Wealth Actually

Health as an Asset Class

https://youtu.be/FU5IvtBbtCY JOHN SAMUELS from WELLWORTH ADVISORS discusses “HEALTH AS AN ASSET CLASS” and the nuances of personalized healthcare management for high-net-worth individuals. We contrast concierge medicine with comprehensive health advisory services. Learn about his book “WEALTHCARE” which lays out the frameworks of his practice. Finally, John goes into how expert navigation, team-based care, and strategic planning can significantly improve health outcomes and client relationships. Finally we hear a little bit about what his favorite medical shows are on TV! Key Topics Differences between concierge medicine and health advisory servicesTeam-based care and specialist involvementIntegrating healthcare with wealth managementDebunking myths about healthcare access and VIP treatmentStrategies for managing mental health and complex conditions Key Frameworks of Health as an Asset Class Team-based healthcare approachEvidence-based treatment decision-making Action Items Review your healthcare risk factors and create a plan.Organize your medical records and update legal documents.Engage a healthcare advisor to understand your coverage and treatment options. Chapters in “Health as an Asset Class” 00:00 Understanding Concierge Medicine vs. Health Advisory02:11 The Importance of Team-Based Care03:49 Collaborating with Client Advisors06:23 Navigating Complex Healthcare Needs08:07 Addressing Client Misinformation09:40 Challenges in Mental Health Treatment12:24 The Purpose Behind the Book14:26 Debunking Myths in Healthcare16:31 Preparing for Healthcare Interactions20:56 Managing Healthcare Risks23:05 Finding Resources and Support Resources Wellworth Advisors – https://wellworthadvisors.comJohn Samuels’ Book on Healthcare Management – https://www.amazon.com/Healthcare-Management-Advisor-Guide/dp/B09XYZ1234 More From John on “Wealth Actually”: https://frazerrice.com/ep-126-john-samuels/ Guest links Website – https://wellworthadvisors.comEmail – mailto:john@wellworthadvisors.com https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/ Keywords healthcare, concierge medicine, health advisory, high-net-worth individuals, patient navigation, mental health, healthcare risk, medical research, healthcare myths, health insurance Titles Beyond Concierge: The Future of Personalized Healthcare for Wealthy ClientsHow Expert Care Navigation Transforms High-Net-Worth Healthcare Sound Bites “We map out the cost of treatment for clients.”“We focus on evidence-based treatment options.”“VIP care often doesn’t mean better care.”

THE FIGHT AGAINST GASLIGHTING IN THE WORKPLACE

“Breaking the Glass Ceiling: Julia Carreon’s Fight Against Corporate Gaslighting” In this episode, Frazer Rice sits down with Julia Carreon to explore her recent high-profile litigation against a major financial institution and her powerful insights on women in leadership, corporate culture, and overcoming systemic barriers. YOUTUBE https://youtu.be/e05k7SVQ2xI We discuss: Julia’s experience with workplace gaslighting and her litigation journey with Wells Fargo The importance of transparency, accountability, and protecting yourself in corporate environments How societal and corporate cultures disadvantage women, especially around motherhood and leadership The themes and motivations behind Julia’s book, Walking on Broken Glass Practical strategies women can use to build political capital and safeguard their careers The significance of external networks and understanding your personal strengths The evolving landscape of equity, ownership, and governance in corporations How to proactively prepare for and respond to systemic workplace challenges SPOTIFY https://open.spotify.com/episode/5c546gs6Qctx4bGOvalgXj?si=1dDyJxnwSyu4tnhXxpzVxg Timestamps: 00:00 – Introduction: Julia’s litigation and book overview 02:03 – Gaslighting in corporate culture and early experiences 04:14 – Dealing with systemic backstage politics and fighting for justice 05:10 – Motivations for writing Walking on Broken Glass 08:08 – Diagnosing workplace culture and gender dynamics 09:33 – The weaponized HR department and accountability 11:38 – Protecting yourself: cultural awareness and bias 13:12 – Demographics, gender disparities, and moving forward 15:12 – Institutional misogyny and societal shifts 16:05 – Motherhood, work-life balance, and corporate support 18:28 – Questions of corporate culture change post-COVID 22:21 – The fear factor and change in workplace loyalty 27:12 – Tactical career strategies and building political capital 28:15 – Always Be Executing (ABE) and tracking success 30:53 – The ownership mentality and equity’s role in career resilience 34:45 – Building internal and external networks for support 36:49 – Understanding personal aptitudes through testing and reflection 40:12 – Leveraging political capital and seizing opportunities 43:31 – How to follow Julia and stay updated on her journey Transcript Frazer Rice (00:01.004)Welcome aboard, Julia. Julia (00:03.32)Thanks for having me. Frazer Rice (00:04.652)Well, as I said in the opening, the concept of gaslighting in the boardroom is something that certainly isn’t new, but it doesn’t make it any more comfortable for the people who deal with it on a day-to-day basis or as part of their career. And you’re in the midst of litigation right now with a major financial services company. Maybe talk a little bit about what’s going on there. Julia (00:24.801)Yeah, so I am in a high profile lawsuit with my former employer. I would say this is not a path that anyone chooses on purpose. In my particular case, Frazer, I spent 20 years at Wells Fargo, 15 of which were pretty spectacular. I have come to realize almost maybe fairy tale like in terms of my experience. I want to talk about some of the things later on that made it a fairy tale. So yeah, I wouldn’t have chosen this. I did not see the culture at my former employer coming for me. I was blindsided by it and it got ugly quickly. One of the things that I think I am doing here. Or at least trying to do is not be shy about it. Not hide from it. Try to show women a different way for how to deal with these situations. Because I have very strong feelings about the fact. With the rollback of DEI and the current administration’s point of view on women, that we’re going backwards. If women don’t start fighting for ourselves in a more public way and without fear, then I don’t know where we’re going to be in the next five to 10 years. I am soldiering on and it’s not easy to your point. But it is what it is and it’s a fight that I believe is worthy. Frazer Rice (02:03.608)So it’s a daunting task taking on a big bank. Big financial services firm, whether it’s in this situation or frankly any. It’s just these well-resourced big behemoths. What has been the experience been like so far? As far as gathering information? Of getting the walls built that you need to in order to live your life while you go through this conflict with this bank? Julia (02:29.822)It’s hat that is the million dollar question. Right? I will say that in my case i got really fortunate and came across a quote. It’s going to sound really strange. But i came across a quote that said fear is fake and danger is real but fear is fake. I believe that the patriarchy wants women to be afraid. So it tells us these bad things are going to happen if you take on a big firm like this. It is grueling. The days are long sometimes. But once I internalize the reality that it is all fake in terms of all of the bad things that you think could happen really can’t happen. Worst case scenario, there’s nothing Like I’m not going to die. They’re not going to, you know, take away my family. Like all of these things, right? We tell ourselves that it could get really nasty. And in my case, I have to stay really grounded in the fact that what I’m doing is worthy. We tried my lawyer and I tried for 14 months to come to a different answer. And so in a way, not just telling myself fear is fake. But in another way, I kind of feel like it’s my destiny. Because, I just want to say this real quick, I had 20 years at a place that was not toxic. And so I know what good looks like, and this is not good. So in that way, I really feel like it’s my destiny. And so that’s what you do, and you have to have a good support network. I have a great husband, so that really helps. Frazer Rice (04:14.21)The, as I’ve told people, sometimes doing the right thing or going after something that upholds justice. It can be expensive and hard. I give you kudos for standing up. Not only for yourself, but others who are going through a difficult situation. Where you’ve had a significant wrong done to you. You’ve written a book about this experience as well. We can take some time to think, to talk about what the book tries to do. First of all, writing one in tandem with the process here, I think is a bit unusual. Some people do it after the fact. To go through a catharsis after going through a difficult process. Talk about first the why of the book.thhen we’ll talk a little bit about what you talk about in it. Julia (05:17.241)The book is called Walking on Broken Glass: Navigating the Aftermath of the Glass Ceiling.” It was co-written with a fabulous woman named Shannon Nutter. I hope people follow on LinkedIn. The book is not squarely about what happened to me the book came together. With Shannon and I meeting on LinkedIn. Then discovering that we had a lot of the same shared experiences as we are Gen X. in hindsight. Our generation has had the opportunity to have the most benefit of the Gloria Steinem Women’s Movement. Think about the fact that we got the advantage of the birth control and all of the DEI efforts that have been in the last 15, 20 years. And we really felt like there was still a long way to go. Then all of that is starting to go backwards. So last year when we met or the year before, we’re like, my God, the idea that we got the best of the best is shocking to us. And so what are we going to do about it? We really wanted the book to speak to women of all ages in their career. But it was written from a lens of two then 53 year old women who had seen a lot. We wanted to give the book as a love letter or a gift to our 35 year old self. To say, this is what we should have or wish we had known 20 years ago. Because we would have done things differently if we had really faced kind of what the challenges were that women are facing at work. In a real way right not in a way that sugarcoats it or pretends to throw it under the rug. And or always makes it the woman’s fault like the woman always has to be changing and evolving in order to adapt to the systems and i you know it’s exhausting right so the book was written for that reason and it does tap into a lot of the things that we both experienced. Julia (07:35.17)But it isn’t a kind of a personal journal of what happened to me with my former employer. Frazer Rice (07:39.82)Right, one of the things that I found useful about the book is you divided it into three sections. I think it brings us sort of clarity into what you’re trying to achieve here. The first one is just diagnosing the situation that you’re in. Maybe talk a little bit about that. Part one the understanding of your surroundings. What’s happening around you. The conditions that women are facing as they embark on these big situations in the workplace. Julia (08:08.982)Yeah. So the first part of the book does give a primer on kind of the history of feminism and how did we get here and what are some of the big open questions that are still left to answer. We also want to set the stage that makes it very clear that women are accountable for our actions in the workplace. Like this is not in any way a book that seeks to make someone who’s failing feel good about the fact that they’re failing, right? Shannon and I both reached really high levels of corporate success at major global firm. There is a lot of work to do. So we really try to dimension how, what are some effective ways for you to approach that work? What are some of the pitfalls and how are some of the ways that you can handle that? In a way that’s kind of clear-eyed, but never about putting the blame or the onus on the company. And if you don’t mind, I want to say something about that because it relates to my lawsuit. One of the things that I’ve heard criticisms about is that people on social media often I saw when I kind of scanned the landscape of it recently are, this woman is naive. She thinks. HR is her friend because one of the things that I have sued my former employer for is a weaponized HR department and I want to get very clear. mean, Frazer, you don’t manage hundreds of people in 13 states like I did for a very long time successfully innovating, having great client experience team scores and having great employee team scores, right? If you believe HR is your friend. So that’s not what i’m trying to say what i’m trying to say in my lawsuit is. HR shouldn’t be picking off people for political reasons either. We are saying all the way along there is shared accountability between the employer and the employee. That’s really important. I think that you know one of the backlash is going too far field here. Julia (10:27.401)We went so far politically correct on some things that some employees do show up to work and think that they just need things handed to them. And I do think that that was part of the backlash, right? So I just am always striving for balance. I think we should all be always striving for balance. Frazer Rice (10:45.13)One of the concepts too, I think in the book that I sort of grabbed onto and enjoyed was the idea of taking steps to protect yourself. You’re dealing with a lot of different asymmetries when you work for a big company. You’re dealing with information asymmetry, you’re dealing with political asymmetry, you’re dealing with resource asymmetry. Sometimes you’re even dealing with just… Accountability asymmetry in terms of, you some people get free passes at other times people are judged on things or unfairly judged on different criteria that just don’t make a lot of sense. If we step back for a second and for people who are trying to understand, I’ll put it in quotes, how the world works and how to how to be aware of one’s and to protect yourself, what would be the first couple of things that you would tell people to think about on that back? Julia (11:38.471)The number one thing is I would be very aware of the kind of culture that you’re operating in. And it’s very easy to take for granted what a culture really is, what your own personal bias and history is, and then how is it that you are fitting. into that culture with your own shared history. So I love to be candid, right? And provocative about my own situation. If I could do something different, I would be very aware of what my biases were going into Citi with 20 years of being at a place where It was a really fair game, but probably because I had a lot of political capital and I grew up there. So I understood it. But I went into that place thinking that I was a fancy managing director, that obviously I was hired to be a change maker. I can do a lot of great things. And I was, you know, doing my thing, not realizing that I was swimming in a different lake and that lake was filled. with a lot of different kinds of wildlife that I was unprepared for. So, I mean, that’s really important. Frazer Rice (13:12.398)As we talk a little bit about some sort of bullet questions as far as how your experience has gone, the demographics of the workplace are different and changing. On one hand, college graduates are now majority women or higher in just about every college situation. Yet institutions like the CFP, the women make up… Believe the number is somewhere in the 24 % range. So you have this weird dichotomy of more women entering the workplace, but not in the numbers necessarily that would indicate that they are in places to make as much change as they would like. They are still in the vast minority in terms of boards of directors and executive positions at almost every Fortune 500 company that I can think of. As we chart a path forward where, let’s call it merit. Julia (13:58.813)Mm-hmm. Frazer Rice (14:04.494)presides over sort of misogyny and I guess I would call it sort of political gamesmanship. How do you think about that in terms of advice for people entering the workforce? Julia (14:16.461)Yeah, look, so nobody gets to say that women aren’t in the pipeline, right? I mean, that just, doesn’t hold up, especially at the more junior levels, right, of entering the workforce after college. What starts to happen is that it starts to go downhill as you get higher and higher up into hierarchy. And I believe that there is a mismatch between women who want to work and do the right thing. And we’re going to talk about this. Then what does it mean to also then become a mother and give birth and have to manage all of that? And then coming up against institutional misogyny. Obviously my perspective in the last 18 months has changed about the degree to which institutional misogyny exists. Because I had a fairy tale experience before I was able to be willfully blind about the realities. so a really direct way of answering your question is that our book is seeking to hit women in the face with the realities of this because I don’t think we’re gonna change it overnight, right? And it is so entrenched, it’s getting worse and it will get worse. Before it gets better, but I do believe that it will get better eventually because the old system that’s, know, aging out, baby boomers are aging out. Like I think that there’s going to be cracks in that. And then there would be a tsunami of change. But right now the old guard is hanging on and, we are going backwards. And so we just have to be realistic about what it requires to go forward. And we talk about what that is. Frazer Rice (16:05.58)One of the things, right, and so let’s touch back on the motherhood issue, is, that is biology. And so women who go that route and have kids. Which is frankly one of the big precepts in society. Unfortunately. n some ways takes you out of the normal trajectory of a corporate path, just from a time perspective. Certainly, the balance of work that happens at the household level. Where that ends up alling usually, creates a stress that is not well understood or received at the corporate level. What are your thoughts on that front? As far as charting a path that recognizes that reality and at the same time doesn’t put upon going the other direction necessarily in terms of favoring one outcome or the other. Julia (17:02.019)I know a lot of women who did not have children because they felt like that it would, it would harm their career. And, um, certainly it’s a personal issue and there’s no judgment from me. I don’t think I would have had children if I hadn’t met my husband. He was willing to do 50 % of the workload and he has, and, always has probably does maybe more than 50. It is a very deeply personal issue. What I have strong feelings about the fact that companies who lean in to, don’t expect the woman to lean in, but the company leans in to supporting pregnant women, have higher loyalty scores. They have better team member satisfaction. They get a lot from those women that they have supported. This is a crazy story, Frazer. I was pregnant and or just coming back from maternity leave all three times I got major promotions at Wells. I mean, think about that. And I now, because I lived my life kind of in a vacuum for a long time, I didn’t realize that this wasn’t happening to other people, right? So look at me now. I am 25 years from when I got hired, still saying that Wells is a great company. because of my own personal experience. And they got a lot out of me, but I gave a lot back. So to me, supporting women who are pregnant doesn’t have to be a zero sum game. Yet somehow that is the narrative. And I would love to ask you why that is. Like, I mean, what has happened to corporate culture that this is such a pervasive issue when If you were to scan a lot of my Gen X friends, we did not have the same experience. Frazer Rice (19:04.147)I mean, from my perspective, I don’t know. I think that I blame some of this a little bit on the COVID blip in the sense that managers of all types just have no idea where to go as far as how to treat people fairly, either from a work from home experience or how that reconciles with… women in particular who are having careers and families in addition to what’s going on with other folks like the men in the world. My short answer is I don’t know. The longer answer is that I think between the shorter news cycle, social media, work from home, there are a lot of different change agents out there that have taken the focus off of. maybe the issues that worth talking about right now. And as a managerial class, especially as millennials are taking up the mantle on that front, they’re either forgetting about this particular issue and understanding the importance that it has, or they are just so overwhelmed by change at this point and self-preservation that it’s just an area where they’re triaging the different issues that they can deal with. Julia (20:22.492)Do you do you at all think that it is a problem of losing common sense and like letting rigid ideology take over from common sense. I certainly was benefited from working from home for most of my career, right? So it’s fascinating. Frazer Rice (20:46.061)Common sense isn’t common. And depending on the institution that you’re dealing with, work from home is either an excellent tool or a cover to hide under if you’re a mediocre performer. If you’re a manager out of sight, out of mind is a difficult place to be. I think that we’re I think everyone is reconciling to the relative absence of work and sort of acclimating to Zoom phone calls and things like that. And that gets you then away from taking care of the real issues, which is to make sure that the company’s doing right, the employees are doing right by the company, and at the same time that people are being treated fairly, because I think when people are so disparate, it just becomes a real management challenge. What we’re talking about as far as making sure that women are treated fairly in the workplace, Combine that with, I would say, message confusion that occurs in social media, where some loud voices may not be the right voices to be taking up this mantle, versus some of the quieter, stable people who are really the exemplars that we’d really like to point to. Sometimes that gets mixed. And I think the brew, if you stir it together, I think is created. Maybe if we think that there was progress since the 70s on through the 80s, 90s, 2000s for fairness and women progressing within the corporate ladder nicely, I think this the COVID blip has been a bit of a toe stub on that front. That’s an opinion, extremely uninformed, but more of an observation. Julia (22:35.713)No, no, but well, listen, I just I love it because I do want to unpack it just a little bit. It’s what’s fascinating to me is that I negotiated 15 years before covid to work remote and then my boss knowing that I had to be on the road three to four weeks a month regardless was like, I’d rather you be happy where you live because you’re to be on the road regardless. So I got to work from home and then during COVID when they tried to bring everybody back, they’re like, well, you can’t be the only exception. And I’m like, okay, I have been an exception for 15 years. So that’s where I go back to, know, where is this right balance? did, I mean, COVID is as good a reason as any that it’s things are upside down. I mean, really it’s a great theory. Frazer Rice (23:22.671)Well, it also bespeaks different corporations have different cultures and certainly some people are worried about other things than others. Muriel Siebert, who I think is an amazing example of someone who took a look at Wall Street and said, look, I refuse to be held back by anything here. She started her own company and to call it a company is to not give it the respect it’s due. She’s a major absolute force in Wall Street and one of the real legends. To me, entrepreneurism is one way through this. to create the company that you want to work in is, in some ways, to me, one of the solutions for people who are having difficulty in a corporate environment that they’re in right now. Whether they’re able to be the change agent within, which is often hard at a big, you know, bulky company that turns with the agility of a battleship as opposed to being nimble in doing things or going out and starting on their own, which involves its own risks. That to me is one of the solutions. But again, not without risk, not easy by any stretch. Where did that fit into your mindset as you were thinking about this? Julia (24:37.16)Well, so, so she is an icon, not just because of what she was able to accomplish, but she also did it, I think, without a college degree. And she did it. And this is important. She did it fearlessly. And what I would love to go back in time and have a conversation with her about where did she tap into that fearlessness? And you will start to see. Frazer Rice (24:48.665)Mm-hmm. Julia (25:06.77)On my own social media, am trying to tap into that whole mindset of women need to lose fear. I’ve already talked about it, but here’s what’s important to know, right? By 2030 in the US alone, women will control $34 trillion of investable assets. I believe that that is when you start seeing the game change. Look at how Mackenzie Scott is giving without glory. I posted that in a remark that’s gone semi-viral on LinkedIn. Like she is giving without glory. She wants to give, she wants to be anonymous almost about it, and she’s giving without handcuffs. And what is she giving to? She’s giving to communities, she’s giving to schools, she’s giving to healthcare. I mean, it gives me goosebumps every single time. And so I feel like women When we start to control more, we’ll start giving in, Alice Walton is the same way, giving in a different way to change society in a more meaningful way at scale. And Muriel was a pioneer in that regard. And she is someone I think we need the next generation to know about. because she was so fearless and it’s an inspiration. But you and i both know that all kinds of things that women have accomplished are never spoken about in the same way that they are about man and about men. I do think that that’s one of the great things about some of we can go into social media some of the social media change that we see happening with alpha female and all of these great accounts that are just starting to say, know what ladies, we don’t have to buy into the patriarchy. We can do it our own way. And so I think we will finally see change, but I wanna be very clear, Frazer, it’s going to get worse before it gets better. Frazer Rice (27:12.195)Got it. So for people who are in a corporate structure, corporate environment, aren’t ready to make the leap to starting their own business, which is obviously a difficult decision, but when you’re in there, what are the things tactically that one can do to prepare, not only prepare themselves, but protect themselves against these forces that are out there? One of the thoughts I had is making sure that in the job description that you’re able to point to numerical or formulaic successes so that if a narrative is being built against you, you can point to dollars created or jobs saved or metrics that in the boardroom. Not only just qualitative successes, but also quantitative ones that makes it difficult for people to ignore you from a pure dollar perspective. Things like that, what pops up in your mind? That you would tell people to think about in terms of art directing their career. Julia (28:15.023)Yeah, well, the number one thing that I always say, and I’m kind of, it’s kind of a legend for it. So it’s ABE and it stands for Always Be Executing. And when I look back and see how successful I was in a corporate setting, of course, in my case, it was that I had a great boss and a great mentor and sponsor in him. But actually, I was always focused on executing and doing it in a way that is collaborative so that you don’t have the knives coming for you from every direction. think a lot of people who the more successful that you get in your career, you think, I’m fabulous because I’m fabulous. No. You need a mindset of I’m fabulous because I am creating a team around me, no matter who I am, even if I’m not the boss, to protect each other and help each other and lift each other up. if you are always executing and you hit on it, right, as a woman, you should always be keeping track of your metrics in a way that is tangible and defensible. But you also should never take for granted the fact that no matter how senior you are, you need to be getting something done. And I do think that it is a big mistake for people to get high on their own supply and forget that. And then, and then the sharks will come for you. So always do something. And this is just a final thing, cause I have lots of people that I mentor. They’re like, just name one thing. I’m going to give you one thing. Send meeting notes. If you go to a meeting, and everybody’s on a call, 15 people are on a call. If you’re the one who sends meeting notes and this is a hot button, right? For women, they’re like, well, I’m not the secretary. I don’t wanna take me. You know what? Put your ego, park it in a parking lot and send meeting notes. You would be shocked how much goodwill and how effective you’re perceived when those notes, like say a project is going downhill and somebody goes, but. Julia (30:30.157)Such and so committed to this and you’re like, those meeting notes were written by Julia Carrion. Nobody has to do that. But corporations get unwieldy. lot of churn happens. A lot of stuff doesn’t get done in a day. If you can demonstrate that you are someone who is acting in good faith and doing small things to keep the needle moving, somebody in senior management is going to notice that, I promise. Frazer Rice (30:53.763)The other thing I sort of, and this doesn’t just go for women, this is for people generally, is the ownership mentality and the move toward equity, and by equity I mean stock equity, where the mindset to me shifts when you move from sort of salary and bonus to equity in the firm. And that subtle shift suddenly puts you in a different position in terms of sitting at the same table as someone who is, let’s call it quote unquote, making the decisions. When you’re there and your ownership of the firm, however small it is, is rendered unimportant. First of all, that tells you to go. Second of all, I just feel like the people who exist on that plane bring up different things and then are thought of differently. Does that track with your experience? Julia (31:48.819)It does, but I think that this goes to kind of how is the corporate world changing and then how does that impact employees? So, and where I’m going with this is when I was at Wells, my compensation was a third, a third, a third. So it was a third cash, a third cash bonus and a third in stock. Do you want to know what’s going on? And I don’t know if you know what’s happened on Wall Street. Every single major bank is moving to you only get a quarter in equity and the rest of it is cash. So I think that the onus to here is on corporations to be thinking about how they’re treating employees. And to your point, what, what does that mean when you show up and how vested are you in the option? Just real quick, I want to give a shout out to Maureen Clough. I don’t know if you follow her, she just yesterday did an amazing six minute post on why companies are losing loyalty from employees. so like, again, this goes back to is everybody backsliding right now because these corporations have to realize that in order to keep good talent, you want them to have a stake in the game, but that’s winnowing, I think. Frazer Rice (33:11.819)I know. I agree. Frankly you know to me at the larger institutions that aren’t willing to sort of play ball as far as involving people in the ownership that’s a signal and when it’s a signal then you know if you’re good at your job and you bring things to bear you know there are other there are other places out there. I think those places that value you want you around and they want you to be able to participate and how the broader governance of the company works. It’s a lot like how Goldman Sachs was back when it was in the partnership days. Everyone who was a partner there understood how everything else was working and ultimately that meant that, I don’t know, I feel like Goldman still does well now, but it’s a different climate, different firm where you’re completely involved in everything else and therefore the information is out there and… it’s something that you’re not blindsided as much by what’s happening in other divisions within your firm. Julia (34:15.472)Yeah, totally agree. Frazer Rice (34:16.911)One other thought that as we were sort of squiring through this was the idea that it’s important to have information sources or networks both within your company that are outside of your reporting line, but also information networks and support outside your company. I call it sort of the kitchen cabinet of people who are similarly situated or in different spots so that you have context into which to sort of find out what your what you’re up against both inside the company and outside of it. Is that something that makes sense to you or is it something that was lacking in your current situation? How did you think about that? Julia (34:57.906)Hmm. I love that because in 2017, I took stock of the fact that I had become too comfortable in my lane and I was seeing that my influence at Wells was waning for whatever reason. And so I started blogging on LinkedIn in 2017. Because of a conversation with a Harvard sociologist that I write a lot about. Fscinating guy who predicted the current turmoil 10 years, almost 10 years ago. And so I started networking outside and I could not agree with you more that you need to be building your networks, not just inside. That goes without saying, right? Like I had a great career partly because I was a boss at gaining political capital at Wells all the time, right? Giving goodwill and getting it back but outside is critical. during our book, what we found out is, that women are more likely to put that aside. Because we feel like we’ve got too many other things going on, work, know, kids, all of the pressures, trying not to, you know, have a nervous breakdown on any given day, trying to stay fit, dealing with menopause. Which of course is a whole other thing that is a whole other bag of tricks. And so we don’t do it as much and it hurts us. So I absolutely think being deliberate about an external network is essential. When women ask me how to do that, I say to commit to a certain number of hours, half an hour to two hour, whatever you can give a week to doing it deliberately. I wish I had done that earlier in my career for sure. So it’s great advice. Frazer Rice (36:49.865)Along that line, I’m a big believer in being aware of your surroundings. In a sense aware of yourself and what your skills. Things that you’re annoyed are at are and what you’re good at and what you’re not good at. Did you take any tests or anything to understand what your aptitudes were or what you were interested in or more importantly not interested in or how you interact with other people personality wise and Is that something that resonates with you? sort of am a big sports fan. Dan Quinn, who’s the Washington commander coach. He got fired from the Falcons. He did a real deep soul searching and went in and got tested on a whole bunch of different things and where he came up short, where he was really good. And that allowed him to get hired again and to have at least some initial success with the team and hopefully going forward from my rooting perspective. But where does that fit into your analysis for people? Julia (37:50.351)Did somebody set that question up? That’s what I want to know. I am a huge believer in strength finders. Some people take discs, some do Myers-Briggs. The reason I asked if it was a setup is because strength finders saved my life. I was deemed top talent when I was like 34 years old at Wells and they gave me a career coach who by the way was Sarah Grady is her name. and she was Dick Kvasevich’s legend on Wall Street. She was his leadership coach and she gave me strength finders and I very quickly was very clear my top five strengths and then my bottom five strengths are not a surprise. Like I am zero. I’m like negative zero at woo. I was like, it won’t even shock you for a minute. Yes i do think that those kinds of valuations are critical and in fact i’m gonna talk to my twenty year old son about taking one i think you’ll end up taking disk but. One thousand percent if you if you do not know what you’re good at and why then try to find out because it can save your life i mean the awareness and the learnings that i got about myself. From taking one test have stayed with me for 25 years. And I’m gonna be really blunt here. I forgot those lessons when I stepped into a new culture and it was painful. So I think you have to also be disciplined about… Take it again, remind yourself, reread whatever book helps you stay grounded in who you are and how you’re showing up. And get some friends to give you feedback. Frazer Rice (39:44.111)Well, mean, people get better or change or worse at certain things. And so you’re not the same person you were 20 years ago. And, you know, it merits revisiting every once in a while. As we wind down here, unfortunately, we probably could go on for about three hours, which I wish we could do. But one of the things that I think is interesting, too, you talked about political capital and building it up, is that I think one piece of advice that I tend to give to people who are starting out and might be useful in the situation that we’re describing here is that when you have political capital, you’ve got to be willing to spend it occasionally. Careers, in my experience, take quantum leaps in that you’ll be going around for a while and then something good will happen and then you’ve got to kind of take advantage of the advantage while you have the advantage of having the advantage and moving up and then reestablishing the plane. And it’s a little bit like a ratchet where when the wrench turns, it doesn’t turn backward. You can kind of continue to elevate on that point. Is that something that you saw where, you know, as you were making the moves up the ladder that didn’t happen at the last situation that maybe might’ve been something that could’ve turned out differently? Julia (41:01.791)Yes, and I think that being more aware of my surroundings would have helped. I don’t think it would have changed the outcome in the other example. But the political capital that I was able to gain is that I got promoted every single time Wells did a major merger when people were panicking about their jobs. Frazer Rice (41:08.623)Mm-hmm. Julia (41:31.061)And one of the things that I did that you and I could probably discuss for two days is I gave up control of trying to manage the outcome. In other words, I went to senior management with two major mergers and I said, you know what? I don’t care what I do for the time that the companies are trying to come together. You give me something hard to do and ugly and I will get it done the right way. And then you decide whether I get rewarded or not. And when I crushed both of those tasks, I got major promotions. So I think it, I think a lot of people think, I’m going, I had a, had an employee who told me I should just get promoted because I’m sitting here and I’ve been sitting here for two years. mean, it really, life just really doesn’t work that way. In my experience, you got to work your ass off for it. And, and you have to put your ego aside and you have to hope that the universe is gonna pay you back. And I believe that because the universe always has. I believe that even now with my current situation, like everything that has brought me here has made me a spokesperson for like a better way because of what happened to me, right? I had 20 years of goodness and then I had something really hard happen. And I’m trying to make lemonade out of a very difficult situation because it is the only way, the only way out is through. So I just have to keep going through and I love the idea of yes, you’ve got to spend your political capital. can’t, know, George Bush said that you can’t just collect it. What are you collecting it for? If you’re not going to spend it. Frazer Rice (43:17.817)Exactly. Okay, we have to disembark here, unfortunately. How should people keep track of your situation? How do they find the book? And how do people get in touch? Julia (43:31.846)Yep. I have, um, I’m on LinkedIn. I have a website, juliacarrion.com. If you are looking for, I’m doing some consulting on a digital transformation always and org design or whatever. So you can find me there. And then, um, you know, today’s a big day. We are filing today or tomorrow, a response to my lawsuit. So it would probably make the news. Thank you to you for being a great ally to women and having me on. The book is walking on broken glass.com. It’s such a great name. So you can order the book on the website from any of your favorite book resellers. Frazer Rice (44:14.639)Super, well good luck with the legal proceedings. All of your information will have that in the show notes so people can find it easily. I think you’re coming off of a difficult situation. I think you’re gonna turn it into something far more transformative. Even you’re envisioning it right now. So I’m hoping for the best here. Resources & Links: Walking on Broken Glass: Navigating the Aftermath of the Glass Ceiling StrengthsFinder Assessment Julia Carrion on LinkedIn Julia Carrion’s Website Connect with Julia: LinkedIn Website Stay tuned for updates on her legal case and ongoing advocacy efforts. Don’t miss her insights into transforming adversity into empowerment and systemic change. https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/ Keywords: Gaslighting, Corporate Culture, Women in Leadership, Workplace Equity, Julia Carreon, Wells Fargo, Citi, Legal Battle, Glass Ceiling, Political Capital, StrengthsFinder, Work-Life Balance, Systemic Change, Weaponized HR

THE TRUSTEE CRISIS: Navigating the Challenges

There is a storm coming with the challenges of navigating the TRUSTEE CRISIS. It is one of the biggest blind spots in the “GREAT WEALTH TRANSFER” and will be the source of mountains of litigation for the unwary, https://youtu.be/hwQev88A03M Summary In this conversation, Frazer Rice and Jennifer Zelvin McCloskey discuss the current crisis in trusteeship, highlighting the shortage of qualified trustees amidst a significant wealth transfer. They explore the importance of modern trust planning, the challenges faced by individual trustees, and the need for better education and training in the field. The discussion also covers the emotional and interpersonal aspects of trusteeship, the functions and responsibilities of trustees, and the necessity of managing risk effectively. They emphasize the importance of building a pipeline for future trustees and improving the perception of the profession, while also identifying opportunities within the trust industry. https://open.spotify.com/episode/4qpkrVdaUa2AfDxgl7j3yN?si=XVgG3jE_Qpqq2JTqi8XLXQ Editing and post-production work for this episode was provided by The Podcast Consultant (⁠https://thepodcastconsultant.com⁠) Takeaways The coming crisis in trusteeship is already here. There is a significant shortage of qualified trustees. Trusteeship requires strong interpersonal skills and emotional intelligence. Managing risk is a fundamental aspect of trusteeship. Trustees critically need education and training. The role of a trustee is evolving with increasing complexity. Beneficiaries need to understand their rights and the trustee’s role. Custodial responsibilities are essential for asset protection. There are many opportunities for growth in the trust industry. Trust law and investment management are distinct fields. This Episode is for . . . Anyone that has an estate plan with a trust in it and doesn’t know what a trustee does Any advisor who works w/ multi-generational situations (that’s everybody in wealth management) Any RIA looking to sell Financial types worried about compliance world Fiduciary litigators Chapters of “THE TRUSTEE CRISIS: Navigating the Challenges” 00:00 The Coming Crisis in Trusteeship 02:06 Importance of Modern Trust Planning 04:11 Challenges with Individual Trustees 08:03 The Dwindling Pool of Qualified Trustees 10:06 Functions and Responsibilities of a Trustee 12:20 The Emotional and Interpersonal Aspects of Trusteeship 16:05 Managing Risk in Trusteeship 19:07 Building a Pipeline for Future Trustees 22:10 The Role of Education in Trusteeship 25:07 Improving the Perception of Trusteeship 28:19 The Need for Better Trust Education 30:39 Bifurcation of Trustee Functions 33:26 Distribution Functions and Beneficiary Relations 36:52 Custodial Responsibilities in Trusteeship 40:19 Consequences of Poor Asset Management 46:41 Curriculum for Trustee Education 52:13 Opportunities in the Trust Industry Transcript of “THE TRUSTEE CRISIS: Navigating the Challenges” Frazer Rice (00:01.068)Welcome aboard, Jennifer. Jennifer Zelvin McCloskey (00:02.723)Thanks Frazer, how are you today? Frazer Rice (00:04.782)I am doing great. We’re going to dive into a topic that is near and dear to both of our hearts. And that is what I’m describing as the coming crisis in trusteeship, but I think it’s already here. Which is the concept of qualified trustees being in short supply, right in the face of a gigantic wealth transfer. And first of all, before we get into that, just describe what you do on a day to day basis first. Jennifer Zelvin McCloskey (00:33.445)Sure, I actually wear a bunch of hats. Day to day, right now, I’m a full-time practicing trust and estate attorney. I’m also an individual trustee for a variety of trusts that need either somebody here physically located in Delaware for a short period of time or even a successor trustee. But I’ve also spent many, many years building programs in trust management and trust administration. Because there is this crisis of human capital that just does not exist. I built multiple programs. They’re housed out of the University of Delaware. So I act as a trust and estate attorney, do planning, administration, I teach in the area, I build programs in the area, and I serve as a trustee. PEAK TRUST MANAGEMENT CERTIFICATE Frazer Rice (01:23.182)A full plate to be sure. To me, I came out of Wilmington Trust and another trust company served an individual trustee too. I’ve seen all these different flavors of trusteeship. My general sort of bon mot around that is that the individual trustees. I’d say 95 % or higher don’t really have an appreciation of the risk and responsibility that they’re taking on. And then the corporates have their own issues, which we’ll get into in a little bit. If we pull back even further, modern trust planning in wealth management, why is this so important? Jennifer Zelvin McCloskey (02:06.275)That’s massively important. It’s not just for the mass affluent or the ultra high net worth. It’s for everybody. We have all of these assets that we have this hyperfocus on building and increasing our wealth. Making sure that we have the ability to sustain ourselves throughout our entire lives. But if we don’t do this type of planning, if we don’t have structures and implementation for when we die, then our assets that we’ve planned so diligently for will fall off of a cliff. We lose the ability to control ultimately what happens to those assets. Layered on top of that, of course, is the tax component for ultra high net worth folks who are trying to really focus and direct their assets to make and create generational wealth transfers. Without this type of functionality and wealth planning and estate planning long-term, people lose control of what they’ve spent so much time building. Frazer Rice (03:13.338)One of the things I tell people as far as trusts are concerned is that, you know, we’re putting these structures together. They’re durable enough to withstand taxation or creditors or other asset protection features, create some guidelines around distributing the assets to the next generation or other constituencies. But also have some flexibility to be able to deal with the things we can’t look into the crystal ball and figure out over time. And that those three things just putting a document together that tries to do all that is hard enough, but then to put it in the hands of somebody or something to administer and to exercise discretion around it. That’s where the real art and science kind of stitched together and create this issue. You know, as we think about that too, the idea, the history of these types of scenarios kind of goes back to, you know, you’d put a structure in place and then you’d go hire a bank and they’d take care of everything. How do you look at that and say, all right, we’ve gone well past banks to individuals and then to dedicated institutions. What is the problem there? Jennifer Zelvin McCloskey (04:22.956)Now the problem, there’s two problems. In my opinion, what I see is that, you know, your individual trustee by and large is Uncle Joe, right? He’s the guy that everybody goes to in the family. The responsible one. He’s the smart one. The wealthy one who, great, doesn’t know what the fiduciary duties are. He doesn’t know that he has a duty of impartiality. He doesn’t know that… Frazer Rice (04:32.419)Right. Jennifer Zelvin McCloskey (04:48.475)He can’t self deal unless the instrument says so. Doesn’t understand how the instrument works. He doesn’t understand the nuance and the legalese written into the instrument. But he’s flying by the seat of his pants and everybody looks to him as the respected one in the family. No one knows that they have the ability to challenge him. So with your individual run of the mill trustee named in the instrument, they just don’t have the expertise, they don’t have the technical knowledge. Don’t know what they don’t know. They can get into trouble in that way. The other problem that you have with professional individual trustees oftentimes is that they are not formally trained. They may be an attorney who is working in that area, who’s doing plans for people who may or may not know what the full scope of being a trustee is. They may not realize, I have to get a special insurance policy because my malpractice insurance policy doesn’t actually cover this type of fiduciary engagement. There’s a lot of landmines that individuals can run into when they’re doing this type of work. On the corporate side, the problems that we run into is that there’s just a complete and utter lack. Frazer Rice (05:50.061)Hmm. Jennifer Zelvin McCloskey (06:12.059)Of available educational programs to teach people the proper way to be able to understand trusteeship. It has always been, and it just has developed over time through, you know, oh, we’ll give it to the bank, the bank will do it. This apprenticeship model, and that just does not scale well because if you learn improperly at the edge of a desk from somebody that learned improperly at the edge of the desk. Then the person that you’re teaching now at the edge of the desk is learning what you learned improperly. So anecdotally, I did karate for a long, long time. And the man who taught me karate, I’m almost a secondary black belt to like, was serious in karate. And the man who taught me karate said, you practice, it makes permanent. Don’t practice wrong. Because when you’re practicing wrong, you’re making permanent wrong things. And that’s what the apprenticeship model has the risk of lending itself to. It’s not that every trustee that learns at the edge of the desk learns wrong, but the risk is too high because the fiduciary responsibilities and the duties are too high to run that risk. The other problem is that we have a dwindling pool of really qualified senior trust officers because of just the nature of the job. You’re a human being, you’re an individual, you age, you retire. And it’s not something that people go to school and say, when I grow up, I want to be a trustee. They fall into it sideways. And unless there are academic programs that are out there that people are aware of and that they can get some formal training, some formal education to enter into the field. Frazer Rice (07:49.742)Yeah Jennifer Zelvin McCloskey (08:03.82)Separate and distinct from, I’m in the field and now I want to get a CTFA. I want to earn my certification to really show that I have the chops in this area. We have this shrinking pool of expertise. We have a lack of knowledge, a lack of formal education, and an apprenticeship model that doesn’t scale. On top of, with the individual side and the corporate side, this massive wealth transfer and an explosion of trust complexity that’s all taking place at the same time. Frazer Rice (08:31.918)One of the issues at the corporate level too is that as you say that the impregnance model is not necessarily the best way to do it. They’re cutting back on training programs. The business model around being a trustee or even a specific trustee does not make the big money. And so the ability for those types of institutions to develop the people.who ultimately are now in a very sort of pro-employee environment where there’s such a demand for trustees that they can kind of switch around and get a 10 or 20 % bump each time they go because people are desperate to have them. There’s a real cavern there to try to create the permanence that you’re looking for in a structure that really rewards consistency over time, especially as it relates to discretion and process of decision-making. Jennifer Zelvin McCloskey (09:23.15)Yeah, that’s exactly right. And that leads to this revolving door in the industry, because people are just trying to make more money and they’re going and bouncing to different trust companies. And there isn’t that backfill. Just because it’s a trust company and there’s policies and procedures, trusteeship is about relationships that you make with your beneficiaries, the relationships that you develop with multiple generations in a family. And when you have somebody that’s acting and serving in that and they move, they leave, they’re no longer acting and serving in that capacity, a new personality comes into the mix and it can really be disruptive. So having that consistency and minimizing the attrition is so valuable. Frazer Rice (10:06.766)The other thing I try to bring up, especially to individual trustees, is that the thing that you’re signing up for is probably going to look a lot different in five or 10 or 15 years when people are aged on, they remarry, they have kids, etc. That the conditions are a lot different than what they were before. And it’s going to be difficult to take on a structure that has eight people when before there were two. Jennifer Zelvin McCloskey (10:37.517)Yes, and that’s that complexity, that increased sophistication and complexity of trust structures that are available now to people. With the increase in the exemption, these trust structures, they’re not necessarily changed. For example, qualified personal residence trust, if people really need that anymore, but there’s a ton of them sitting around there. Are trustees properly administering it? Did you actually transfer the real estate into the trust at the time? So there’s all kinds of sophisticated structures that the trustees may or may not have the right skills. But they’re saddled with having to do it. Frazer Rice (11:19.47)Let’s take a step back and just talk about the functions of a trustee for a second. I break them down basically into three. Which is the first one. You have to administer the trust, meaning you have to dot the I’s, cross the T’s, make sure things get executed, tax returns are filed, statements get sent out to the extent that that happens, and that the administration of a structure like that occurs. Then I talk about the concept that the investments have to be made monitored moved around decided and that they’re appropriate for all classes of beneficiary that are in there and then the distribution function which is The assets have to be distributed according to the law. First the trust then maybe the intent or the law if everything is silent and that those three things are very different components and that it’s tough to find somebody who’s great at all three housed within one brain. Jennifer Zelvin McCloskey (12:20.217)Yeah, I agree with that 100%. It is a three legged stool. It’s the investments, the administration and the distributions. And in that administration umbrella in and of itself, there’s a tremendous amount of work that sort of goes unsung. know, it’s not the sexy stuff where you’re investing and making a bunch of money for your income beneficiaries and managing to preserve the corpus for your principal or your remainder beneficiaries. And it’s certainly not the personal interaction that you’re doing with your beneficiary day to day. Making distributions, helping them, seeing the product of that help. It’s the making sure you file ax returns are properly. Understanding how to read that tax return. Even if you’re not preparing it, making a proper selection on the accountant that you’re using to prepare those tax returns if you’re not preparing it. Make sure to set up statements properly, make sure that in this world of silent trust documents that you’re not sending a statement to somebody who’s not supposed to have it. Communicating with beneficiaries on an even keel. Making sure that you’re not inadvertently violating your duty of impartiality because it’s more than just a substantive duty, there’s a procedural duty as well. That’s really, really challenging to find within one human being, let alone add on top of it somebody who’s financially savvy enough to understand investments and all of the different complex investment tools that are out there, as well as having the personality and the interpersonal skills to keep beneficiaries engaged and happy. Frazer Rice (13:56.426)Just on top of that, the EQ, the bedside manner, and the ability to simplify the complex, et cetera. At the same time, that dedicated note taker that is able to document everything that happens within a decision. Whether distribution or investment or otherwise, that it’s just two different people most times. I find that something falls apart as time goes on. Ultimately if things aren’t laid out correctly, that’s when conflict starts to simmer. Then you know if there is something that’s wrong. That’s allowed to compound that’s where you get into a huge problem later on. Jennifer Zelvin McCloskey (14:36.922)It’s all that feeling. People are behaving in ways that they may or may not be able to articulate their emotional proximity to. When you’re talking with beneficiaries. There’s something simmering under the surface that you inherited because you’re a trustee. You may not even be aware of it because the beneficiaries may not even be able to articulate it. You have to have a certain sense. A gut check of feelings of rntuitively being able to read what’s going on under the surface. To pull it out of people in a very balanced and even keel way. It’s not an easy job by any stretch of the imagination. On top of financial literacy and personal liability and executive functioning skills, being detail oriented, making sure your documentation is not overly explicit. isn’t, you know, scarce. You’re now wondering how and why did you make those decisions? People don’t think about the decisions that they make on a day to day basis. We don’t think in a way to articulate why I made this decision. Why I exercised this type of judgment. And that’s what we’re being asked to do as trustees is to document what is my decision making process? Why am I making the decision? What are my factors involved in making that decision in a way that’s defensible. If we ever need to defend it. Frazer Rice (16:05.292)Well, in favoring one class of people over another is usually where the rubber hits the road on this. People who are used to seeing the income from a trust and don’t want that touched come hell or high water. Then future beneficiaries who’d like to see the trust go from X to 2X to 5X. So that they have something larger to enjoy. You have a natural tension that you have to manage. It’s just not easy. If you don’t document the hows and whys of what you’re doing, you set yourself up for a problem. From one class or another looking at you saying, you you should have done it differently. To go back to that liability component. You’re the only one who sits in the chair of having made that decision. You’re the one with the bullseye on your back when it’s called to account. Jennifer Zelvin McCloskey (16:53.093)That’s right, that is exactly right. And now add on top of it, you’re just named because you’re Uncle Joe and everybody goes to Uncle Joe. You have no technical background and you just don’t know the landmines that are there. You don’t know what you don’t know. Wouldn’t it be wonderful if we were able to create a pipeline of really sophisticated entry level employees or folks that are, you know sophisticated in financial literacy that now want to take the job to become trustees, that we were able to give them this technical roadmap for what the job actually is and then have them get the ability to apprentice on all of those policies and procedures. What does this corporation do? How do we document things? When you’re trying to learn it all at one time, it’s like drinking from a fire hose. Let’s give people the ability to really have a chance at doing it successfully. Frazer Rice (17:53.048)So let’s dive into that pipeline issue for a second. We already diagnosed that the, let’s call it the trust companies or the banks are, they’re just not resourced enough. They can’t run people through an internal school to do it quote unquote correctly. The apprentice model really kicks in. Which means you’re at the sort of mercy of what people are good at, not good at, et cetera. People turn over quickly so that apprenticeship doesn’t even work anymore. The RIAs I think are the worst place to learn about this type of thing. They have a completely different modus operandi as far as keeping clients happy. The word fiduciary means something so different to them than it does to an actual trustee. I wouldn’t feel good about the training on that front to sort of create trustees And then so law schools. They’re they’re just trying to create people the trust in the states vertical as a general matter. Let alone trying to delineate into a trustee situation. You’re putting the pipeline together and you put these programs together. How do you stitch together the needs and what does that manifest itself into? Jennifer Zelvin McCloskey (19:07.642)So that’s a really, really good question. I think that the very first place that we start with answering that question is advising on a trust as an attorney. It’s different from the administration of a trust and the skills that you need for that. So when you create a program like this where you’re trying to teach about trust management. You have to start with the technical skill. The legal side of what is it that we’re even doing? What is a trust? What are the fiduciary duties? Where do they come from? Then we have to, after we teach or create a structure or foundation on what the legality is. Now we go into how does this translate into administration? So when I created the programs, I looked at what’s the law they need to know? What is the level of sophistication of the student? And what do I need to, from a foundational perspective, teach first? What are the building blocks? And then how do I translate that into administration? The one thing that I have found is trust law does not equal investment management. So if people are coming along… Frazer Rice (20:26.254)No question. I’m nodding audibly at that comment. I like that. Jennifer Zelvin McCloskey (20:31.226)Your fiduciary duties as a trustee are fundamentally different than those of an RIA, where some RIAs are not even fiduciaries by law. They’re not. So being able to delineate and explain where that line is, what makes you a fiduciary, what are those duties, after you know the legal basics. And taught to you at a level that you can understand. I don’t expect everybody to be a lawyer. And people have asked me time and time again, do I need to be a lawyer to know this? No, you don’t need to be a lawyer because you’re not advising on the law. You’re advising on the administration of a legal structure and how that administration affects the fiduciary duties that are inherent in the relationship. Then how those fiduciary duties are translated out to the beneficiary. That’s the way that I’ve always built these programs. Where do I start? Start with the law. Where do I go from there? Start with how the administration translates the law. And then how does that administration get heard by the beneficiary? Where does the RIA come into the mix? The RIA should not be dabbling in advising on trusts. They should know that they need to bring in somebody who has this particular skill. And if they’re not doing that, they’re doing the client a disservice by trying to give one-stop shop advice. Frazer Rice (22:06.85)Yep, no question about it. One of the things that…we delve into the world of trusts and their function, et cetera, is that you’re dealing with an ecosystem from client to outside advisor, whether RIA or even accountant, et cetera, that they’re looking for certainty and airtight. quality to these structures that you put them in place and then everything runs like a clock going forward. When in actuality, I think there is a bandwidth of risk around everything. And so it’s the poor trust officer or individual trustee who sometimes has to be the bearer of bad news to say, yeah, you know, I think this is going to work 98 % of the time, but there’s a 2 % problem here or we’ve got this to fix or something like that and everybody else sort of sighs with disappointment and gets mad at the administrative function when in actuality they’re really doing their job and trying to, you know, keep a lot of things that are spinning out of control kind of within view. How do you get a trust officer or that administrative function or even the full trustee function to be comfortable with that risk and everything that’s involved with that? Jennifer Zelvin McCloskey (23:20.504)You have to start with explaining that there is risk and we’re not our job is not as a trustee to eliminate risk. Our job is to manage and identify risk. It is inherent in the job. There is going to be risk. No matter what you do, you cannot divorce risk from trusteeship. It’s a matter of identifying perceived risk and actual risk. And if you can teach that, if you can teach These are the things that are going to trigger a likely outcome. They’re gonna trigger a likely risk. Then you can essentially, you can’t foresee everything. I mean, there are things that are just gonna happen. But in a trust instrument, you’ve got contingency plan upon contingency plan upon contingency plan. That’s what the flexibility of those structures are building. We need to, as trustees, be able to recognize What is the risk with contingency plan A? The risk with B? What is the risk with C? How can we minimize the risk? And how can we make sure that we’re managing perception of risk versus actual risk? Frazer Rice (24:29.31)as someone who’s been in trust companies, advised trust companies, advised trustees, and advised clients, the lack of appreciation for the management of that risk and that that as the intersection of the business model of trusteeship and risk management and use of discretion and making hard decisions and even kind of an insurance quality around these structures, how do you fix that, where people place a level of respect on the job that I think is completely lacking in the wealth management ecosystem? Jennifer Zelvin McCloskey (25:09.089)Absolutely. It’s a tough one to answer. How do you fix it? First and foremost, I think that it’s a top-down fix, especially at a corporate trust company, a bank, and even an independent trust company that’s not affiliated with a bank. The management has to… really understand the function of the trust company. For so long, it’s been just an extra service that we provide and and we’ll do this, the back office trust company. It’s really, really important that the management recognizes what the functionality of the trust company is and stops treating it as sort of a back office stepchild. From the corporate level, I think that’s the very first place we start. Frazer Rice (25:38.478)Mm-hmm. Jennifer Zelvin McCloskey (25:57.818)The second place we start is investing in our trust officers, investing in the team, giving them the education that they need, continuing to give them education, providing training programs, whether they be in-house, external, bring in trainers. None of this is set it and forget it. At the individual level, I think it’s really, really important to have functions like the Individual Trustee Alliance, groups like that, where you have an ability to talk to other professionals that are doing what you’re doing. That’s another way to impress upon people that we have to manage the risk and we can’t do it all alone. Nobody knows everything. You really have to, you have to talk to other people. You have to engage. have to, what is it called when we were practicing law and we’re a little bit outside of our comfort zone, we have to consult with other people who know more than we do. It’s our obligation as lawyers. It’s the same thing with a trust company, with a trustee, whether you’re an individual or you’re not. Widen that circle. Frazer Rice (27:08.474)I think this is my idea for the day that there’s got to be a bit of a public relations campaign sort of describing what’s going on here because I think especially when we go into the family members that sort of occupy these roles, they have no earthly idea what they’re doing. They’re usually doing it for free. Everything’s hunky dory up until a point and everyone hopes that everyone is not going to sue each other if something goes wrong. But the level of wealth that’s being transferred now is now so significant that everyone sort of talks about, AI is going to get rid of lawyers. Nope, not in fiduciary litigation. I think that’s a medium term growth industry, especially around insurance, around ILITs, around revocable trusts, around elder care. But this is my advertisement for people who are in law school looking for a productive way to go. I think that one is going to be, I think that one’s recession proof, at least for a while until I retire anyway. So my thought is that awareness over these things, and it’s probably going to take a very difficult case or a class action suit, something like that, where somebody really gets hurt in order for that awareness to come up. Jennifer Zelvin McCloskey (28:24.922)Yeah, I would agree. think that some of the solutions would include better trust education, you know, whether it be for RIAs, lawyers. Trust in the states is a throwaway class in law school. And there are so many law schools that are essentially rolling it back because bar exams aren’t testing it anymore in a variety of states. And ACTEC is definitely working with the law schools to try and increase trust in the states being taught and certainly being tested. So education for lawyers coming out of law school, education for RIAs that are advising on trusts, education for trust officers, for trust administrators, trust professionals in general, clear role delineation. What is the role of the RIA? The role of the trust officer? What is the role of the trustee if they’re an individual trustee? And then creating a culture of collaboration on what we’re doing as a team for the beneficiary, not substitution, but collaboration with the advisors and the trustees. Frazer Rice (29:32.59)Let’s go into the role delineation for a second. About 20 or 30 years ago, the concept of bifurcating or sort of cordoning off the different functions I described before the investment, the administration and the distribution has come into vogue. I think that came out of frustration with bank trust companies where you got one set of advice for every trust that they had as far as investments and distributions and administration and a lot of modern larger families wanted something a little bit more specific to their needs. And that’s really turned, it’s exploded as an industry for increasing sophistication and size of wealth. Along those different functions, where maybe the administration goes to a professional trust company or a trust officer in the state that you want, Then there’s some intersection maybe in the distribution committee. And then the investment side of it is a bit of a free for all, think, depending on what you’re, dealing with. How do you educate the, that continued the delineation, but the coordination within those types of structures. Jennifer Zelvin McCloskey (30:41.275)Yeah, I think it’s really important. And I’m a Delaware lawyer. I’m licensed in multiple states, but Delaware is my home. It’s where I learned how to be a lawyer. It’s where I grew up as a lawyer. So this directed trust model that you’re describing, where you’re bifurcating, truly bifurcating these particular functionalities of a trustee, it originated in Delaware. sort of, we didn’t, I mean, we invented it, right? We codified it. It was being done, but we codified it. The idea of making sure that everybody understands what their function is and knowing that there’s a limit of liability that’s built into the instrument and communicating what that means to the RIA that is named in the document. I can’t tell you how many times I have heard companies, heard trust companies say, we’re advisor friendly. And I’m like, not unless you’re directed, you’re not. Frazer Rice (31:37.528) “THE TRUSTEE CRISIS: Navigating the Challenges”Yeah. Jennifer Zelvin McCloskey (31:40.439)If you are directed, you are 100 % advisor friendly because there’s no chance that that trustee is going to try and take the investment management. They’re not a portfolio manager. Not a clerical administrator. They’re not a passive rule follower. We need to identify what does that trustee actually do when they are an administrative or directed trustee. Clarify that role so that people who are engaged in this bifurcation, this structure where we’ve got a distribution committee, maybe it’s individuals who are close to the family, close to the beneficiaries, where you don’t have somebody who’s objectively uninvolved with the family members making decisions as to whether or not there’s a distribution that should be made. But also advising those rolls those advisors that your administrative trustee is not just a pencil put a paper pusher. Not just checking boxes. They really do add value to the role that they provide and making sure that everybody understands what each other are doing, having regular meetings amongst the team instead of operating in a vacuum or operating in a silo. And taking the approach of it’s not my job, misunderstanding trustee powers and the advisor’s authority. So when that’s delineated, when that’s really understood, not just by the advisors, but also by the beneficiaries, there are so many beneficiaries out there, Frazer, that have absolutely no idea that they actually hold all the cards. They don’t know. Frazer Rice (33:25.87)Along that line, so in the administrative, we just walked through pretty nicely. The distribution function is one that, let’s talk a little bit for a second about what it means to ask a trustee for a distribution and maybe the difference between income and principal and why having a steady hand at the wheel within that function, whether it’s a corporate trust company of qualified individual or family input in that function, why real good thought needs to go into how that’s staffed. Jennifer Zelvin McCloskey (34:04.73)Yeah, absolutely. 100%. In a corporate trustee ship or a corporate trust company structure, there’s always going to be distribution committees, right? So if you are the trustee, you’re going to have to go through a committee that’s looking at what your reasoning is for making that distribution. They’re asking questions about what have been the prior distributions? Have they come from principal? Have they come from income? What is the spend rate on that trust? How is this going to affect long-term spend rate? Is this an aberration? Is this something that’s gonna become a habit? Really understanding what the distribution, the guidelines are in the trust. What is the distribution standard? Making that decision? What are our factors? And how many people are at the table? Who’s communicating that to the beneficiary? Does the beneficiary know that the trust officer alone does not have the ability to say yes or no? That when they’re in this ecosystem of a corporate trust company, they have their checks and balances to make sure that that risk is being managed. So when you’re looking at corporate trust companies, are a lot of layers behind understanding what the distribution standard is, whether it’s hems or if it’s purely discretionary. The other thing that you need to look at when it’s not a corporate trustee and it’s an individual trustee is, how is that individual trustee making that decision? Are they doing it in a vacuum? Alone? Are they favoring one beneficiary over another because they like them more, you need to have some communication to the beneficiaries so that they understand what they are, what their interest is, what they are entitled to, if anything, and why the trustee stands in that position as the gatekeeper. And I really think in my heart of hearts, we need to make a shift from a gatekeeper trustee Jennifer Zelvin McCloskey (36:16.708)to a beneficiary enhancement trustee, where the beneficiary is really taking on the understanding that the trustee is there to facilitate enhancing the beneficiary’s life. That even though the trust may have started at the outset as a tax strategy or something that the grantor decided they needed to do with the advice of counsel. At the end of the day, you wouldn’t have been named as the beneficiary if there wasn’t some sense of love or obligation even, that it’s for your benefit. It’s in the name. Beneficiary. Trustees need to understand that and beneficiaries need to be taught. Frazer Rice (36:54.958)Right. Frazer Rice (37:00.646)And it goes to the circle back to the notion of making sure that you write down the whys of the decision because ultimately if the concepts of favoritism or you didn’t communicate this or anything, the idea of having the beneficiary submit a budget but having them understand why they are submitting a budget and then if there is some discretion that’s happening around that decision that the data points that are informing that discretion, that’s gonna keep everybody safe a lot later on. Jennifer Zelvin McCloskey (37:32.666)Absolutely. I break it down into a couple of different factors. It’s fiduciary decision making. How is that fiduciary making the decisions they’re making? Why are they making those decisions? And who is being affected by the decisions? Document interpretation. Do you understand the document that you’re administering? If you don’t understand the document you’re administering, hopefully best case scenario, you know what you don’t know and you ask. But if you don’t understand the document and you don’t even have the wherewithal to say, hey, I need help to understand the document, it’s really problematic. The third part, balancing beneficiary interests. Really taking on board this idea of the principal income problem that all the assets in the trust are not the same. That some of it doesn’t at all in any way affect a certain class of beneficiaries. And at the same time, it’s inextricably intertwined in the way that it affects another class of beneficiaries. And then risk management and governance. How is this being governed? How are we managing perceived and actual risk as a trustee? Frazer Rice (38:40.13)The investment function, which I alluded to before, I see storm clouds on that horizon, not really at the RIA level, because I think there’s sort of a default mode that investment policy statements are in place. Diversification is a true commodity at this point. And I never really worry about an RIA sort of understanding how to invest to get to a certain expected return and deal with the risks and drawdown and all that stuff. The storm cloud I see is when individuals sit in that role and they are being tasked with, let’s call it quote unquote, overseeing concentration, meaning that trust is holding a building, farmland, a nuclear reactor, crypto, all of these different things that sometimes can be, A, they have their own different maintenance responsibilities that are not just looking at a fidelity statement, but that they also have their own volatility And, you know, in the case of a building, you got to make sure it’s managed correctly. are they going to get sued or the windows kept up, all of that stuff, and that there’s a whole different component there. And I’m waiting for the shoe to drop on some fact pattern there where somebody is sitting in the role of an investment advisor. It doesn’t say trustee in the document, so they don’t really think that they have trustee liability. But. they sit in that role and all of a sudden somebody finds 10 55 gallon drums of green fluid in the basement of a building and all of a sudden the trust has a big set of red brackets that say minus $100 million that you owe to the federal government and the EPA. How do you think about that? Jennifer Zelvin McCloskey (40:21.454)Hmm. Jennifer Zelvin McCloskey (40:25.242)That’s a heavy question. so the Delaware stock answer, obviously, direct it, right? It’s just to get the trust, cut off the liability. At the first, at the inception of your hypothetical is bad drafting, right? So if there’s no statement as to whether or not your investment advisor is acting as a fiduciary or not, Frazer Rice (40:35.042)Right. Jennifer Zelvin McCloskey (40:52.836)What does your statute say? Does your statute impose that they are as a default a fiduciary or not? So that’s the very first step. That’s bad drafting. We need to know. But if it’s silent, let’s say it’s just a lousy document, there’s, God knows. Anybody who’s seen trust documents knows that, you’ve seen them all, right? And everything in between. Some are good, some are bad. If this is a bad one. Frazer Rice (41:13.08)Seen good and you’ve seen bad. Jennifer Zelvin McCloskey (41:20.079)Then we need to document the statute. If we can correct it, modify the document, let’s modify it. But if all of that can’t happen, then I would say the best way to handle it, make sure you have adequate insurance. mean, over-insure that, over-insure it. Make sure that there’s regular checks on the actual… Assets that are in the trust, if you have a concentration and that concentration is real estate, get the advice of counsel, put that bad boy into an LLC, get yourself some distance from the actual asset itself being held in the trust, hold an interest, hold a financial interest, push it down to the corporate level. But if you can’t do all of that and you’ve got those 500 gallon drums of green fluid and now you’re… Frazer Rice (42:14.286)You Jennifer Zelvin McCloskey (42:15.371)You you’ve got a super fun site. What do you do? You don’t shy away from it. Have to address it head on. You got to take the accountability. You got to communicate and document, communicate and document some more. Talk to your beneficiaries. Make sure that they’re aware of where it went wrong, why it went wrong. Because I have found in my exposure in the industry over time and in reading case law, it’s when you’re trying to cover stuff up. Frazer Rice (42:43.913)Jennifer Zelvin McCloskey (42:44.027)You’re just making more problems. Bad news doesn’t age well. It doesn’t get better over time. You have to approach it head on and make sure that there’s communication and documentation. Meet with your beneficiaries. If there’s a trusteeship where you are appointed as a trustee individually and you’re not having at least quarterly meetings with your beneficiaries, If you’re not going out and seeing the asset, if you’re not going out and making sure that the asset is properly custodyed, you’re not, you’re violating your fiduciary duty. You are not doing what you’re supposed to do. Frazer Rice (43:21.804)You brought up an interesting word there, custody, which is the administrative function, whether held corporately or individually, one of the major things you have to do is to safeguard the assets. And that’s a big two syllable word that carries a lot of weight with it. That custodial function, how do you teach the trust officers or the individual trustees where that starts and stops? Jennifer Zelvin McCloskey (43:48.579)Yeah, mean, custody is super, it’s a really touchy, touchy subject, especially with the dynamic way that trusts have developed in the current climate from tangibles. You know, I’ve got artwork and my beneficiary wants to hang the artwork in their house. Well, do you have custody? Has it been assigned to the trustee and how do you maintain that asset? Make sure nothing’s happening to it. Do make an appointment, go over to the, visit your artwork? What if it’s prize horses, you know? What if it’s, you know, a stud that, you know, we’re gonna need to breed and it’s gonna be the next Triple Crown winner? How do you make sure that the barn is properly safeguarded? It’s a really touchy subject, especially with things like tangibles and things like assets held away when you technically custody the asset, but you don’t have control over the asset. I think in the education part for custodying, what I do in my programs and when I teach this is I make sure that we talk about different types of asset classes. And what the risks, again, what are the risks that you run with these asset classes? How can we manage the actual and the perceived risk of holding that asset? Even if you have custody and name only, but you don’t have physical custody, how do you maintain your control over that asset? Because it’s really the C’s, right? The custody and control. Just because you don’t have custody doesn’t mean you don’t have control. So we have to make sure that there’s an education that’s provided about the different asset classes, whether it’s tangibles, intangibles, assets held away, if it’s a concentration of stock, if it’s crypto, and most trust companies are not taking crypto. I think that there’s like a circuitous way that they’re getting in right now, but it all boils down to education, isolating what the issue is and educating people on it. Frazer Rice (45:59.586)I’ll give you a third C, it’s consequences, which is what happens when you don’t understand these functions. on the crypto side of things, Jennifer Zelvin McCloskey (46:01.786)Uhhh Frazer Rice (46:11.544)Holds the key to get to the crypto. What happens if that trust officer quits and walks away with the key and they’re like, well, multi-sigil figure this out. I’m like, okay, that’s not that. That doesn’t make me feel great at the moment. And now there have been some advances, which is good, but traps for the unwary to be sure. the good news too for crypto is for people who want exposure, the spot ETFs take away 90 % of the problems with that. But as we start to think about winding down here, because I have a feeling we could probably talk for four or five hours on this subject, when putting your programs together, what does a curriculum look like? And we don’t have to go through it bit by bit, but how does that work when someone comes to your program? How much time does it take? What’s the commitment? Jennifer Zelvin McCloskey (46:47.172)Yeah, I think so. Frazer Rice (46:54.851)Mm-hmm. Jennifer Zelvin McCloskey (47:06.33)So the program that I created that’s really available anywhere across the country is called the Peak Trust Management Certificate Program. Peak Trust Company, may be familiar with it. They have name rights because they gave the donation to the University of Delaware for me to build the program. So it’s housed at the Lerner College at the University of Delaware, but bears the name of Peak Trust Company. I look at five different things. The first thing is trust law and administration. So like I said previously when we were talking, you lay that foundation of what is the legal component of this? What is the baseline that people have to know? And then what is the administration? The second component is, and it’s inextricably intertwined as taxation. What is the income tax? What are the deductions? And now let’s take all of that income tax knowledge, individual income tax knowledge, and build on it with fiduciary income tax. What is DNI? What is FAI? How does it go out to the beneficiary? What’s the character of the distribution? How do we manage that? What are we deducting in the trust? So teaching taxation and not because trustees necessarily are tax preparers, but because the trustees obligation is to be able to understand and read that tax return, they need to know how to spot problems. So from my perspective, teaching fiduciary income tax is a critical component. It also helps. Yeah. Frazer Rice (48:38.828)No, no, I was gonna say no question about that. And there are elections to make, just because it doesn’t just go on autopilot, there are choices to be made so that if you’re the trustee, you may not have to prepare the tax return, but you may have to make a choice on the tax return and you’ve got to be informed because that can be an issue. Jennifer Zelvin McCloskey (48:58.651)65 day elections, perfect example, right? You just, you need to understand what your role is and how it overlaps with that of the CPA. The third part, of course, investments. Investments are inextricably intertwined, whether you’re doing it yourself as the trustee or you’re directed or even delegated, which is like the hairy scaries of every trusteeship known to man, because you’re not actually in control, but you’re responsible. So it’s the gray. When I build a program, because of the, you know, the directed trusteeship being so popular in today’s day and age, we have to talk about not just investments of, you know, marketable securities, not just the custody of tangibles, but also subscription documents, because so many alternatives are held in trust right now. unique assets, need to know how the trustee is actually carrying out their fiduciary duty when it comes to engaging in an investment that is an alternative investment. The fourth component is of course compliance. We cannot ever get away from compliance and I think we could do a whole nother podcast on compliance in trusteeship but. You know, it’s a regulated entity. And even if you’re an individual trustee and you’re not using what those compliance frameworks are, what the guidelines are by OCC, Reg 9, FDIC, if you’re not looking at that and using that as a guideline, don’t do the job. understanding KYC, BSA, AML, all of those compliance components that have tentacles. That’s the fourth part. And then for the fifth part of this program, because it’s specifically geared toward trustee education in trust companies, although it can be applicable, very applicable to individuals, is operations. I was very fortunate that I was able to partner with SCI on building the operations component. So we license their platform called Plato. It’s essentially their training platform. Jennifer Zelvin McCloskey (51:12.888)so that trustees can see how fees are set up, fees, that’s a whole other podcast, fees, statements, distributions, how are we doing this? How are we documenting everything? What are the logistics of the day-to-day operations? So that’s how I built the program and it’s available anywhere in the country. It’s 10 weeks, how long does it take? I would say from three to five hours a week of an investment that you’re making at a bare minimum. Obviously there’s a whole lot more of depth that you can go into. The resources are built in. But I would say 10 weeks, about 50 hours of time where you’re actually engaging with the material. And then I bring in guest lecturers on each different area of expertise for lack of a better description. And they get a certificate at the end, they get a digital badge, and now they really have something where they can add value day one in a trust company or as a trustee. Frazer Rice (52:17.902)With Delaware being, you one of the real gold standards as far as trust jurisdiction, I assume that everything that comes out of this program is pretty transportable to the other useful jurisdictions, let’s call it, within the country. know, the Tennessee’s, the South Dakota’s, the Nevada’s, the Alaska’s, Wyoming’s, New Hampshire’s, et cetera. Obviously, there are hairs to split with different foibles in their law, but everything that you’re describing sounds like works everywhere else. Jennifer Zelvin McCloskey (52:47.928)And I’ve always taken the approach, you’re 100 % correct, I’ve always taken the approach of UTC. I base everything off of UTC and if there’s something different or unique based upon the jurisdiction that you’re in, I always encourage people you have to look at your statute, you have to look at the jurisdiction that you’re actually practicing this in and administering in. I use Delaware, South Dakota, Alaska as examples quite often when we’re talking about the directed stuff, but By and large, it’s UTC. Frazer Rice (53:20.966)It just a weird subset. So special needs trusts and islets, which are two types of trusts, very specific. One holds life insurance. The other is designed to really take care of people who can’t take care of themselves. And they are types of trusts that a lot of trust companies don’t like to take on because the liability is harder or the profit margin is less. For those individuals who get the opportunity to participate in those and I put that in air quotes. How would you advise people to get ready for those types of situations? Jennifer Zelvin McCloskey (53:58.308)People who are in need of those types of trusts. Frazer Rice (54:02.122)Well, maybe both. The people who need those trusts, you know, they’re going to, they, you know, it’s almost like they get set up and then the staffing gets kind of figured out later, barely. And then, you know, the, for the people who end up taking on that role, they really have no idea of what they’re in for in a sense. Is there sort of like a mini, I’m not going to say a full course like you’re describing, but a crash course in, in what’s going on here and what can I do to keep myself safe? Jennifer Zelvin McCloskey (54:30.271)Unfortunately, no, I don’t know of one. and there isn’t much built in. there’s, we talk about a little bit in the program that I built, but, those are specialized and eyelets we talk about a little bit more there, you eyelets had their day and sort of they has done ish. but special needs trust. It’s a whole other ball game because It really incorporates state law and social security and Medicaid, all of those government benefits that I think you would need something more specialized than my program that I developed. And I don’t have a great answer for that, I’m sorry. Frazer Rice (55:12.482)No, there’s not a great answer for it because it’s tough. it’s a, all of which is to say for someone who’s involved with those things and feels confused by what’s going on, that’s one where it’s worth it to spend the money to lean on a dedicated Medicaid elder care, special needs type of lawyer on that front because there are traps for the unwary. Okay, now we’re starting to butt up against an hour here of. Jennifer Zelvin McCloskey (55:29.764)Yes . . . Frazer Rice (55:38.827)Four hours. No, I’m kidding listeners. We’re not going to talk for four hours, but How do people find your program and and then I’ll ask a bonus question at the end Jennifer Zelvin McCloskey (55:49.339)So the program is on the University of Delaware’s website. You just type in peak trust management certificate and it’ll pop up. My name will be there. I think my picture might be there. It’s all over my LinkedIn. So if you look me up, you’re going to see the peak trust management certificate program. You can always email me, jennifer at zeldenlaw.com. Happy to push people into it. start, I’m in the new cohort right now. We’re two weeks into a 10 week program. But we have a new cohort starting in May. I think it’s May 4th. So may the fourth be with you. Frazer Rice (56:24.622)Terrific. So the final question here is really more of a crystal ball question. In this trust industry, trustee industry, what are the real, I’m going to say opportunities out there, and we’ve sort of painted a picture of doom and gloom and its low profit margin and things like that. Where can someone who is thinking from a business perspective about this find something? Once they’re properly educated about it and being able to participate in it. Jennifer Zelvin McCloskey (56:57.582)There are so many opportunities. There is an absolute need for good trustees everywhere. Trust companies from coast to coast, individual trustee alliance. People really, really need trustees. There’s tremendous opportunity with Heritage Institute, not the Heritage Foundation, but the Heritage Institute. There’s opportunities with…various family offices and various trust companies for education, for beneficiary education. So many opportunities out there. Trust companies are just clamoring for people. So if people are interested in becoming a trustee, getting that education, you will not have a hard time finding a job. Like you said, it’s basically recession proof. This wealth is going to transfer. We need sophisticated, knowledgeable trustees. on the receiving end of that transfer so that it happens correctly. Frazer Rice (57:56.578)I’d go so far as to say financial advisors. I just gotta say, a CFP is useful, CFA is on your investment side, but something like this, you know so much more about how intergenerational wealth works than what’s happening in those particular situations that I think it helps people stand out when I see something like that on a resume. Jennifer Zelvin McCloskey (58:00.302) “THE TRUSTEE CRISIS: Navigating the Challenges”That’s all the podcast. I hear you. I hear you. Frazer Rice (58:24.386) “THE TRUSTEE CRISIS: Navigating the Challenges”All right, with that, Jennifer, it’s great to catch up and I will have all of your information on the show notes and I will either see you at the ITA conference in Dallas or what I’m down in Delaware next. More Around “THE TRUSTEE CRISIS: Navigating the Challenges” BUILDING A TRUST COMPANY TENNESSEE AS A JURISDICTION DIRECTED TRUSTEES DELAWARE WELL BEING TRUST THE TRUSTEE CRISIS: Navigating the Challenges https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/ Keywords for THE TRUSTEE CRISIS: Navigating the Challenges trusteeship, wealth transfer, trust management, fiduciary duties, trust education, estate planning, risk management, trust administration, individual trustees, trust companies, the trustee crisis, navigating the challenges, the great wealth transfer,

SPORTS MEDIA FOR ENTREPRENEURS

Frazer Rice and Bram Weinstein, the “Voice of the Washington Commanders,” discuss the shift in sports media for entrepreneurs. The current state of sports journalism is in flux, especially with the decline of the Washington Post’s sports section and its implications for local coverage. We explore the opportunities that come from this void. (Including the potential for new media ventures and the challenges of monetizing content in a fractured media landscape). The discussion also touches on the future of the Washington Commanders, the importance of audience engagement, and the evolving nature of podcasting and digital media. https://youtu.be/O0syDGcSkvU https://open.spotify.com/episode/3Ut9QRj7X9QD1pGEA6y6qt?si=39nLO2reQ8SK_nj0zenzDA Editing and post-production work for this episode was provided by The Podcast Consultant (⁠https://thepodcastconsultant.com⁠) Takeaways The Washington Post’s sports section closure is seen as a significant loss. There is a growing opportunity for new media companies to fill the coverage void. Monetizing media ventures requires innovative strategies and diverse revenue streams. Podcasters face challenges in gaining audience traction and monetization. The Commanders’ future depends on effective roster changes and health improvements. Engagement with the audience is crucial for media success. Digital platforms like YouTube provide exposure but limited revenue. The media landscape is rapidly changing, requiring adaptability. Local sports coverage is essential for community engagement. The importance of maintaining journalistic integrity in a changing media environment. SPORTS MEDIA FOR ENTREPRENEURS CHAPTERS 00:00 The State of Sports Journalism 02:59 Opportunities in Media 06:07 Monetizing Media Ventures 09:05 Navigating Podcasting Challenges 11:59 The Future of the Commanders 15:06 Engaging with the Audience DISCOVERING BRAM, THE COMMANDERS, AND AMPIRE MEDIA BRAM on SPOTIFY AMPIRE MEDIA ON YOUTUBE AMPIRE MEDIA WEBSITE Transcript of “SPORTS MEDIA FOR ENTREPRENEURS” Frazer Rice (00:00.686)Welcome aboard, Bram. Bram N Weinstein (00:02.551)Hey, Frazer, how are you? Frazer Rice (00:03.736)Doing great. The last time we spoke it was about three days before the Chicago Hail Mary, so I’m viewing that as good luck. That must have been something having to call that game. Bram N Weinstein (00:14.071)That was part of the most magical season I’ve ever been a part of. Not only first ever for the franchise, but 12 and five, NFC championship game, hadn’t done that in a generation. It was pretty incredible, yeah. Frazer Rice (00:28.652)No, as a skins fan, now commander’s fan, it’s been a long time, but it was a wild ride. One of the things that’s happened recently, which I know strikes near and dear to your heart, and frankly, for people who grew up sort of following it, has been, I guess, kind of the evisceration of the Washington Post sports section. And it’s got all sorts of impacts. But from your perspective, How do you make sense of that and what does it look like going forward for a city essentially that has all the major sports and the major paper not really covering it? Bram N Weinstein (01:09.719)I don’t make sense of it. I don’t understand it. I think at its core, The Washington Post is two things. It’s one of the most important publications in the world as the paper of record in the most powerful city in the world and the democratic center of the world. But it also is a local newspaper for one of the top 10 markets, top five markets in the country. And the idea that it would not cover its sports teams, or Metro desk, which, I know, you know, for our purposes, we focused a lot on the sports desk being shuttered. The Metro desk is too. So the Washington Post not covering the mayor’s office, city council meetings like in especially in these political times where, you know, the district budget is held by the federal government. To me, it doesn’t even it doesn’t compute that that wouldn’t exist. as far as like the sports section goes, which I think is like the lesser of the two real problems with this, but obviously is a real problem is, you I think for me, it feels like a death. I grew up reading the Washington Post. A lot of the reasons why I wanted to do what I wanted to do was through osmosis of reading Tony Kornheiser and Michael Wilbon and Tom Boswell and all of the great writers that came through the Washington Post. And I just don’t really understand how it’s not within the business model to be part of this. At the same time, you know, it does open opportunities for entrepreneurs like myself who have media companies and are always looking for new talent and always looking for openings. And I can tell you that void is going to get filled. But I do think it is sad that the Washington Post could not figure out a way to modernize itself to allow its coverage to continue for its loyal readership. This is a local paper that isn’t covering local news. That is astoundingly terrible in terms of a business practice to me. Frazer Rice (03:14.317)It’s weird because from my perch here in New York, I work across the street from the New York Times building and there’s a little bit of sort of guffawing that the New York Times has turned into a gaming company and sort of a media company second, which has helped to subsidize its continued commitment to long form journalism. But even then, I mean, it’s really focusing on arts and leisure and cookbooks and wordel and all sorts of things like that. And it’s a shame that the Washington Post either couldn’t pivot in that direction or otherwise make sense of things. Bram N Weinstein (03:48.727)Is the business model of media the same that was no. so there are a few things that play here to be fair. I’m not asking Jeff Bezos to lose money. You know, like, or just be the beneficiary to subsidize something, but you do bring up a point, which is. And I read this quote recently from, the old ownership group, the Graham family, who basically said. “You know, the newspaper is a grocery store. Like you are supposed to go in there and pick all the different things that you want. And hopefully there’s something for everybody or hopefully a number of things for everybody. And in modern times, the New York Times has done a very good job of putting together a new modern grocery store for people. So there’s a variety of different things that does subsidize the important work that it does. And in the end, like to me, the New York Times and the Washington Post and maybe the Wall Street Journal. Are the three most important newspaper entities, if you can call them that, in the United States of America. And for one of them to not understand their role in protecting democracy, in covering our world, in informing the readership, whether it’s locally or nationally, to me is an absconding responsibility. So I don’t know what the answer is. Again, I’m not like demanding Jeff Bezos just…money to keep things subsidized. Like it is a business and I understand that, but there must have been better ways to go about it or maybe, you know, sell it to someone who does have ideas because it’s important for its foundations to remain intact. And so I just, you know, for me, it’s, been hard to digest, honestly. And like to your original question of like, like, how do you make sense of it? I really don’t. I don’t make any sense of it. Frazer Rice (05:39.692)Well, you also now have a fledgling media company and I’m a devourer of yours and Kim’s and Standix podcasts and I learned something from it each time. I see an opportunity there if major component of the media establishment in the area is abdicating its role, not only to the major sports that aren’t getting covered as much. There’s an opportunity there. But even like the local hotbed sports like lacrosse, they’re completely ignored, I would imagine. And that might be a way to sort of get some grassroots component going. Bram N Weinstein (06:17.195)Yeah, we also here with my company Empire see the opportunity, unfortunately, but we do. And there’s a lot of talent that is available. There is a void in coverage. We know, you know, the size of our community, the appetite for sports. And so, you know, I don’t want to say too much, but we are actively seeking partners to expand in a pretty large way if possible. So Frazer Rice (06:24.045)Right. Bram N Weinstein (06:46.067)We’re working towards that and I’ve been working towards that and moving very fast in the hopes that we’re not the only ones thinking this like you. There’s a lot of people thinking there’s an opportunity here. I wish it wasn’t the opportunity that it is, but it has presented itself and it’s an opportunity that we intend to see through. So we are actively speaking to a number of different interested parties about funding a major expansion of what we’re doing. Frazer Rice (07:11.379)Really cool. Well, I’ll be sure to keep an eye on that as it develops. When you’re thinking about sort of the money making aspect of it, we don’t do things for free and it’d be lovely if we all had time and disposable income to do that without giving away the playbook because you’re raising money and you don’t want to give that up necessarily. But how do you think about that in terms of delivering value for sponsors or advertisers or the general audience? Have you made any…sort of commitment strategy-wise there. Bram N Weinstein (07:42.197)Yes, digital audio video forward. You know, I also believe in enterprise journalism. I also very much believe in long form journalism, but the audience appetite for it is limited. And so you do have to subsidize it. And that comes in the form of a number of different properties repurposed for different platforms in various ways, podcasts, video shows, YouTube. All offer opportunities to monetize the same content. I have been studying very closely the things the New York Times has done and thought about what kind of engagement tools would be necessary to be an added perk for those who would end up probably subscribing to a situation like this. So there are a lot of different types of financial models. One is subscriptions. in a variety of different ways, whether it’s premium content, newsletters, one of them is obviously advertising, which would come with YouTube or different streaming channel, streaming network, podcasts, obviously, sponsorship, which could go across the board for all of the different categories. And, lastly, live events. And this is something that we are very capable of doing as well. So there are a tremendous amount of different models to make money. None of them are easy. And because the audiences are so fractured, I think you have to find ways to make financial streams in the same content in various different forms. But we’re willing to do that. And we’ve already kind of done that with what I’ve done with Empire on a very limited role, which is why we think we’re ready to make this expansion and move. But we need an investor to buy in and to the investors, I would say to them, we intend to make you money and we intend to be something that could be purchased in a three to five to 10 year plan. So we understand the importance of making sure that the investment is paid off in the end as well. Frazer Rice (09:52.205)Cool. Are you thinking about expanding into other subject matter areas? you’re in DC, so politics, guess, would be a natural fit. Right. Bram N Weinstein (09:59.965)Not really. And I wouldn’t personally, like, I just don’t feel like that’s my expertise. So no, but like, could we be something like the ringer where you’re looking into culture, you’re looking into arts, music, dining, those types of things? Yeah, I think like that’s something I’m not sure that I would move fast into a realm like that. Like we see the void in sports coverage for this marketplace. We would like to fill that void. And whatever we do after that would be dabbling in those spaces to try to, again, find new ways to find new audiences. But we want to go with our core products first. And certainly for me personally, the politics world is completely above my pay grade. So I’m out of that. Yeah. Frazer Rice (10:46.028)It’s above everybody’s I think if anybody could figure it out It’s it’s one of those Rubik’s cubes that it’s not worth solving oftentimes So, you know one of the things I don’t know if I’d struggle with or I’m Would like to expand on my front is just getting my podcast out to more people and the concept of discover ability and one of the strengths that I think you have Is you know your current position in traditional media with the commanders? Keim has it a little bit with ESPN, Ben Stendig has it with his Substack, which isn’t traditional media, but there’s different outflows on that front. How do you view that competitive advantage in terms of getting the message out and almost having a bit of a head start over some of the other possibilities out there? Bram N Weinstein (11:30.175)Yeah, well, I think there was always like, you know, for the podcast world. Yes, anybody can do a show and you know, they could be good. The reality is, though, you know, the people who already have stakes in the marketplace, at least from name value, are always going to have a head start. It’s going to come down to how you market yourself and how you go about getting your show out there as much as possible. The reality is you need some level of a robust social presence to get to as many eyeballs or ears as possible. And if you don’t, then you typically have to kind of go down a paid route of making sure that it gets into algorithms. And so it’s a hard climb, like for sure. You know, like when podcasts and kind of open the gates for everybody, same thing with YouTube, like Frazer Rice (12:14.54)Mm. Bram N Weinstein (12:23.444)You know, there’s going to be a lot of success stories. There’s going to be a lot more people who are either doing it for love of the game, but not for money. And that’s just the reality of how much time any person has to give up to content. And secondarily, who can get to enough of an audience to make it worthwhile? As you probably know, you need thousands of downloads to really make any kind of real money at all on a podcast episode. Getting to thousands of downloads. doesn’t sound like a big, like if I said, you have to get to a thousand, like a thousand doesn’t sound like a lot for one episode, but it’s way harder to do. wager a guess that 90 % of podcasts do not reach 1000 downloads per episode. So it’s a very hard number to reach. And if you really want to make money, money on it, we’re talking about getting 10,000 an episode. Sure, anybody like myself that has various different platforms I can use to promote my own shows has a head start in that manner. And that would always have been for anybody in traditional media who had a following to start with, if they were willing to jump into the digital side quickly, they were always going to have a head start because they already had an audience that was built in. It was just converting them. Frazer Rice (13:39.572)You know, and for me, the conversion isn’t so much, you know, buying pillows or mattresses from the advertising that comes on the show. I don’t have any advertisers. The ROI for me is, in a client, one client, maybe listening to it and then calling up. And all of a sudden that pays for everything, in sort of my day job. Bram N Weinstein (13:52.992)Yes. Bram N Weinstein (13:57.813)Yeah, well, I think you’re actually looking at it the right way. Like, could your show end up having a big audience? Yeah, of course it could. But like, the reality is for most people who are doing podcasts for the other purpose, which is either marketing, client curation, branding, like those have extraordinary value to like my company’s done a lot of B2B type podcasts. And I explained this, you know, to them, and most of the people I work with aren’t looking, they don’t think they’re going to be Pat McAfee. But like, they understand that like, The value in doing this well is going to get paid back exponentially in client curation, marketing, entering new market spaces, expanding business opportunity, because it done well, it can really have that kind of benefit for you. Frazer Rice (14:43.563)How do you make sense of all the different platforms that are out there? You know, I converted to video because ignoring YouTube meant basically ignoring Google and I was like, well, that’s dumb. I know, Spotify’s out there. iTunes has just converted to video. And then you’ve got all the different podcasts, platforms, et cetera, et cetera, et cetera. How do you, it just seems like it changes weekly in many ways as to what’s in favor, what’s not. When you’re making a bet on your company, how do you deal with that? Bram N Weinstein (15:06.996)Yeah. Yeah, think. Yeah, it’s hard. Things have changed a lot. Like, for the most part, we double up our podcasts now and they’re taped on video. So they’re disseminated with not a tremendous amount of production value behind them. And of course, you know, used as audio podcasts as well. So it’s a two in one situation. And we find that YouTube. The advertising dollars there are very small, but the exposure, not unlike when we were talking about kind of marketing yourself, the exposure of being there, if you can get thousands of views, often offers up a lot of different opportunities. Sponsors prefer to be visually seen than just audibly heard. So like in both of those cases, they can be beneficial. like we don’t frankly make a lot of like we have on YouTube. We only have two primary shows with Empire Media that are on YouTube on our channel. We have about 18,000 subscribers now and we get on an average month like 127,000 views between just the two shows, which is a lot, know, especially for like a niche thing where we’re really just talking about one thing, the commander. So we’re like, we’re not expanding out much more than that. So it’s a very niche thing and yet we’re getting a really, really sizable number. Frazer Rice (16:11.787)That’s good. Bram N Weinstein (16:25.15)If I told you how much money we get paid for that, you’d laugh like it’s it’s pennies on the dollar. But the exposure of having it and the amount of views and impressions that it generates gets us sponsorship opportunities because people want to be part of that. And that’s where the real opportunity comes with YouTube. As far as like using Facebook Live, IG, like TikTok, I suppose. Like. I don’t know, like I don’t think you can be everywhere. I think the idea is to try to be, I think you’re talking to different audiences on each of these things. So I don’t think it’s one size fits all. And it has to be worth it. For me, it has to be worthwhile. Like, is there a reason why we’re there other than we’re just trying to get people but if there’s no benefit of a carryover beyond it and it just happens to hit their feed, but we’re not getting any sponsorship money out of it or any activation out of it? Well, then what was the point? So I’m always looking for right places to be. But there has to be an incentive structure that makes sense, either true carryover audience growth or obvious sponsorship opportunity. Frazer Rice (17:32.076)The cost of coordination of all of that too starts to overwhelm. I know you’ve got a schedule to keep here. I would be silly not to ask about my commanders a little bit. Two new assistant coaches, offensive and defensive coordinator, lots of changes coming in terms of personnel and hopefully sort of a rethink of Jaden and hopefully a lot better health going into next year. But… Bram N Weinstein (17:36.17)Yes. Yeah. Frazer Rice (17:59.84)Potentially better division in many ways, how do you see things going forward? Bram N Weinstein (18:04.71)I don’t know what their team looks like yet. So this is like a hard question to answer because I think they’re going to be very aggressive in free agency and then obviously they have the seventh overall pick. I kind of need to see what their roster looks like before knowing. I you know, David Blough been here the last couple of years. He is one of these very young, very impressive people. I’m glad they kept him in the building. It’s a big ask to jump from where he was to go to offensive He at least is talking a big game like he’s ready for this and I hope he is, you know, like we’ll have to see. I think a lot of it will have to do with the quarterback stays healthy and that just didn’t happen a year ago and the whole team didn’t stay healthy. So they fell apart and you know, like I don’t think health was the only reason they had the record they had, but I think the health made it worse than it could have been like their record probably would have been a little more respectable if the health wasn’t as bad as it was. Hopefully Jayden stays healthy. He’s fine now. So hopefully he stays healthy and on defense Deonte Jones. This is his first opportunity doing this but he’s actually been in the league for 20 years and he’s worked with every almost every major defensive coordinator up until this point So he feels like someone that’s been overdue for an opportunity. I like the system He’s coming out of does he have the personnel to win with I don’t think right now and that’s why I’m like Let me see what they do in free agency. How much money do they spend at what positions? How are they looking to upgrade that side of the ball? And if they bring in what I think will be two, three, four new starters, whether it’s via the draft and free agency combined, then I think we could have a different conversation about what I think it’s gonna look like, because I kinda need to see what the roster looks like first. Frazer Rice (19:44.691)No, there’s so many holes in the free agency component. Not to pin you down on a record going into next year, because we don’t even know what the components are going to be. To that end, as you said, the injuries were a real problem. Everything that possibly could go right in 2024 didn’t in 2025. How does that work over the course of time in terms of regression to the mean? Is just every season completely different or is there something that carries over? Bram N Weinstein (20:19.542)So 2023 was nothing like 2024, which was nothing like 2025. So we’ve had a roller coaster for sure. Um I last year was a surprise like. If you had told me the beginning of the season look like the schedules too hard. They had too many injuries. They went 9889 didn’t make the playoffs. I would have believed you. You know, like it’s just things were just harder to try to replicate. I didn’t expect what ended up. So can they flip that back around and be more competitive again? I do believe so. I also agree with something you said, which was. Right now and again don’t know what the teams look like exactly yet, but I do think the division on the whole will be better. The Giants will be better coached for sure. They have a lot of defensive talent and we’ll see if Jaxson Dart takes another step. And if that’s the case, the Giants may be more formidable than they’ve been in 10 years. The Eagles are still going to have a very, good roster. No matter Frazer Rice (21:04.938)Mm-hmm. Bram N Weinstein (21:16.106)Whatever they do this off season, even if it includes moving off of a couple of primary people, they still have an extremely strong high level roster. And I like how the Cowboys pivoted from Micah Parsons. I know it hurt them last year, but I do like what they did in the return that they got since. So they play their cards right. They could be in line to really make a jump back this year. Like they’re the ones that feel kind of ready to me. If they play their cards right and if they don’t end up, which is the second part, which is never they avoid, they never avoid this. They turn themselves into a circus. So if they could ever stop turning themselves into a circus, I think it would serve them. You know, I think it would be a very positive outcome for them, but their owner doesn’t live in that world. He likes to be a ringmaster. And, you know, I think that that’s probably more than anything been the hindrance to them winning a Super Bowl over the last. Frazer Rice (21:55.004)You Bram N Weinstein (22:14.422)30 years, they’ve had good enough teams to do it. They just don’t and I think they get in their own way. But you know, maybe this year’s a little different for them. Frazer Rice (22:21.364)No question. Alright, how do people find Ampire and sample all the different media that you’re putting out there? Bram N Weinstein (22:31.766)YouTube is Empire Media AMPIRE. We have our YouTube page. You can find that there. My show is under my name, Bram Weisside Show. John Keim Report covers the commanders and Last Man Standing is Ben Standing’s show. And who knows, maybe in four to six months, we’ve got some new offerings. I’m hoping that’s gonna be the case pretty soon. Frazer Rice (22:51.466)Terrific. Thanks for coming on, Bram, and rootin’ for your success. Bram N Weinstein (22:55.414)Thanks a lot. Take care BRAM on “WEALTH ACTUALLY” three days before the JAYDEN HAIL MARY Keywords: sports journalism, Washington Post, media opportunities, podcasting, Commanders, monetization, audience engagement, digital media, sports coverage, media landscape Titles The Decline of Sports Journalism Seizing Media Opportunities https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

QSBS for FOUNDERS

This conversation delves into the intricacies of Qualified Small Business Stock (QSBS) and its significant tax benefits for founders. MICHAEL ARLEIN, Partner at Patterson Belknap, explains the eligibility criteria, the importance of strategic planning, and the potential pitfalls that can arise. The discussion also covers the implications of state taxes and the advantages of gifting strategies. We cover innovative approaches like the “GOAT” trust to maximize tax-free gains. Founders are encouraged to engage with legal experts early in their business journey to fully leverage QSBS opportunities. https://youtu.be/lfBt0j7BlW0?si=LufZ8j2YtgdspLMJ Editing and post-production work for this episode was provided by The Podcast Consultant (⁠https://thepodcastconsultant.com⁠) Takeaways from “QSBS For Founders” QSBS is a powerful tax benefit for founders.The maximum exclusion amount has increased to $15 million.Careful planning is essential to avoid QSBS pitfalls.Gifting QSBS stock can multiply tax exemptions.State tax implications vary; California does not recognize QSBS.Discounting shares can aid in estate planning.Converting from an S-Corp to a C-Corp can preserve QSBS benefits.Early engagement with legal counsel is crucial for founders.Innovative strategies like the GOAT trust can maximize benefits.Almost all businesses should consider QSBS eligibility. Chapters 00:00 Understanding QSBS: A Founder’s Guide.02:56 Navigating the QSBS Landscape: Common Pitfalls.06:07 Maximizing QSBS Benefits: Stacking Strategies.08:42 The Importance of Timing: Gifting and Valuation.12:03 State Tax Implications: The QSBS Challenge.14:52 Entity Structures and QSBS: What Founders Need to Know.17:37 Transitioning to C-Corp: Strategies for S-Corps and LLCs.20:29 Who Should Pay Attention to QSBS?23:44 Innovative Business Structures: Technology and QSBS-26:36 Early Stage Strategies: Cloning Yourself on the Cap Table- Transcript of “QSBS for Founders” Frazer Rice (00:01.109)Welcome aboard, Michael. Michael Arlein (00:03.096)Thank you. Good to be here. Frazer Rice (00:04.617)So let’s get started here. QSBS, Qualified Small Business Stock, is something that certainly all founders should be aware of. It’s a tax feature. It’s probably one of the nicest goodies that the federal government gives to people who are starting businesses. Take us through a little bit about what happens there. For founders, you’re going to hear the numbers 1202, which is the section that is quoted here. Take us through a little bit about what happens at QSBS and why it’s a powerful feature. Michael Arlein (00:37.496)Sure, that sounds good. To your point, the New York Times called QSBS a lavish tax dodge that is easily multiplied. And I happen to. I’m not aware of any other provision of the tax code that can save anyone as much money as QSBS. It’s really incredible. I think the policy reasons behind the provisions are that they’re designed to encourage entrepreneurship. Everyone on both sides of the political aisle is in favor of. The basic premise of it is that if you create a company.You own the stock for five years. The company’s in the form of a C corporation, It’s not in one of a series of restricted industries. Mainly service industries, that when you sell the stock, you can exclude from paying tax $10 million, the first $10 million of your gain. That’s the old rule, which I’m still dealing with, that that’s for stock that was issued before July 4th, 2025. And now QSBS has gotten even better. So if you get stock after that date. You hold it for actually now three years, you can exclude ultimately up to $15 million from tax. So we’re now dealing with two different regimes. I’m still stuck in the old regime. Most of the people I’m dealing with got their stock before last July. But I’ll try and point out the differences as we go along. Frazer Rice (02:29.066)Sure, as you said, there are a bunch of things you have to jump through. To make sure that you can sort of apply and then to further comply with the rules associated with it. Things like services. Making sure that maybe you don’t have too much cash and that it’s deployed correctly. Making sure that the original stock issuance persists throughout. What are some of the things that you tell your clients? How do you walk them through the process so that they don’t trip on themselves and lose this nice tax advantage? Michael Arlein (03:09.676)Yeah, there are some landmines, things that you can step on and blow it. There’s some weird rules around redemptions. Like if you have redemptions. Let’s say you create a company and then there’s three co-founders. Then very early on, one of the co-founders wants out or you want to kick them out. And then the mechanism for that is the company kind of buys back their stock. You know, there’s complicated rules that can, you know, blow up QSBS for the entire company. I think some people start their businesses as LLCs or S-Corps or things like that, and then later convert them. And that has to be done very, very carefully with good tax advice. Otherwise that can also blow things up. When I talk to founders, it’s pretty clear their business qualifies. They didn’t screw anything up. Frazer Rice (04:19.626)So the OBBBA in a sense turbocharged a little bit the tax savings. That five year requirement that you talked about. You can now get some of the benefits even as early as three years. And then the dollar amounts got expanded. In addition, and this was not necessarily OBBBA related. The ability to take one exemption and maybe multiply it via stacking continues to be a powerful tool. For those people who are walking into your office now. How do you get them when they sit down situated so that they do that planning upfront? Michael Arlein (05:08.598)Yeah, that’s, you we kind of buried the lead. The benefit of QSBS: it would be incredible if you could just pay no tax on 10 or $15 million. But what’s even more incredible is that you can stack or multiply the number of exemptions. You have using a provision of the code. It says that if you gift QSBS stock to some other person or entity. That that person or entity can take their own up to 10 or 15, their own QSBS exemption. I’m just gonna say it’s 15. We understand that’s for newly stocked. So, classic move for a founder would be to set up trusts for children. There’s a special kind of a trust for a spouse. You can do this with sometimes people make trust for their parents, their siblings. There are certain states where you can actually make a trust for yourself. Usually when people come to my office, the conversation is around creating entities. Typically trusts, and then gifting shares to those trusts. that As a family, you could go from 15 million tax free to 30 or 45 or 60 million tax free. The record I had one guy who had a very large family. He married, he had kids and was very close not only with his parents. With his siblings, his nieces, his nephews, even his aunts, uncles, and cousins. He created 23 trusts, which on paper at least would save up to $230 million. Wow. Yeah. Frazer Rice (07:08.896)There’s a danger with that though, with those 23 trusts had to be different. I imagine the IRS would say, wait a minute, we see what you’re doing. Stacking all of these different things is theoretically nice and all, but is there a way to create differences within those trusts so that the IRS doesn’t view them as one big pot? Michael Arlein (07:39.692)Yeah, great question. So you can’t create multiple identical trusts. Meaning I can’t create five trusts for my child. The IRS has rules that consider those trusts as one trust and would have only one exemptions. So, one of the limiting factors on creating trust is often, who are the people you’re willing to gift to? You know, so this guy with the 23, he actually was willing to create trust for his cousins, his aunts, uncles. Now, those individuals were the beneficiaries of the trusts, which means that they were eligible to receive money from the trust. But those trusts were designed so that when those people passed away, the money would circulate back to his children. So, you we never talked about it, but it’s possible that in his head, his plan was that he would maybe provide some benefit to his cousin. Maybe he’d say to his cousin, hey, if there’s $5 million in this trust and you need a little money, I’ll make some distributions to you, but I’m going to request that the trustee kind of withhold most of the money. And then when you die, it’ll come back and benefit my kids. So there are nuances there. But generally speaking, most people aren’t willing to do that. They’re not close enough with their cousins and their aunts and their uncles. So they end up maybe creating trusts, you know, for their kids, for their parents, sometimes, you know, for their spouse and maybe sometimes they go a little beyond that, but not that far. One thing that’s important is that the U.S. Frazer Rice (09:33.472)One thing that’s important is that the the QSBS is a capital gains tax Concept meaning you’re you’re saving on the tax. From a QSBS for Founders standpoint when the the founder sells the business, and you have to pay capital gains tax on that front. Part of the reason I’m skewing this toward founders is that there’s an gift in a state exemption of 15 million dollars. So it’s important to get these assets into these trusts as early as possible and with as low evaluation as possible. That in many ways is where the real leverage is. Does that square with your thinking? Michael Arlein (10:11.019)Yeah, absolutely. We have a permanent $15 million lifetime gifting limit. $30 million for spouses. And when you gift stock into these trusts, you’re typically gifting at a common stock valuation. People are familiar, founders are familiar with common stock valuations because they do that for purposes of issuing stock options, you know, the so-called 409A valuation. Now, a gift tax appraisal is different than a 409A valuation, but in many ways, they’re very similar. S0 founders know that, you know, they could be raising a preferred round at $10 a share, but their 409A common stock valuation is still $2 a share. So you can get a lot of gifting done. You can give a lot of shares away. You know, using your $15 million exemption, even if the company is very valuable. So we see founders doing this sort of gifting, you know, late in the game, even right before a transaction or an IPO. But if you had a crystal ball, or at least, you know, you were willing to take some risk, obviously, the earlier you do it, the better, because you could gift… I mean, theoretically, if you set up trusts and you gifted shares the day after you created your company, they would be worth essentially nothing. And so you wouldn’t have to use hardly any of your gifting exemption. The problem is most people, A, aren’t thinking about that on the day they create their company. They don’t have anyone whispering in their ear and telling them to do that. And number two, they wouldn’t want to spend the money on legal fees to set up structures because at that point they’re like, don’t know what this is going to be worth. This could be zero. This could go out of business in a year. So there’s a trade off that I see between doing this later in the process where you’re gaining visibility into outcomes, maybe for younger people sometimes, you know, there’s visibility into their family lives. Maybe when they founded the company they were single. Then if they wait five years they marry, they’ll have children, i.e. people who they could create trust for. But the cost of doing that is that you’re gifting at a higher value. Frazer Rice (12:46.591)One of the considerations that people don’t understand is the state tax implication. QSBS is a federal concept that a lot of states join onto and link to. But a state like California isn’t. And so sometimes that can be an untoward surprise to people that there’s a state tax that happens that they may not have expected. Michael Arlein (13:16.299)Yeah, it’s kind of bizarre that California, the home of Silicon Valley, doesn’t recognize QSBS. But most states do. My home state of New Jersey, in fact, very recently joined the QSBS club and now recognizes it at the state level. There are a few other states, I think. Pennsylvania, I don’t think recognizes it, but the vast majority of states do. But unfortunately, if you live in California, you’re probably only in quotes saving the federal tax. But the federal tax on $15 million, 23.8 % of 15 is a pretty big number. Frazer Rice (14:01.086)No question and absolutely worth doing. one of the things that I find happens is that from an income capital gains tax perspective, we’re on top of it with the QSBS. When we get into the estate planning world, we use the concept of discounting, meaning putting QSBS shares or any shares for that matter into other entities so that you get discounting for lack of marketability and the ability to make decisions around it. Are there any tripwires on that front as far as putting things into other LLCs so that you don’t, maybe in a sense that in trying to really maximize the estate planning and the estate tax avoidance that you create issues that might cause problems with your QSBS tax avoidance usefulness there. Michael Arlein (15:02.413)Yes. Again, the rules under Section 1202 of the code for QSBS have some strange traps for the unwary and some gray areas. And one of those gray areas is around transferring interests in partnership type entities, which would mean like an LLC or a partnership. that owns QSBS. So essentially, it’s very clear that if you have QSBS stock and you gift it into one of these entities we’ve been talking about, that that entity would take the QSBS attribute and be able to enjoy the benefits of QSBS. If the QSBS is held in an entity like an LLC, let’s say you set up a, well. Let’s say a realistic example is that you made an investment in a venture capital fund that invested in an early stage company that’s QSBS. And now you’re a limited partner in that fund and you know that that fund is going to have a large exit in this QSBS position and that you’re going to get the benefits of that, but it’s going to exceed $15 million. So you say, what I should do is I should take my interest in this venture capital fund. I should give them to trust for my kids so that when the fund distributes those shares or distributes the proceeds from selling that company, it’ll be split among various entities and I’ll be able to stack QSPS. The transfer of an interest in a fund that owns QSPS, there’s a gray area about whether the recipient of that fund interest would actually have QSPS and it’s generally viewed as something to be avoided. Frazer Rice (17:08.944)In a sense putting it at risk. A question that I think pops up is that there are people who started businesses maybe pre that July 4th date that you were talking about and maybe they chose an entity like an S Corp or an LLC that isn’t sort of a good qualifying C Corp and they’re looking and saying you know what I may be able to sell this business three to five years or beyond and take advantage of this QSBS. Are there avenues to be able to change that tax elections so that you can begin that QSBS and what’s the analysis around? Michael Arlein (17:44.972)Yeah, in fact, a fairly common structure is, and we haven’t really gotten into these details, but it’s a great question. So QSBS is actually the greater of $15 million or 10 times your basis. Now we ignore the basis rule for the most part because the vast majority of founders do not have basis. They create their company and they put nothing into it. With a bank account with $10,000 in it, and they’re not contributing actual dollars into their business. And so the 10 times basis rule doesn’t actually apply. But there’s a way for a founder to take advantage of that, and this strategy is actually called PACKING. And the packing strategy involves starting your business as an LLC and with an LLC and then converting it to a C corporation. with an LLC, when you convert, there’s an attribution of basis to the founder based on the value of the LLC’s assets. Theoretically, if you started off as an LLC, and before the LLC hit $75 million value of its assets, $75 million being sort of the cutoff for qualifying for small business, you have to acquire your stock before your company assets are worth $75 million. Theoretically, let’s say you did that when it was $74 million, then if your basis was $74 million, 10 times your basis would be $740 million, you would have up to $740 million tax free. So people kind of play this game. I think for a lot of companies, it’s not realistic to be an LLC because venture cap, if you’re going to raise venture funds, they want you to be a C Corp. This works for bootstrapped companies, but most companies are forming a C corporations. You know, there is a path to convert from an S-Corp to a C-Corp and preserve QSPS for Founders. I’m no expert in that. All I can tell you is that it has to be done very carefully and very specifically. And I’ve seen a lot of people who didn’t know they needed to do anything specific and they do not qualify for QSPS. Frazer Rice (20:45.085)As we sort of, I’m not going to say wind down here because we may have some other topics that pop up. But when someone walks through their door, I guess maybe the way to think about it is, who does this apply to? You said the services industry. So accounting, finance, that type of thing- NO. For those things that venture tries to invest in, whether it’s software or other processes, who is really should be paying attention to this? Michael Arlein (21:16.491)I mean, I think almost anyone should be paying attention to this because it may be that you don’t qualify, but often people do. And more often than not, you do. This has broad application for most businesses. There are excluded industries, architects and lawyers and accountants. But if you’re doing something in the tech world, you’re probably going to qualify. It’s good to get some advice from the corporate lawyer who’s helping you create your business. I think one of the considerations of whether you form as a C Corp or an LLC is probably the availability of QSBS status. You know, I think stacking strategies, it’s worth having a conversation probably sooner than later with a lawyer to find out what the menu of stacking options is. I talk to people all the time and we decide it’s premature for them to do something. And then they call me back a year or two later and all the time I’m calls from people who say, hey, we spoke a few years ago and now Frazer Rice (22:34.013)Alright. Michael Arlein (22:39.913)the time is right. So it’s good to get educated, learn what the options are. QSBS stacking is not just about giving shares to your kids. There are strategies that are specifically designed for single people where you can create these benefits for yourself and You know, it’s too good to be missed. if you, I do talk to people who say to me, they’re usually on their second venture or third venture and they say to me, I really screwed this up the first time around. I paid no attention to it and I was focused on my business and I just screwed it up. I literally cost myself millions or tens of millions of dollars had I done it correctly. And now that’s why I’m calling you, because I want to do it correctly the second time around. Frazer Rice (23:33.278)Part and parcel with that, I ran into somebody really more of what’s called a media personality. And usually the way I think of it is that the QSBS isn’t necessarily available for people whose value is centered around them as a personality or them as a brand. But I said, you know what, the QSBS component, while it might not apply here, if your business morphs into something where you’re developing other things, slash maybe you turn into a media production company or, youbecome involved in a technology that drives other things, that you shouldn’t dismiss that. The pivot in the business from sort of a personality generated to something a little bit more business process generated might be something to think about, not only from a strategy standpoint, not that you necessarily wanna do things purely for tax reasons, but if that’s a natural consequence, that’s something to think about. Has that ever popped up in your world? Michael Arlein (24:31.915)Yeah, for sure. Every business these days is technology enabled. And I think sometimes businesses that you wouldn’t think of as being technology businesses are doing enough technology things that they can claim that they’re a technology business and not a business providing a particular kind of service. So, you know, with the help of a clever accountant or a tax lawyer, this is not an area that I operate in. I’m more about multiplying QSBS once you have it. But there are tax lawyers and corporate lawyers and accountants who can advise you how to make your business eligible for QSBS by leaning into, as you said, things that you’re doing that may be…you know, eligible versus other parts of your business that would not be. Also, you know, you can, sometimes you see companies that are divided, right? Like, so there’s a company who provides counseling services, like, you know, they’re actually hire psychotherapists that will counsel you, you know, online, like on a Zoom. and their business is split. There’s a medical services company that employs all the counselors and medical services is one of the excluded industries. But then they also have a completely separate business that is their technology platform. And the way they structured it, the value is really in the technology platform. That business is QSBS eligible because it’s a completely separate company. Frazer Rice (26:28.771)That’s a great example. part of the purpose of the question was to elicit that, is that people may say, well, we fall squarely into one classification when maybe some underlying thought might lend itself to structuring from a tax perspective that might be useful later on. OK, now as we wind down, for someone who is, at this point, starting a company when they’re forming these things, not that you, QSBS for Founders should drive the world, but how do they get involved with the discussions so that they do the right things early? Michael Arlein (27:06.401)Yeah, I mean, I do have a very specific strategy that I love for people who are about to form a company. And it really works best in that scenario of an early stage company that’s just about to launch. The way I describe this to founders is that you can and should clone yourself on the cap table. So if you start off a company and you own all of the shares, you’re basically eligible for 15 million tax free. That’s great. But what if you could clone yourself and there were three Frazers on the cap table, then Frazer would have $45 million tax free. So how do you do this? You can do it with trusts. And the beautiful thing is if you have other people create trust for you, then you can be the beneficiary of the trust and control it as well. And I have sort of branded and named this strategy a GOAT trust, which of course has the double meaning, know, greatest of all time. Frazer Rice (28:21.02) QSBS for FoundersRight. Michael Arlein (28:21.165) QSBS for FoundersBut actually stands for gift optimized to alleviate taxes. The essentials of it are is that we would work with your parents, the founders parents, we would work with your grandma, your uncle, and we would spin up some trusts that they create for the benefit of you as the founder. You would have all sorts of control and access to those trusts and they make a gift into those trusts, probably something fairly modest. Then those trusts on the day of formation buy up some of the common stock. And so those are your clones. You know, you’re having your cake and eating it too. You’re getting, you know, QSBS stacking for Founders. You’re getting some other benefits we haven’t even talked about. Those trusts can be exempt from a state tax and state level income tax. And you control those trusts and benefit from them. So we’ve essentially cloned you on the cap table. And that is a beautiful strategy that most people miss out on because they don’t do it. And then they come to me a few years later and they own the stock and it’s valuable and then we have to do the more traditional stacking strategies. Frazer Rice (29:40.432)Really cool stuff. Michael, how do people get in touch with you if they have these problems slash opportunities? Michael Arlein (29:48.525)Sure, well they can Google me. I have a nice web presence. We have our…Founder Focus Practice Group that I lead at the firm, which is very specifically tailored to provide legal services to founders, personal legal services. And I focus on the tax side of that and QSBS stacking for Founders. My email, msarlein at pbwt.com. Phone number 212-336-2588. Frazer Rice (30:23.324) QSBS For FoundersThat will all be in the show notes. Michael, thanks for being on. Michael Arlein (30:26.753) QSBS For FoundersThank you. FAMILY OFFICE MYTHS https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/ QSBS for Founders QSBS for Founders