Real Estate Agents: Your LLC Isn't Protecting You Like You Think

0:00we all are going to leave a legacy. Are you going to leave it in the way that you want?
Turning over control of your decisions to whatever the statutory default rules are. And it was a 10-year um court battle because she had not recorded what she wanted to happen in that instance. Everyone's going to leave a legacy. What kind are you going to leave? Welcome back to the Be Wealthy Podcast. I'm Brett Tanner and this is the show where we deep dive into the strategies, mindsets, and real world tactics that unlock true financial freedom and abundance in your life. Today on the B wealthy podcast, we've got my personal estate attorney, Marc Dearth with Dearth Law. And in this episode, we break down what is an estate plan, what are the basics you need, and why you don't want the state in charge of your finances. We all are going to leave a legacy. Are you going to leave it in the way that you want? And there's some decisions you need to make. We walk through the additional layers of trust structures and how you could think about those, how you could actually give wealth to your kids without making them entitled, why privacy matters in your life, and how you should think about

1:03risks in your LLC's, and so much more. Mark, beyond being a geniusly gifted attorney, an incredible businessman, he's a really cool dude who loves to fish like I do. He's a really good friend of mine, and I am very excited to have him on the podcast. Let's jump into my conversation with Mr. Marc Dearth. Mark, welcome to the podcast.
Thank you for having me, Brett.
Mark, I wish we had a cool story how we met, like it was cage fighting in Cambodia or something, but that's not how we met. Uh we met because I was looking for a trust and estate plan and that was probably gosh what has it been like that was originally that's over I was going to say 15 15-ish years ago right around in there something like that
pretty close. So Mark, you work with um a family offices, wealthy people, very successful individuals um who are looking to leave a legacy. They want some tax strategy, but they really wanted an estate plan that really is thoughtful about their wishes. And so

2:07before we go there, I always want to go back to how did Mark kind of become Mark? And so Mark, where did you grow up? Where'd you come from?
So originally from Dayton, Ohio. um family. Dad took a job that moved us from Dayton, Ohio to Clarksburg, West Virginia to Richmond, Virginia to Atlanta, Georgia by the time I was in middle school. And so, while I'm a Midwesterner by nature, I've grown up in and around Atlanta, Georgia since since middle school.
Okay. And when you were growing up, you know, I always like to figure out was when when money was talked about, your dad, you know, moved jobs. was when you were 10 years old was when money was talked about was it was there scarcity around it or was it totally abundant?
Uh I wouldn't say scarcity. I mean we were comfortably middle class is how I would describe it and um dad you know moved up the corporate ladder throughout the years but um it was I distinctly remember my mom telling me a story one time that you know we live paycheck to paycheck. Your dad brings it home and that's what we live on and he does very well and we're comfortable but you know

3:10there wasn't a lot of margin for error in that process. I felt
when you when you look back at it, seeing some of those, are there any lessons or, you know, I believe there's two ways we could learn, right? We can learn from great things our parents did. And I've got definitely some lessons there. I also look when I look at my parents, there's some things I look back and go, man, I I don't know if you guys were were nailing that at the time. Are there any things with money when you look back at your parents and you go, gosh, this was helpful or this wasn't helpful?
I'll tell you. I mean you it's a it's a quote from uh one of the Wright brothers about like I'd nothing more than for my son to have parents from Ohio like loving parents and be from Ohio or something. Very much feel that way. I mean my parents um did things right. I mean, mom was um, you know, intently centered on taking care of my sister and I and making sure that we had good childhoods and taking care of things. And dad worked his butt off, but also was at every baseball game and coached in everything else. And so, um, they were great role models in keeping the

4:14keeping first things first. Um, but I don't know, there was a ton of money lessons in there. It was just kind of you do what you what you're supposed to do and um you know it'll work out.
So you didn't come into this though with some you know you didn't you didn't gain a lot of lessons. You learned all the financial lessons later through experience and we and we'll go there. So it was all kind of money. We had enough. We weren't starving but we didn't it didn't really wasn't it sounds like it wasn't something that was talked about at home often or we weren't really talk about compound interest and Mark this is how you might rule the world through thinking about it a little differently. That conversation doesn't sound like it was happening.
Not really. No.
No. Cool. So you grow up there. When do you decide that you go to college? Where do you go to college?
Uh University of Georgia.
All right. And then when is it Go Dogs. When do you decide go Bulldog? When do you decide that uh you want to be an attorney? When did when did you kind of when did that take place?

5:16
Well, it's interesting. I mean, one of the first real conversations about money that I remember having was colleges. Um I had always, you know, just assumed that I was going to go back to the Midwest somewhere and go to Ohio State or something, Indiana. And um we had the Hope Scholarship in Georgia and my parents said like, "Listen, you're going to Georgia, Georgia Tech because you don't need student loans." And so I had always thought I was going to go to Georgia Tech and be an engineer. Um when push came to shove, I got into Georgia Tech. I I was admitted into Georgia and all my friends were going to Georgia. It's like, "Well, I'll go be a business major." Um I say all the time like I was the quintessential quiet kid in the back of the class who didn't cause trouble and made good grades, but not great grades. Um, my junior year at Georgia, I feel like I finally became a mature student for the first time and figured out how to actually do it. And um, at that point, I felt like, well, if I finally figured out how to be a student, I may as well go ahead and extend this and go into um, law school. And I knew going into law

6:21school, it was going to be something transactional. I knew it was going to be something tax kind of math-based and not litigation. I'm not a generally controversy adverse and so um it it dovetailed very nicely through the process of going to law school and then from there. All right. If you've been listening to the show for any period of time, you know I run a a high-end mastermind for entrepreneurs that are looking to create a different outcome and create more freedom in their life as it relates to their wealth and their money. And that's what I want to offer you a risk-free opportunity to come check it out. We have two seats available at our upcoming mastermind. You can book a call with my team over at bewealthy.com, navigate to the mastermind section and book a call. We would love to have you at the event and check it out and see what it's all about. Okay. So, you and you ended up and then what pushed you into the the section you kind of live in today, which I understand the math, the tax part. What got you into the kind of the estate planning and really thinking through how to help people transfer

7:22their wealth?
Well, it's super interesting. I mean, so you had you started practicing law in 2004 and um with an estate planning firm that had a specialty in wealthy South Georgia land owners and at the time you had really low estate and gift tax exemptions. You had, you know, skyrocketing real estate values before the Great Recession. And so we were doing a ton of planning around how you minimize estate taxes for those people that were, you know, pickup truck millionaires that had no liquidity in their life but suddenly had tens and 20s and 30s of millions of dollars. Um you you couple that going into, you know, 2007, 2008, 2009, 2010, you had the great recession that brought real estate values down. Um you had rising estate and gift tax exemptions. And I was really recruited away from that firm and saying, "Hey, you know, the inf it was clear that estate and gift tax planning was um becoming less of a of a specific platform and you needed to have more

8:26tools in your toolbox. And so, um, was recruited by a firm that was doing those same things plus, you know, balance sheet structuring, how you own what you own, plus income tax planning, um, you know, asset preservation type things in, you know, for a broader segment of of not just land owners, but entrepreneurials, individuals that were creating creating wealth in a different way. So joined that firm in 2010, started my own firm in 2015 and have been practicing, you know, just past 10 years now on my own.
Wow. Um, it all it all I mean it all makes sense. I I love what you said a minute ago is like you went into this specific niche and you mentioned like, hey, I didn't want to be, you know, a litigator. That just wasn't who I wanted to be. Uh, I think it's interesting for all those listening or watching to understand that it's important when you reach out to your attorney to make sure that you're getting the person that is the specialist in that area because I think everybody wants to have the go-to, right? Hey, I just want to have one

9:28person. Um, but that one person might be fantastic in their specialty, but if they don't want to go to court and fight and they're just that's not their thing, like the litigator I use locally, that's all he wants to do. This guy is built he's built for um literally controversy. I mean he would walk into a room he wants the opposite view and he wants to debate it right in a very impassionate way. And when you see those guy it's a just a different it's a different deal right but um I had to learn that lesson early on right that there wasn't the oneizefits-all right you want people that are world class and the best in the world at what they do um and they're not going to be world class at everything. So, let's go Mark to um I want to talk estate planning a little bit or just mistakes. Let's start with the average person out there. Let's assuming they're watching this, Mark. And you know, they've they've got some money. Uh we'll call that, you know, we're going to call it they've got an estate worth $500,000 to a million dollars as an example. Uh but they don't have anything, Mark. It's just uh I kind of know what I want to do

10:31with my stuff. I've got some ideas in my head, but nothing's documented. So, let's start with if I if something happens to me and I'm in that situation, what happens to my stuff?
The state law is going to tell you what happens to your stuff. And that may be, you know, state law dependent on where you're living at that time and things like that. It's, you know, it's um you're turning over control of your decisions to whatever the statutory default rules are.
So, let me make just I want to repeat that. So, if I'm and we'll use Georgia because that's where you are. Uh, so if I'm in Georgia, I've got that 500,000 million. Something happens to me and I'm like, now my my two kids or my three kids come in there and they're like, "Hey." And the the court, the state's going to basically say, "This is subject to to Georgia law." Like this is the process. So, walk us through what would happen in Georgia, like in that example, when you say it's subject to state law, what's that process like? Because I don't have any paperwork filled out. Then we'll go to we'll step the solutions up from there.
Yeah. Yeah. And so Georgia is one of the easier states to deal with in the

11:33probate context. Um, you know, that's an intestate administration is what it's called. They're going to find a preset amount that your spouse gets and then a preset amount that your children split equally.
Yeah. So it's just so you've got a million bucks. It's predetermined. Your spouse gets this, each kid gets this. Even if everyone knows that Brett would not have wanted, you know, one of his kids that had an issue or whatever, wouldn't have wanted that. Basically, the even the spouse has no control over what happens. Is that also true?
Correct.
What's the hardest what's one of the harder states? Could you give us an example of like what what would be the kind of the worst case scenario? Because that scenario already doesn't sound very good.
Yeah. I mean, so you get into the states that take a long time, um, where probate can be timeconuming, expensive, or invasive or just create dispreferred family dynamics. Your Californiaiforns, um, New Yorks, Florida's, um, Washington, there's a bunch of states where the probate process is much more,

12:37you know, non-c customerfriendly, if you will.
What's the ballpark like? So, give us an example. I know rough timelines. Let's assume everything goes reasonable or let's give an average for Georgia and then an average for one of those states that's more difficult. What's the timeline we would be looking at for something like that?
Uh Georgia typically 3 to 6 months.
Okay. And then what about your New York or California ballpark? Just a guess.
Uh 9 months plus.
Wow. So, you've got a here you got a family grieving and can they use the funds or are the funds tied up and they've got to use their own funds to march probate forward?
Well, and that's where, you know, before we even get to the documents, I love talking about um just information gaps and information collections. You know, one of my favorite um anecdotes is um the best marriages lead to the biggest information gaps. I barely know how to log into my bank account. As long as my MX works, I'm a happy camper. And um I go do investments with friends and clients and I tell my wife about

13:39them, but she doesn't care. We have a very mutually beneficial relationship. I hand her checks. She makes sure all bills are paid and my MX works. Um and so, you know, 20 years ago, we could camp out by the mailbox if something happened to one of us and figure out where everything is and and what assets are in my name, what assets are in her name, what assets are in joint names, because all those titling decisions matter. um you know it's harder to to fill in those gaps these days because the mail is not necessarily how everything comes anymore and so you know having that system and process to search up centralize information so we can see how things go is super important.
So let's talk about I love that I love your quote the best marriages would you say can create massive information gaps. Mhm.
Yeah. Because to your point, like you're getting along great. We don't have a we don't have an issue, but she's handling it, you're handling it, but something happens to you, the random deals you do with your buddies or whatever, you know,

14:42there's paperwork on it, but if she doesn't know where to get the paperwork or the file or who's involved, it could cause problems. So, when you when you talk to your clients, let's start there. Uh number one, the first example we gave is having no plan at all. Unless you want your wishes to be handled by a state, probably not a great example. So as removing the step two, it sounds like we need to get our information together in a way that both parties have access to it should something happen.
Well, and a a third party because if something happens to Jamie and I, who's going to come in? you know, at least we have partial information, but my dad, my mom, or whoever else may not have access to even that partial information.
Gosh, that's okay, great point. So, when we think about this information, someone watching this at home and they're like, "Oh my gosh, I've got I've got shoe boxes full of stuff, quote, shoe boxes on the internet, right?" Because today, the shoe box is all over the internet. Where should we start? Like, what kinds of information should we start to gather? What are the what are the things that come to your mind if we're making a

15:45list here?
Yeah. So, first thing is a balance sheet. Um and the more detailed the better. Um what you know what account is it? Who's it titled in? Is there a beneficiary designation on it? Um is it joint? Is it in one of our names? Is it a retirement account? Is it not? You know, what's the address of our real estate? What's the mortgage number and everything else? Right? There's almost you can't you can almost not be too detailed in gathering this information because you never know what somebody's going to need or what they couldn't find elsewhere.
Okay, so we start with every bank account. How's it titled? Is there a beneficiary? What's the routing number? Who's it with? What's their address? Who's the point of contact? What's their information? So, we go through every bank account, stock account, whatever. Separate retirement from otherwise. Okay. Where do we go next? uh real estate go down and you know here's the address, here's the partial ID number, um here's where the insurance is for it. Um you here's when the

16:50property taxes are due, you know, like have that checklist to where somebody can pick it up and continue to steward it as you steward it for all these years yourself.
Okay, so we got bank accounts, we got real estate, we hit retirement. Are there any other and then we probably go into just random stuff, but are there any other big areas or buckets that you think of as you think through this information?
Private investments, LLC's, corporations, you know, stock and non-publicly traded assets. That's often the hardest place to find information.
Okay. Um, pit cars
is a great one. Titles for cars. Um, you know, personal property that has titles and things. Life insurance, who's the beneficiary? Who is the, you know, what company issued the policy? Who's the agent that wrote it? So, we have a, you know, you know, who's the beneficiary of it? Is it joint with husband and wife? Is it just one person? Is it the kids? Oh, and I was thinking as you said that, right, maybe the contact information for every person on your wealth team that was associated with the estate, right?

17:53every person just this is my stock guys, my estate attorney, this is my contract attorney, this is my insurance agent, life insurance agent, banker and I always the way I explain it is I said I I my wife we use a software online that um is out there. I think it's wonderful. I used to do my net worth in a spreadsheet and it just got more cumbersome and technology got better. It's called Cubera. K U B E R A. Uh what happens is like if I don't log into it, I think it's like let's call it 90 days or 120 days. It downloads everything and send it to my wife. It just know like and I can always click the button. Oh, I'm still alive, right? And it would pop back up. But the idea is she would have a really detailed map, you know, and we've got things in place where my assistant who, you know, is a uh a trustee in my estate, which just made a lot of logical sense. the person who's been me 17 years and helped me build it all. She knows where every, you know, where every uh every jar that's got money in it's buried. She knows where all of them are. Um, so that's a great list. So, we get the information

18:55together. Would you agree that's step one? Let's just get the information and see what we got.
Another great one is passwords. Um I think we all under underappreciate how central technology is particularly as you get into the multiffactor authentication and and um things out there. Um you know being able to get into your email to multiffactor things and um you know we use one password but there's a ton out there. I think you you know like the old spreadsheet that we keep in the safe is an antiquated idea that is problematic in and of itself. Like Jamie and I actually share one and it's a simplifier of life because now if I needed to log into that bank account I could. I still don't want to but at least I could.
Totally. I mean a password share a a shared password keeper to your point between spouse today is the ultimate I mean that that is a huge passwords are are massive and also if you're going to take the next step which is where we're

19:56going if you want to plan your wishes all of this cleanup that we just did and the information together it's going to make it way easier uh for you to do your job not even easier but it's going to make it better cuz you if you don't know what I have it makes it really hard for you the draft docks to prepare. If if I don't know what I have, I know one thing, you won't know what I have, right? I mean, that's very
and that's the number one place that lawyers like I don't say screw up, they fall down. You know, we talk about and say, "Hey, well, you know, what are your wishes?" Well, we can draft that into documents, but if your assets are titled differently than your wishes, we've got this great plan over here that actually doesn't work. you know, if we want, you know, if we want um everything to go in trust for your wife, but everything's titled jointly, well, that's not how your plan's going to work. And so, you've got to, you know, you've either got to marry the balance sheet to your plan or marry the plan to your balance sheet. Can't just design both independently and not compare them

20:57together.
That is, that is so uh so good. So, all right. So, Mark, we're ready. We got our stuff together and we're thinking, look, I've got this estate to save 500,000 to a million bucks. I need a I need something. I don't want the state to decide. I have my own ideas. I come to you. What what what's the base level things I should put in place? If I just say, hey, I don't I don't want the state to decide. I want the the bare minimum. Where do I go?
Uh there's probably three to four documents. You need a financial power of attorney. You know, who makes financial decisions for you in the event you're alive but incapacitated? Okay.
A health care power of attorney. Same thing but for medical decisions. You know, I'm incapacitated. Who's going to consent to my treatment? A living will. What happens in the event I have a, you know, a endstage condition that I'm not going to recover from? How do I want my treatment handled? And then a will. And the will will govern what happens to your assets when you pass away. and

21:59direct where they go.
All right, so let's break down those four documents a little bit. So I signed the financial power of attorney, right? So I Brett, how is that used? So imagine I'm old, I'm I'm in my 80s or whatever age. And how's the financial power of attorney used? When does the application of it come up?
So they can be springing or effective immediately. meaning they I could you know if you name mark your power of attorney I could go transact on your accounts now most people don't do that most people say it is springing meaning it comes into effect when you are unable to manage your affairs be it age be it infirmity be it car accident when it springs into effect that person can then go you know exercise the powers that you had over those assets so that you are or you give them in that document to go take actions on your behalf And I always like to go the other way. Absent of this document, Brett is in a car accident, um, and is just

23:02unable to do anything for a bit, right? Whatever whatever reason. Um, my affairs right now, unless someone else has signed on those accounts, they just kind of sit on hold. Correct. I mean, nothing just nothing happens.
Somebody would have to go to court and be appointed a conservator to take action on your behalf in that example.
Okay. in how long I mean what's a ballpark on state dependent but
who knows
so it could be in other words there you if you have stuff going on that needs regular attention not day-to-day attention but it needs monthly you know you got to make some decisions if this takes a long period of time you could put your financial world in a lot of trouble just by not having someone the ability even to step in and just move the ball down the field a little bit
pay your power bill
right if you if anyone hasn't had this experience. Have you ever called in on someone else's account, even your spouse's account that you're paying for? Cuz this happens to me and I'm not on the account. And they're like, "We can't talk to you. We can't do anything." And you're going, "I'm the one paying the bill, but it doesn't matter cuz my

24:04name's not on the joint account." And it it it doesn't sound like a big deal, but this is not a huge document that would save endless amounts of pain in your life by having this.
Mhm.
All right. Then we go to the healthcare power of attorney. Same kind of deal, right? Who makes your is this just who makes the medical decisions if I become unable to make my own?
Mhm.
Okay.
Yeah. And so again, I had a great example of this. My wife woke up with um you know, a herniated disc in her back. She goes to the hospital, they immediately put her on morphine for the pain. At that point, she's not able to make medical decisions for herself. Like I have the form. It is much easier for me to say yes, go ahead and, you know, start the treatment regimen versus, well, do you you do you have that power or not? like yes, you're married, but is your marriage good? There's no more questions. That piece of paper just opens that door and lets me make the decisions.
Okay. What was the next document you said before will? Was that a a living will?
A living will.
Okay.
Uh this is what governs uh this one governs end of life decisions. Um you most states break it down into two key

25:08um you know medical conditions. Terminal condition meaning you're going to pass away in a reasonably short period of time, days, not weeks. and you can't communicate your wishes or persistent vegetative state, zero brain activity with zero hope of recovery. Um, this is as much to pres prevent family infighting as it is to um effectuate your own wishes. Um, you know, famous case out of Florida 20 years ago or over 20 years ago now was the Terri Schiavo case where 30-year-old young woman falls into this and her husband says she wouldn't want to live like this. And her parents said no, the withholding of treatment is tanamount to suicide. She's a good Catholic girl. She wouldn't want that. And it was a 10-year um court battle because she had not recorded what she wanted to happen in that instance.
And so she and and and did she ever did it ever would were her actual wishes ever known in this example or no?
No. Um I think courts basically found that like gave deference to the husband

26:11in communicating her wishes and she was eventually allowed to pass away but not before it was you know national news and a political hot button issue. So, in the worst case, what I'm hearing you say, Mark, if I'm at the end of my life and I'm I've filled this out correctly and say, "Look, if I can't come back and live a normal life, I'm just going to be hooked up to a tube and there's no brain activating." And while we're debating the fighting, my family wants to keep me alive. My wife knows that's absolutely not what I wanted. I'm just sitting there just kind of in a in a not great place.
Not where you want to be
now. And and so everyone watching this or listening to this, you likely when it comes to your money and your life, you likely had a plan for it. And if you don't have things filled out, you don't get to pick what happens to your money and your life in some things at the end when it actually might matter. Um and then the will. So what is the will? Why is that important?

27:13
The first of all, it designates the people that are important. you if we have minor children, that's where we articulate who our guardians are. Um, it, you know, designates who the executive of the estate is, who's the one that's charged with taking it through the court system and paying final bills and then moving the assets where we say we want them to go. Um, you know, depending on how we design and where we want those assets to go, that will may need may name the trustees of the trust that are created under that will and the terms upon which those assets are to be administered going forward.
Okay? So, base level, everyone listening to this, if you don't have those four documents, you need to find someone, get with a firm like yours, and we're going to include all your show notes, all your details and contact info in the show notes. But level one, get these four documents. Put them in a place that it sounds like three people know where they are. At least three, you, your partner, and someone else that might have to take care of your wishes. And can Now, let me let me ask you a question. So, I put these documents, Mark, in my financial

28:15power of attorney. Am I able to name like successors? Like if I do this once and say, "Hey, my first pick's Mark, but if Mark's not around at that point, then go to this person, then go to this person." So you can kind of plan a little further out. Is that how it works?
Yes. Like our recommendation is to name three just because that's a good panel. Some clients will name two, some will only name one, but we got to be real careful to make sure that we're stewarding the plan to make sure that we're not creating gaps. You gave me some of the best advice on picking people and because I was trying to think forever, right? Who's the person I could just put in here and never talk about again and I did the three but you told me like think in fiveyear windows like pick your folks for five years and as you revisit it cuz I if I go back when I did my plan with you the first time uh 15 years ago my dad was a trustee and I got to tell you there would have been no one better. Uh now I can tell you 15 years later his mind's still there. um his health feeling and I'm working on ironically all the documents you just gave. I am that guy uh for my dad. Um

29:19but today even with his mental acuity his patience and tolerance to deal with my estate would not be helpful, right? He would just say, "Hey, that the voice I do for him is always the nut. Brett, there's some homes in Kentucky and Indiana and we're just not going to do it. we're just not dealing with that part of the he would just he'd have some just hard nose of things he's not doing which isn't helpful right you got to because you got to take the whole thing in um yeah I think fiveyear periods thinking through that and then you could always readjust the plan all right so Mark if I want to go up a level let's say I've got a larger estate we're getting into the let's call it I've got 5 million to I don't know you tell me the numbers 20 to 50 what's the next step up to where we look at we want to go a little we want a little more control and not control may not the right word we want a little more um influence over some decisions and be a little more thoughtful. What's the next tier up from the four documents you gave us there where do we go? Well, the next step is, and it can, you know, it's state byst

30:21state in a lot of ways. So, value is not necessarily, it could be family dynamics, is a revocable trust. Um, okay. A a revocable trust is the tool you bolt onto a plan to avoid probate.
So, you would bolt it on to the same documents we just discussed.
Mhm.
Okay. So, what does it add? What additional value do we get from a revocable trust that we don't get from those original four documents? uh done well, it can provide a modocum of privacy, but the primary purpose of it is just to avoid that probate process, that three to whatever months it takes to go through the court system. Revocable trust skip that process altogether.
So, if we just have the four documents, we're still going to have to go through the probate process. We've just got directions on how it's going to occur. We're not dealing with just the state's decision. These are our decisions. We still have to go through probate.
Correct. So, your recommendation, I'm guessing, would be that most people should step right up to the revocable trust to skip probate and because when you're I always

31:23think about this when I'm gone, the last thing I want to do is to leave my family with a bunch of problems and pain uh if I can avoid it, right? And so, all right, so a little bit of privacy and now I can skip probate. So, when I'm when I'm gone, they've got a map and a plan and they can just start executing the plan as I said in the document. Is that right?
Yes, sir.
All right. What's the next tier beyond this? Where do we go from here?
Well, I'll say this. I mean, you know, I think design of those wills, revocable trusts is probably the next function of where you build complexity. Um, that's where you if you're, you know, basic sweetheart will is um wife passes everything goes to husband. Husband passes everything goes to wife. Second spouse passes, everything goes out right to the kids. That's your your traditional um load net worth plan if you will. Um building in trusts within the in the system, your testimeamentary trusts that kind of are created by that will or revocable trust when somebody

32:25passes is the next thing to bolt on where you can provide rather than just giving everybody or the person the assets immediately, you can designate a trustee to feather those out over time.
Okay. So let let's talk. So to your point in scenario one, let's use we'll use round numbers because it's easier to do. I got a million bucks. I pass away goes to Taylor. Taylor's got a a million dollars. Now something happens to her. Each of the kids gets 333 grand regardless of their age. Correct.
Uh generally if it's an outright to less than a 18year-old, a court will create a trust for that child until that child attains that age.
And then who manages that? The court manages that trust. until that child attains that age.
Court would designate somebody.
Okay. So, again, you're back to other people controlling your stuff, right?
Which could cause your family issues. Like the kids like, "Man, I'm I'm 17 or 18. I got this trust. I need a car. Base level transportation. He could probably get it, but it it it might be a giant

33:28pain in the ass, and they might not have the wherewithal to navigate it."
Mhm.
Right. So now let's make the numbers exponentially larger. We'll go to 10 million. Something happens to me goes to Taylor, something happens to Taylor. Now the kids are, let's say they're 18, 22, and 24. Each kid gets 3.3 million. Kaboom, right? They're of age. Is that the way I mean, they would just get that money, correct? So you got an 18, a 20, and a 24 year old running around with $3 million. Probably not going to make the greatest financial decisions potentially. They'd had a lot of fun though.
They would have had what a wild How many boats would be per how many jet skis do you think would be bought? Um, so all right. So now we get a trust. We go to an irrevocable trust. And so in this case, I would How does the control work there? How do we pro Why is this helpful? And why does this protect us?
Well, it it decouples um control of the assets from access to the assets. um we can put somebody in charge of those

34:31assets that we trust to to follow our wishes and guidance for the benefit of those people that we want to benefit from those assets but not necessarily trust to manage those assets today. And so that 18year-old's great like you know 18-year-old Mark shouldn't have been in charge of $3.3 million in our example. Well, the idea of saying, well, you know, we're gonna put Brett Tanner in charge of that for 18 year old Mark until Mark's able to maybe till he's 25 or 35 or maybe forever if we're that concerned about Mark. We just add more customization and um you know, specific client desires to that plan.
So, let's talk a little we could use my plan. I'm comfortable using my plan and and a lot of the things that you help me design um because I think it's instructive for the audience on how to think about it and when I started working with you to actually figure out and to write so basically in a I want to take a step back in a irrevocable trust essentially my my entire estate is in this bubble up here what I'm going to

35:33call bubble um if something happens to me I can select people trustees that are going to run this bubble based on my wishes. Now, these are my ideas. My wishes, they're not hardcore laws or if you were a trustee and two other people, you guys are going to read the documents that I wrote like this is how you know Brett thought about it and then administer the plan with my errors and my to and and my wishes. Is that a good way to frame it in?
Correct. I mean, I love the idea of using a panel. We rule number one we tell people all the time is pick good people and give them the ability to make good decisions. And so almost all conversations start around this dynastic type trust of having three trustees. Um the idea is that reasonable people could disagree or could could disagree with what Brett's goals and objectives were even if he leaves us really detailed notes.

36:36Well, if we pick the right three people in a wisdom of crowds approach, those three people, two out of the three will be able to most closely approximate the decision Brett and would have made in that example.
Uh, by the way, you recommended that book great wisdom of I would have it's counterintuitive uh that book like when you said wisdom of crowds, I'm like, man, the average of society today, their decision-m I don't know that I trust it. However, it's shocking, right? So, I can't remember the author. I don't know if you recall it off hand, but Wisdom of Crowds. Uh, everyone should go read that book. Uh, it's fascinating.
I'm looking to see if I have it on my shelf here next. No, they'll they'll we'll find it and we'll drop in the show notes. Um,
it starts with an S, but I don't want to dare try to pronounce it because I'll mispronounce it.
All right. Wisdom of crowds. Go get the book. So, I picked these trustees. It could be three. It could be more, right? I'm not limited. I could pick how many I want. We're thinking in fiveyear cycles. And now what are the limitations, Mark,

37:40on how I could think about leaving my estate? Are there any limits or boxes I'm confined to? Or is it kind of really anything? I mean, what are my options here? Or how should I start thinking about it since I went from limited options to it sounds like I've got a bunch. What are the ways in which I could lead it? Like how should I be thinking about it?
Uh there's a ton of ways to design. I mean your your probably typical approach is an ascertainable standard health education maintenance and support standard which is
and what does that mean?
Uh distributions can be made for health education maintenance or support very typical plan in your lower net worths in my mind where your typical father of you know two minor kids with a lower net worth. The goal of those assets is to make them last for baseline needs as long as we can and if our if there's money left over after our kids reach the age of majority, we'll deal with it. Um it is possible on the other end of that to make a fully discretionary plan saying the trustees can do whatever they

38:44want whenever they want so long as it's a majority of our panel. Meaning we can distribute, you know, we can not distribute for those baseline needs or we could distribute funds in excess of those baseline needs. And that's where that um you know legacy letter, ethical will, um statement of wishes, core values letter where we encourage clients to give that non-binding legal guidance to their trustees on the decisions that we would like to see made.
So what's the downside if we go the basic needs route that you just described, which seems very simple, right? Hey, if I'm not here, my kid needs education, needs to, you know, some health things done, need a tooth pulled, whatever. What's the downside to that plan of doing it that way?
Uh, when you add wealth into the conversation, I believe that's where the term trust fund baby, trust fund mentality comes from because if our kid becomes an achiever, by definition, they don't have a health, education, maintenance, support me. Whereas, if that kid sits around and plays video games all day, the trust is required to still maintain their health, education,

39:48maintenance, and support needs. And ultimately um you know in the theme of retaining control whether or not we're meeting that standard of health education maintenance support or not is determined by a judge not somebody that we've selected. Hey if you're getting value from the show. Do me a favor. Take less than 10 seconds and hit subscribe. Whether you're on YouTube, Apple podcast, Spotify, hit subscribe. Leave us a review. It helps us immensely. Our goal is to help more people and you are one of the keys to doing that. So, please do us a favor and leave us a review and also subscribe. I got So, so it sounds like I mean to your point, number one, there's wealth there, right? We're we're not incentivizing achievement at all in a in a weird way, we're disincentivizing achievement. Person that works that doesn't need it now. I guess they'll get the money later, but young kids are I mean, you may not be thinking through that. What are the other risks of doing it that way? What about So, if I do the base

40:50level way, you know, basic needs and I get to that age, is there a target age that it would be distributed to the kid? Well, and that's where attorneys for years and advisers have said, well, hey, we'll solve that problem by saying at, you know, certain threshold ages, 25, 35, or 45, or client, pick your number of what you think the right ages are. You'll just give them big chunks of money. So 25, 35, 45, you get a third, a third, a third of the assets. So the trust is all gone by the time you're 45. Um, yeah, that's terrible from an asset protection standpoint. We don't know what the hypothetical child at 25, 35, 45 is going to be going through, positive or negative. So,
yeah, what if that kid Mark's going through at 30, 35 in your example, he's in the middle of a divorce and a lawsuit and, you know, he's, you know, and bam, here's 3.3 million bucks. Creditors look up and go, "Yeah, we're not bingo. We're not settling now. You take that settlement away." And and so he goes,

41:53the settlement goes out, he gets a divorce, the other half's gone. um where if we had a different plan that would not have happened. Is that right?
Correct.
So, uh I kind of want to So, when you helped me design my plan, it took I want like to be clear to the listeners. I mean, designing the plan on your side didn't take that long. I mean, it took time. Figuring out my mindset and my wife around how we wanted to leave massive amounts of wealth to our kids and the causes and the people we care about actually took a lot of time. uh my wife and I are couldn't agree on most things more uh but we had a little we had some challenges which I want to walk through. So the the first you know idea that I saw um in in some of the ideas you talked about or and I can't I think it was may have been some of the examples you gave but it was kind of those examples coupled with other things. I wanted a way to incentivize my kids to achieve earlier in their lives. And so the way we kind of structured ours is that that you know the trustees could decide that that kid

42:55could submit their tax return to the trustees and the trustees based on that tax return would release an amount equal to their earnings but it's got to be invested into an asset that the trustees approve of. So now the idea is my kids at 20 years old or whatever are going to you as an example to go, "Hey Mark, I want to buy, you know, a mushroom factory um and it's with his buddy and it's stupid." The trustees are probably going to look at like, "Hey man, we can't approve. This isn't a real investment. This looks like a scam." But if they said, "Hey, I want to buy a duplex across the I'm going to live in one side, rent out the other, and this is how I'm going to start cash flowing my life." Trustees would probably go, "H, you're getting a good deal. We'll help with the pay." That's a reasonable thought. So, releasing that money, I'm allowing my kids to move faster. Now, where my wife and I couldn't agree was that what if one of our kids super achieved, so they're drawing the money

43:58out quicker, and one of our one of our kids wants to be the greatest artist on earth, but never makes a lot of money. How's that fair? This is what we had a hard time, uh, my wife and I. And so, our answer to that was upon our passing, our trust actually breaks into three separate buckets, one for each kid. So, the superchever, he is taking his tr he is using more of his spuns earlier. the other person who's not, they're still getting a 100% of their tax return into an asset. They're just going to have a bigger ball later. Uh we didn't choose mandatory dates of which to release money to folks as you mentioned because I want if my kids going through a lawsuit or something crazy. We don't want to just release the money at a certain age. I also don't know the age of which my kids are mature enough to handle massive wealth, right? I can't predict that. And I think I I know one thing for all of my three kids. I think it's going to be a different age. I think that's probably true for everybody. Um, what are other considerations that you've seen really thoughtful people consider, Mark?
I mean, it's such a good question.

45:08Clients love to think about you. Incentivizing achievements is probably overarching of many things. Um you incentivize education, incentivize um families um your family connectivity between spouses and or your siblings and grandchildren and everything else to to keep the family unit. Well, um you know, incentivize collaboration um you know, around one kind of tentpost asset, having the you know, the f the proverbial family farm that everybody can collaborate around. um incentivize um your business engagement, incentivize marriage and and um your quality of marriages. Incentivize um I've got one now who is you know wants to incentivize um you know spirituality and not necessarily a dogmatic one choice but to just explore all um you know all of the world's religions and spend time you know connecting with a higher power of

46:11some sort. So I want to break those get those are great talking points I think are important. So in my legacy letter right the way I thought about it the way I wrote to my trustees on education was u you know dad believed in all forms of education not necessarily professional education by the way he also believes in the timelines required to achieve education. So should a four-year degree one of the kids want to pursue a four-year degree the expectation of the trust is that it takes four years and the trust should not pay for professional students right was one of the way it also the trust also does not should highly encourage different types of learning i.e. you know, as you know, I run and you're a part of our our be wealthy community. And it I want I said I I made a career teaching others about their wealth. And if my kids wanted to join a mastermind, a small group in whatever its form in the future is, it was expensive. The trust should allow for that. It should vet it, but it should allow for that,

47:13right? So, we're not just saying it's only school and nothing. Um, so that was how I thought through education. That was my advice. say that it's the trustes decision, but here's how dad's thought about it. Love education. I don't believe in professional students.
I think timeline I believe timelines matter, right? I you know, if you're going to law school for three years, it takes you four. No offense, kid. The fourth year is on you, right? Your life's the sum of your choices and that's okay. Um I loved you talked about keeping the family together. Um, the way I thought about it was, you know, during the course of our lives, our family had traditions and rituals that mattered to the family and maybe my kids in the future wouldn't be able to afford those same things on their own potentially. So, we thought about, all right, we spend every year for Christmas in Kawaii. Should the kids go and stay at the same location? I think it's the way I worded it, right? At least they got to get the flights. They got to go there together. I can't make them be together when they're there, but I can sure make sure they're in the same circle. trust would reimburse for those things to be together on those holidays. Uh so the

48:16things that I valued in our life that they were a part of if they continue now by the way if two out of three go sorry right doesn't that doesn't encompass my best wishes but I'm just I'm just trying to give the listeners different ways to think about how can I I'm not trying to control from the grave I'm trying to provide a little encouragement for the kids to stick together right um you referenced the family farm as you know my place is is my cabin and I wanted to be really thoughtful Because, you know, again, if our my I don't know what level of achievement my kids will have. I hope they're all massive achievers, but they could inherit some of this thing some of these things and it would be challenging for them to possibly keep up with them. And so, I wanted this, you know, this legacy property we have to essentially live on forever. And you helped me with the idea. There's a couple ways we could do that. Number one, we could pull it into a different trust, buy life insurance on my life, that upon my death, that money goes right into that trust. Well, that the general rates of return, the

49:19risk-free rate of return on the life insurance money would pay for all the maintenance and all the usage of the of the cabin indefinitely. It won't build new buildings that, you know, if they want to build a ninestory tower on one of the properties, it's not going to do that. But it's not designed to do that. designed that their families could go to the place they grew up in for their kids, their kids' kids, and their kids' kids indefinitely. This place could be enjoyed. Is there any other and I want to give those examples of Have you seen any other really creative or unique ideas that you think the listeners could could learn from when thinking about their estate plans?
Well, I'll say this. Um, you know, the greatest way to to create true dynastic wealth is to raise good kids. And um, I think most people have the bias of thinking small. Um, I love to talk about my grandfather, the quintessential American success story, or dropped out of middle school to go work in a factory. Um, you know, but he raised my

50:23dad, first guy to go to college in the family and have a career. My dad raised me and I'm doing okay. Um, whatever grandpa left at the end of his life, by definition, we'll see at least his great-grandchildren because he did a good job raising his son and his son did a good enough job of raising me despite fact I turned out to be a lawyer. And so, you know, be thoughtful about how you be dynastic in what your long-term goals are. Don't just say, "Well, it's not enough to worry about." Because you get into the financial advisory aspect of the, you know, rule of sevens and time value of money and compounding interest. It's amazing what a a well stewarded nest egg can become.
It's a really good point. You know, the comment I always make is everyone's going to leave a legacy. What kind are you going to leave? Right? A crappy one. Like if you're not if you're not not raising good kids or not having these conversations. Um, I'm also really, you know, one of the things with my kids, I mean, that that's the structure. I tell them right now, my

51:24plan, if I were all of you three, I would plan on getting left nothing cuz that's where I'm at today. Um, there's some documents that we we have executed or could execute that could be to your benefit. Uh, but today, dad's planning on giving it all to the Red Cross or whatever. Um, because if you're planning on getting something, I want to leave you nothing. If you're planning on getting nothing, I want to give you everything is kind of my mentality because I see my peers who have wealthy parents and I almost see it's been to your point like a lack of achievement. They they're honestly just waiting. You can see it in their, you know, they're not going they're just like kind of waiting for mom and dad. I'm like what an awful legacy, right? My legacy was that my kids just waited so they could get the money. And you know what happens, right? people that do not prepare for for mass wealth and inherit it. The stories and the data is pretty clear, right? It's parted from them very very quickly, right? Those without a plan. Uh I think I love that advice there. Uh any I want to switch gears, but anything else before we wrap up this

52:27um irrevocable trust discussion or things that we should be mindful of, Mark? Anything else we should be thinking about?

I suspect it's where you're going next. So, I'll put pause in there and we'll come back. We'll we'll go down the road where you're going where you're headed.
Well, I was going to go to privacy. Um, is that where you thought I was going?
Of sorts.
Okay. So, is we're as we're now I want to kind of move to the LLC risk, the risks of life. Um, so the first risk is I I believe in especially in today's world. I for me Mark I don't think 20 years ago and the reason I I didn't have this stuff baked in 20 years ago I don't know that privacy 20 years ago we were kind of all really private because the internet wasn't as there was no social media right social media has removed a lot of the privacy meaning people can see where you're at where your kids are what what they're doing in real time um and in a word world that's getting weirder every day um the internet's connectivity has removed our privacy do you agree with

53:31that is just as a as an idea of why I think this is so critical today and it was critical back then but less critical. Is that am I looking at that right?
It is wild the the pace that privacy has changed in 20 years. So, if I have a if I don't have privacy, I go set up an LLC and I go down to the Corporation Commission in Arizona and I file it myself and I put my home address on there and cuz I thought that's just what you're supposed to do and I don't know how to fill out these documents. I'm the manager and I'm the uh the organizer of the articles and I'm everything. Um, it would take any human being about 11 seconds. You probably could do it in chat GPT today. Just say what's Brett's home address and I bet it would go here it is for the world to see. That's the way that many did it. Um, now let's talk about if I don't want it's not that I'm hiding anything, but I just don't want some random stranger who's sitting in their basement to be able to look up my home address. What's the process to start thinking

54:32through privacy and to build this into our world?
Well, and I think I think the first step is just to think about it. Um, we see attorneys all and adviserss all the time just, you know, either they equate it to asset protection, which it's not the same thing, or they just don't place value upon it. Realizing that, you know, not having our name on public records and being thoughtful is step one, because then it's how do we do it? You know, it's not naming our LLC Brett Tanner LLC. It is not naming our revocable trust, the Brett Tanner Revocable Trust. um you know, we can look at those and know who's whose it is without seeing anything. So, let's create the you know, the BT 2024 trust. You know, at least we've got there's a lot of BT initials out there, right? Let's pick some some name that's not identifiable to us. Um with respect to forming LLC's, um be mindful about what states you put it in. Um some states are very private and require very little information. Um [0:55:33] be mindful about who forms it. you. And we'll use Georgia as an example. Georgia, the only name that you have to provide is the person that's called the organizer, the person who formally filed the document with the Secretary of State. Well, if Brett Tanner goes with Georgia's website and files that, it says Brett Channer at brettanner.com. If a parallegal in my office does it, it has their name. So the person who knows to click on that button, they can see Brett's name or they can see a parallegal firm. Which one would we rather have? Rather have the parallegal. Um, you know, as far as registered agent goes, um, most people just list themselves. Well, they list themselves with their home address. And so the registered agents, who gets to receive service of process when there's a lawsuit filed? Well, if we list ourselves and our home address, the sheriff or process server is going to come knock on our front door. And is that what we want? Or is that, you know,

56:35do we want the guy in the basement to be able to know, hey, that's where Brett lives. Let's go over to his house and knock on the door just so we can meet it.
You know, on here you said, "Oh, keep going. Keep going. Keep going."
No. And so understanding that and realizing that there are ways to design it to minimize that is super important from a planning perspective. Then once you realize it, good advisor should be able to help you, you know, minimize if not eliminate your digital footprint.
So what I'm hearing you say is number one, the states that we set up our LLC's in matter for privacy. Certain states have more privacy. What are the states with the best privacy? Uh Wyoming is far and away um private. Delaware is great. Um Georgia is great.
Um I won't go through a 50 state list, but
No, that's a few.
Yep.
Yeah, that's perfect. So I know you a lot of minor in Wyoming to your point and for those reasons, right? It's totally So you you track down my LLC, you go to Wyoming and then it's just

57:39it just disappears, right? In Arizona, you could go see who the member is and go find all their other LLC's. And I mean, it's endless how far that rabbit hole can go. So, we So, we start with privacy. That's a threat. Okay. How else? And I'm I'm kind of going through this risk, you know, this idea around um risk. So, where's the next? So, privacy is a huge risk that I think um is a huge deal only getting only becoming a bigger and bigger deal. So, we need to be mindful of privacy. There's also a I don't know if I've ever talked to you about this, but this website called delete me. I think it's delete.me and you're familiar. I've signed up for it because it goes through you real it first does a scan and sees how many places is your home address, your phone number and your email out all over the internet. Now, I care less about my email except that it is all of that is reducing my privacy, right? Because that email goes to a website. Website likely could lead them to the LLC. if I'm not done right, LLC comes right to my home address. So, this delete me scour the internet, submits the information

58:43um you know out to those data brokers that are on the internet and makes them remove it and they constantly are doing it. So, I I just love service like that are helping you know remove your information from the internet. Um
another one is optery we've seen lately coming up more in addition to delete
optery. Okay, good. All right. So, anything else on privacy we need to be aware of?
Just be mindful.
Be mindful. Next thing, what are our next threat from, you know, risks out there in terms of, you know, we start a business, we got an LLC. What's our next threat going to be?
Asset protection.
Okay. How do we protect the assets with how do we be more mindful there? What's the what's the thought process? Well, I think it goes back to our balance sheet is you first step is to understand how we own what we own impacts what's exposed. You know, different states have different rules around what assets are attachable by creditors. Um, you look at Georgia, Georgia retirement

59:48accounts completely asset protected, life insurance completely asset protected. you know, those are the two main ones in Georgia. Um, you know, if we go to Florida, your personal residence may be protected through a homestead or other states that have, you know, broader homestead exemptions. Um, some states say that joint accounts by husband and wife called tenants by the entirety are asset protected from one creditor. And so, you know, job number one is to understand, you know, just because my net worth is $10 million doesn't mean I have $10 million of exposure. Um, I may have some fraction of that as an exposure to creditors.
So, when we're thinking about um I want to think I want to go back to this risk and estate planning and tie it together. So, we're also talk to us about the estate exemption because I think that's a place where the planning kind of starts. So, as of the year we're filming this in late 2025, um I understand that if I were to pass away a certain amount, if I had none of

1:00:51this stuff, we talked about getting the money to the people we care about or the wealth in the way transferring the way we wanted. We didn't talk about taxes yet. So, talk us through estate taxes. How does that work a minute? Where does the estate plan fit in to solve that? So, um, current estate tax exemption per person is $13.99 million. Uh, it is per going
per person
per person. Uh, it is going up to $15 million per person as of January 1st, 2026 as part of the one big beautiful bill. I spouses her US residents get to double that essentially. So 15 becomes 30 for a married guffle. It is scheduled to go up for inflation every year thereafter. and it appears to be permanent until another administration tries to make it not permanent.
What is not included in that number? So, we get to basically you said 13, we're just call 13 million. So, 26 million this year roughly. We're not going down to the exact 13. And then what would not be included in there? Like what are the

1:01:54personal things that I can't that would not be included in the exemption?
Well, I'll say this. you know, in appropriately structured irrevocable trust, those assets could not be included in the exemption.
Okay?
Clearly speaking, all other assets in our name are includable in that exemption. Although life insurance is payable to its beneficiary and doesn't count against our exemptions. So everything in our personal so retirement accounts are going to be outside of that. Those are going to go towards that exemption. those retirement accounts are not going to be inside of our trust. Correct.
Correct.
Got it. So, we want to be mindful of if we've got wealth over those exemptions. That's where the estate planning and the and the trust makes so make so much sense because what's the taxes on this? Let's say I'm above the exemption and I'm $10 million over it. What's the estate tax right now, Mark? To give people
40%.
40%. So, if I don't plan correctly, $10 million I leave, four million gets,

1:02:59you know, paid to the government, six million then is distributed. But had I had an estate plan, it would have gone on without that $4 million tax.
Mhm.
So, huge, it's a massive issue. And it's not I think the thing people miss, Mark, you know, because I spend my day talking to to wealthy people about their money in the future. Is it fair to say in your experience people radically underestimate where they might be in 30 years in the future?
Yeah, most people in our worlds are at the lowest net worth they're ever going to be, whatever that number is. Um, yep. There's always the next deal just growth and everything else and accumulation. It's, you know, you start doing those rule of tens and all of that stuff. It's crazy what things what um gets mapped out on a balance sheet.
All right, so risk one was privacy. Risk two is I'm calling just not thinking through the estate tax limits and being mindful of what's personal and what's in my trust. Risk three, let's go into LLC

1:04:02liability. So, I go set up this LLC. Mark, I was smart. I did the privacy. You helped me set it up. And then I threw in my operating business that I'm a I'm a dentist by day. Better yet, I'm running heavy construction equipment by day. I got a rental property I threw in there. Uh, and I got a vacation all in this LLC, but I've got an LLC. How am I doing for risk protection, Mark? So far,
well, so probably not great. Um, you
Why is that though? Why? Because I know everyone listening watches that we we make a joke about it, but it's really easy to go, I already got this LLC. I'll just throw some stuff in it, right? keep throwing stuff in it. Why is that an issue?
So, I mean, you LLC's are designed to to isolate liabilities in the sense we're talking about. And so, if I create an LLC and I put my rental property in it, the design of that LLC is that if somebody gets hurt at that rental property and and sues that entity, that

1:05:04that's where the liability resides at. And so if we put 25 different assets or 25 pieces of property in the heavy equipment machinery in that LLC, we are creating asset protection exposure because now all of those assets are in the same pool when somebody gets hurt on one of those rental properties. And so the legal
another way to say it, any anything you put in there, right, anything a risk or a lawsuit from anything affects everything else inside the bucket.
Perfect. And so, okay,
you know, the legal answer always is is you isolate each of those individual assets in their own LLC to isolate the liabilities of each thing from the other things. Um, even that is only part of the story in that what we're talking about there is an inside out creditor where somebody getting hurt at one property's ability to attack everything else. We're not talking about what is Brett Tanner's liability getting sued, what's the creditor's

1:06:06ability to get down into that LLC. Um, single member LLC's do not offer any asset protection there. And so, um, being mindful that you when when lawyers say, well, you form an LLC because it'll protect you from lawsuits, they're only talking about those inside out creditors. they're not talking about Brett Tanner's liability and the assets within that LLC and their protections. And so being mindful of that that you know there's only two states that purport to offer single member LLC asset protection, Wyoming and Delaware. Um and so we have to understand that it's not just asset protection from those individual liabilities at the individual asset levels. It's also what's our global liability and the protection of those assets from that global liability and how do we design a plan um to mitigate that
that okay so I've got to be thinking about um what I put into each LLC right how is it owned how is it I mean set up

1:07:10because if it's set up single member it doesn't sound like I did a lot um I protected one thing but I left myself exposed to another um what about uh if I've got partners, Mark. So now I've got a partner in this LLC. So first of all, let's go back to LLC's and as you've counseledled me, we should kind of think about the risk profile. So operating businesses, things that are operating as a business have much more liability generally speaking than one rental in an LLC. Right? Now, done wrong, everything that generally speaking, that one rental in my heavy construction equipment business have radically different risks. And we've got insurance levels. So we got the asset protection LLC. We could also have insurance, you know, general liability, property and casualty and all that stuff. And then we might even have umbrellas over that before it gets to us. But we should be mindful. So number one, separate. Now, how do we think about equity in an LLC? So I've got these. Let's assume the greatest strategy I've heard would be if I'm going to have a 100 rentals is I'd have

1:08:11a hundred different LLC's, right? Each one in its own, right? I'm going to be really separate. Now, the practicality of that, right? Right. From an attorney's perspective, you're like, "Brett, I love a 100 different LLC's because that's the we can isolate the risk,
but if I don't run my LLC's correctly if I'm just fast and loose and, you know, this one's filled out a certain way, uh it's really hard to to run those correctly, right?" And there's this thing I've heard where, you know, attorneys try to pierce the corporate veil. Can you speak to a little about the idea of do we do one asset per LLC or how should we be thinking about if we're going to put assets not operating businesses every operating business should be in its own how do we think about what goes in each of those LLC's
well and I think this is where like you know discretion can be the better part of valor in so many ways the legal answer is a separate LLC for every property um but we need to be practical you know if we have, you know, a

1:09:14$150,000 units with a, you know, it doesn't make sense. The cost alone would eat away at returns on that. Um, you know, adequate insurance is always the the leading edge of asset protection. And it's possible that we could have, you know, if we've written the right insurance, it may be possible to say, hey, let's put all hundred properties in one LLC because we've got the, you know, the insurance to manage this properly. uh it may be more practical to say we're going to put five in one LLC or 10. You pick a number and and um you know run the plan on that and I think you highlight it well like let's pick a plan let's be consistent with it and let's steward and manage that plan well. if we're not, you know, even if we think a hundred LLC's is the right answer, if we don't think we're mature enough to um, you know, steward it and maintain it in the right way to avoid those piercing the corporate veil ultravirs. It's the wrong idea. Let's go do less

1:10:17LLC's and buy more insurance.
And so is another way to think about it, you know, Mark, if we've got mortgages on these, right? So it's not all the total asset, right? because the creditor coming in still's got the mortgage issue. It's encumbered. Um is one of the ways to think about just equity exposed in the LLC total.
And I think you know the strategic use of debt as asset protection is a really um a really underutilized underappreciated um aspect of a balance sheet. um as a general proposition, most creditors don't want to go pay off a first mortgage to get you to equity in a property. And so you just do not see it happen very often. And so not only is you know like the amount of debt or you know whether or not debt exists an important factor, but the percentage of that debt, you know, if we're 80% loan to value, there's not a whole lot of exposure there of equity. If we're 10% loan to value, well, a creditor could be incentivized to come in and pay

1:11:21off that first mortgage as part of a a plan.
All right. If you've been listening to a show for a bit, you've likely heard that I run a wealthb buildinging mastermind largely around some of the same concepts and content that we talk about here on the podcast. We have an upcoming mastermind. We've got two seats left for it. If you want to come shadow our mastermind, take a look at what it's like, get an actual feel for what it feels like to be with a tribe of people that are on the same journey as you. We've got a completely risk-free way to do so. Just go to bwealthy.com, navigate over to our mastermind, and book a call with one of my team members to learn more about our mastermind, and you can how you can come completely risk-f free and check it out. Got it. So, um, all right, that makes sense. So debts, that's another strategy we could put in there. Um, isolate the risk, cover with insurance. All right, so we talked about we talked about privacy, talked about save plans, talked about risk and LLC's. Now, let's go to partners in an LLC. So, I got a partner. Things are going swimmingly

1:12:24well. Uh, let's pretend if, you know, it's me and my buddy Joe, who's the real name of my partner, and we go down the road and we built this incredible business. and for whatever reason, we can't get along in the end. Um, what happens? Let's just say I want to sell the business, he doesn't, and we have no operating agreement. We've been kind of we we got in business 30 years ago and just kind of gripping and ripping here. What happens to us?
I mean, ultimately, you're in a Wall Street to figure out what happens if you're 50/50 owners unless we've been thoughtful in planning for this. And so, um, you know, the solution is to have an estate plan for our business, a business succession plan. It talks about what happens, you know, if Mark and Brett are 50/50 owners in something. Well, what happens if something happens to one of us? That something happening could be Mark wants to go fishing and Brett wants to keep hustling. That could be one of us passes away. Could be one of us is, you know, has a creditor issue of our own. Um, you know, most businesses

1:13:29never, you think that, well, Joe and I have gotten along for 30 years. we'll continue to get along. Well, the time to solve what happens if we don't is now while we're getting along, not once we're kicked off at each other trying to figure out how to extricate ourselves from the the prisoners dilemma of being stuck in a 5050 partnership.
You know, I'm glad you brought that up. You know, my uh one of my partners, right, we owned a tremendous amount of real estate together. Um and so and and a business and I wanted to be really mindful about this. And to your point, you got to be mindful as you set it up, not mindful it because when you have the problem that it's get really hard to wrench the time machine and go back. And so what we did was if something happens to me as an example, uh we took out life insurance on each other. So something happens to me, he immediately gets 100% of the business. The life insurance is paid to him. He immediately gives that to my wife as a down payment to buy her out. There's a predetermined formula how to buy her out. The life insurance would cover 80% of it. The remainder is a note payable

1:14:34over time that the assets would more than cover. So something happens to me. He's got the loss of his partner who's doing stuff in the business. Number one, he's got time to figure it out. He doesn't owe an immediate check immediately. I don't think people are thinking through that though, Mark, because absent the life insurance, let's say we do have a plan and let's say there's $10 million of assets. Something happens to me and it says, "Well, Taylor's owed half." He's got 30 days to come up with five million bucks to pay Taylor or he's going to end up in trouble. Is that right?
Well, and we talk about all the time with clients, you know, you know, a thoughtful plan covers four points. What are the triggers? Um, is it just death? Is it um wearing a black hoodie on a Monday morning? Is it um disability? Is it retirement? you we can name whatever triggers we want. What is that? What action does that trigger cause? Um is it a put option? Is it a call option? Is it mandatory? Is it optional? Um how do we value the

1:15:38business at that moment? Then how do we pay for it? Number four. And a good plan covers all four of those.
Okay. We keep coming back to Mark as we've talked about this as we're wrapping up here. just go back to planning, be mindful, and get great counsel. Uh, and make sure your documents are perfect. You've thought about, but make sure and I think the other thing, Marco, what I love what you do, I know you're attorney by trade. You're a smart business person, but what I tell people about you, you're a teacher, right? You're like, you actually educate and the greatest professionals on earth, I believe, are teachers, right? They take their craft and the you could have taken this conversation to the zenith of comp complexity that no one would understand and using the buzz of legal words which is actually helpful to no one honestly. I mean maybe attorney to attorney but like I always tell you talk to me like a golden retriever and this will be perfect. Um cuz I actually want to understand the plan that you and I are designing because if you do a worldass job but if I get something and I don't understand it it's not that helpful if I

1:16:40can't explain it to anybody else. Right. Right. I mean, I've got
If if you can't explain it, you can't go execute on it.
Exactly. That's that's perfectly set. So, I think that get with someone who understands your ideas, can help teach you, and go through it. Um, we're going to provide all the contact information for you and your firm. And Mark comes with my highest possible endorsement. Uh, he full disclosure, he is my attorney. He did design my estate plan. and I call him and text him constantly about a lot of legal things and also fishing, which is almost equally as important as my estate plan. Um, so Mark, um, thanks for all that advice. As we're wrapping up here, I ask every gu every guest three questions. Um, and I want to ask him top three books that most influenced your life.
Uh, any number one has to be seven habits of highly effective people.
I love it. Okay. Uh number two is probably um meditations by Marcus Aurelius. Anything stoicism I love.
That is a uh it it is just to anchor

1:17:45that point. Uh I read it for the first time heard about it a million times three or four years ago to think back of what was going like the things that that guy was thinking about with very limited connectivity to the world, right? I mean, you're literally riding on a a horse to go somewhere to talk to someone. Like, that deep reflective thought that he had is um mindbending. It's a it's a I highly recommend everyone read that book. That's awesome. What's your third?
Uh into thin air. Jon Krakauer.
Oh, what's that about? I haven't read that one.
Uh it's about a a a group that summited Mount Everest and um several of them passed away. Um, and just a really I could read anything Jon Krakauer wrote, but um, such an interesting story to me about all the little warnings that were missed in and of themselves um, weren't a big deal, but the totality of them led to just an absolute disaster.
Okay, I like that. All right, next question. What's the best purchase

1:18:47you've made in the last 12 months under $200 that most improved your life? Uh probably my chat GTP GPT subscription. Um
yeah, I
amazing what you can do with it and the amount of um of what you can do with it and how it helps organize thoughts and and give perspective. Uh the the other dumb one is um exercise hand balls. I love to sit here and squeeze them all day while I'm thinking and talking.
Okay, those are two huge B. Have you are you playing around with the new chat GPT browser, the Atlas? Alice,
not yet, but it's on my list.
I gotta tell you, so, you know, I This is the advantage of having a 17-year-old. He's like, "Dad, come here. Look at this." So, he was going this past weekend to a concert in Vegas with mom, and he's like, "Watch this. Hi, Chad. I'm looking for a restaurant that's hip and cool, near here, won't be on a wait. Can you book me a reservation?" And in my mind, I'm like, "It's not going to work." So, you see it, it's

1:19:49opening. So, it's opens up new windows, site sources. It took it through Open Table all the way to all you had to do is click the button. It was wild. Wild. Um, it's it's I'm using it and you're going there hadn't been a lot of browser improvements in my opinion. You know, it's just like increment. This one's faster and this one's got more tabs and they really have got it where and then as you're in a site, you can click chat on the site and it's I mean it's it's wild. It is a you I can't imagine ever using another browser again. I don't know how I would do it because it it makes it so easy. So you got to play with it. It's so intuitive. You're not going to like oh my god, how do I do it? It's like well and then as you're in a browser you click chat comes over and you could say could you just fill out this form and complete it for me based on this outcome I want based on these go get this source information and rewrite this and it'll while you're on the page go through and fill it out for you. Wild.
Well, I know what I'm doing tonight, Val.

1:20:51
It will. You'll lose yourself. It's uh It's cool. Last thing, Mark, before we wrap, you could go back. You got 60 seconds to talk to 21-year-old Mark. What advice and what would you say to him?
Uh, work smarter, not harder. Um, I'm a grinder by nature and I um but there are probably easier ways to to accomplish a lot of the things I'm accomplish without banging my head against the wall so much. A client said it to me the other day, um, you know, the best part of banging your head against the wall is when you stop. Um, I was probably too hard-headed as a as a 46-y old, let alone a 21-year-old where, you know, look for a easier path rather than just um running into walls constantly.
I love that. Mark, if people want to connect with you, what's the best way if they want more Marc Dearth, where should we where should they go?
Uh, website's probably number one. dearthlaw.com. dearthlaw.com. All right, Mark, we'll include that in

1:21:56the show notes. Thanks for all you do for me and our community and just everyone out there for being uh a great adviser who's a good dude, a good teacher, and a business guy first. I appreciate you do all you do, Mark. Thanks for being here today. You added a ton of value to our audience, and I appreciate you. Thanks.
I appreciate you. Thank you for having me.
Thanks.