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Tax News Now Ep. 11 - Beyond the Numbers: Family-Centered Succession and Estate Planning Strategies with Martin Finn
364 Plays16 days ago
Mark Gallegos, Tax Partner at Porte Brown, and his guest, Marty Finn, delve into some of the leading tax topics of the day. In this episode, they discuss turning complex succession and estate decisions into actionable plans—balancing control, fairness among heirs, liquidity, and efficiency.
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Transcript
Introduction and Guest Overview
00:00:09
Speaker
Hello, everyone. Welcome back to Tax News Now. I'm your host, Mark Gallegos. Today, we're diving into a place where numbers meet meaning, where tax law, business strategy, and family legacy all intersect.
00:00:21
Speaker
My guest is someone who has mastered that intersection for over three decades. Marty Finn, Senior Counsel at RLGC Law Group. Marty is that rare combination of attorney and
Expert Advice on Law and Business Strategy
00:00:31
Speaker
CPA. He advises individuals, families, and businesses on the full spectrum of estate, financial, tax, and elder law issues, from corporate structuring and business succession to estate administration and long-term care planning.
00:00:45
Speaker
He's built a career helping people plan for every stage of life and doing it thoughtfully. He earned his BBA from Siena College, his JD from Albany Law School, and his LLM in taxation in New York University, a pedigree that reads like a roadmap to tax excellence.
00:01:01
Speaker
He's an AICPA credentialed personal financial specialist and a member of the Estate Planning Hall of Fame as an accredited estate planner. He's distinguished and respected leader across both the bar and the CPA community.
00:01:13
Speaker
And on a personal note, Marty and I served together on the AICPA Engage Conference Planning Committee for Tax Strategies for High Income Individuals track. I get to see firsthand how his insight, his humor, and his humility help shape dialogue around planning for those who need it most.
00:01:30
Speaker
He embodies what our profession aspires to be, technical mastery with human touch. So Marty, it's an honor to have you here on the Tax News Now podcast. Welcome. Oh, thanks for having me, Mark. and That sounded really impressive, but if you could have left the over three decades part out, that would have been okay, but that's, it's all
Personal Insights and Career Decisions
00:01:47
Speaker
right.
00:01:47
Speaker
ah So before we get into planning techniques, strategies, let's start with your journey. um Like, tell me, you began, you started your career or your your college career as a numbers person in the accounting world.
00:02:01
Speaker
Tell me how you got into that and what brought you in that direction. Yeah, it's interesting, Mark. It's kind of a boring story. But you know I was a high school kid. I knew I was going to go to college. was a good student. um And you know quite frankly, i I kind of talked to my dad and said, hey, I know I'm going to go to college. I just don't know what I want to do or where I want to go.
00:02:22
Speaker
And my dad was a man, actually, two of his brothers, my uncles, were graduates of Siena College, which is a little Franciscan college up in Albany, New York. And I grew up in a little town about 40 minutes from from Albany.
00:02:37
Speaker
um He said, why don't you go to Siena, get an accounting degree, and go to law school? And I said, OK. So, i mean, it it was brief. It was probably the best advice I ever got in my life.
00:02:49
Speaker
And it turned out pretty good for me. So that's what I did. You know, I went to Siena. It's a great business school. It's a great accounting school. um And then ah ultimately went to Albany Law School to to continue that process.
00:03:04
Speaker
That's great. That's great. But was there a moment when you realized once you're in law school that tax law isn't just about forms and formulas, but more about life transitions, families, choices, really being somewhat of an advisor for people?
00:03:18
Speaker
I think it was probably more so when I got out,
Family Influence and Planning Philosophy
00:03:22
Speaker
Mark. I it kind of you know i did enjoy ah the the the accounting courses. i it's i guess Am I supposed to be embarrassed to say that? I enjoyed the accounting courses. No, I think it's great. i and kind of enjoyed the accounting courses. that It logically made sense to me, that kind of thing. So maybe that's the way my brain was built. But and and But I did really enjoy a business law courses at at Siena too. And I had a had a yeah professor at Siena who was a ah lawyer CPA, ah practicing lawyer CPA. and And, you know, I really enjoyed his classes. And and so that kind of
00:03:59
Speaker
spurred me on to continue this this path of going to law school and in law school. Again, great professors that, you know, after first year is kind of all basic stuff. But second, third year, you start picking some courses. And I did pick some tax courses and estate planning type courses that, ah yeah, it just kind of continued that process. I thought that's that's kind of thing I want to do that ah that type of work.
00:04:24
Speaker
ah Probably the you know, the the Where I wanted to head with it was more once I got out of of school and started experiencing what I could do for for people.
00:04:37
Speaker
That's great. That's great. Now, you said your focus is helping families through every stage of life. Where did that philosophy come from? And was there like a mentor or somebody that kind of instilled that in you or did you just create it on your own?
00:04:50
Speaker
I, you know, again, I think it was partly part partly that family's always been important to me in my life when I was growing up and certainly with with my wife and I and our our four adult sons, that you know, family's always been a big part of things.
00:05:05
Speaker
ah But certainly when I got out and started doing some practicing, and particularly, I think, in the estate planning area, ah you do see you know how family is important in that process, right? I mean, I'd be talking to an individual or a married couple, and you know it's it's not just the numbers. It's not certainly not that just the tax issues that are involved. It's what's the right way to deal with this estate plan how do we leave things to the family at some point and the whole issues come up about what's what's the dynamics in the family so i think it was it was probably more so just as i got more and more involved in the estate planning process that that i realized that family is a big issue here and uh
00:05:53
Speaker
Again, we'll bring it up again after three decades of working in this thing. Now, you know, I'm working with, you know, many of the families I started out with. I'm working with, you know, second and third generations in in their estate planning.
00:06:07
Speaker
Yeah, no, I think that that's that's just phenomenal. And i agree. I mean, the numbers are one thing, the law, um the technical aspect, but having that relationship is key. So now you've been working with families, some of them, like you said, for for generations, you know maybe it's two or three generations deep at this point time.
00:06:24
Speaker
um But again, those long relationships, taught what have this taught you about trust, continuity, human side, all those things in respect to the work you're doing?
Common Mistakes in Succession Planning
00:06:35
Speaker
Well, I mean, I think that the most important thing is is asking questions, you know going back to family dynamics, trying to understand as much as possible about the family dynamics, because the planning is going to kind of fit into that, what the needs are there.
00:06:50
Speaker
you know all kinds of crazy stuff what what's the marital relations of the of the kids involved that we're planning for because that's going to dictate do we really need to have trusts involved that protect assets from from things um what's the health situation for some of the kids do we need to think about supplemental needs trust trust that protect wealth uh so that you know it can be spent properly uh for the needs of that child or grandchild um So I think that's the, you know, it's just the family dynamics, understanding it as best as possible, because it is more than just taxes. And, you know, you know, Mark and, you know, my presentations with the AICPA, I try to make sure people understand that, that it's more than taxes when you're doing estate planning and probably a bigger percentage of it is making sure we're planning appropriately for the family situation.
00:07:44
Speaker
Yeah, no, I agree. i think it's it's huge. And I know myself, yeah you know, you're talking when I'm working with business owners and their families as an advisor, i know that there's more to it than just dotting the I's and crossing the T's. And, you know, and and one of the things that comes up all the time that I'm dealing with is business succession. Hey, dad's run the company. Maybe me, grandfather started it. And now he's like, hey, I wanted to leave it to my children who are not working in the business, right?
00:08:13
Speaker
um So kind of like moves us into succession planning, a topic that I see seems to be urgent to a lot of families. Some like to talk about it, some don't, right?
00:08:24
Speaker
um So when you've helped so many closely held businesses transition ownership, whether they they're kids, key employees or outside buyers, what's the most common mistake you see when owners wait too long to plan or hesitate on that?
00:08:38
Speaker
Well, it's that last part, right? They wait too long. That's the biggest issue that happens. They just wait too long. And, you know, i we have but I've got countless situations where they've waited too long and something happens. Either they get sick or they die.
00:08:52
Speaker
And now the family's dealing with what do we do with this business? um it It could be a ah business that some other family ne members, kids, all of them are part of them are involved in the business, but most cases it's not. The family isn't involved and now we're in a fire sale type situation. So the waiting too long is is kind of number one on the hit parade is in and and we do.
00:09:16
Speaker
For my practice, you know in upstate New York, you know for my higher net worth clients, the folks that may have to be dealing with maybe state because we still have a state estate tax or in some cases still federal estate taxes, um their net worth is generally because they have a closely owned property.
00:09:38
Speaker
business involved and that's where their wealth is coming from. So we see it a lot. ah Planning for it ahead of time, thinking through what am I going to do with this business so or how can I set things up so that my family members can deal with it if I don't do anything while I'm alive?
00:09:54
Speaker
um making sure it passes down to kids if they're involved in the business or having some other kind of exit strategy. Maybe you know but dealing with the issue up front and saying, hey, maybe I need to sell this thing now while it's ah it's appropriate to do so. So and that that really is really the tough one.
00:10:15
Speaker
The other one is always when there are kids involved and probably ah two sides to that. One is if I've got both of my kids, two or more or multiple kids involved. Right.
00:10:29
Speaker
And I got both my kids involved. That's great. Maybe it's going to go 50 50. But sometimes you got to have that tough conversation with clients and and parents that say, hey, maybe 50 50 doesn't work in a business. Maybe you got to pick somebody that's going to be in charge of this thing. And that that becomes sometimes an issue that's got to be discussed.
00:10:52
Speaker
And then you know the other part is always going to be, hey, I've got two of my kids involved, but two aren't involved. And you know what do we do?
00:11:03
Speaker
Yeah, it's appropriate that this business be left to or gifted to or sold to these two kids. What do I do about the other kids? um Do I need my estate plan to be equal?
00:11:16
Speaker
Equal sometimes isn't always fair. So that, you know, and I'm sure you see that all the time. What's what's the appropriate way to pass that thing down? Yeah, yeah, and I agree. I think there's many those conversations, and I think that's one reason why people kind of like refrain from wanting to talk about it. Exactly. is You know, you can't split the baby in half concept, you know. no so So when you, so let's say you get a new ah engagement and you you sit down with a new client and they have a plan that they've maybe developed, whether it's internally or maybe made it's something that's been in place for a while.
00:11:53
Speaker
How do you determine whether that succession plan is genuine or just kind of like needs a lot of, you know, sharpen the pencil and let's get to work on it? what What are you looking for? and Well, I mean, again, it's the it's the getting into the family dynamics, the family situation. what Where are we going to head with this business?
00:12:15
Speaker
Where are we going to head with this estate plan? what's what's That's always more important. it's it's that it's the What's the appropriate way to deal with this thing? Forget about taxes. for a minute, right? we're got to We're gonna have to deal with that in most cases. We're gonna have to deal with that issue, ah but let's deal with number one, what's the appropriate way to pass this thing down or start gifting now ah based on circumstances.
00:12:40
Speaker
A lot of that is asking probing questions, but probably more so it's listening to what people have to say. And in in many cases, it's it is the absolutely, and when we got a married couple involved,
00:12:55
Speaker
It's listening to both sides of that that couple, whether it's that we've got cases where the woman owns the business and and she's you know she's got certain things that she's thinking about, the husband or vice versa.
00:13:08
Speaker
But the non-business owner, if there is one, they've got specific things they're thinking about also in this planning. So it's listening to both sides and then trying to marry all that together into a plan that works, number one, for the family, but then you know, layering in how can we do this in a tax efficient manner?
00:13:28
Speaker
Well, you said something important there that I think everybody needs to is listening. I mean, sometimes you want to go into a meeting and be like, all right, I got an agenda. Let's and you just talk, talk, talk. But the reality is listen to your clients and take notes and really dig into what they have to say.
00:13:43
Speaker
So you're often balancing emotion and economics with clients and asking those probing questions. So you're talking about fairness among children, control versus liquidity, um legacy versus valuation.
00:13:56
Speaker
But how do you navigate those discussions without letting the tax tail wag the family dog, let's say? Yeah. I mean, again, it's listening to the clients and what what they're trying to accomplish here.
00:14:08
Speaker
um But it's also you know laying out some options, right? Sometimes they just don't know what their options are with respect to you know, being fair among the family or equal if they want to try to be equal.
00:14:23
Speaker
So laying out some option, ultimately, it's their decision, right? And I might try to make sure they understand, you got to tell me what you want to do. But here are some ways that we could deal with this with this situation. I mean, in the again, the the one that gets the diciest, in my experience is the one where the two kids are involved and two kids aren't involved in the business. How do we be fair among the family?
00:14:47
Speaker
And you know we lay it out and say, hey, you got these two kids are involved. They've been involved for 20 years in this business. They've added to the wealth that's here for this business.
00:14:59
Speaker
Maybe they that's one option is they just get the business, period. And then the rest of the wealth is split in four shares equally. Maybe they get the business and we got to equalize that distribution to the non-business kids in some manner with other assets or something in between that. So we we just try to figure out where they're coming from. And that's not always easy because you know you you see it too. We get a married couple.
00:15:27
Speaker
One's coming from one place and one's coming from in another place. And we got to try to bring those two together in the mix too. so ah We lay out options for them, but they got to decide where where we're going to go with this thing.
00:15:39
Speaker
That's correct. I know I'm currently dealing with a family. Mom and dad started a business together 50-50 and they've run this thing and it's it's gone from you know maybe a $10,000 investment to roughly a $50 million dollars valuation now.
00:15:53
Speaker
And they have two sons. One doesn't do anything with the business. One has been working in the business since he was 16, is ideally the one that would take over for mom and dad.
00:16:05
Speaker
Dad says, hey, I want to we should gift our shares or have it so that son takes over. Mom says they both need to own it 50 50. And so that's the dynamic that they're at today. we're We're helping them get through this. But again, it's it's that exact thing you're talking about where yeah you know there's a lot of dynamics there.
00:16:24
Speaker
Yeah. and And the thing is, again, as you know, you're you're. You got to keep them moving along. you know Sometimes you get caught in this thing where they just can't make a decision and nothing happens. And we we really try to impress them. We're not trying to force them into any situation or so do it too fast. But you know it's better if you have something in place. So let's come up with a resolution that you know you both can agree to.
00:16:49
Speaker
That's correct. So if a business owner comes to you and says, hey, I may retire or sell in five years. And that's what I'm thinking right now. What should you advise them they should be doing tomorrow in order to start getting ready?
00:17:03
Speaker
So it it it depends on the circumstances. One one obviously is you know, we we try to and and we work with the CPA involved, right? Because we don't do the the accounting aspect. I'm a CPA, but I don't do the accounting aspect, financial statements, things like that. But getting financial statements in order sometimes closely held business interest i'm sure you don't see this with your clients mark but those financial statements aren't the best thing in the world and there's a lot of personal expenses going through there and all that kind of stuff we like to get that in order so that's a a good personal or ah business financial statement
00:17:40
Speaker
that but you know a potential buyer wants to see to be able to offer ah an appropriate price for that. If that's what's going to happen, the sale is going to
Navigating New Tax Laws
00:17:48
Speaker
happen. So getting financial statements in order, we we we encourage them to do that with their CPA, getting corporate records in order where we're appropriate so that we're prepared for that potential transaction when it when it happens.
00:18:02
Speaker
um then it's Then it can get into some tax things. What should we be doing to minimize the hit ah when when that might happen? Whether that's trust planning, charitable trust planning in some cases, there's you know grantor trust, ah GRATs, things like that that we can do to help minimize the hit a little bit as as much as possible.
00:18:26
Speaker
and And that stuff, as you know, you can't wait until the day you have an offer to do that kind of stuff. You got to get it ahead ah ahead of time. I agree. I mean, and I know it's getting financials in order, getting getting your house in order, essentially, yeah so that yeah when the day does come or you go to market, there's the opportunities there and you're not you're not you know rushing up against the end hour to get it. snap I always get a kick out of you know new new business clients, corporations, particularly that are LLCs that you know come in, we talk to them and
00:18:57
Speaker
How's where's your your black beauty? Where's your corporate record book? And they're like kind of look at you with a face that what's that? And then it's like, oh, well, we got to start with the basics and and get some of that put stuff in place, so if nothing else, just for liability protection ah things to get those things in place.
00:19:17
Speaker
Yeah, no great idea. Now, kind of moving over into estate planning. Obviously, we've seen the estate planning landscape over the number of years change rapidly. We, you know, for years, we've been talking about TCGA and the sunset and what's going to happen to the lifetime exemption. And then, you know, July 4th of this year,
00:19:37
Speaker
The president signed H.R. 1 tax bill that starting in 2026 makes it $15 million dollars lifetime exemption per individual. So with all that going on, what are you seeing as far as advising clients? Is this the time to do estate planning or not? And I say that because I know myself that after the president signed this bill, clients were saying to me, well, we're good now, right? Since we don't have to worry about this. And I have my answer, but I'd like to hear what you have to say. Yeah. I mean, well, we we're good because everything is permanent, right? Everything in that bill is permanent now. So, um yeah, that's the the word they're focused on.
00:20:17
Speaker
and And, you know, we had that leading up to this whole thing. We had already had a little advisor fatigue going on because for years things were becoming They're going to go out. They're going to expire.
00:20:30
Speaker
This was coming up to ah this 10 year deal was going to expire and it was going to drop down. And and, and i you know, I've had clients say, you keep saying this, that this stuff isn't and it doesn't happen.
00:20:41
Speaker
ah But, um yeah, we got to continue to talk to them about these things. Permanent, we make we make jokes about it, right? Because it's nothing's permanent in Washington. with Another election in two years, another one in two years after that, and the whole thing could change.
00:20:59
Speaker
right I got to tell you, though, that just having that word permanent in the bill does give me, even as a planner, a sense of, well, It's not going out on its own at some point in the future.
00:21:14
Speaker
right It's not a 10-year like we had last time. It's it's it's in place. And you know Congress is really going to have to do something to make a change to it. so Even given that, you know I still talk to clients and say, hey, well, so we still have an issue in New York state, right? In New York state, we've got our own state estate tax. so And that's much lower than what the federal exemption is. So I have a lot of clients that are in the, hey, I don't necessarily got to worry about the federal exemption, but I do need to worry about the New York state exemption. And in our particular state, we don't have portability. So we you know we each
00:21:52
Speaker
married couple has one of these exemptions and we got a plan that we're making sure we use both of those exemptions. So we still have a little bit of that going on to deal with to deal with clients.
00:22:03
Speaker
And we still have clients that are you know bumping up against that 30 million or more. And and we got to do some planning. And the folks that are close to that, we're you know still saying, you know, if you're able to make gifts and you know you bring in now your personal financial planner and say, hey, can you give away large chunks of assets and still live comfortably for the rest of your life?
00:22:32
Speaker
ah We're still looking at that and saying, hey, maybe we ought to do it, picking on things that we think are going to highly appreciate in the future business interests, potentially um that that could potentially ah appreciate, we want to get those out of the estate, the extent we can.
00:22:49
Speaker
Maybe it's a slow burn. Maybe we do it a little bit at a time over and working with a client right now. He's willing to start doing, you know, 5% gifts to the kids of of his interest, but um he's not ready to do a big gift and that's fine. You know, at least we start the process of of moving some stock and over.
00:23:08
Speaker
No, that makes sense. And I agree. I think there is There is so much and you you brought up the state side, like I live in Illinois and we have a $4 million dollars um state exemption.
00:23:19
Speaker
So clients, they're like, hey, 15 million, 30 million if we're married, we don't have to worry about anything. And then you start to realize, no but you have a state problem and they're like, oh, yes. So we do need to do something. And again, I'd say no matter what, you need to do something. You need to start thinking and be proactive and listen to the advisors.
00:23:38
Speaker
Right. Right. Now, there are all kinds of tools that are out there that you know we all use to help our clients in different situations and no one's for every you know one size fits all. But are you seeing a surge in gifting as far as using GRATs or sale defective grantor trusts for things right now? or you where do you see things going within the planning stage?
00:24:01
Speaker
yeah So again, it all depends on the the net worth we're talking about, right? um But um we're we're looking in at upticks in qualified personal residence trusts with interest rates a little bit different now.
00:24:15
Speaker
um you know, talking about interest rates, I, you know, I got to tell my kids always, you know, I used to have an 11% mortgage at one point in in, you know, so stop complaining about six or 7%. I know it used to be two or 3%, but, um but yeah, so even that uptick has caused a little bit of resurgence in qualified personal residence trusts. So we we look at that.
00:24:39
Speaker
We've got, you know, folks up here in in New York with, you know, vacation properties up at Lake George and, you know, up in the Adirondacks and the lakes. And, you know, they just make perfect ideal gift candidates when you can you can make gifts to a trust and still use it, you know, under the terms of the trust. And then certainly they'll have a rental ability later on.
00:25:02
Speaker
ah through the terms of the trust. So yeah, I mean, those kinds of things we're seeing. Grats, we're seeing a little uptick in those too. If you've got a you know sometimes a business interest that's pushing off enough cash to to fund the annuity, ah that's always an ideal circumstance for that. If you're gonna do some gifting and you you know you got a healthy enough client that you can you can outlive the the term of the grat.
00:25:29
Speaker
We want to do that, obviously. ah So, yeah, we're seeing a little bit uptick that, you know, we're like everything else. i'm I'm trying to talk to clients about the basics first. You know, do you have a will in place? And it's and it's amazing how many of you see it all the time, too. It's amazing how many clients just have done nothing.
00:25:51
Speaker
in their estate plan. So just getting things like powers of attorney and health care proxies and and wills or revocable trusts in place initially. So you have a basic estate plan in in place.
00:26:04
Speaker
Power of attorney, I think, is probably the most critical document. you can you can have in place for somebody to manage your affairs. If you can't manage your financial affairs, if you couldn't do that while you're alive, ah but having in that power of attorney a gifting ability so that somebody can do this estate planning for you if something happens and you can't do it for yourself anymore.
00:26:30
Speaker
So just critical stuff like that. And then we just kind of tear. I try to do this stuff and in in tiers for clients. Let's get the basics done. Then you know we want to make gifts of assets. What's the stuff we can gift when it doesn't impact you at all?
00:26:45
Speaker
Usually that's life insurance right off the rip, right? They're not going to get any benefit from the life insurance. Let's get that out of your estate and set up life insurance trusts. We're seeing an uptick on those again.
00:26:56
Speaker
um So getting those out of the estate and get them into life insurance trust. So it's there for the benefit of your family, but it's not creating a kind of estate tax. And then we look at further you know gifting opportunities. so Right.
00:27:10
Speaker
No, this is some great things. And, and, you know, you mentioned something before, you know, tax law being permanent with quotation marks. And I, I laugh because I hear this all the time about all kinds of things in tax legislation. yeah um But what conversations do you have with clients that help them understand that, you know, waiting is not always the best answer for, you know,
00:27:33
Speaker
for anything in planning, because that decision may be the biggest cost or the costliest decision of their life. Meaning, hey, I have i've built this value over my life and I'm paying my taxes year after year, whether I like the value that I'm paying the taxes on or not.
00:27:48
Speaker
But then after they pass, the amount that they could be subject to a estate tax, assuming they're over the threshold, it could be catastrophic to the family. you know And this is where people don't not always understand.
00:27:59
Speaker
Yeah, I mean, and that sometimes does come down to the funding part of it, just letting them know what you know, what is the estimate that we would be looking at for a potential estate tax?
00:28:11
Speaker
And, you know, then where's the money going to come from? You know, looking at the rest of their personal financial statement, is there enough liquidity there to fund that thing? Or is it going to again be in a situation where there's going to be a fire sale of that business in order to generate the revenue and the cash to pay those pay those taxes, in our case, both state and federal ah level taxes.
00:28:34
Speaker
ah Sometimes that part gets in the funding part can can get them to spur on a little bit. you know Sometimes it just doesn't. you know They just, number one, you know, to with these business owners, number one, they're not going to die ever.
00:28:48
Speaker
So it's not an issue. um And then number two, they just are not prepared to give up any kind of control at this point, which we could deal with. Right. We can we can set up some kind of situation where you're still in charge, but you've given away a lot of value of things. So it's given them options and you can lead them to water.
00:29:09
Speaker
Sometimes they just won't drink. It's just, that's correct. Yeah. So you've also devoted a significant part of your practice to elder law and long-term care planning areas that touch people that, you know, at different levels and also people that are vulnerable.
Elder Law and Future Planning
00:29:27
Speaker
um So what drew you into really taking a liking to this area? Cause I think it's a, it's a very valuable resource. it Yeah. it And again, not not terribly exciting answer to this. i So when I got out of law school,
00:29:42
Speaker
I spent eight, almost nine years at a public accounting firm, a big regional public accounting firm up and up in Albany in their tax practice, which was tremendous, right? Because it gave public accounting tax, you you you learn tax from that. you know There's almost only so much you can do in school, but sitting down and doing compliance oriented type things ah really gave me a great background.
00:30:08
Speaker
About eight, nine years in, I had met a colleague of mine who was also ah an attorney CPA, and we kind of decided to leave the the accounting area to to start a law firm.
00:30:21
Speaker
So we started a law firm in the Albany area um with the idea to do tax work, you know, and and a little bit different now because in an accounting firm,
00:30:32
Speaker
As an attorney CPA, you don't get to do too much of the attorney stuff. You get a lot of compliance benefit, you get planning, but then you got to hand over. You can't do the documentation. You can't draft documents, things like that in that accounting setting, at least and in New York. um So we said, it and we want to do the whole enchilada. We want to be able to do everything. So we started this law firm um from scratch.
00:30:59
Speaker
I had ah a wife, a house, a kid. So um when you start from scratch and you don't have any clients, that means that it's very simple business, a law firm.
00:31:12
Speaker
you You have clients, you do work, they pay you and you have money. That's right. When you don't have any clients, there's no money coming in. So we were kind of scratching and clawing, trying to figure out any way we could get things going.
00:31:25
Speaker
And actually, at that time, ah when we started, ah you know i had just seen some things and been to some state bar programs. And this elder law thing was coming up to be a real practice area. And I said, yeah that's kind of interesting. And that's a little more widespread practice area than this tax estate tax planning.
00:31:47
Speaker
um So I just got kind of and got involved in it through the State Bar Association, ah learned more and more about it and just started doing it. And it was, you know, it's been a great practice area. And yeah, it's, it you know, not everybody has estate tax issues to think about.
00:32:06
Speaker
But everybody needs to think about how am I going to deal with my life and my living arrangements if I had some kind of illness later in life? And they like how do I not only deal with that, but pay for that?
00:32:20
Speaker
And to piggyback on that, when families come to you in crisis or, you know, mom and dad or, you know, got that diagnosis or things have gone sideways. Yeah. um You know, what opportunities may have been missed by waiting too long to start the planning?
00:32:37
Speaker
Yeah. Yeah. So um and and really for that kind of planning, at least just the number one, that all the basics are there again, right? And probably more critical than even we said before, it's you know healthcare proxies and powers of attorney.
00:32:51
Speaker
You know, there could be potentially a situation where someone can't make decisions for themselves anymore. So you want to have people in place under those documents and make those decisions for them, or you're faced with ah proceeding under state law in a court for guardianship, conservatorship that you know could be very costly, ah could take a long time. And it could be the person is petitioning for guardianship, conservatorship is not the person you would have chosen to make decisions for me. Probably the more important issue is I get to choose who I want making decisions for me if I have those documents in place. So that part is critical.
00:33:30
Speaker
Financing long-term care costs, yeah, I mean, they can, depending on the circumstance, it can be very expensive. It really is, you know, there's only three simple solutions to it. It gets a little complicated in the solutions, but number one is that you self-pay and you kind of look at personal financial planning and what assets do I have? What income do I have?
00:33:53
Speaker
What assets do I have that I could turn into income producing? Maybe I'm OK. Maybe I could finance my care. And in a lot of cases, clients come in and we sit down and go over it with them and say, you know, you probably could finance this yourself. And and maybe you don't need to do anything.
00:34:10
Speaker
it It is self-insurance, basically, but you're taking on the risk yourself. Second option, right, you shift that risk to an a insurance company and yeah you buy long-term care insurance or ah life insurance policy with a long-term care rider to it, or maybe just life insurance policy, whether it's a single or a joint life policy where it's just a Back to square one, I'm going to pay my own way if I have to, but I've got this policy out here that'll reimburse basically that wealth to my kids if I if i need to. So you got that insurance option potentially too for clients.
00:34:51
Speaker
Clients sometimes you know like the life insurance option better because life insurance is really the only type of insurance that Somebody's going to get something. ah you don' you know You're going to die and somebody's going to get paid off at that point. If it's I don't go into any kind of setting, family gets my wealth plus the insurance. So um yeah, and it's a good option.
00:35:14
Speaker
And then the third is the you know the Medicaid option, if you will, planning to artificially get rid of your assets so you don't um own them anymore and you'll qualify for Medicaid.
00:35:28
Speaker
Usually, you know does pay for you know home care type stuff, but limited more nursing home type costs. so But it's irrevocable planning, right? You've got to irrevocably give stuff away, ah whether it's to kids directly, which we kind of frown upon. you know We start with the premise that the kids are bums.
00:35:50
Speaker
We're not going to, right? and like um My clients got to prove otherwise to me that thats but I usually like to use trust. I usually like to use trust in that kind of setting. So all depends, again, on the client's particular financial and family circumstances, which way we're going to go and what their feelings are on ah the various options. But it really comes down to one of those three when you're when you're doing that planning.
00:36:14
Speaker
That's great, great knowledge there that I think people need to open their eyes to and as advisors really, you know, take a look at. And if you don't know it all, get the right people like Marty involved to help you um in that process or with your clients.
00:36:30
Speaker
So europe' you're an attorney, a CPA and a personal financial specialist, which means you see the entire board, not just one corner of it all. How does that blend of skills shape your approach to problem solving for clients?
00:36:44
Speaker
Well, I think it it I think in and basically everything we've talked about, right in the estate planning area, the business succession planning area, planning for clients that you know have that business aspect to their planning.
00:36:56
Speaker
um I think it's been great. I think it's, you know, from a marketing perspective, when we're trying to build the practice, it was it was helpful.
00:37:08
Speaker
To have that tax knowledge, you know, and and be able to say, hey, here's how we could plan things and how we could do that more tax efficiently. I understood, you know, from education in the tax area, from working with a CPA firm.
00:37:23
Speaker
I understood how the taxes fit into this plan, whether it's income taxes, state taxes, how it fit into the planning. And I think that's that you got to know that stuff, because everything we do in the estate planning area has some kind of tax ramifications to it. It may be not a state tax for some people, but it's going to have some income tax issues involved.
00:37:44
Speaker
ah Also, you mean irrevocably give away something. you lost basis step up, right? And that you would have had if you didn't do something like that. So you got to think through all that stuff.
00:37:56
Speaker
ah So I think that's been valuable, having that that technology. And I think my clients have been found it valuable. ah The other areas, particularly going back to when we started this firm and we're trying to you know trying to get a practice going,
00:38:11
Speaker
I spent a lot of time ah marketing to CPAs. you know we did Back then, we did some compliance work. We did some you know in the law firm. We did some tax returns, income tax returns, fiduciary returns, estate returns.
00:38:25
Speaker
But I could go talk to accountants and say, look, at I'm not trying to take that part from you. I just want to work with you, with your clients, and on the estate planning part. And we'll we'll talk it.
00:38:37
Speaker
Which ones you want to do? Not a lot of smaller firms, you know upstate New York. and I don't want to do fiduciary returns. I don't want to do estate or gift tax returns. You can take care of that.
00:38:48
Speaker
But if they want to keep doing the individual, they keep doing the individual. So being able to to talk the CPA language, if you will, was tremendously helpful to me in building the building the practice. We get a lot of referrals from CPAs.
00:39:03
Speaker
i would imagine. Yeah. No, that's great. That's great to bring in all the tax efficiency, legal protection, and even the personal value there. That's yeah so good. yeah And for CPAs and practitioners listening to this podcast that don't have all these credentials, you know they're just focused on the compliance aspect and the grind, what's your best advice for building collaboration and across disciplines? I mean, is it like you did go out and meet lawyers, meet people that the things that you don't do, right? that's That's number one, right? Going out there and meeting the other advisors. Exactly. We said that doing the things that you don't do and make sure you've got that corral of advisors that you can go to in in circumstances.
00:39:44
Speaker
ah But the second level is make sure you're communicating. You know, that's where things can fall apart in a planning engagement where you're not communicating with everybody who's involved, whether it's a CPA that, you know, from my perspective, the CPA is involved, a personal financial planner, a trust advisor, investment advisor.
00:40:05
Speaker
everybody's got to be on the same page with what's what's going on in this plan. So communicating among everybody. Somebody's got to, you know, choose who's going to be the quarterback in this thing. Again, ah you know, just like the business situation, who's in charge, ah it's you know, you got to have somebody maybe that's a quarterback on that.
00:40:24
Speaker
Sometimes that's the CPA for us, and, you know, they'll kind of, you know, keep everybody in the mix. Or sometimes it's me, but making sure everybody's talking to each other is critical. in this, in this planning engagement.
The Human Element in Estate Planning
00:40:38
Speaker
Valuable lessons there for sure. Yeah. You you're living it. So let's go deeper into the human side of planning, because this is where I see that you really shine. After decades, and we'll use that term decades. We use one decade working with families.
00:40:53
Speaker
What patterns have you seen how people make or avoid decisions about legacy? You know, and I guess this is, this is, it's different for everyone, but what what kind of patterns have you seen over the years?
00:41:05
Speaker
So i mean, it it a making decisions and moving forward with a plan is always the tough. This is not a topic, unfortunately, that you know it's not like talking about movies or sports or things. Talking about estate planning is not the something that people really want to talk about.
00:41:23
Speaker
But it is critical to have plans, especially with the higher ethnic folks net worth folks that we want to pattern in tax savings into this thing, too. they really got to talk about it and put, put some of these things in place.
00:41:38
Speaker
You know, sometimes it is bringing the kids in the mix. You know, we, we, you know, you know, for me now, when there's different levels involved, it may be talking to the parents and the kids at the same time, always up to the client to make that determination. Is, is that something you want to bring the kids into the mix now?
00:41:57
Speaker
Uh, For me, sometimes it makes it helpful because some the kids can often spur the parents on to get get things in place. You know, it it doesn't mean I always talk to my clients that I'm doing the planning for. It doesn't mean we got to share financial information. Clients are sometimes close to the vest on that stuff. I don't want them to know.
00:42:19
Speaker
how much I'm worth or what we have because it's going to cause them to not work at all or harder. So that's fine. You don't have to. But it it I think it's important that the kids know, adult kids in particular, obviously, that you're meeting with somebody about this stuff. You're talking about it. You're going to put a plan in place and you know you're you're going to have, hopefully, an estate plan in place that deals with all this stuff.
00:42:44
Speaker
So good. And then when you're working with clients, how did, what are some strategies or some things you've worked with and help them move past the fear? Maybe it's guilt or indecision that often blocks them from moving forward with planning of any kind.
00:42:59
Speaker
Are there things that you've done to kind of move them along? Yeah. I mean, I, um, so number one, I have a, a, a bulldog of a, a paraprofessional paralegal that, uh,
00:43:13
Speaker
You know, we just constantly call and say, OK, it's been two weeks since we met. You've got draft documents. Let's let's move. So trying to keep on top of clients to move them forward is is key for us. We don't let it sit for months at a time and, you know, know that they're not ah responding to things. We try to keep on top of them to move them, move them forward on things. That's key to to talk to them.
00:43:42
Speaker
um But then making sure, you know, when they're doing their planning, i think going back to we talked about earlier, just making sure they have options. Here's different ways we could deal with this. They do often want to hear from me.
00:43:56
Speaker
This is the one I think makes sense for your circumstances. And if they did they show up tendency to want that, I'll let them know. i think this makes the most sense for what you guys have talked to me about.
00:44:07
Speaker
So given my blessing to to the plan, if you will, I think that helps sometimes. But just you know letting them and letting them know you know, again, kind of what we talked about earlier, net letting them know about the consequences.
00:44:22
Speaker
If we don't do something, here's what happens if you don't put something in place. Oh, that's so good. And again, you know, there's no one size fits all for any of these clients, like you said, but I think it's just helping them.
00:44:36
Speaker
open their eyes that, hey, you're there for them. You're you're that soundboard. But we're we're here to help move you along the way get to what you actually need. I tell you, the last case, you know, the worst case scenario is always to when I've had it happen, not a lot in my career. But there's some times where I just say, you know what?
00:44:55
Speaker
I don't think I'm helping you. You know, you you you're we're not getting anywhere. We're not doing it. Maybe we should you should think about talking to somebody else and, you know, give them names of people.
00:45:06
Speaker
nine times out 10, that causes them to say, no, we're but well okay, we'll do it. we get it's not You know, sometimes, but sometimes you just have to reach that point where like I say, hey, maybe I'm not the guy for you guys. Maybe it's there's somebody else could talk and get you to move forward.
00:45:23
Speaker
So good. Now let's shift gears to our shared workspace, which is part of the AICPA Engage Conference.
Leadership and AI in Planning
00:45:31
Speaker
ah We serve on the tax strategies for high income individuals track, and I feel like it's a great area, obviously um draws a lot of people in.
00:45:40
Speaker
But what motivated you to get involved in conference leadership along the way? yeah um Yeah, I mean, that was but that was, and you know what I'm going to say, that that was Sid Cass. For me, it was Sid way back, you know,
00:45:56
Speaker
Decades ago, Sid approached me through a friend of mine at at the other at that first CPA firm that I work with. I had already left and started this um this law firm, but it kept relationships with the other CPA firm. And there was a partner there that had recommended me to Sid to speak at that conference.
00:46:16
Speaker
Back then, Tax Strategies was a separate conference. It wasn't part of Engage. Gage hadn't been born yet. um So it was a separate conference. He asked me to speak and Sid reached out and said, would you, Bill suggested, would you be interested in speaking at our conference?
00:46:31
Speaker
I said, yes. I went and spoke and I think it i think I only spoke one year. and whether it was the end of that conference or later on, Sid reached out to me and said, so we we'd love to have you back next year. But would you also consider being part of the committee to be involved in putting this conference together and and i said yes again you never say no to sid kes so i said yes again um and uh then you know kind of got involved in the committee going forward then again it was just the tax strategies committee
00:47:05
Speaker
uh you know for that in individual conference um and it just i mean there's that you know that guy has been a meant had been a mentor meeting i got you know we miss him terribly but uh he had been a mentor to me you know throughout my course of dealing with the aicpa learned so many things um from sid over the years but um So, yeah, and then, you know, ended up chairing that conference and then engaged came along and was on that committee and ended up chairing that conference. So it kind of all grew from from that. But, um you know, for me, that conference is, again, because of my you know tax attorney, CPA combination.
00:47:46
Speaker
It's such a ah conference that has so many practical, useful things that I can use in in in my practice. So it's always been a great conference, I think, going forward.
00:47:58
Speaker
And you would you say that that's why attendees keep coming back year after year is because of the practical takeaways they get from it or what else? Yeah, I mean, I think so. And again, i I'll go back to Sid.
00:48:10
Speaker
You know, Sid was always whenever and when I got involved in it, every year he'd be talking about, we got to make sure that there's takeaways from this guy. We got to make sure that the speakers are clear that this is what you can take back to your practice right now and start talking to your clients about and generate revenue right in your practice and, you know, help your clients out with with these tidbits. And Yeah, I think that's it's a very practical conference. The topics are and when we, you know, Sid knew everybody. we We have the best talented speakers in the country in in the in this conference. So and that's been the case from day one. So, yeah, that's that's huge.
00:48:54
Speaker
Great speakers who give us practical advice makes it a great conference. Now, we've seen even prior to Engage and then now with Engage, too, that the the strategy or the conversation from compliance to strategic advisory has really taken off and really been how we've seen people really have more takeaways of what they can do, right?
00:49:18
Speaker
how You continue to see that evolution as time goes on because you know we you and I run into a lot of people that they're just stuck in the grind of running their practice and dealing with the compliance that they can't they They don't think they have the time to do strategic advisory. What do you have to say to that?
00:49:37
Speaker
Well, I just think it's that's, you know, bottom line is that's what clients really want. i mean, they need the the tax return. They need the compliance part of it. Right. Because they got to file a tax return every year. or They got to you know prepare personal financial or business financial statements. They need that for the bank.
00:49:57
Speaker
What they want is advice and how they run their business. And I just think a ah CPA in particular is uniquely qualified to to look at things and advise on that area. So you you got the tools. CPA's got the tools to do that advice.
00:50:15
Speaker
And it's just really what clients want. So why would you not be in that be in that area? And it's just another level of revenue source. ah for the business. And in today's world, we'll probably talk more about this, but with everything we have, the tools, the the software products, the AI now that can help us streamline the other part, the compliance part of things, you you really need, you can't You can't do the the managing to help them manage their business or the consulting part necessarily with all that. It's it that takes the the CPA mind and experience to do that.
00:50:55
Speaker
So good. Yeah. And as we look to the future, what do you see is the nest next big frontier in estate business planning for your from your perspective? Yeah. I mean, I think it's, you know, obviously the answer is AI and how can that help out?
00:51:09
Speaker
um It, you know, if you just it's going to be a ah big benefit, but you got to be careful about it with with like everything else We just, you know, we we just were away for a couple of weeks in Iceland and my wife planned the whole thing on chat GPT. Right. She just planned the whole trip on there. and And even while we were there, she was like, we're in this town, we're going to this town. What should we?
00:51:34
Speaker
Sometimes the things that came up with weren't really there in the restaurant. So you got to you got to use it the way it's meant to be to give you some ideas. But it's not going to add in the experience that you have as a as a as a CPA from your knowledge, expertise and other clients you've dealt with and and being through this process with other clients.
00:51:57
Speaker
It's not going to give you that. So it will help. with with the process but you it's still going to be up to you to to provide your expertise to clients Yeah, I agree. And I think you've already alluded to it, you know, technology like AI and AI built into software and apps and everything else are going to amplify what we do.
00:52:16
Speaker
But there are many people still that say, well, is it going to replace me? And what are you what what would you say to someone who says that? I just don't think how can it replace that expertise and knowledge and experience, experience right, of of dealing with clients. I just think for me at least, dealing with clients in the same situation or similar situations, being able to use that experience on on new clients and you know how to get them to move forward or how to solve their problems, I think that's where you know you just can't replace that.
00:52:48
Speaker
No, that's so good. If you had to sum up the guiding principles for our listeners right about planning, family, and legacy, what would it be? Well, so number one, we we kind of we we talked about it, I think, for at least my practice area for estate planning and and tax planning.
00:53:05
Speaker
It's the listening part, listening to clients, seeing what they're certain, you know, not not coming in with a you know preplanned. This is what you got to do based on your financial statement.
00:53:17
Speaker
It's listening to clients, seeing what they want to do and what kind of specific family dynamics are involved and then patterning patterning a ah plan around that and then adding in the tax efficiencies. I think that's critical and it's critical in business planning and family personal planning, it CPA advice tax planning.
00:53:40
Speaker
It's understanding client situation before you before you run forward with it. And, you know, we we have, you know And they're all over the place. There's law firms here and and in other parts of the country that it's a factory thing. In many cases, that works. you know The same plan works for everybody in certain sicken situations.
00:53:59
Speaker
I just could never get that to work in in my practice. It's just everybody's got different stories, different circumstances, ah different potential circumstances in the future that I got factor into the plan. So I can't get one one plan works for everybody.
00:54:16
Speaker
So good. Well, thank you, Marty. This has been an incredible conversation. Been rich in wisdom, experience, and obviously your heart. You reminded us that tax planning and estate planning are not about avoiding something.
00:54:29
Speaker
They're about creating something. And clarity and confidence is part of the planning process. You've shown us that in our profession, we can serve people in the most important moments of their life and their journey, not just by saving tax dollars, which are important, but but also protecting what they value most.
00:54:48
Speaker
And for our listeners, we want to start early, right? Communicate openly. Don't be afraid to bring your whole family and team to the table because the best plans are collaborative and rooted in empathy.
00:55:00
Speaker
Marty, it's been a real honor serving alongside you, the AICPA Engage Committee, and having you as a guest on the Tax News Now podcast. um You're an embodiment of what our profession strives for and the depths of knowledge you have and wisdom just go beyond.
00:55:16
Speaker
And I'm forever grateful for you sharing it with everyone. Well, thank you very much, Mark, and it's been great. I appreciate you asking me to be part of it. Thank you. And to everyone listening, thank you for joining us. If you join enjoyed today's episode, please subscribe on Becker Accounting Podcast and share it with your colleagues and friends.
00:55:34
Speaker
I'm Mark Gallegos. Stay curious, stay proactive, and keep planning for every stage of your life. We'll see you next time.