Wealth Actually

“Behavioral Finance” is all the rage. BeFi (as the not-so-cool kids in the financial world call it) is the next phase in guiding individuals, teams, boards, companies, and leaders to better decision-making. There is plenty of material telling us where people get it wrong. Even the best brains get deceived by a litany of behavioral biases. These biases cause people to fall off the track of economic rationality. However, even with all of these labels, there is little guidance on how to identify and use this context. Until now . . . PETER ATWATER argues in his new book “THE CONFIDENCE MAP” that there is a straight forward mental model. https://www.amazon.com/Confidence-Map-Charting-Chaos-Clarity/dp/0593539559/ It can diagnose an individual’s emotion and confidence, its directionality and its relationship to group and social mood. Further, Peter asserts that people (and their advisors) can use this information to pull decision-makers out of the own limitations of their own silos. People will be able to recognize what is occurring in their surroundings, mitigate risk and maximize opportunity.  We’ll discuss Peter’s findings, the mental model he’s developed and, finally, the process of writing the book.  Outline Quick background- The Confidence Map- central tenet of the book The context of one’s place on the confidence map has as much to do with the decision making process as data and logic. Rationale behind the book – what was the problem that you were seeing? What was your research showing? Examples Johnson and Johnson Tylenol Case Boeing 737 Dreamliner Bud Light Defining the axis- Toggling between “Certainty and Control” Toggling between “Confidence and vulnerability” (not price!  Are humans innumerate?) Mapping human confidence (and using it in a forward looking manner) Individuals and recognizing their own position in the chart Leaders looking at group confidence and mood “at scale” to mark strategic shifts Collective mood vs individual mood Defining the group (which group is the individual following) Recognizing where one is on the map personally vs the group vs the masses Augmenting “behavioral finance” Behavioral economics tries to give us the tools and bias catalogues of where human beings fall off the train of rationality How do we think about the confidence map to help people predict (and avoid) their own frailties – especially around big decisions? What is the “equipment” you need to use these tools effectively to help me to understand their decision contexts and make better decisions (potentially in times of maximum stress)?  Is there a danger that this is giving a loaded gun to the financial services industrial complex? What was the book writing process like? Turning a box of ornaments into a Christmas Tree Using a Coach What were the struggles? How do we stay in touch? https://peteratwater.com/ Linkedin: Peter AtwaterTwitter: @peter_atwater Amazon: THE CONFIDENCE MAP https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

The Corporate Transparency Act is legislation that is going to touch all high net worth clients in 2024.  This is like KYC procedures on steroids and investors need to be aware of it. Attorney, STEPHEN LISS helps us understand the scope of the developing new regime. The financial reporting system currently makes it cumbersome for regulators and law enforcement to track the asset ownership and cash flows.  Lessons learned from the Panama Papers and Pandora Papers disclosures signaled the need for a change.  Congress passed the CTA legislation in 2022 to combat money laundering, tax evasion and other illegalities.  After public input, final rules were recently promulgated. There are significant reporting responsibilities and criminal and financial penalties for non-compliance. The impact of these initiatives takes hold in 2024- It’s becoming a point of emphasis for the legal, accounting and financial services communities. It will be significant part of the estate planning process for HNW clients going forward. With the expected “2026 avalanche of estate planning. Clients are in a for a surprising change in the standard procedures around standard techniques. The concept of “Putting it in an LLC” or “putting it in a trust” is about to become more expensive, complicated and time-consuming- particularly in dealing with the law firms and especially financial institutions. STEPHEN LISS is a partner at Dungey and Dougherty and is on the forefront of this legislation and its impact on clients. We’re going to talk about the scope of the CTA, it’s impact and why it’s important for HNW clients to start early and get ahead of these requirements when the planning avalanche comes. Background Congress enacted the Corporate Transparency Act (“CTA”) under the Fiscal Year 2021 National Defense Authorization Act on January 1, 2021. The requirements of the CTA are being implemented “to help prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity, while minimizing the burden on reporting entities.” That said, even FinCEN acknowledges the enormous reporting burden imposed by the CTA, which it most recently estimated to be over 118 million hours in 2024, with an annual burden of over 18 million hours thereafter. The CTA added 31 USC §5336 to the Bank Secrecy Act with the title, “Beneficial ownership information reporting requirements”. The CTA has three core elements: Reports to FinCEN The CTA requires certain entities (each a “reporting company”) to identify itself, its primary owners and officers (each a “beneficial owner”), and certain professionals who helped to form or register the reporting company (each a “company applicant”). The reporting company must then report to the Financial Crimes Enforcement Network (“FinCEN”) information sufficient to identify the reporting company, its beneficial owners, and any company applicants (“beneficial owner information” or “BOI”). Control Access to Information FinCEN will provide BOI to government regulatory and investigatory bodies, but it will not be made available to the general public. In addition, there are specific procedural requirements for government actors to access this information, along with civil and criminal penalties for improperly accessing or using such information. Revised Due Diligence Requirements The Secretary of the Treasury is required to revise Customer Due Diligence requirements for financial institutions to conform to the CTA, and account for the ability of financial institutions to access beneficial ownership information. Outline What is the Corporate Transparency Act? The purpose of the Act is to Set a clear federal standard for incorporation practices Protect U.S. national security and commerce Enhance national security, intelligence, and law enforcement efforts to combat money laundering, terrorism financing, and other illicit activities Bring the U.S. into compliance with international anti-money laundering and countering of terrorism financing standards The Act does not create a public registry of business entities in the U.S. What Does the Corporate Transparency Act Require? •A Reporting Company must disclose information about the entity itself, the Company Applicant, and its Beneficial Owners to the Financial Crimes Enforcement Network (FinCEN) of the Department of Treasury •For each Beneficial Owner or Company Applicant, the disclosure must include •Full legal name and date of birth •Each Beneficial Owner’s current residential address, and each Company Applicant’s current business address •An identification number (such as a driver’s license or passport number) or FinCEN Identifier number (available upon request from FinCEN after providing name, address, and date of birth) and a digital copy of the identifying document •Effective January 1, 2024 A REPORTING COMPANY must also disclose its: •Full legal name •Any “doing business as” names •A complete current business address •The State, Tribal, or  foreign jurisdiction of formation •For a foreign reporting company, the State or Tribal jurisdiction where such company first registers •The TIN of the reporting company or foreign equivalent if a foreign reporting company has not been issued a TIN by the IRS FINCEN Identifier •Provide the information that normally must shared with a Reporting Company and FinCEN will issue you an identifier number that can be provided to any Reporting Company. •Any individual or entity with a FinCEN identifier must report to FinCEN within 30 days of any change in BOI or if they become aware or have reason to know any information was inaccurate. •If a Reporting Company and an entity that owns it have the same beneficial owners, the Reporting Company can use the entity FinCEN identifier instead of disclosing BOI of the owners of that entity. Protection of Beneficial Ownership Information The CTA does not authorize public disclosure of BOI FinCEN can disclose the information to: •A Federal agency engaged in national security, intelligence, or law enforcement activity, for the use in furtherance of such activities; •A State, local, or tribal law enforcement agency as part of a criminal or civil investigation, with court approval; •A foreign government, to assist an investigation if a Federal agency requests the information; •A financial institution with the consent of the reporting company, to facilitate compliance of the institution with customer due diligence; or •A Federal regulator to determine compliance of a financial institution with their customer due diligence requirements. Tax Adminsitration Officers and employees of the Department of the Treasury can access “beneficial ownership information for tax administration purposes…” 5336(c)(5)(B) Security Protocols The protocols are intended to: •Protect the security and confidentiality of any BOI; •Require requesting agencies to establish, maintain, and abide by a secure system that would store BOI; •Limit the scope of information sought, consistent with the purpose of seeking the information; •Restrict access to BOI to those who have undergone appropriate training, and who are authorized to access the information; and •Establish an auditable system of records to track each request, purpose of the request, name of requesting individual, and any disclosure of information. •Proposed regulations were issued December 16, 2022. Penalties for Government Misuse of Information •Any individual guilty of unauthorized disclosure or use of Beneficial Owner information •Is liable for a civil penalty of $500 per day the violation continues or is not remedied and •If found criminally liable shall be fined no more than $250,000, or imprisoned for 5 years, or both or •If violating another law of the United States or any illegal activity involving more than $100,000 over a 12-month period, the maximum criminal fine increases to $500,000 or 10 years imprisonment. What Does the Corporate Transparency Act Require? A Reporting Company must disclose information about the entity itself, the Company Applicant, and its Beneficial Owners to the Financial Crimes Enforcement Network (FinCEN) of the Department of Treasury Reporting Companies •The Act defines a Reporting Company as: •A corporation, LLC, or other similar entity that is 1.Created by filing a document with a secretary of state or a similar office under the law of a State or Indian Tribe; or 2.Formed under the law of a foreign country and registered to do business in the United States by the filing of a document with the secretary of state or a similar office under the laws of a State or Indian Tribe.  •LPs, LLPs and business trusts (statutory trusts) are “similar” entities •Trusts and general partnerships are excluded from this definition Exemptions for Companies •The Act excludes 23 types of entities from qualifying as a Reporting Company. A “Large Operating Company” •With 20 or more full time employees in the United States •30 hours a week or 130 hours per month •With gross receipts or sales as reported on a federal income tax return of over $5 million •Must be U.S. sourced income •With an operating presence at a physical office within the United States 501(c) tax exempt charitable organizations and foundations 527(e)(1) political organizations 4947(a)(1) and (2) charitable and split interest trusts Publicly traded organizations Domestic governmental authorities Banks, credit unions, depository institutions, and money transmitting businesses Broker dealers and RICs Securities exchanges Insurance companies Public utilities Public accounting firms registered under Section 102 of the Sarbanes-Oxley Act Financial market utilities Certain pooled investment vehicles An entity wholly owned or controlled by an exempt entity is also exempt from the obligations of a reporting company unless the exempt entity was: A money service business, A pooled investment vehicle, or An entity assisting a tax exempt entity. Company Applicants An individual who directly files a document creating a domestic reporting company. An individual who directly files the first document registering a foreign reporting company. The individual primarily responsible for directing such filing. There can be two Company Applicants, but no more. Only applies to a reporting company formed or registered after January 1, 2024. Who is a Company Applicant? 1.Attorney directs paralegal to form LLC and paralegal faxes required documents to secretary of state. 2.Attorney directs paralegal to form LLC and paralegal completes online form provided by Formation Co. 3.Attorney directs paralegal to form LLC and paralegal faxes form to Formation Co.  Employee of Formation Co. then faxes that form to Secretary of State. 4.Partner tells associate to form LLC.  Associate tells paralegal and paralegal faxes required documents to secretary of state. Who is a Beneficial Owner? Beneficial Owner Not a Beneficial Owner An individual who •A minor child (as defined in the State in which the entity is formed) if the information of the parent or guardian of the minor child is reported in accordance with the Act. •Directly or indirectly •Through any contract, arrangement, understanding, relationship, or otherwise— •An individual acting as a nominee, intermediary, custodian, or agent on behalf of another individual. (i) Exercises substantial control over the entity; or •An individual acting solely as an employee of reporting company and whose control over or economic benefits from such entity is derived solely from the employment status of the person.  This does not apply to senior officers. (ii) Owns or controls at least 25% of the ownership interests of the entity. •An individual whose only interest in a reporting company is through a right of inheritance. •A creditor of a reporting company, unless the creditor otherwise falls within the definition of a Beneficial Owner. Who Has Substantial Control? Senior officers (Includes a president, CFO, general counsel, CEO, COO, or anyone who performs a similar function) Those with authority to appoint or remove any senior officer Those with authority to appoint or remove a majority of the board of directors (or equivalent) Those who can direct, determine, or have a “substantial influence” over important decisions made by the reporting company. What is an “Important Decision”? The sale, lease, mortgage, or transfer of any principal asset Reorganization, dissolution or merger Major expenditures, investments, and issuance of equity or debt Selection of business lines or geographic focus Setting compensation for senior officers Entering into significant contracts Amendment of governance documents Who is a 25% Owner? Ownership interest is defined broadly to include equity, profit sharing agreements, voting trusts, convertible debt, and options. Ownership interests can be direct or indirect, and can include a mere understanding or relationship. Trust assets are attributed to: -A trustee or other individual with authority to dispose of the asset. -A beneficiary who is the sole income and principal beneficiary. -A beneficiary who has the right to demand substantially all of the trust assets. -A grantor if the trust is revocable or they otherwise have the right to withdraw trust assets regardless of form. Calculating Ownership of a Reporting Company -Any options or similar interests are treated as exercised. -If there are capital and profits interests you compare the individuals interests to “the total outstanding capital and profit interest of the entity…” -For corporations, it is the greater of the vote or value held by the individual. -If an ownership interest cannot be calculated with “reasonable certainty” an individual is a beneficial owner when owning or controlling at least 25% of any class or type of ownership. When is a Report Due? Initial Report Existing Reporting Companies- by January 1, 2025 Domestic Reporting Company formed January 1, 2024 and after—30 calendar days Foreign Reporting Company registered January 1, 2024 and after—30 calendar days Updated Report Within 30 calendar days after there is any change to any information previously submitted to FinCEN. Change in who the Beneficial Owners are Minor reaching age of majority Information related to a Beneficial Owner (like a change in address or change in drivers license number) An entity becomes exempt from reporting OR is no longer exempt If a Beneficial Owner dies, a change occurs when the estate is “settled.”  That term is not defined. Correcting A Report If a Reporting Company becomes aware “or has reason to know” that information contained in a report is inaccurate they have 30 calendar days from that date to file a corrected report. Penalties •An individual who willfully provides false or fraudulent information, or willfully fails to report complete or updated Beneficial Ownership information faces a civil penalty of $500/day the violation continues or is not remedied, and a criminal fine of up to $10,000, and/or 2 years imprisonment •There is a 90-day safe-harbor if an individual voluntarily submits a report containing correct information What Should You Be Doing Now? Start Estate Planning Now Budget 2x the Time needed to implement Budget 2x for E&O insurance and administration costs Address the CTA in your engagement letters. Address the CTA in operating agreements. Notify all your clients the CTA is coming January 1, 2024. Decide- Will you provide CTA advice or will you find a vendor? Most Advisors should obtain a FinCIN Identifier as soon as you can. Stephen Liss Contact Information STPEHEN LISS BIO https://www.dungeydougherty.com/stephen-liss https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

State Estate Taxes – State Estate taxes can be a nasty surprise- especially with the disconnect between State and Federal Exclusions. Currently, the Federal Exemption stands at $12.92mm per person. 17 states have and estate or inheritance tax and it’s often uncoupled from the Federal exemptions. In New York, the state estate tax exclusion stands at $6.58mm per person- and that exclusion isn’t portable with a spouse. With state estate tax rates reaching 16%, this could lead to a potentially big number. However, planning around this tax can be complicated. Estate Planning Attorney, GEORGE BISCHOF is here to define the problem and the clients it affects, provide some context for planning and give us some ideas on how to deal with it. George is an Estate Planning Attorney here in New York City at the WILLS AND TRUSTS FIRM (https://thewillsfirm.com/). He focuses on clients between $4 and $20mm in net worth. Estate Tax Federal ($12,920,000 per person) vs NYS ($6,580,000 per person) More New Yorkers can be caught in this than they think Real Estate can be a big issue Linkage to Gift Tax (NYS has no gift tax) Rates (40% Federal vs 16% State) NYS Cliff – Established in 2014 105% Estate Tax Exclusion is where the cliff kicks in. Graduated Tax Calculation Goes back to dollar zero and can be a $250K+ mistake Calculated on NYS property NYS has floated a longer phase-out range, no progress yet Being a City vs State Resident is irrelevant (as opposed to an income tax situation) Portability – Federal: Yes, NYS: NO!!! (but, Credit Shelter Trusts can be a solution) Ways to Reduce / Minimize This Tax Using Charity and a drafting Santa Clause (a conditional formula bequest that leaves money to your preferred charity (or one chosen by your executor or trustee), but only if doing so will result in a higher after-tax estate for your beneficiaries). Changing your residence AND domicile (and cutting NY linkages!) – See an in depth discussion on this topic with attorney MARK KLEIN – (SNOWBIRD PLANNING EPISODE) Using Gifting to get “under the cliff amount” (but beware of 3 year look back). Moving wealth to non-NY jurisdiction Maximizing “portability” with Disclaimer or Credit Shelter Trust structures Disclaimer language in wills and/or trusts Make sure you have an independent co-trustee   BONUS: I wrote about this topic back in 2019 and it gives some context around the planning. (The numbers have not been updated): https://frazerrice.com/blog/the-return-of-the-nys-estate-tax-cliff/ https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/  “Frazer Rice is an employee of Next Capital Management, LLC. This podcast is not investment, legal, or tax advice, nor does it reflect the opinions of Next Capital Management. Any opinions represented in the show are Frazer’s individually and not an endorsement of the guest. This podcast is for educational and entertainment purposes. It is neither investment, legal, nor tax advice and does not represent the opinions of any employers of the host or guest.”

Crisis Management in the Wealth Space Lawyers, Accountants, Wealth Advisers and other advisers – are used to dealing with difficult situations all at the heart of their specialty.  But often, the advice the clients need goes past the wealth arena . . . . How do you help them when you hear situations like this? My son shows no drive and won’t get up from bed- My daughter is cutting herself- My brother just got his second DUI this year and is running the business into the ground- The trustee of my trust has missed filing taxes and is making mistakes- What do you do when you are the first point of contact, but out of your expertise?  What happens when the family is in crisis and devastating wealth impacts are in view? What happens when it’s not in your business model or expertise to deal with this part of the family’s issues? How do you do the right thing by your client and yourself? JANE MINTZ is the person to help us deal with this gaping hole in the wealth management industry. Jane is an internationally respected pioneer who has spent 20 years working with individuals and families around crises related to addictive illness, mental health, and life concerns. Best known for her work as a concierge strategist guiding clinically complex individuals and their families through extraordinary challenges, she is also a noted thought leader, industry consultant, educator, and speaker who has garnered international recognition. Jane has extensive experience working with family businesses and private family wealth offices so that the dysfunctions of today do not destroy the legacies of tomorrow.   Jane is a Licensed Professional Counselor with multiple dimension training credentials in high acuity clinical clients. She is a Laurel School graduate (Cleveland, OH) with degrees from Washington University (St. Louis, MO) and John Carroll University (Cleveland, OH).  https://open.spotify.com/episode/6s4CX5W9qxMtXwRRbBOtUi?si=zvatryXoRUadZirFtJJO4w Outline Jane, in a couple of sentences, what do you do as Professional Counselor- How is your expertise applied to the wealth space? (Family Businesses and Wealth Offices/Trustees) Crisis What constitutes a crisis? What is the difference between a crisis and a mistake (or “growing pains”)? How does a financial advisor, coworker, wealth manager know when to intervene? What are we looking for signs and symptoms that someone needs help:   Misspending  Not showing up for appointments  Missed deadlines  Disruption in workplace  Missed work  Inability to participate in large planning matters  The Intersection of Being a “Fiduciary” and Getting a Client the Help They Need? What is a fiduciary relationship?  vs. Human Ethics? When do human ethics supersede fiduciary ethics?  How can a clinical strategist be a key collaborator in bridging the gap between the two?    What does a professional counselor do?   What happens when a client is introduced to to a Counselor?    What are reasonable expectations?  For the family? For the Adviser? What does progress look like?  How do you set up the structures for long term success? Where does the Adviser fit in that process? How do we stay in touch and how do listeners find you? JANEMINTZ.COM Books Mentioned . . . . https://www.amazon.com/Four-Agreements-Practical-Personal-Freedom/dp/1878424319  “Frazer Rice is an employee of Next Capital Management, LLC. This podcast is not investment, legal, or tax advice, nor does it reflect the opinions of Next Capital Management. Any opinions represented in the show are Frazer’s individually and not an endorsement of the guest.” https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

Why Do You Podcast? And How Does It Help in the Wealth/Law Space? Why do I do it? What’s involved?  How does it interact with your career? Should I do it? (YES- At least try it) How did you get started and how much does it cost? Do you make money on it? Is your ROI on the show different? Do you use it for research or marketing (or both)? Do you enjoy it? Two Advisor Podcast Experiences I thought I would have BRENT NELSON on the show, so we could trade our two podcasting experiences.  Brent is the host of the successful and entertaining Wealth and Law podcast and heavily involved in the wealth management space.  This is his second visit to the Wealth Actually Podcast. He is an ACTEC Fellow and a partner of the Tucson-based RIMON LAW FIRM and focuses on international and domestic estate planning. For those curious about the world of podcasting and where it can fit into your business or practice, this should be a useful listen from two people who have done it. I liked the idea of two people, who have demanding day jobs, describing their podcasting experiences and how they make it fit within a demanding schedule- Why we did it? Why do we continue to do it? What do you listen to and what did you take for inspiration? What’s your process? What started off poorly and has gotten better? How much time / resources / workflow does it take? What functions do you keep / what do you delegate? How do you measure success? How do you “monetize?” Business model? Advertising? What do you wish you had? Struggles with audience building- Weird stuff like music / disclaimers? The Wealth and Law Podcast: https://open.spotify.com/show/3bQK3jsLsacNqryQKQuSRG I am also adding this excellent primer on “HOW TO PODCAST” from my friend, Jason Cilo of Meeting House Productions- it goes into some depth on the “Who, What, Where, When, Why and How” of the process from a person who does an extremely professional job on his show. It is well researched and serves as an ode to his passions in the TV and Film world. Well worth the listen: FULL CAST AND CREW: HOW TO PODCAST https://open.spotify.com/show/1UTZzSo2oPXBxn94UrIjO1 Some of the Podcasts Mentioned: Errol Louis (“You Decide” NYS Political Podcast), Various Horror Podcasts, John Keim (Washington Commanders Beat Writer for ESPN), Full Cast and Crew, Infinite Loops, Penny Philips, Griffin Bridgers, Morgan Housel, Ritholtz Wealth’s stable of podcasts, Invest Like the Best with Patrick O’Shaughnessy https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/ “This podcast is for educational and entertainment purposes. It is neither investment, legal, nor tax advice and does not represent the opinions of the employers of the host or guest.”

In this episode, I recount my experience in taking the plunge and jumping from a stable, large bank job to swim in some different waters. “Funding the Pivot” was written a few years ago as I was doing the post-mortem on my post-book experience. I think the lessons I learned can help a lot of people. This format a bit of an experiment for me in non-interview podcasting- let me know what you think of it. The transcript of the essay is below- thanks for listening! Follow me on TWITTER LINKEDIN YOUTUBE and INSTAGRAM, Don’t forget to SUBSCRIBE/like/rate the show and feel free to send along to your friends. https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/ Funding The Pivot We live in a world where we are bombarded with advice to “follow your passion” and stories of people who wonder about the road not taken.  In fact, more people in their prime earning years are taking steps to fulfill their “dreams” before they reach the brass ring of retirement- a time normally associated with doing all of the things you didn’t have time to do. What happens when you aren’t close to retirement and want to make a career switch or start up a new business? What is realistic? How should you think about the risks so that you avoid a crippling financial decision? As clients and friends have come to me with this issue, I have taken my personal experience and some financial planning concepts to put structure around what can be a high risk, but high reward decision. The Assessment and the Plan Many of us daydream about a better tomorrow . . . better finances, more control of time, health and family happiness, a clearer path to professional or extracurricular achievement and establishing a legacy. These things don’t come without costs and the risk of failure. Therefore, you need a plan. The first step is to assess the situation at hand. Are you running from something or running to something? Do you have an idea that will change an industry (or the world)? Do you want to start a business (and the hell that being an entrepreneur can bring) or do you just want to enjoy the trappings of a well-oiled business machine (already put in place)?  For those making career decisions because of an unpleasant work environment, I would think twice about running headlong into entrepreneurism.  It is a long and lonely road.  You have to “really want it” and be prepared for sacrifice both personal and financial.  Can the same itches be scratched while being traditionally employed? If your current situation is dissatisfying, could the correct change be a move to a firm that is more in keeping with your goals and principles? I had a little of both in my life and used parts of the creative process, the entrepreneurial experience and a corporate situation to move my situation ahead. My situation at my previous employer was suffocating.  I enjoyed working with clients, solving problems, identifying opportunities and being relevant to successful people. However, while enjoying success, I was not participating in the equity or direction of the business and I was not developing.  My career trajectory was flattening and the principles by which I worked were shifted by new management priorities. It was time to go no matter what. I also had a nagging feeling that I had more to bring to my clients, my firm, the industry . . . and myself.  I became involved in podcasting and speaking- two things that I enjoyed.  On the strength of that and my extracurricular interest in writing screenplays and essays, I felt like I had a book in me. Change is good, right? Change brings growth. Generally speaking, that’s true, but change also occurs when you are laid off or when a company closes down. To that end, change is effective when you are the architect of the change. When you are driving new circumstances, you have more control over its effects. In my case, I spent a year writing the book, finding a publisher and getting ready to be an author. I had the collateral to be something more than a job description. This leads to an important question. What Does Success Look Like? It is important for anyone making the pivot to understand what their definition of success is. For almost everyone, this will be an evolution. Ask yourself if you have the talent and the drive to make your new endeavor your life’s work. Am I a writer? In my case, the book was originally going to be TV pilot filled with smart, funny stories and I had over 200 pages of notes. I had written a variety of blog posts that were well-received and had a lot of other positive feedback. I thought I could make a go of it. Am I an entrepreneur? I looked around and saw that my path to success either as an author or in the world of TV was going to be a long shot at best. I spent long hours talking to my publisher and others about what success for my “outside endeavor” was going to look like. Early on (and fortunately), I was disabused of the idea that I was going to be the next Michael Lewis. The structure of the industry made the likelihood of success remote, especially at my stage of life. Making a huge life change on the narrow definition of being a (highly paid) writer/media personality was going to be an enormous risk. Could I turn a talent into something else? My thinking changed. The return on investment was going to be in the form of a major personal Everest climbed and of a new career trajectory, both wider and more upwardly sloping.  I changed the direction of the book from wickedly funny entertainment to intelligent decision-making for the one-percent, an area where I had significant professional experience and where I could make a meaningful difference to people (and their advisors) who need help. I encourage everyone looking to make the pivot to: Speak to others in the field and determine potential realistic results and Write down what their success will look like. This leads to the next question. Do you have the tools and resources to achieve your goal? (The Pivot Fund) Whether starting a business, finding a new job, or embarking on a new adventure, you have to find a way to land the plane back on the carrier safely. Financial and career stress can create a difficult decision-making environment and can have devastating effects one’s family and personal legacy. The first way to mitigate this risk is by taking an inventory of the tools and resources you have at your disposal. Step #1: Be confident that you have the talent to be successful- if you aren’t 7 feet tall, you probably aren’t going to be an NBA center, no matter how good your hook shot is.  Talk widely and broadly to people in the field to get an honest appraisal of your skills. Do things in your new field in bite-sized measures to make sure you enjoy the process. Find a mentor to help you learn the ropes and then a sponsor to give you the push your career will need (these may not be the same people). Join industry groups to get engrained in the culture.Beware: One of the most common pitfalls I see occurs when people assume that success in their current field will automatically translate into a different one.  Investment banking does not guarantee success in venture capital. Being successful in the public sector does not make someone a great businessperson. Being a TV star doesn’t necessarily make one a great author. Step #2: Explain what you want to do with your family and other interested people. You need to have family buy-in when you are financially responsible for them. Without their understanding, the distance between former financial stability and the current uncertainty of success could destroy your project.  Real life is expensive: mortgages, educations, healthcare etc . . . you should not undertake a pivot without deep consideration of these expenses. Communication is vital in keeping your support structure behind you and it will help your team make your pivot a bigger success. Step #3: Determine the important constituencies affected by your decision. This is directed at your employers, customers, community members etc . . . To those that matter to you, their understanding is important as you take on the stress of going through this new challenge. This process is also useful in establishing your allies as you embark on your new adventure. Step #4: Establish your anchor tenant. To go out on your own naked is scary and dangerous. In a new business, having the anchor tenant can be the difference between success and failure. Having an established customer(s) or constituency interested in your success will help get your endeavor off the launch pad and bring instant credibility to your efforts. Step #5: Plan your time for the first year . . . In detail. A huge issue for retirees is understanding what to do with all of the new unstructured time. For many it leads to aimlessness and depression. The same applies to people making a big pivot. You will have a huge surge of energy when your project lifts off. However, momentum is a fragile commodity. Once you settle in and become accustomed to an unstructured situation, uncertainty and procrastination can be dangerous enemies. What are you going to do the first month? The second month? The third month? The sixth month? Then a year out? The more structure you have in place, the more chance you can keep the momentum of your project going until it fuels its own success. Additionally, from my experience, however long you think it will take to get your project moving, double it. Step #6: Establish the Pivot fund. The start of any new project has to be done in conjunction with the financial resources at hand. One should detail the assets and liabilities of one’s financial position in detail. What have you got, what are your family’s costs and what is necessary to make your pivot happen? As discussed, a frank conversation with your family and other important parties is important.  If there is any backward move in your family’s lifestyle or breached commitments to others as a result of your initiative, those interested parties need to know upfront. Otherwise, your curiosity may be interpreted as selfish. As a matter of experience, I put aside a year of living expenses and dollars related to my pivot- I would have been happier if I put aside two years. Step #7:  Protect Your Assets.  So far, our discussion has baked in the notion that your pivot will be wildly successful.  What if it collapses? What if you get sued? What if you file your taxes incorrectly? It is worth getting proper legal and accounting advice to make sure that you are structured properly and following the forms and functions required. Don’t forget to get the opinion of insurance carriers to make sure that you are covered in the event of a catastrophe in your new project.  A lawsuit could be crippling in a new initiative. What happens if you don’t make it? There is always the risk that trying something new will end in failure. That’s why they call it risk. Here are a few that you should be aware of as you go forward. Reputational Risk– I think if you have communicated with the people that are important to you, most of the reputational risk is illusory.  Fortune favors the bold. As long as your decision is considered and your conduct is above board, very few people will hold your decision to try something new against you. In fact, I think it adds an element to a career if you are willing to invest in yourself and take a risk. Career Risk (Re-Entry)- This is a bit trickier, but manageable with planning. Traditional corporations abhor change . . . until it shines a light on something that they can capitalize on. That said, the higher up the ladder you go, the fewer positions that are available. Absence from a traditional track can be seen as disinterest or distraction by some. My suggestion is to have an in depth understanding of your financial requirements and a heightened self-awareness of your career path, your age and where you fit into the traditional model. Maintain the lines of communication into the traditional career ecosystem. If the decision-makers understand the context of your path ahead any discussions, the objections should melt away. If you are able to add a modern toolkit to an industry that needs it, your value will be enhanced if you re-enter your industry. This aligns closely with Step #6 and understanding the role of career risk in the decision-making process. By prioritizing the issues that the pivot is meant to address and establishing the criteria and likelihood of success, you can better ascertain your financial risk. Taking a serious look at your liabilities, how you are going to fund them and the time requirements of your new venture are vital. After taking all this into account, setting aside a buffer of cash and building a conservative financial safety net should mitigate the risk of a major pivot. The Purpose of the Pivot American poet, John Greenleaf Whittier wrote “Of all sad words of tongue or pen, the saddest are these, ˜It might have been.”  In a world where we are all encouraged to live our best lives, it is not wrong to direct the sacrifice and hard work we use to accomplish our financial goals in a direction that maximizes out talents and enjoyment.  It isn’t easy or else everyone would do it. However, well-considered and well-funded pivot can be the key that unlocks our potential and helps us accomplish our goals for our family and ourselves. Disclosure: Frazer Rice is an employee of Next Capital Management, LLC. This podcast is not investment, legal, or tax advice, nor does it reflect the opinions of Next Capital Management. Any opinions represented in the show are Frazer’s or the guest’s individually.

The FAMILY OFFICE – a term that is surrounded by mystique. It conjures notions of massive wealth, mahogany infused offices, private jets and money that has reached escape velocity. When one probes deeper, it connotes secrecy, exotic opportunities and risks, mixed with rigid control and discretion. But what is the reality behind the term “family office”?  At what level of wealth do families bring it all in house?  What functions do they actually perform?  How much do they cost? For families that are intrigued, what questions should they ask before going down that process and what should they focus on?  We’re going to speak with EDWARD MARSHALL, Head of the Global Family Office at Dentons, the international law firm.  Ed has deep experience in the space and is a terrific starting point for families looking to engage the process of developing their own structure. Ed and his white papers and research can be found at DENTONS’ site here: ED MARSHALL and his twitter account is here: ED MARSHALL TWITTER. A link is here for his informative book (with Bill Woodson): FAMILY OFFICES: A COMPREHENSIVE GUIDE FOR ADVISORS, PRACTITIONERS, AND STUDENTS Here are some of the areas we hit on: When a client comes to you looking for a family office, what problems are they trying to solve? What is your process for helping them define what they need? Why not outsource everything? How do you make this a digestible process? Build, Buy, or Partner? Cost Talent Confidentiality Regulation Scope Creep The Rule of 3: It’s could take 3 years to build It could costs $3 Million You will probably want to shut it down 3 times before it’s up and running Below is a brief summary of the question and answer process from Dentons to help families get their bearings around the family office process: Focus areas Getting started General Investing Investing and owning real estate Venture capital and private equity The Lender Management strategy (US-based family offices) Taxes Litigation Operations and governance Employment Impact investing and philanthropy Trusts, estates and wealth preservation Public policy Risks and threats Specialty areas Getting started What experience do you have working with family offices and family businesses? Is your experience local, national or global? What are the legal services that you typically provide to family offices that look like ours? Does your experience with different family offices provide you with best practices that you can share with us? What are the key legal issues to consider before, during and after a liquidity event? Are all of your legal services billed hourly or can you deliver work on a flat-fee-per-project basis? How would you build a team to handle the legal and non-legal matters relating to my family office? Do you (or your firm) have access to a network of family office general counsels? Are the business entities currently affiliated with our family office optimally structured across all areas that we should consider, such as income tax, estate tax, securities regulation, privacy, etc.? What legal considerations and potential pitfalls exist with respect to embedded family offices (i.e., where employees of the family business perform the same function as a single-family office)? If members of the family are investing together and/or separately, what legal structuring should we consider? Would our family office benefit from a holding-company structure? Should one or more trusts own the family office legal entity? What is a family office management company? Should we consider using a holding company for our investments? What are the advantages and disadvantages of using a family limited liability company (FLLC) or a family limited partnership (FLP) in our family office or family business? How can we exercise optimal control of a family office or family business through the use of legal entities and strategies? How can we build governance strategies into our family office to ensure alignment of family interests, values, goals and succession plans? What is the regulatory environment in the jurisdiction where our family office will be located? If the family office provides services to family members who are located in multiple jurisdictions, does that raise any regulatory issues? What are the local jurisdiction requirements for advisors to the family office? What would be the best jurisdiction for all concerned? Have we titled all assets owned by the family effectively and efficiently? What are the legal issues to consider when (a) outsourcing or (b) bringing family office services in-house? What shareholder and operating agreements should we create to support the family office operations? How will such agreements define the relationship between the family office and related entities? In what jurisdiction should we form the family office, and why? General Investing If we are considering direct investment strategies, what specialized entities should we create and why? What are the legal considerations if we participate in club deals with other family offices? Can you provide legal and non-legal due diligence prior to an acquisition or disposition? How can we properly structure profits interest structures? What are the decision points around creating special purpose vehicles (SPVs) for individual investments? Should the SPVs be owned by a trust or a holding company, and why? How do we evaluate all of our investment activities to ensure we are following applicable securities laws? Based on our current and/or planned activities, does the family need to register or make other filings with relevant securities regulators (e.g., in the US, the Securities and Exchange Commission (SEC) or in Singapore, the Monetary Authority of Singapore (MAS))? What are the legal considerations to insourcing rather than outsourcing our investing activities? If our SFO wants to transition to an MFO or RIA (registered investment advisor) model, what are the legal and non-legal considerations to keep in mind? What legal considerations are there for family offices that invest in cryptocurrency or blockchain-related assets (e.g., NFTs)? How do we properly structure cross-border investments? What do we do if we have family members investing together and they have different citizenships and/or places of residence? How can we conduct a red-flag review of illiquid investments (e.g., private equity, hedge funds, direct investments, etc.)? How can we use investment policy statements (IPSs) to help guide and interact with the family’s investment advisors (in-house or outsourced)? If we invest successfully, does the family office team get compensated? How are such arrangements designed to align the family office team with the family? What securities regulations should one be mindful of when considering a family office?  Investing and owning real estate What is your shared family capital vision? What structuring considerations are there with respect to personal real estate owned by individual family members? What structuring considerations are there with respect to real estate owned by the family business or the family office? What are the structuring considerations if the family office wants to invest in real estate, or to finance (or refinance) its existing real estate investments? What if only some members of a family want to invest or participate in a real estate financing? What special considerations exist for specialty real estate asset classes, such as multi-family housing, hotels and hospitality assets? Venture capital and private equity Should we have a standard form of side letter ready to provide to the manager of any fund into which we are investing? How do we ensure that our interests and those of other investors are aligned with those of the fund manager? Do we need any specific reports prepared for our investment e.g., on the ESG status of underlying investments made by the fund? How much legal due diligence should we undertake as an investor or co-investor in an early-stage investment? What are the risks associated with SAFEs (simple agreements for future equity) and similar convertible instruments? Which warranties should we give and which should we avoid when making direct investments? What minimum rights should we seek to negotiate as a minority investor, and why? How can we take advantage of double taxation treaties when structuring our investments? How does one mitigate one’s risks when serving on the board of a portfolio company? How can we use insurance to address these risks? How do our rights differ when investing in a club deal as opposed to a fund? What co-investment and other rights should we negotiate when investing into a fund? What are the pros and cons of investing in secondaries? Where are the legal risks of paying finders fees for deals? What are registration rights and why do we need them? The Lender Management strategy (US-based family offices) What are the facts and circumstances of the 2017 case of Lender Management, LLC v. Commissioner of Internal Revenue, and are they relevant to my family office? What is the difference between Internal Revenue Code Sections 212 and 162, and is this relevant to my family office? What are the factual differences between the Lender case and Hellmann v. Commissioner of Internal Revenue, and are they relevant to my family office? If my family office is organized in a Lender Management-type fashion, do we need to or can we manage investments for non-related other families? Taxes Have we optimized our family office entities and investment strategies to minimize adverse tax consequences? How should we best interface with the family office’s accounting advisors to optimize tax planning and compliance? In preparing for an audit, what steps should we take to ensure our family office is in compliance with all applicable laws? Litigation To avoid conflicts of interest, should family members whose interests are or may differ from other family members retain separate counsel? If separate counsel is retained, how will the family office share information with family members without waiving attorney-client privilege or raising the issue of possible partisanship? How should we prepare for and what are ways we can avoid potential litigation on behalf of the interests of the family? Have we considered that our that actions of individuals or entities are invariably challenged after the fact and judged in hindsight? Are we doing everything by the book? Are we observing all corporate formalities? Are we acting in a procedurally correct fashion? Are we ticking all the boxes? Have we considered that attacking the substance of a deal is difficult and uncertain and that it is often easier to challenge whether the correct form was followed (e.g., a flaw in the process that be argued to make the substance suspect.)? Have we considered potential outcomes of a decision in a manner that allows us to consider broader outcomes and avoid tunnel vision or overly optimistic/pessimistic outcomes (e.g., reasonably optimistic best case, reasonably pessimistic best case, reasonably optimistic worst case, reasonably pessimistic worst case, etc.)? Operations and governance If we decide to hire an in-house GC for the family office, what experience, qualifications, compensation and other factors should we consider in doing so? Is it better to hire a generalist or someone who specializes in a particular legal discipline? What should we have as a process for establishing a board of directors/advisors to help manage the family office? How can we consider the use of and hiring of independent directors? How do we select the staff that will run the family office? What characteristics and backgrounds are important in general and for their specific roles? How do we go about developing and testing a business continuity plan for the family office? How do we pay for the operations of the family office and what are the legal implications of the various funding sources? Does the technology our family office uses for operations meet all local, regional and global laws, policies and regulatory standards? Employment What kind of pre-hiring evaluation should we be doing (and are allowed to do) for potential family office staff? How can we create an effective staff screening system? How can we create effective security and risk management policies that govern staff after they are hired? What arrangements should we use to employ/engage staff (i.e., should they be employees, consultants, etc.) and who should employ/engage them? How can we create effective employment/ engagement agreements and compensation strategies? Should we include severance provisions in our agreements? How can we ensure that our employment manual complies with all federal and local labor laws? What non-disclosure agreements, non-competes, non-solicitation and related provisions can we require of family office staff? Do we need any immigration permissions for family office staff to work in the desired location? What are the tax implications of how we operate family office staff? What legal and compliance obligations do we need to be aware of and adhere to once we have employed/engaged family office staff? Are we following all of the local, state, federal and international laws, policies and regulations with respect to our family office staff? (e.g., wage-andhour laws, drug testing and substance abuse management, etc.) Are we in compliance with ERISA and any state/local laws and regulations applicable to our benefit plans? Are we compliant with local, regional, national and global rules around qualified/non-qualified retirement plans, executive compensation, and perks and fringe benefits (e.g., use of private aircraft, corporate cars, etc.) for family office staff? How can we manage exit strategies from the family office or family business for inactive family members, and what legal risks do we need to be aware of? Impact investing and philanthropy How can we optimize our charitable-giving strategy? What legal entities, tax considerations and related strategies should we consider to optimize our philanthropic impact? What are the important legal structuring and tax considerations with respect to impact-investing? What are the tax and legal considerations of such philanthropic vehicles as charitable lead trusts, charitable remainder trusts, donor-advised funds, scholarships and private foundations? What are B corporations and what is their potential relevance to our family office? Trusts, estates and wealth preservation Should we be using pre- or post-nuptial agreements in our family? What about agreements specific to citizens or residents of different countries? What are the trusts-and-estates law considerations for each member of the family? If family members are subject to multiple jurisdictions, what are the local, national and global legal structuring and planning considerations? How should family members evaluate both on- and off-shore life insurance requirements and navigate life insurance planning? When and how should we consider the pros and cons of irrevocable life insurance trusts, offshore life insurance, split-dollar life insurance, private placement life insurance and insurance-dedicated funds? How should we create wills and trusts for families in multi-jurisdictional situations? How can we plan for liquidity to satisfy estate taxes that will be due after the death of a principal? What legal considerations are there for the administration of estates with specialty assets (e.g., art, collectibles, wines and spirits)? How can we educate the next generation on legal matters and best practices pertaining to the family office, their expected obligations to the family and their potential inheritance? Should our family office consider establishing a private trust company (PTC)? What are the legal and tax consequences of using a family bank strategy? Do our legal entities allow for the sale, gifting or transfer of family office ownership among family members? Should agents of family members, such as investment advisors, trustees, attorneys, etc., be required to sign non-disclosure agreements for the family office? How can we support family members with issues concerning trustees? How can we plan around the cash flow needs and general financial planning concerns of family members? Should the family office hold regular meetings with the members of the family? Should there be meetings between the beneficiaries/each of the family members and the trustees? Are the conflict-of-interest policies up to date? What’s in place to assure full disclosure? What should we implement regarding practices and policies for maintain confidentiality and continuity in the event of the divorce, death or incapacity of a family member who is in the bloodline of the matriarch or patriarch who established the family office wealth? Public policy Should we take a proactive stance and attempt to influence the public policy dialogue with respect to the scope of the family office exemption and related issues? Will our family office be subject to additional regulation should the SEC act on its stated desire to produce amendments to the Family Office Rule? If our family office wishes to engage politically and at the public policy levels, should we try to achieve our goals independently or as part of a coalition of likeminded, similarly-situated family offices? How can we measure return on an investment in political and public policy engagement? Risks and threats How can we set up a family office to maximize the family’s privacy? How can we protect ourselves in the event of a breach of privacy (e.g., stalking, blackmailing, public disclosure, theft, etc.)? Have we structured the family office to maximize our liability protections? If our family office is not subject to specific regulatory oversight, how can we implement our own compliance processes and policies to prevent risks and prepare for future potential requirements? How do we establish controls and procedures to prevent fraud? How do we ensure that our legal and non-legal questions are covered under legal privilege? Are there steps we can take to ensure that communications and advice from third-party advisors (e.g., security companies, accountants, banks, etc.) are protected under attorney-client privilege? What legal agreements and strategies should we have in place prior to the death of a matriarch or patriarch? Does the family office need director-and-officer as well as comprehensive general liability policies with respect to the performance of duties by family members and employees, as well as coverage in connection with those serving on boards and in officer positions of portfolio companies to protect family office assets from third-party exposure? What legal and non-legal strategies can we implement to avoid family feuds and litigation after the death of a principal? How can we handle intergenerational conflicts, especially where family members are located in different jurisdictions? What legal and non-legal strategies should we have in place to help protect us against risks and threats (e.g., cyber, physical, fraud, lawsuits, natural disasters)? How can we conduct a thorough risk-and-threat audit of our family office? How can we build a system for responding to medical emergencies and do we have adequate preventative health care measures in place? Should we consider having a social media policy for family members and the family office? What type of internal compliance policies do we need to avoid transactions involving restricted/ denied parties, or structures susceptible to money laundering? How can we prepare for inquiries from the media? What is our communication policy on public events? Specialty areas How can we ensure that our private aircraft meet local, regional, national and global regulations (e.g., FAA in the US; International Civil Aviation Organization (ICAO) on an international scale)? How do we properly structure private aircraft acquisitions, dispositions, insurance, finance, leases, tax issues, use policies and ownership entities? How can we ensure that our active-investor trading policies comply with local, national and global laws and regulations? How can we ensure that we are following anticorruption laws (e.g., Foreign Corrupt Practices Act (FCPA)) in our home country and other countries where we operate and invest? How can we properly structure sports and entertainment investments (e.g., team ownership and control vs. non-control/passive investment)? How do we properly protect intellectual property assets? What steps should we take in responding to requests for information to satisfy Know Your Client (KYC) requirements from third-party vendors for the family members and the family office? https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/ DISCLOSURE: Frazer Rice is an employee of Next Capital Management, LLC. This podcast is not investment, legal, or tax advice, nor does it reflect the opinions of Next Capital Management. Any opinions represented in the show are Frazer’s or the guest’s individually.

We are now into 2023 and it’s turning into is a unique wealth planning environment Families are dealing with volatility and depressed asset values. We have extremely generous Federal Estate Tax Exemption levels for the next couple of years (we think!)- Most intriguingly, we are witnessing rising interest rates which are bouncing hard off of generational interest rate low. Since interest rates are an important driver of many strategies, the effectiveness of many popular estate planning tools is up for review. Furthermore, some “out of season” techniques are getting a new look. To help survey the landscape is MATTHEW HOCHSTETLER. Matt is a Partner at David J Simmons and Associates which based in Canton, Ohio and Naples FL Matt is an ACTEC Fellow and well qualified to help us think about the current environment Welcome Aboard Matthew- Matt’s Background and Practice The Rising Interest Environment- What rate are we using?  AFR and 7520 Rates How does it work?  Monthly reset? Where were we (From 2010 to 2021 historic lows that went under 1%) and where are we now (Near 6%)? Strategies for a low-interest-rate environment Lending to transfer wealth with little or no gift tax. The interest rate reflects the hurdle that appreciating assets must beat to be effective for some estate planning techniques to be effective. Intrafamily-loan  Installment Sale to an Intentionally Defective Grantor Trust (IDGT) Grantor Retained Annuity Trust (GRAT)  Charitable Lead Trust (CLT)  Strategies for a high-interest-rate environment You may be able to capitalize on strategies whose benefits hinge on using higher interest rates to reduce the actuarial value of a taxable gift. The higher the rate, the more beneficial these strategies will be. Qualified Personal Residence Trust (QPRT):  Charitable Remainder Trust (CRT):  This is the reverse of a CLT; the grantor receives an annual payment from the CRT for a term of years, and charity receives whatever remains at the end of the term. Any other thoughts around planning in 2023 and 2024 with the sunset provisions looming at the end of 2025? Start Your Thinking Early! Law Firm and Valuation Firm Capacity may get stretched thin by 2025 as people delay It is easier to top up previously implemented strategies than establish new ones on the fly. HOW DO WE STAY IN TOUCH? TWITTER: @MRHesq LINKEDIN https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/ Frazer Rice is an employee of Next Capital Management, LLC. This podcast is not investment, legal, or tax advice, nor does it reflect the opinions of Next Capital Management. Any opinions represented in the show are Frazer’s individually and not an endorsement of the guest.” This podcast is for educational and entertainment purposes. It is neither investment, legal, nor tax advice and does not represent the opinions of any employers of the host or guest.

Casual investors understand that states approach taxation of its citizens differently and can have different approaches to raising revenue. However, in the last month, there has been a shift in the directionality of state tax policy. Seven states (including NY and CA) released aggressive (and interrelated) proposals to increase taxes. Some of these proposals center around forms of the controversial “wealth tax” – a tax that would raise revenue from unrealized gains. JARED WALCZAK will explore the new proposals, the likelihood of passage and their broader impact.  Jared Walczak is Vice President of State Projects at the Tax Foundation. He is the lead researcher on the annual State Business Tax Climate Index and Location Matters, and has authored or coauthored tax reform guides on Alaska, Iowa, Kansas, Louisiana, Nevada, New  York, Pennsylvania, South Carolina, West Virginia, and Wisconsin. Jared’s work is regularly cited in The New York Times, The Wall Street Journal, The Washington Post, Los Angeles Times, Politico, AP, and many other prominent national and state outlets. He previously served as legislative director to a member of the Senate of Virginia and as policy director for a statewide campaign, and consulted on research and policy development for a number of candidates and elected officials. He has been recently quoted extensively on this topic in the Wall Street Journal, the New York Post, and MarketWatch. Trying to predict tax legislation can be folly. However, states are known to be the laboratory for broader national tax legislation. These state proposals can provide interesting data points on the mood of legislatures and the directionality of tax policy across the nation. It’s important to know about them. Enjoy the conversation with Jared Walczak. Jared’s Background  The Tax Landscape Context around Income Taxes Capital Gains Taxes Estate Taxes Wealth Taxes State Taxes vs Federal Taxes “Raising Revenue” vs “Wealth Redistribution” What is new in 2023 that has 7 states looking to raise taxes? Which states are we looking at here? California Connecticut Hawaii Illinois Maryland New York Washington What about the passage of Massachusetts’ Millionaire Tax? What is the likelihood of passage? What does this tell us about the “Diverging Directionality” of State Tax Policy? Wealth taxes? We’re already used to the concept of taxing unrealized gains with property taxes- Not popular- Haven’t these been tried worldwide and often discarded? Administratively difficult?  Invest in valuation firms! Forced liquidations? Lower Business Valuations? Reduced Returns for Shareholders? Fairness?  Do you get a carry forward if there is a loss? Is the Wealth Tax Constitutional?  Is it a Taking? Is this a Business Climate to be Encouraged? Tax increase Directionality What do the tea leaves look like? What political points can be scored in such a divided environment? Any big crystal ball predictions here? How do we keep track of Jared and the Tax Foundation? JARED WALCZAK JARED’S WEALTH TAX ARTICLE @JaredWalczak ON TWITTER https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

We are all familiar with the labyrinth of the healthcare system:  The paperwork, the confusion and the cost can be overwhelming. One of the blind spots in wealth management at all levels is the advice for the most significant liability most families will face: healthcare.  I spoke to JOHN SAMUELS, founder of Better Health Advisors, to get smarter on the topic of how to better advise people around this thorny issue. For more than 20 years, JOHN served as a senior healthcare leader in top New York City hospitals, including Northwell Health and Mount Sinai Beth Israel. In 2016, John founded Better Health Advisors, an independent healthcare advisory firm, to share the expertise he developed as a healthcare insider with members of the public. He brings a unique viewpoint on the intersection between healthcare and wealth planning. After listening, I hope you better understand the landscape around helping families deal with this imprecise, paperwork heavy, massively expensive and emotionally taxing issue.  OUTLINE Talk about your background in emergency medicine and how that led to the founding of your company Why do you consider a person’s health their greatest asset? Why is health management as important as wealth management  Do wealthy people usually get better healthcare? What do you wish more people understood about the intersection of health and wealth? What are the biggest mistakes you see people make related to health care?  In the United States, a healthcare crisis often comes with a big bill. What steps do you recommend people take to protect their wealth before an emergency arises? How is health insurance related to financial planning? Having health insurance options once you’ve sold or left a company in a W2 environment Bridging the gap to Medicare Elder Care (and my rule of thumb of 1 Tuition / parent / year as a way to flesh out costs) Managing (or outsourcing) the paperwork Finding the right instiutions and the right people in the institutions to get the correct care What is the definition of “concierge medicine” How do you manage HIPAA and privacy concerns? How does one build a team of advisors to deal with the legal and financial impacts around these issues? The importance of having a centralized repository for one’s medical information. HOW DO WE STAY IN TOUCH WITH JOHN? BETTER HEALTH ADVISORS JOHN SAMUELS LINKEDIN HEALTH ADVICE RESOURCES FOR ADVISORS ADVISOR ISSUE SPOTTING GUIDE HEALTH VS WEALTH FUNCTIONS **This podcast is for educational and entertainment purposes. It is neither investment, legal, nor tax advice and does not represent the opinions of any employers of the host or guest. Frazer Rice is an employee of Next Capital Management, LLC. This podcast is not investment, legal, or tax advice, nor does it reflect the opinions of Next Capital Management. Any opinions represented in the show are Frazer’s or the guest’s individually. https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/