally to, to help take care of other people, you will build the biggest, best beneficiaries possible. And that goes back to that ultimate gift that had that thread in there. But we actively talk about that.
[34:43] Ryan Warwick: Looking outside of ourselves, how do we help others?
[34:45] Bruce Popper: Right.
[34:46] Ryan Warwick: Gonna create m- far more joy than, "How much of this estate am I gonna get, Bruce?"
[34:51] Bruce Popper: Yeah. That's right.
[34:53] Ryan Warwick: "So I can go buy a, a Ferrari."
[34:57] Ryan Warwick: Um, I, I think that's a great, a great place to stop.
[35:03] Ryan Warwick: Um, beautiful ending, and, uh, I hope that everybody can see, um, why I am so grateful to have you on, on our team to, to be a resource to our clients that we serve who are trying to do the right thing and, and the best thing for, for their heirs and, and, uh, uh, just like you mentioned, for, for charities to, um, to help others. And, and you probably know this, but our, uh, big, hairy, audacious goal is to create human connection with a million people so that families and communities flourish, and it really is, is just that. We wanna see all of the resources that we and all of our clients are entrusted with stewarded so that they're leveraged to go out and, and bless as many people as possible. It's, uh, so this is... I- it's, it's really important, um, information, and, and these strategies, um, when implemented appropriately, can truly create real worth and, and help a lot of people.
[36:10] Ryan Warwick: It's exciting.
[36:11] Bruce Popper: Yeah. It is.
[36:12] Ryan Warwick: And I found-
[36:12] Bruce Popper: It's a pleasure working with you
[36:13] Ryan Warwick: ... I found it riveting. I know
[36:17] Ryan Warwick: you think it might be boring, but, um-
[36:19] Bruce Popper: No, I don't. Uh, any w- any time we can help other people-
[36:23] Ryan Warwick: Yeah
[36:23] Bruce Popper: ... through whatever discipline we're bringing to the table, we're doing what we're supposed to be doing.
[36:28] Ryan Warwick: That's right.
[36:29] Bruce Popper: And,
[36:31] Bruce Popper: uh, I just happen to be able to tap into people emotionally. It gives m- it, it actually warms my heart when I'm talking to somebody at a table, we're going through the what-ifs, and somebody comes to tears.
[36:42] Ryan Warwick: Yeah.
[36:44] Bruce Popper: And, and that is my confirmation that this is an emotional business. The financial part got them to the table. This is an emotional place, and every estate plan, if you look for the end in mind, and I'll have people argue with me right and left on this, but again, it's my conclusion. Th- uh, peace of mind is the ultimate objective, and how we get there is it, uh, changes-
[37:10] Ryan Warwick: That's right
[37:11] Bruce Popper: ... based on the uniqueness of the individual. That maybe peace of mind is that they're paying the least amount of taxes. Maybe their peace of mind comes from something else. But that's where it ends. That's the, that's the target.
[37:22] Ryan Warwick: It's, it's usually around, are we going to be okay? Are my kids going to be okay? Are my grandkids going to be okay? And that n- doesn't necessarily mean monetarily.
[37:34] Bruce Popper: Right.
[37:36] Bruce Popper: In fact, sometimes it means the exact opposite.
[37:39] Ryan Warwick: That's right.
[37:40] Bruce Popper: Yeah.
[37:41] Ryan Warwick: It's really good.
[37:42] Bruce Popper: Pleasure.
[37:42] Ryan Warwick: Thank you.
[37:43] Bruce Popper: You bet.
[37:44] Ryan Warwick: Thank you for listening to the Worth Beyond Wealth podcast. If you liked this podcast, please like, share, and subscribe. The highest compliment you could give would be sharing this with a friend. Thank you. The opinions expressed in this program are for general informational purposes only, and are not intended to provide specific advice or recommendations for any individual or any specific security. RW Investment Management, LLC, dba RW Investment Management, is a registered investment advisor. Testimonials given by current clients are not in exchange for compensation. This document is solely for informational purposes. Advisory services are only offered to clients or prospective clients where RWIM and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by RWIM unless a client service agreement is in place. RWIM is not a legal or tax advisor.