Broker Check


Episode 20: Utilizing Purposeful Trusts In The Family Business

In this episode of the Family Business Show, host Michael Palumbos engages with esteemed guests Ray Odom and John Warnick, both ACTEC fellows, to delve into the nuanced realm of family businesses, trusts, and the essence of purposeful planning. The discussion illuminates the often-overlooked significance of aligning a family's wealth and business endeavors with a deeper sense of purpose and intentionality.

Ray Odom shares his journey and insights into the world of trusts and estate planning, emphasizing the importance of understanding the 'why' behind wealth and business decisions. His anecdote about a medical records company highlights how a clear, purpose-driven mission can profoundly influence all aspects of a business, fostering a sense of commitment and direction that transcends mere financial success.

John Warnick, on the other hand, explores the concept of purposeful naming in trusts and family enterprises. He illustrates how a thoughtfully chosen name, imbued with meaning and reflective of the family's values and aspirations, can serve as a powerful beacon, guiding future generations in stewardship and decision-making. Through examples like the Red Corvette Opportunity Trust, Warnick demonstrates how a name, coupled with a narrative, can encapsulate and communicate a family's legacy, values, and goals, thereby ensuring that the wealth serves a purpose beyond itself.

The conversation also touches upon the delicate balance required to align the interests and well-being of the family with the business's demands. Both guests stress the importance of collaborative teamwork among advisors and honoring existing relationships within the family's advisory circle, ensuring that expertise and familiarity work hand in hand to support the family's objectives.

In essence, this episode sheds light on the transformative power of purposeful planning in the realm of family business and wealth management. It underscores the idea that wealth and businesses are not just financial assets but tools that, when wielded with intention and foresight, can cultivate a lasting, positive impact on the family and the broader community.

Episode 20 Transcript


1

00:00:03.090 --> 00:00:07.440

Michael Palumbos: Well welcome everybody to the family business show. I'm your host, Michael.

 

2

00:00:07.440 --> 00:00:08.250

John Warnick: Columbus.

 

3

00:00:08.340 --> 00:00:10.110

Michael Palumbos: With family wealth and legacy

 

4

00:00:10.440 --> 00:00:12.090

John Warnick: here in Rochester, New York.

 

5

00:00:13.019 --> 00:00:17.250

Michael Palumbos: Today I am it really excited to bring

 

6

00:00:17.699 --> 00:00:21.210

Michael Palumbos: Another set of incredible guests.

 

7

00:00:22.230 --> 00:00:36.120

Michael Palumbos: You know typically most people are really reluctant to set up a meeting with an attorney yet alone a meeting with two attorneys and to think that they're going to have a great time. I'm here to tell you that

 

8

00:00:36.150 --> 00:00:37.860

Michael Palumbos: This is going to be a great time.

 

9

00:00:38.820 --> 00:00:41.970

Michael Palumbos: For those of you who have been following me for a while.

 

10

00:00:42.270 --> 00:00:43.140

Michael Palumbos: You know,

 

11

00:00:43.170 --> 00:00:44.220

Michael Palumbos: You know that

 

12

00:00:44.730 --> 00:00:53.280

Michael Palumbos: I'm a giant fan that when you're working on your state that you're working with an act tech fellow, and I am blessed to have to

 

13

00:00:53.340 --> 00:00:55.860

Michael Palumbos: Act tech fellows here with me today. So

 

14

00:00:56.490 --> 00:00:59.970

Michael Palumbos: Ray autumn and Johnny Warnecke welcome to both of you.

 

15

00:01:01.590 --> 00:01:05.070

John Warnick: Thank you, Michael. Right. It's a pleasure to be here. Michael

 

16

00:01:05.610 --> 00:01:08.190

Michael Palumbos: So we have a tradition on the show.

 

17

00:01:08.220 --> 00:01:10.530

Michael Palumbos: Where rather than me reading

 

18

00:01:10.590 --> 00:01:12.000

Michael Palumbos: The laundry list.

 

19

00:01:12.060 --> 00:01:16.620

Michael Palumbos: Of wonderful accolades in your bio people can go to the website to read those.

 

20

00:01:16.620 --> 00:01:28.170

Michael Palumbos: Things. What I have what I have found to be in kind of a little bit more fun, a little bit more exciting is to kind of take us through your journey. Take us through, you know, what were the steps. How did you

 

21

00:01:28.200 --> 00:01:29.790

John Warnick: End up working with families.

 

22

00:01:30.000 --> 00:01:32.490

Michael Palumbos: You know family businesses and families of wealth.

 

23

00:01:32.730 --> 00:01:37.740

Michael Palumbos: So that people get a kind of a background of, you know, where did you come from.

 

24

00:01:37.740 --> 00:01:38.160

Michael Palumbos: And

 

25

00:01:38.220 --> 00:01:39.990

John Warnick: How did you get here today so

 

26

00:01:40.110 --> 00:01:42.360

Michael Palumbos: Ray, would you mind. Kicking us off and

 

27

00:01:42.540 --> 00:01:43.860

Michael Palumbos: Tell us about your journey.

 

28

00:01:44.640 --> 00:01:46.500

Raymond Odom: All right, very good. I was

 

29

00:01:46.800 --> 00:01:49.680

Raymond Odom: Looking forward to hearing John's first so I could try to copy him.

 

30

00:01:51.030 --> 00:01:51.720

Michael Palumbos: Fair enough.

 

31

00:01:52.080 --> 00:01:52.770

So,

 

32

00:01:53.910 --> 00:01:57.270

Raymond Odom: Yes, my journey started, you know, coming out of law school, I was a

 

33

00:01:57.570 --> 00:01:59.910

Raymond Odom: Thought was gonna be a tax guy. And again,

 

34

00:02:00.120 --> 00:02:22.110

Raymond Odom: US tax Council of northern and really enjoyed a lot of the nuances of, you know, the tax code and really didn't have a connection with clients, per se, except that I would be called in when it was you know problematic one of my early situations, was I was called in when there was a week.

 

35

00:02:22.140 --> 00:02:23.640

Raymond Odom: shipping magnate who

 

36

00:02:24.750 --> 00:02:34.710

Raymond Odom: Had we had file a tax return for and it looked like we had ever done everything perfect but you know when you're dealing with shipping the rules are amazingly

 

37

00:02:34.710 --> 00:02:35.430

Raymond Odom: Complex.

 

38

00:02:35.940 --> 00:02:42.990

Raymond Odom: And I remember using the tax law to save the day for our client and for our company I feel pretty good about that.

 

39

00:02:43.980 --> 00:02:45.120

Raymond Odom: Fast board and I

 

40

00:02:45.390 --> 00:02:50.070

Raymond Odom: Went into private practice and the pilot petitions with a firm.

 

41

00:02:50.190 --> 00:02:51.300

Raymond Odom: That represented

 

42

00:02:51.840 --> 00:03:01.530

Raymond Odom: Dutch clients and that should mean anything to you, except for there was this unusual propensity for Dutch clients to be in the

 

43

00:03:02.280 --> 00:03:13.740

Raymond Odom: Garbage business believer now. And because of that, during the time when all of these local companies were selling to browning Ferris and waste management.

 

44

00:03:14.370 --> 00:03:27.630

Raymond Odom: And those mom and pop companies that had been represented by our firm for a long time, all the sudden we're getting 100,000 100 million dollars in cash in their 80s, back when that was really 100 million almost

 

45

00:03:28.650 --> 00:03:38.130

Raymond Odom: And so that was another experience and the, the whole idea of the complexity of families and their ownership and then from there.

 

46

00:03:39.360 --> 00:04:00.750

Raymond Odom: Like came about in Northern Trust back more than just in a role of a trust administrator and as a relationship manager and my story. That brings me to this point is a story of a wealthy woman who had about maybe 200 million or so dollars but all she cared about was her home.

 

47

00:04:01.620 --> 00:04:03.270

John Warnick: Her ranch and

 

48

00:04:03.600 --> 00:04:08.010

Raymond Odom: Which was a family business. And we kept saying, well, there's other things, other family business.

 

49

00:04:08.040 --> 00:04:09.210

John Warnick: We should care about and

 

50

00:04:09.240 --> 00:04:10.200

Ultimately,

 

51

00:04:11.490 --> 00:04:23.010

Raymond Odom: All the things that we tried to do for her. She never really caught on or cared about. And then she died in a year in which there was no estate tax 2010

 

52

00:04:24.690 --> 00:04:30.060

Raymond Odom: And that was when I got religion because I realized that I had spent all of my time.

 

53

00:04:30.090 --> 00:04:31.230

Raymond Odom: Five years with her.

 

54

00:04:31.470 --> 00:04:32.700

Raymond Odom: Trying to create a tax.

 

55

00:04:32.700 --> 00:04:33.570

John Warnick: Experience.

 

56

00:04:33.780 --> 00:04:35.040

John Warnick: That wasn't relevant

 

57

00:04:35.130 --> 00:04:45.540

Raymond Odom: At her death, and that she had from the beginning, one in her business interests her money interest all to be part of a purposeful trust.

 

58

00:04:45.810 --> 00:04:46.680

John Warnick: As I

 

59

00:04:47.040 --> 00:04:48.210

Raymond Odom: Eric Johnny's thoughts.

 

60

00:04:49.320 --> 00:05:08.010

Raymond Odom: Purposeful trust that took care of giving her children and experience that would allow them to be the best they could be. And that really is how I got to being an advocate for the use of trust and purpose statements and statements of intent.

 

61

00:05:08.760 --> 00:05:11.520

Raymond Odom: For anyone, anyone who is in business.

 

62

00:05:11.730 --> 00:05:12.840

Raymond Odom: Or who has wealth.

 

63

00:05:14.220 --> 00:05:14.730

John Warnick: Well,

 

64

00:05:14.850 --> 00:05:16.470

Michael Palumbos: I appreciate you sharing. Thank you.

 

65

00:05:17.400 --> 00:05:18.150

John Warnick: Johnny

 

66

00:05:18.840 --> 00:05:19.890

John Warnick: Tell us. Oh, I'm going to

 

67

00:05:21.120 --> 00:05:32.190

John Warnick: Turn over to the side so they can get a little glimpse of three of a kind, and a joker. That's the the steer is the Joker and that oil painting behind me and it

 

68

00:05:33.270 --> 00:05:35.010

John Warnick: Don't need the blue Hornet glasses.

 

69

00:05:36.600 --> 00:05:52.920

John Warnick: It tells a little bit of my story. I've always my father was raised on a farm. My mother was raised on a farm both dairy farms, although my father also had some sheep.

 

70

00:05:54.150 --> 00:06:02.880

John Warnick: In their family. My dad ended up becoming a professor of animal science of reproductive physiology, to be precise. When I was 14

 

71

00:06:03.630 --> 00:06:11.760

John Warnick: Our family was involved in, believe it or not a case in the US tax court. My father had spent a little over almost

 

72

00:06:12.630 --> 00:06:30.990

John Warnick: A year and a half, outside the US, we as a family had gone with him. He had been working for the United Nations that year and a half, and there was a controversy tax controversy over whether the income earned while outside the US was taxable so

 

73

00:06:32.100 --> 00:06:46.110

John Warnick: He and the other professor that were kind of to guinea pigs. In this case, they went up to the tax court together. I was actually interviewed and kind of a deposition type setting.

 

74

00:06:47.220 --> 00:06:59.730

John Warnick: By the tax attorney in Washington, DC, who was representing us and the other professor who was Professor Scott. Anyway, these two cases were decided in our favor.

 

75

00:07:00.540 --> 00:07:10.890

John Warnick: But that stuck with me. It filled me with this excitement around tax. I thought this tax attorney was almost as cool as radio and he was polished and

 

76

00:07:11.340 --> 00:07:24.720

John Warnick: And really just really a gentleman and his name was Angelo. I had a role. And so I i went off charge through college as fast as I could, got into a great law school.

 

77

00:07:25.170 --> 00:07:32.700

John Warnick: decided that I was going to be a tax attorney, the law school. I went to fortunately had both a master's level tax program.

 

78

00:07:33.120 --> 00:07:41.250

John Warnick: That was an evening and I was working in the day and going to school last going to law school at night. So I took a lot of those Masters level tax courts.

 

79

00:07:41.760 --> 00:07:51.600

John Warnick: And when I came out, I was a tax geek and I initially for the first five or so years kind of parallel story with Ray, very much.

 

80

00:07:52.320 --> 00:08:03.420

John Warnick: thought everything was in the dotting the i's and crossing the T's on the tax returns, and the structural, you know, the forms that we would use to implement tax strategies.

 

81

00:08:04.380 --> 00:08:16.170

John Warnick: It was in the next 1520 years of my practice evolution that I became purposeful and there was a major event that actually two events.

 

82

00:08:16.560 --> 00:08:31.530

John Warnick: Within quick succession that occurred to me right around the turn of the century, and in the year 2000 and they forever changed the trajectory. After that those two experiences. I really began to ask

 

83

00:08:33.750 --> 00:08:47.880

John Warnick: Isn't there a better way to do this planning. Isn't there a way that we can avoid some of the loss of human potential. The fracturing of families that I was seeing show up all too often.

 

84

00:08:48.660 --> 00:08:56.310

John Warnick: In the technical plans that we had so precisely erected, but then they were kind of through these forces that we didn't

 

85

00:08:56.790 --> 00:09:09.810

John Warnick: Anticipate or couldn't control were being torn apart. So that's how I was asking that question isn't there a better way, that's what led me to a series of

 

86

00:09:10.320 --> 00:09:29.820

John Warnick: Amazing professional experiences I've always often said the clients have been my greatest teachers and everything that I've learned in the last 1520 years really can be traced back to those two professionally jarring experiences I had that caused me to ask that question.

 

87

00:09:30.900 --> 00:09:35.640

Michael Palumbos: Awesome. Again, appreciate you sharing. Here's a question. I don't

 

88

00:09:35.940 --> 00:09:37.560

Michael Palumbos: I don't know the answer to.

 

89

00:09:38.070 --> 00:09:39.240

Michael Palumbos: How long have the two of you.

 

90

00:09:39.270 --> 00:09:40.110

known each other.

 

91

00:09:42.960 --> 00:09:51.240

John Warnick: We're a let me take a first stab at that. I, I believe that Ray came on behalf of Northern Trust to Denver.

 

92

00:09:52.620 --> 00:10:02.520

John Warnick: Probably in the OH 60708 timeframe somewhere. I believe in that period of time is when I, that was the first time.

 

93

00:10:03.630 --> 00:10:06.930

John Warnick: I got to hear ray in person got introduced to him.

 

94

00:10:08.160 --> 00:10:10.380

John Warnick: And began to follow him.

 

95

00:10:12.000 --> 00:10:13.230

John Warnick: The reason I asked.

 

96

00:10:13.380 --> 00:10:21.690

Michael Palumbos: Is because I think it's really interesting how you're in different states. You're in different companies.

 

97

00:10:21.720 --> 00:10:28.890

Michael Palumbos: You're not affiliated and the path sounds almost identical. That's

 

98

00:10:28.920 --> 00:10:30.930

John Warnick: You know my story.

 

99

00:10:30.990 --> 00:10:35.790

Michael Palumbos: How I found you, Johnny is very similar, except the families that I was

 

100

00:10:35.790 --> 00:10:36.450

Michael Palumbos: Serving

 

101

00:10:36.780 --> 00:10:39.690

Michael Palumbos: You know they were a million to $10 million. They weren't

 

102

00:10:39.780 --> 00:10:40.290

Michael Palumbos: Huge

 

103

00:10:40.320 --> 00:10:41.910

Michael Palumbos: Giant wealth but

 

104

00:10:42.210 --> 00:10:51.060

Michael Palumbos: What we saw over and over again was, we would put together these really good technical estate plans with the help of the attorneys and we would, you know,

 

105

00:10:51.540 --> 00:10:54.540

Michael Palumbos: Put all the tax pieces together and back in the day.

 

106

00:10:54.960 --> 00:10:58.680

Michael Palumbos: Even you know if you had $5 million that was still a tax problem sometimes

 

107

00:10:59.280 --> 00:11:01.530

Michael Palumbos: Um, but

 

108

00:11:02.580 --> 00:11:02.970

Michael Palumbos: They would

 

109

00:11:03.180 --> 00:11:05.130

Michael Palumbos: You know, a client would pass

 

110

00:11:05.760 --> 00:11:07.710

John Warnick: And the whole thing that we put together was

 

111

00:11:07.770 --> 00:11:10.620

Michael Palumbos: unraveled because nobody wanted the cottage on the lake.

 

112

00:11:10.740 --> 00:11:11.790

Michael Palumbos: Nobody wanted

 

113

00:11:11.970 --> 00:11:24.750

Michael Palumbos: You know this, that, or the other thing they didn't want to spend time together once mom and dad were gone. And so that's when I said the same thing. There has to be a better way. And that better way

 

114

00:11:25.110 --> 00:11:25.890

John Warnick: Is just

 

115

00:11:26.220 --> 00:11:27.630

Michael Palumbos: Communication so

 

116

00:11:27.660 --> 00:11:30.840

Michael Palumbos: That's what we're here to talk about today. Ray, you and I enter I

 

117

00:11:30.870 --> 00:11:32.580

Michael Palumbos: Think you had something you wanted to add about

 

118

00:11:32.700 --> 00:11:33.540

John Warnick: John a

 

119

00:11:33.840 --> 00:11:37.110

Raymond Odom: Does that know just his recollection of of our

 

120

00:11:37.290 --> 00:11:38.370

Raymond Odom: Meeting is accurate.

 

121

00:11:38.400 --> 00:11:39.150

John Warnick: Although

 

122

00:11:39.300 --> 00:11:40.890

Raymond Odom: He was a bit of my hero before

 

123

00:11:40.890 --> 00:11:41.910

Raymond Odom: That I just didn't know it.

 

124

00:11:45.030 --> 00:11:47.370

Michael Palumbos: mutual admiration society. I love it.

 

125

00:11:47.580 --> 00:12:03.720

John Warnick: So I think we both have gray already knew a lot. I knew a little, maybe a lot in some respects, but we both learned so so much more in the last 10 1214 years, whatever. It's been that since we first met

 

126

00:12:05.430 --> 00:12:06.810

Michael Palumbos: So today's show is

 

127

00:12:06.870 --> 00:12:12.720

John Warnick: Michael, let me say this. I, it is true, I've been privileged to serve.

 

128

00:12:14.040 --> 00:12:16.350

John Warnick: Billionaires center millionaires.

 

129

00:12:17.610 --> 00:12:30.360

John Warnick: But I find truthfully, that the number of digits in a balance sheet reflecting a family's financial capital isn't an accurate.

 

130

00:12:31.170 --> 00:12:47.130

John Warnick: barometer of how purposeful that plan might be. And those I found that clients. The, the kind of Millionaire Next Door client that nobody might suspect of being a millionaire.

 

131

00:12:48.900 --> 00:13:03.690

John Warnick: They sometimes can be as more purposeful, then the billionaire or sent a millionaire, who has so much more financial wealth, but it really comes back to vision and heart.

 

132

00:13:04.800 --> 00:13:06.180

John Warnick: That's what it's all about.

 

133

00:13:07.680 --> 00:13:08.970

Michael Palumbos: Yes, I would agree.

 

134

00:13:10.470 --> 00:13:11.610

Michael Palumbos: So today's show.

 

135

00:13:11.640 --> 00:13:12.480

Michael Palumbos: Trusts

 

136

00:13:12.780 --> 00:13:25.590

Michael Palumbos: Family Business purposeful or persistent and you know at the when I'm just saying those words trusts and family business purposeful a persistent

 

137

00:13:26.400 --> 00:13:33.960

Michael Palumbos: Would have the first one of the first things that come to your mind, Ray. What it, what does that. What does that say to you when we just utilize that title.

 

138

00:13:34.740 --> 00:13:35.280

Raymond Odom: You know,

 

139

00:13:35.340 --> 00:13:37.230

Raymond Odom: It really sets up the

 

140

00:13:37.290 --> 00:13:40.890

Raymond Odom: The conflict that you know you're taught in law school and I think

 

141

00:13:40.920 --> 00:13:43.080

Raymond Odom: Even our clients understand that.

 

142

00:13:43.650 --> 00:13:54.090

Raymond Odom: A family business. And the business entity that is in is somehow going to last forever. That's what we talked about the

 

143

00:13:54.090 --> 00:13:55.170

Raymond Odom: Perpetual

 

144

00:13:55.320 --> 00:14:03.450

Raymond Odom: Kind of entity and it's going to persist and sometimes, you know, we kind of assume

 

145

00:14:03.480 --> 00:14:04.680

Raymond Odom: That the fact that we

 

146

00:14:04.680 --> 00:14:12.390

Raymond Odom: Have a business entity that doesn't die means that we have a purpose and for me.

 

147

00:14:12.600 --> 00:14:14.640

Raymond Odom: That's not the case. And so

 

148

00:14:14.880 --> 00:14:18.450

Raymond Odom: What your title says is, look, there's

 

149

00:14:18.510 --> 00:14:20.010

Raymond Odom: A persistence built

 

150

00:14:20.040 --> 00:14:34.260

Raymond Odom: Into the nature of a business entity, but that's completely different from what its purposes and you shouldn't really confuse the two or else you're going to wind up having something that doesn't persist, because it doesn't have a purpose.

 

151

00:14:35.580 --> 00:14:47.040

Michael Palumbos: Love it. That's fantastic, fantastic. And you know, when we did a pre show call together. The three of us, and I had a lot of fun going

 

152

00:14:47.100 --> 00:14:47.730

John Warnick: Through just

 

153

00:14:47.760 --> 00:14:49.050

Michael Palumbos: Thinking through

 

154

00:14:49.380 --> 00:14:58.260

Michael Palumbos: You know what we're going to be sharing what we're going to be talking about. And one of the first things that we uncovered and through that conversation was the

 

155

00:14:58.260 --> 00:14:59.190

John Warnick: Fact that

 

156

00:14:59.640 --> 00:15:00.210

Michael Palumbos: You know,

 

157

00:15:00.420 --> 00:15:03.000

John Warnick: The difference between, you know,

 

158

00:15:03.060 --> 00:15:08.940

Michael Palumbos: Having a family run business versus a family in business and why that's so

 

159

00:15:08.940 --> 00:15:09.720

John Warnick: Important

 

160

00:15:09.990 --> 00:15:15.750

Michael Palumbos: To make that distinction and, you know, Johnny, would you mind, you know, just kind of walking

 

161

00:15:15.750 --> 00:15:16.770

John Warnick: Through that

 

162

00:15:16.950 --> 00:15:19.890

Michael Palumbos: For people. What does that mean when I say that to you.

 

163

00:15:21.780 --> 00:15:22.950

John Warnick: Well, I think.

 

164

00:15:24.780 --> 00:15:38.160

John Warnick: You know, this is really one of the great challenges that faces the entrepreneur business owner family patriarch or matriarch is how do we

 

165

00:15:39.660 --> 00:15:53.400

John Warnick: How do we bring family and business together and become as you said Michael family in business or as I like to say an enterprising family.

 

166

00:15:55.410 --> 00:16:08.070

John Warnick: I have feet. I've seen too many situations where sadly family took second or third chair to the business. And so the the founder typically

 

167

00:16:09.030 --> 00:16:28.620

John Warnick: give so much energy attention. Time to building the business, creating this financial empire huge success and the family in a sense is really third place or second place, at least in his life or her life and there is

 

168

00:16:29.700 --> 00:16:40.560

John Warnick: That, that really is not a positive recipe for a flourishing family so it takes it really takes discipline. It takes focus

 

169

00:16:41.190 --> 00:16:52.140

John Warnick: It takes a little bit of that persistence word for someone to rebalance and either put family ahead of business, or at least on

 

170

00:16:52.500 --> 00:17:03.330

John Warnick: equal footing with business to make sure that family is never made to feel second place and and i think that what we're going to be talking about

 

171

00:17:03.810 --> 00:17:29.640

John Warnick: Today are different ways that Ray and I and you Michael have discovered that we can help families put heart and soul into the structure that are the vehicles for the intergenerational transfer of this wealth, whether it's an operating business or more of a passive

 

172

00:17:30.690 --> 00:17:33.450

John Warnick: You know, holding company or family investment company.

 

173

00:17:36.480 --> 00:17:38.220

Michael Palumbos: Ray, anything to add to that.

 

174

00:17:38.700 --> 00:17:40.740

Raymond Odom: No, said, Amen, that's well said.

 

175

00:17:43.140 --> 00:17:48.540

Michael Palumbos: I would throw in just the other piece to that and Johnny, I think we're on the same

 

176

00:17:48.780 --> 00:17:49.800

Michael Palumbos: 100% on the same

 

177

00:17:49.800 --> 00:17:52.860

Michael Palumbos: Page about, you know, bringing in that heart and

 

178

00:17:52.860 --> 00:17:56.070

Michael Palumbos: Soul into the thing to do as Ray said purpose.

 

179

00:17:56.310 --> 00:17:57.240

Michael Palumbos: I think, you know,

 

180

00:17:58.590 --> 00:18:02.880

Michael Palumbos: Making sure that there's a purpose behind the business. A lot of times when we

 

181

00:18:02.910 --> 00:18:03.390

Michael Palumbos: Hear

 

182

00:18:03.450 --> 00:18:11.670

Michael Palumbos: When I hear that people are thinking about, am I making decisions for the business from a family perspective.

 

183

00:18:12.150 --> 00:18:15.270

Michael Palumbos: Or from a business perspective and

 

184

00:18:15.510 --> 00:18:17.250

John Warnick: If we're making them for

 

185

00:18:17.310 --> 00:18:19.350

Michael Palumbos: The family perspective. Sometimes that that

 

186

00:18:19.350 --> 00:18:20.640

Michael Palumbos: Can turn into

 

187

00:18:20.910 --> 00:18:22.830

Michael Palumbos: A mess something, you know, it's

 

188

00:18:22.980 --> 00:18:27.750

Michael Palumbos: You get, you get a company vehicle because your last name is Smith.

 

189

00:18:28.950 --> 00:18:33.120

Michael Palumbos: You know, you get a raise, because you're going through a

 

190

00:18:33.120 --> 00:18:35.130

Michael Palumbos: Divorce right now and child support is

 

191

00:18:35.130 --> 00:18:37.110

Michael Palumbos: Going to be more, you know, hire

 

192

00:18:37.290 --> 00:18:38.610

Michael Palumbos: So there's that piece.

 

193

00:18:38.670 --> 00:18:39.450

Michael Palumbos: Of that

 

194

00:18:39.900 --> 00:18:41.010

Michael Palumbos: You know portion

 

195

00:18:41.610 --> 00:18:44.130

Michael Palumbos: And then there you know and then as well as the

 

196

00:18:44.340 --> 00:18:45.810

Michael Palumbos: You know, is this a lifestyle.

 

197

00:18:45.810 --> 00:18:48.780

Michael Palumbos: Business versus an equity business.

 

198

00:18:49.140 --> 00:18:52.830

Michael Palumbos: But I think it's that that that piece that you both bring to the

 

199

00:18:52.830 --> 00:18:53.580

Michael Palumbos: Table that we're going to

 

200

00:18:53.640 --> 00:18:54.540

Michael Palumbos: Be spending the

 

201

00:18:54.900 --> 00:18:57.060

Michael Palumbos: Focus on of that.

 

202

00:18:57.120 --> 00:18:58.530

John Warnick: Hot bring

 

203

00:18:59.070 --> 00:19:10.170

Michael Palumbos: That purpose, the values that that own that's extra that really makes being in a family business to the nth degree so I

 

204

00:19:11.610 --> 00:19:13.260

Michael Palumbos: I appreciate that Ray. Go ahead.

 

205

00:19:13.710 --> 00:19:26.760

Raymond Odom: And I think, I think you're onto something. I think the key is that when we talk about business. One of the phrases we all use this. Well, you know,

 

206

00:19:26.820 --> 00:19:28.260

John Warnick: It's business.

 

207

00:19:28.740 --> 00:19:33.030

Raymond Odom: It's it you know this is business and what we know what we're trying to say we're saying

 

208

00:19:33.030 --> 00:19:42.870

Raymond Odom: Look, there is an need to make a decision that has an objective reality, apart from the emotions.

 

209

00:19:43.080 --> 00:19:44.310

John Warnick: That are connected to

 

210

00:19:44.310 --> 00:19:50.220

Raymond Odom: Relationships, and that's a truth, but it really is.

 

211

00:19:50.280 --> 00:19:51.810

John Warnick: A subordinate truth.

 

212

00:19:52.140 --> 00:19:54.540

Raymond Odom: To the greater truth which is yes.

 

213

00:19:54.660 --> 00:20:01.140

Raymond Odom: There is that need to make that decision that has objected base basis.

 

214

00:20:01.470 --> 00:20:03.000

John Warnick: But to me it's

 

215

00:20:03.060 --> 00:20:04.200

Raymond Odom: Always set in

 

216

00:20:04.230 --> 00:20:10.650

Raymond Odom: A greater context as to whether the decision is bringing life.

 

217

00:20:11.040 --> 00:20:12.660

John Warnick: And meaning.

 

218

00:20:12.750 --> 00:20:24.270

Raymond Odom: And and purposefulness to the family and the individuals involved or whether it's taking away from life. I actually liked that word, whether you know good and bad doesn't work so well.

 

219

00:20:24.450 --> 00:20:25.530

Raymond Odom: But is it

 

220

00:20:25.560 --> 00:20:28.140

Raymond Odom: Is it something that's allowing thriving.

 

221

00:20:28.200 --> 00:20:29.370

John Warnick: And flourishing.

 

222

00:20:29.940 --> 00:20:32.850

Raymond Odom: Or is it something that's going to set up chaos.

 

223

00:20:32.940 --> 00:20:34.620

John Warnick: And division and

 

224

00:20:34.650 --> 00:20:39.840

Raymond Odom: Even though the decision is very objective and as you know

 

225

00:20:39.930 --> 00:20:42.480

Raymond Odom: reviewed by experts who have all kinds

 

226

00:20:42.480 --> 00:20:42.810

John Warnick: Of

 

227

00:20:42.900 --> 00:20:43.650

You know,

 

228

00:20:44.940 --> 00:20:51.060

Raymond Odom: You know numbers and things that we can look at, at the end of the day when that

 

229

00:20:51.090 --> 00:20:54.300

Raymond Odom: Objective decision over some measure of

 

230

00:20:54.300 --> 00:20:56.340

Raymond Odom: Time is causing a

 

231

00:20:56.760 --> 00:20:57.930

John Warnick: Deterioration

 

232

00:20:58.200 --> 00:20:59.790

Raymond Odom: Of the lives and being

 

233

00:21:00.360 --> 00:21:02.010

Raymond Odom: That's not

 

234

00:21:02.070 --> 00:21:04.620

Raymond Odom: A good decision whether you call it family or

 

235

00:21:04.620 --> 00:21:08.340

John Warnick: Business, I think that's the thing I'm trying to bring

 

236

00:21:08.820 --> 00:21:10.620

Raymond Odom: To my clients when I

 

237

00:21:10.650 --> 00:21:13.890

Raymond Odom: Talk about this issue. I try not to get into that.

 

238

00:21:13.980 --> 00:21:15.330

Raymond Odom: dualism of

 

239

00:21:15.420 --> 00:21:17.010

John Warnick: Business family.

 

240

00:21:17.100 --> 00:21:19.500

Raymond Odom: But have this bigger context.

 

241

00:21:19.740 --> 00:21:21.900

Raymond Odom: Of relationships and

 

242

00:21:21.960 --> 00:21:26.970

Raymond Odom: A motive for profit that's designed to help people thrive.

 

243

00:21:28.410 --> 00:21:29.040

Michael Palumbos: Great.

 

244

00:21:30.360 --> 00:21:33.180

Michael Palumbos: That rolls right into it and tell me if

 

245

00:21:33.180 --> 00:21:34.440

John Warnick: It sounds right.

 

246

00:21:34.560 --> 00:21:36.840

Michael Palumbos: But when we were talking about controls.

 

247

00:21:37.140 --> 00:21:38.460

John Warnick: Versus roles.

 

248

00:21:40.410 --> 00:21:44.970

Michael Palumbos: Why don't you you know what my note here is that, you know, controls versus

 

249

00:21:44.970 --> 00:21:45.420

John Warnick: Roles.

 

250

00:21:45.780 --> 00:21:55.800

Michael Palumbos: kind of understand the difference when it comes to family shareholders and employees when the business is held inside the trust is kind of that.

 

251

00:21:55.920 --> 00:21:57.570

Michael Palumbos: Control versus Rosie, when I

 

252

00:21:57.870 --> 00:21:59.040

Michael Palumbos: Hit on that for a moment.

 

253

00:22:03.270 --> 00:22:08.040

John Warnick: I can just offer a little bit and then I'd love to hear what Ray might contribute

 

254

00:22:09.180 --> 00:22:13.350

John Warnick: I do think this is an important distinction. And today.

 

255

00:22:14.790 --> 00:22:26.130

John Warnick: Is I look back on almost a four decade long professional career serving families in the tax area, particularly in the wealth transfer planning area.

 

256

00:22:27.060 --> 00:22:47.640

John Warnick: The one thing that stands out to me if there's a trend line that you can plot and see kind of a steady progression over 40 years that trend line to me is complexity in terms of the the base documents the trust documents. When I first started practicing

 

257

00:22:48.660 --> 00:22:56.010

John Warnick: We were just on the edge of automating word processing that word processing was just beginning.

 

258

00:22:56.580 --> 00:23:08.370

John Warnick: To come into its own. And so will documents and trust documents were like average will five to six pages average trust 15 to 2025 pages, Max.

 

259

00:23:08.910 --> 00:23:24.870

John Warnick: And then you see with the proliferation of technology that the size and the complexity of these documents has grown exponentially over the last 3035 years to where now you know a common

 

260

00:23:25.890 --> 00:23:32.340

John Warnick: Quote simple trust maybe 50 to 70 pages in length. It's so, so lengthy so complex.

 

261

00:23:33.570 --> 00:23:38.850

John Warnick: What is another trend that ties back into this point. Michael is that

 

262

00:23:39.870 --> 00:23:52.650

John Warnick: It used to be predominant that we would see distributions large distributions often staggered over a period of time. It could be a chronological timed

 

263

00:23:53.070 --> 00:24:14.460

John Warnick: distribution pattern like 25 3035 or 3035 40 but the idea of a trust a perpetual trust or even a lifetime trust was less common. Today you can flip that and even modest wealth today.

 

264

00:24:15.570 --> 00:24:24.930

John Warnick: The attorney is strongly suggesting that you need an asset protection trust kind of rapper as part of your estate plan and

 

265

00:24:25.320 --> 00:24:45.930

John Warnick: This means that you want to protect your children for other lifetimes. So this leads to the idea of a lifetime or in some cases and larger states perpetual trust the generation skipping trust the so called dynasty trust. Well, how does that relate back to control and roles.

 

266

00:24:47.640 --> 00:25:00.600

John Warnick: Many times today the control and the ownership is put into trust for tax purposes or asset protection purposes and

 

267

00:25:01.740 --> 00:25:09.540

John Warnick: So the this really kind of confuses things because it used to be four or five decades ago that

 

268

00:25:10.050 --> 00:25:18.450

John Warnick: That stock would go to an individual, the individual would become an owner, they would have a role as owner

 

269

00:25:18.930 --> 00:25:37.380

John Warnick: Today, it's the trustee. More often than not, that is going to be the quote owner and the role of the beneficiary, the individual family member is difficult. So this is where I think from a trust design standpoint for business owners.

 

270

00:25:38.580 --> 00:25:54.600

John Warnick: Be careful think seriously about what does it mean to divorce or erect a huge wall between your children and the responsibilities of ownership.

 

271

00:25:55.200 --> 00:26:10.440

John Warnick: Is there a way that you can design your trust so that the children can be taught, not just to be excellent beneficiaries, but also to feel the responsibilities of ownership and to learn what it takes to be a great owner

 

272

00:26:13.290 --> 00:26:14.130

John Warnick: And re

 

273

00:26:14.160 --> 00:26:15.660

Michael Palumbos: You know when you throw

 

274

00:26:15.990 --> 00:26:22.290

Michael Palumbos: When it's the business that's inside of there, it's even 10 times more complicated. Correct.

 

275

00:26:22.890 --> 00:26:23.370

Raymond Odom: It is

 

276

00:26:23.460 --> 00:26:24.180

I think that

 

277

00:26:25.830 --> 00:26:36.510

Raymond Odom: The thing I love about trust is it's based concept. The concept of a trust says something that's really counterintuitive that the person who owns something

 

278

00:26:37.500 --> 00:26:39.660

Raymond Odom: Is not the person who

 

279

00:26:39.690 --> 00:26:42.930

Raymond Odom: Is supposed to benefit nor

 

280

00:26:43.140 --> 00:26:45.990

Raymond Odom: Is the person who benefits.

 

281

00:26:46.110 --> 00:26:47.430

Raymond Odom: In title as an

 

282

00:26:47.430 --> 00:26:47.910

John Warnick: Owner

 

283

00:26:48.300 --> 00:26:49.920

Raymond Odom: But all the benefit.

 

284

00:26:50.520 --> 00:26:58.860

Raymond Odom: Of ownership goes to the beneficiaries of the trust, but all the responsibilities and burdens of ownership goes to this.

 

285

00:26:58.860 --> 00:27:01.590

John Warnick: Person who gets zero

 

286

00:27:01.860 --> 00:27:06.450

Raymond Odom: That's a key thought zero benefit. In fact, you know, just bringing a listing

 

287

00:27:06.600 --> 00:27:08.880

Raymond Odom: That zero benefit is so small that

 

288

00:27:09.090 --> 00:27:12.300

Raymond Odom: Has done a nose. They we actually had to create

 

289

00:27:12.300 --> 00:27:13.470

John Warnick: Statutes

 

290

00:27:13.590 --> 00:27:14.310

Raymond Odom: That allowed

 

291

00:27:14.340 --> 00:27:15.870

Raymond Odom: Trustees to get paid.

 

292

00:27:16.590 --> 00:27:18.540

Raymond Odom: Because it was considered a conflict of interest.

 

293

00:27:18.570 --> 00:27:25.590

Raymond Odom: Even to get paid in the role of a trustee. Now that's not as well, you know, not problem. But the point of it is

 

294

00:27:25.830 --> 00:27:27.450

Raymond Odom: Is in the area.

 

295

00:27:27.480 --> 00:27:29.520

John Warnick: Of managing your

 

296

00:27:29.550 --> 00:27:31.740

Raymond Odom: Money, it's nice to have that

 

297

00:27:31.740 --> 00:27:32.700

John Warnick: Bifurcation

 

298

00:27:32.940 --> 00:27:39.330

Raymond Odom: But I think as john pointed out the reality that control and

 

299

00:27:39.390 --> 00:27:41.400

John Warnick: Ownership decisions.

 

300

00:27:42.750 --> 00:27:45.690

Raymond Odom: Could be disconnected or apart.

 

301

00:27:45.960 --> 00:27:47.610

John Warnick: From the actual

 

302

00:27:47.850 --> 00:27:49.830

Raymond Odom: dollar value wealth.

 

303

00:27:49.860 --> 00:27:53.550

Raymond Odom: Benefit of the dividends and the stock ownership.

 

304

00:27:53.610 --> 00:27:55.110

Raymond Odom: And the day operations.

 

305

00:27:55.320 --> 00:27:58.080

Raymond Odom: I actually think that's, that's a good way to think

 

306

00:27:58.080 --> 00:27:59.310

Raymond Odom: About things because for

 

307

00:27:59.310 --> 00:27:59.940

Me.

 

308

00:28:01.020 --> 00:28:01.920

Raymond Odom: In talking with

 

309

00:28:02.010 --> 00:28:06.600

Raymond Odom: many business owners, the idea of control and

 

310

00:28:06.600 --> 00:28:07.770

John Warnick: Benefit get

 

311

00:28:08.070 --> 00:28:09.690

Raymond Odom: Get more together.

 

312

00:28:09.780 --> 00:28:21.300

Raymond Odom: So often, that they don't have a clean and clear understanding of the long term benefits or detriments of what their business structure.

 

313

00:28:21.330 --> 00:28:23.040

Raymond Odom: Or their business decisions are doing

 

314

00:28:23.940 --> 00:28:26.820

Raymond Odom: So, because as john well put it

 

315

00:28:26.880 --> 00:28:31.650

Raymond Odom: Back in the day they owned it. They the checking account. Everything was kind of running

 

316

00:28:31.650 --> 00:28:32.280

John Warnick: Together.

 

317

00:28:32.340 --> 00:28:35.160

Raymond Odom: And so you never really thought about all the

 

318

00:28:35.190 --> 00:28:46.260

Raymond Odom: Various impacts of decision making within the business. For me, it really allows for someone, a lot of times in my trust the a CEO will be trustee.

 

319

00:28:46.290 --> 00:28:48.390

Raymond Odom: Not a corporate producer, but a CEO or

 

320

00:28:48.750 --> 00:28:52.320

Raymond Odom: Someone who's, who's got an interest in making sure the business.

 

321

00:28:52.320 --> 00:28:53.340

Survives

 

322

00:28:54.450 --> 00:29:01.380

Raymond Odom: And yet knows that put the businesses survive and for what purpose to give you a job. No, it's to give this greater

 

323

00:29:01.740 --> 00:29:03.510

Raymond Odom: Need to T called the family.

 

324

00:29:03.630 --> 00:29:07.470

Raymond Odom: The ability to thrive and survive and this group of people called

 

325

00:29:07.470 --> 00:29:08.400

John Warnick: Employees

 

326

00:29:08.640 --> 00:29:10.230

Raymond Odom: The ability to have that same thing

 

327

00:29:10.440 --> 00:29:12.390

Raymond Odom: I think a trust lends itself to that.

 

328

00:29:12.390 --> 00:29:14.430

Raymond Odom: But why do I agree with Johnny that

 

329

00:29:15.000 --> 00:29:17.820

Raymond Odom: Our complexity and we were kind of a cottage industry.

 

330

00:29:17.850 --> 00:29:19.770

Raymond Odom: You know, we, we, driven by taxes.

 

331

00:29:19.950 --> 00:29:21.180

Raymond Odom: But what we want to do.

 

332

00:29:21.270 --> 00:29:22.950

Raymond Odom: If you're really going to do this effectively.

 

333

00:29:22.950 --> 00:29:24.990

Raymond Odom: Is back away from the complexity.

 

334

00:29:25.170 --> 00:29:26.070

Raymond Odom: And that's why

 

335

00:29:26.130 --> 00:29:29.340

Raymond Odom: Purpose and this naming and these statements are so important in

 

336

00:29:29.340 --> 00:29:29.730

Raymond Odom: My mind.

 

337

00:29:30.810 --> 00:29:31.140

Raymond Odom: Love.

 

338

00:29:31.230 --> 00:29:33.900

Michael Palumbos: That's great. You know, it's interesting.

 

339

00:29:35.520 --> 00:29:38.790

Michael Palumbos: Naming the CEO as the trustee.

 

340

00:29:39.210 --> 00:29:41.430

Michael Palumbos: Isn't something that you hear too often.

 

341

00:29:41.580 --> 00:29:43.920

Michael Palumbos: And and it. But as soon as you say.

 

342

00:29:43.920 --> 00:29:44.280

John Warnick: It.

 

343

00:29:44.400 --> 00:29:47.670

Michael Palumbos: As soon as as soon as you connect those pieces makes

 

344

00:29:47.730 --> 00:29:51.210

Michael Palumbos: awfully good sense that you would want somebody

 

345

00:29:51.570 --> 00:29:52.980

Michael Palumbos: You know, at the helm of the

 

346

00:29:53.040 --> 00:29:53.640

John Warnick: Trust.

 

347

00:29:53.700 --> 00:29:54.330

John Warnick: That is owned

 

348

00:29:54.360 --> 00:29:55.140

Michael Palumbos: The business.

 

349

00:29:55.500 --> 00:29:56.550

Michael Palumbos: To be somebody that

 

350

00:29:56.580 --> 00:29:57.720

Michael Palumbos: You know cares about

 

351

00:29:58.230 --> 00:29:59.460

John Warnick: In charge of the business.

 

352

00:29:59.940 --> 00:30:03.150

Michael Palumbos: That's great. I've also seen it done.

 

353

00:30:03.240 --> 00:30:05.640

Michael Palumbos: In smaller cases sometimes where they'll

 

354

00:30:06.000 --> 00:30:07.860

Michael Palumbos: Split the own you know the

 

355

00:30:07.950 --> 00:30:10.950

Michael Palumbos: The shares into voting and non voting shares in the

 

356

00:30:11.100 --> 00:30:12.150

Michael Palumbos: End the voting shares

 

357

00:30:12.570 --> 00:30:14.010

John Warnick: Outside of the trust.

 

358

00:30:14.190 --> 00:30:16.740

Michael Palumbos: But the value is inside, but that causes all

 

359

00:30:16.740 --> 00:30:17.550

Michael Palumbos: Kinds of

 

360

00:30:17.880 --> 00:30:18.600

Michael Palumbos: You know,

 

361

00:30:20.010 --> 00:30:21.360

Michael Palumbos: dilemmas as well so

 

362

00:30:21.390 --> 00:30:23.760

Michael Palumbos: Sometimes I'm

 

363

00:30:24.150 --> 00:30:27.540

Michael Palumbos: The re I think I want to come back to you for a second.

 

364

00:30:27.540 --> 00:30:28.440

John Warnick: Here and

 

365

00:30:29.130 --> 00:30:29.790

Michael Palumbos: Is my is

 

366

00:30:30.960 --> 00:30:33.180

Michael Palumbos: I sound like an echoing right now.

 

367

00:30:34.020 --> 00:30:35.280

Michael Palumbos: Are you getting that

 

368

00:30:36.990 --> 00:30:38.760

John Warnick: No, I'm not. Okay.

 

369

00:30:39.750 --> 00:30:43.080

Michael Palumbos: I'm going to try and just try something here real quick just to make sure

 

370

00:30:43.140 --> 00:30:46.830

Michael Palumbos: And Sierra, feel free to throw a hand up if you see something

 

371

00:30:47.940 --> 00:30:49.260

Michael Palumbos: Or hear something rather

 

372

00:30:50.700 --> 00:30:53.070

Michael Palumbos: Thank you. The nice part about doing these as we

 

373

00:30:53.070 --> 00:30:53.580

Michael Palumbos: can edit.

 

374

00:30:53.610 --> 00:30:56.130

Michael Palumbos: Out the middle sections and

 

375

00:30:56.460 --> 00:31:01.230

Michael Palumbos: Put it together for the podcast. Um, one of the things we talked

 

376

00:31:01.230 --> 00:31:01.800

John Warnick: About

 

377

00:31:01.890 --> 00:31:03.030

Michael Palumbos: When we were together was the

 

378

00:31:03.060 --> 00:31:07.980

Michael Palumbos: Impacts of changing what to why

 

379

00:31:08.850 --> 00:31:11.640

Michael Palumbos: For the end when we're making decisions.

 

380

00:31:11.850 --> 00:31:12.480

John Warnick: Do you want to

 

381

00:31:12.690 --> 00:31:13.140

Michael Palumbos: Talk us

 

382

00:31:13.320 --> 00:31:14.400

Michael Palumbos: Talk about that a little bit.

 

383

00:31:14.400 --> 00:31:14.940

John Warnick: Right.

 

384

00:31:15.150 --> 00:31:16.920

Michael Palumbos: And then, Johnny, I'll throw it over to you.

 

385

00:31:19.380 --> 00:31:19.710

Raymond Odom: Um,

 

386

00:31:20.310 --> 00:31:23.070

Raymond Odom: For me, that why is everything because

 

387

00:31:23.640 --> 00:31:25.350

Raymond Odom: You know you had mentioned in our

 

388

00:31:25.380 --> 00:31:27.660

John Warnick: Pre talk, the idea of

 

389

00:31:27.900 --> 00:31:31.080

Raymond Odom: You know the infinite game.

 

390

00:31:31.290 --> 00:31:31.710

Raymond Odom: And

 

391

00:31:31.860 --> 00:31:34.650

Raymond Odom: Just cause. And I think that's right.

 

392

00:31:34.680 --> 00:31:35.220

Raymond Odom: Is that

 

393

00:31:35.370 --> 00:31:36.810

John Warnick: Especially in these times.

 

394

00:31:37.770 --> 00:31:39.030

Raymond Odom: And one of the things that coca

 

395

00:31:39.630 --> 00:31:40.110

John Warnick: Is done

 

396

00:31:40.140 --> 00:31:43.020

Raymond Odom: If we're really honest with each other. It's really

 

397

00:31:43.080 --> 00:31:43.890

John Warnick: Made us

 

398

00:31:43.950 --> 00:31:44.970

John Warnick: Think about

 

399

00:31:45.000 --> 00:31:53.100

Raymond Odom: What really matters right all the sudden when the the urgency of daily decisions.

 

400

00:31:53.610 --> 00:31:54.180

John Warnick: Can

 

401

00:31:54.630 --> 00:31:56.790

Raymond Odom: Kind of rise to its normal

 

402

00:31:57.000 --> 00:31:58.950

Raymond Odom: Kind of importance, you're

 

403

00:31:58.980 --> 00:32:00.810

Raymond Odom: You're kind of left with. Okay.

 

404

00:32:01.020 --> 00:32:02.130

Raymond Odom: Well then.

 

405

00:32:02.220 --> 00:32:04.620

Raymond Odom: If that's not the urgency what's

 

406

00:32:04.770 --> 00:32:08.850

Raymond Odom: What's really important. The urgent is important. And now you're back to the

 

407

00:32:08.850 --> 00:32:09.900

Raymond Odom: Things I think that

 

408

00:32:09.960 --> 00:32:10.950

John Warnick: That really do.

 

409

00:32:11.160 --> 00:32:24.750

Raymond Odom: Kind of kind of drive the decision making. And I think that, why is absolutely key. And that's what I was trying to allude to earlier when I said yes, it's a business decision.

 

410

00:32:25.350 --> 00:32:36.180

Raymond Odom: But why does the business need to exist wise and I'll just give you one quick example. And moreover, is I have a she's not a client. So I can, I can kind of talk freely.

 

411

00:32:37.680 --> 00:32:48.000

Raymond Odom: They own medical records company and the person literally define the medical records come says we exist. Our Why is to help people have better health.

 

412

00:32:48.810 --> 00:33:00.750

Raymond Odom: And they need to get records and we and that purpose. Just permeated everything the trust makes sense. The moment. And literally, and it makes sense, even to the family.

 

413

00:33:01.290 --> 00:33:07.950

Raymond Odom: But the why of the business begins to permeate everything about how you do what you do.

 

414

00:33:08.310 --> 00:33:21.930

Raymond Odom: And to me that's that's essential if you're going to have any kind of longevity and if you're ever going to have any synergy between family where there's relationships are, you know, important over generations and a business entity, whether it were profit as the main motive.

 

415

00:33:25.170 --> 00:33:29.040

Michael Palumbos: Agreed. Trying to Johnny I muted you. For out there you

 

416

00:33:29.040 --> 00:33:29.490

Go.

 

417

00:33:30.600 --> 00:33:31.020

Michael Palumbos: Um,

 

418

00:33:32.880 --> 00:33:34.230

John Warnick: Yeah, I just

 

419

00:33:35.610 --> 00:33:50.460

John Warnick: Kind of climb right on top of Ray's bandwagon there and say that I think if you ask the question why a trust why this particular trust that we're

 

420

00:33:50.880 --> 00:34:04.710

John Warnick: Designing if we're in the process of creating a trust or if we're thinking about already existing trust what is the principal purpose or purposes of this trust.

 

421

00:34:06.360 --> 00:34:14.850

John Warnick: You know, why doesn't get as much deference and attention and energy as it deserves. I think as you were pointing out, Michael.

 

422

00:34:15.420 --> 00:34:30.930

John Warnick: The what which is oftentimes the asset, whether it's a controlling interest in a business or significant interest in a business or investable assets or the family cottage or whatever it might be.

 

423

00:34:31.950 --> 00:34:42.480

John Warnick: It oftentimes feels like we're paying much more attention and the drafting is much more focused on the what the assets.

 

424

00:34:43.020 --> 00:34:57.330

John Warnick: That are going to be the financial capital side of this trust equation and we just short trip completely the other though the wise that go to

 

425

00:34:57.840 --> 00:35:10.560

John Warnick: Why, what, what is the ultimate purpose for this. Why am I doing this, you know, what do I hope to accomplish. So being able to unleash and help a trust creator

 

426

00:35:11.190 --> 00:35:21.930

John Warnick: And I use that term very intentionally. There are trust makers trust settlers trust Grand Tours, but I love working with trust creators a trust creator

 

427

00:35:22.320 --> 00:35:45.360

John Warnick: understands their role to very creative role. It takes a lot of energy vision thought and emotion positive emotion to really create a truly purposeful trust, but as they began to approach this question of why we I'm speaking now of the Michaels, the raise the

 

428

00:35:46.800 --> 00:35:57.210

John Warnick: John A's and any other advisor that is listening to this podcast we can do so much to help stretch the vision of our clients.

 

429

00:35:57.570 --> 00:36:08.640

John Warnick: And help them understand that there is a whole nother world out there a possible wise that they haven't considered that if they do get

 

430

00:36:09.090 --> 00:36:22.860

John Warnick: An opportunity to consider. They make quickly jump on those wise and go. This really is very, very important to me and I want to make sure that we carry make this this a key purpose of what we're doing.

 

431

00:36:23.910 --> 00:36:24.240

John Warnick: Yeah.

 

432

00:36:25.590 --> 00:36:28.230

Michael Palumbos: Ray when you talked about the health medical

 

433

00:36:28.350 --> 00:36:30.900

Michael Palumbos: The medical records company.

 

434

00:36:31.470 --> 00:36:34.620

Michael Palumbos: It triggered the book we were talking about was the infinite

 

435

00:36:34.620 --> 00:36:36.180

Michael Palumbos: Game by Simon snack.

 

436

00:36:36.240 --> 00:36:38.340

Michael Palumbos: Simon cynics and

 

437

00:36:38.760 --> 00:36:40.110

Michael Palumbos: You'll love this. I don't know.

 

438

00:36:40.920 --> 00:36:42.750

Michael Palumbos: When you get a chance to read it. He talks.

 

439

00:36:42.840 --> 00:36:43.380

Michael Palumbos: About

 

440

00:36:44.010 --> 00:36:45.570

Three different

 

441

00:36:48.000 --> 00:36:49.830

Michael Palumbos: Pharmaceutical companies not pharmaceutical

 

442

00:36:50.940 --> 00:36:51.600

Michael Palumbos: Come on.

 

443

00:36:53.190 --> 00:36:53.790

Michael Palumbos: Pharmacies

 

444

00:36:54.600 --> 00:37:00.660

Michael Palumbos: And I'm not going to name names, but we all know, you know, the major pharmacy plot, you know, pharmacy throughout the United States.

 

445

00:37:01.170 --> 00:37:03.420

Michael Palumbos: And all of them to a tee.

 

446

00:37:03.810 --> 00:37:04.650

John Warnick: Their

 

447

00:37:04.800 --> 00:37:06.000

Michael Palumbos: Their greater good.

 

448

00:37:06.060 --> 00:37:07.980

Michael Palumbos: They're just cause

 

449

00:37:08.340 --> 00:37:10.380

Michael Palumbos: Is to help

 

450

00:37:10.410 --> 00:37:11.160

John Warnick: The health

 

451

00:37:11.490 --> 00:37:12.840

John Warnick: Of the patients.

 

452

00:37:12.900 --> 00:37:13.770

John Warnick: That they serve.

 

453

00:37:13.950 --> 00:37:16.260

Michael Palumbos: Right and and the people that they

 

454

00:37:16.260 --> 00:37:18.120

Michael Palumbos: Serve and

 

455

00:37:18.150 --> 00:37:20.070

Michael Palumbos: One of the companies.

 

456

00:37:20.430 --> 00:37:21.690

Michael Palumbos: Cut cigarettes out of

 

457

00:37:21.690 --> 00:37:22.440

Their

 

458

00:37:23.460 --> 00:37:25.230

Michael Palumbos: You know out of their inventory

 

459

00:37:25.260 --> 00:37:28.200

Michael Palumbos: No longer, it doesn't fit. And this was they did it.

 

460

00:37:28.200 --> 00:37:30.120

Michael Palumbos: Before it mattered.

 

461

00:37:30.270 --> 00:37:31.980

John Warnick: They did it before people were

 

462

00:37:32.040 --> 00:37:33.270

Michael Palumbos: Were yelling about it.

 

463

00:37:33.900 --> 00:37:41.130

Michael Palumbos: And then the other companies that didn't when they were asked and Simon actually reached out to several of them.

 

464

00:37:41.520 --> 00:37:45.570

Michael Palumbos: To say, you know, your core purpose. You're just cause says to

 

465

00:37:45.810 --> 00:37:47.310

Michael Palumbos: Help the health of

 

466

00:37:47.820 --> 00:37:48.870

Your

 

467

00:37:50.820 --> 00:38:01.470

Michael Palumbos: You know your constituents and your the people that you serve. But yet it you sell cigarettes in your stores. How do you reconcile that

 

468

00:38:01.890 --> 00:38:15.570

Michael Palumbos: And that's a really good way of thinking about those things, what was really interesting was most people you know when they're focused on the bottom line, they're focused on the shareholder returns, or the dividends that they're going to be able to pay

 

469

00:38:16.200 --> 00:38:21.120

Michael Palumbos: They would, you know, they might be scared to make a call like that.

 

470

00:38:22.140 --> 00:38:31.560

Michael Palumbos: What they found was that it didn't hurt them nearly as much as it helped them. They saw revenues increase. They saw the sales of

 

471

00:38:32.730 --> 00:38:36.660

Michael Palumbos: Tobacco patches, you know, and people that wanted to quit smoking.

 

472

00:38:36.900 --> 00:38:48.630

Michael Palumbos: Those things all went up. And so those same people, you know, in their mind that were coming through the store and buying cigarettes. They just helped them to make that decision to say now must be the time to say, you know, it's time for me to quit.

 

473

00:38:49.290 --> 00:38:52.860

Michael Palumbos: And that just cause can really make a big difference.

 

474

00:38:53.430 --> 00:39:05.670

Raymond Odom: You know, I love that that stories, those are those are excellent. And one of the keys that's always been something john as emphasize, you've got to rehearse the stories.

 

475

00:39:06.180 --> 00:39:15.120

Raymond Odom: And that's a lot of people get when you walk in a room with with with especially people who are on calls like this entrepreneurs.

 

476

00:39:16.080 --> 00:39:27.150

Raymond Odom: You know, and, and she is really driven by her next quarterly report or annual report the decisions I have to work about the business and its current environment.

 

477

00:39:27.450 --> 00:39:36.000

Raymond Odom: And you say, well, what's your why statement, they're looking at you like, are you kidding me, but the reality is this when I try to do is back them up.

 

478

00:39:36.540 --> 00:39:46.890

Raymond Odom: And just as you did with us, and you did a really nice job, like you said Ray, how did you get to where you are. And it's almost you're asking me that

 

479

00:39:47.430 --> 00:40:00.690

Raymond Odom: Actually began to change the way I was thinking about some things I was saying. And it's so natural, because when you ask the question, it requires me to add some purpose and some

 

480

00:40:01.290 --> 00:40:06.240

Raymond Odom: Shall we say calm trajectory to what it is I'm doing and why I'm doing it.

 

481

00:40:06.690 --> 00:40:13.920

Raymond Odom: And it is embedded in that story and all those drug companies, of course would say well we got into it because we saw solution with it.

 

482

00:40:14.250 --> 00:40:26.400

Raymond Odom: And the more you kind of fine tune those stories purpose jumps out. And this is the thing I think that most of our clients and our business owners don't realize

 

483

00:40:26.730 --> 00:40:40.200

Raymond Odom: That in rehearsing the backstory, the deeper story. The reason for your being, you will find the things that will make your company more profitable and your family, more durable.

 

484

00:40:41.970 --> 00:40:52.290

Michael Palumbos: A grade. It's a it just, there's a lot to it. And I think, you know, it's easier for a family business to

 

485

00:40:52.320 --> 00:40:54.060

John Warnick: Think about purpose.

 

486

00:40:54.690 --> 00:40:55.800

Michael Palumbos: A lot of times

 

487

00:40:55.830 --> 00:41:12.210

Michael Palumbos: Than it is for the you know the public companies because you're really pushed on those quarterly pieces, you know, go back to, you know, we talked about purposeful or persistent right well you when you are thinking about a business that is persistent

 

488

00:41:13.440 --> 00:41:15.600

Michael Palumbos: And you're a family you

 

489

00:41:15.630 --> 00:41:19.290

Michael Palumbos: I think it is potentially is, you know, needs to be reminded.

 

490

00:41:19.560 --> 00:41:20.700

John Warnick: You know, at times.

 

491

00:41:20.970 --> 00:41:39.120

Michael Palumbos: But it's easier to sit back and say, we don't have to think about this in terms of course we can think about this in terms of generations and and that's, you know, a really strong positive for people. They don't necessarily have to have the returns tomorrow.

 

492

00:41:40.530 --> 00:41:48.780

Michael Palumbos: And that's powerful. And so when you put those that you know the persistent and the purposeful together. That's huge.

 

493

00:41:49.920 --> 00:41:55.560

Michael Palumbos: Johnny. We talked about, you know, and we'd hit about trusts and the family business a little bit

 

494

00:41:55.830 --> 00:41:57.870

John Warnick: But when we, when we start talking

 

495

00:41:57.870 --> 00:42:12.000

Michael Palumbos: About creating a trust that is going to hold the family business in perpetuity. There's a lot of intricacies inside of there that people need to be thinking about

 

496

00:42:13.590 --> 00:42:19.800

Michael Palumbos: Is there anything you know we talked about it before, where do you want to take that. What would you like to share with

 

497

00:42:20.220 --> 00:42:37.500

John Warnick: Regard I think what you're asking. Michael is could take, you know, another full hour for us to even begin to get deep into that and there's so much probably more even than we could cover, but I think

 

498

00:42:38.790 --> 00:42:48.630

John Warnick: You know, things that you've got to pay attention to is Ray mentioned this a little bit. There's a tension here between the

 

499

00:42:49.230 --> 00:43:07.200

John Warnick: The demands the needs of the business and the personal individual demands of the family members. Right. And part of where that shows up is in the world of distributions and a trustee has a duty to

 

500

00:43:08.430 --> 00:43:13.200

John Warnick: You know generally to try to maximize the return on investment.

 

501

00:43:14.790 --> 00:43:28.380

John Warnick: This would include, you know, wanting to see cash flow distributions coming to the trust so they can be distributed to the beneficiaries, but having a thoughtful process around

 

502

00:43:29.670 --> 00:43:42.330

John Warnick: Being able to balance the needs of the business versus the needs of the family that's very, very important. Trying to think creatively and this is where I think ray and I have both done a lot of

 

503

00:43:43.590 --> 00:43:55.200

John Warnick: Interesting thinking and doing and working with clients who've taught us a lot is, it's very easy for family members to become entitled

 

504

00:43:56.490 --> 00:44:10.620

John Warnick: Around distributions and to develop really a sense of entitlement. So how do we combat that. I think that's that that's one of the great questions in the design of a trust is to

 

505

00:44:11.340 --> 00:44:22.830

John Warnick: And how do we how do we also cultivate a sense of stewardship around this family business. And then I think another sometimes sadly owners will not consider

 

506

00:44:24.030 --> 00:44:42.120

John Warnick: But the possibility that the day may come when it's in the best interest of the family in the best interest of employees of the business itself to dispose of the business, whether that is taking it public, whether that selling

 

507

00:44:43.980 --> 00:44:57.330

John Warnick: liquidating whatever that outcome is. So I think a lot of creative thoughtful intention around who the trustee is going to be. Are you going to have

 

508

00:44:58.500 --> 00:45:07.170

John Warnick: Investment Advisors, is there going to be kind of like a in one situation that I worked on recently with raise

 

509

00:45:08.280 --> 00:45:28.140

John Warnick: Company as the trustee. We put a lot of time and effort into designing a directed trust that would give us, you know, there, there are issues about concentrated position and the responsibility of trustee has to diversify. So we're just, you know, I've hit four or five

 

510

00:45:29.190 --> 00:45:40.530

John Warnick: Points that are important and Ray could probably add a dozen more. So I hope that that was helpful. Michael, but given the time limitations. I don't know that we can cover everything. No.

 

511

00:45:40.590 --> 00:45:44.190

Michael Palumbos: Yeah, that was exactly what we're looking for. It's just understand

 

512

00:45:44.550 --> 00:45:58.140

Michael Palumbos: That it is complicated. Here's a real quick. You know I mentioned this at the top of the show that you're both act tech attorneys and. And one of the things that I think this is so important for people

 

513

00:45:59.190 --> 00:46:06.180

Michael Palumbos: If you own a family business. If you have created some wealth that you have to look at the team.

 

514

00:46:06.570 --> 00:46:16.110

Michael Palumbos: Of advisors that is around you and I just think this is a really good time to hit on this and that's that, you know, I've seen this. So, oftentimes, where

 

515

00:46:16.470 --> 00:46:28.800

Michael Palumbos: You know, the family has been supported by a general attorney and you know they were at $5 million and 10 years later, they're now a $50 million dollar enterprise.

 

516

00:46:29.220 --> 00:46:40.500

Michael Palumbos: And they're still using for all of their trust and estate work and tax work. They're still using that same person who is also helped them with all the real

 

517

00:46:40.500 --> 00:46:43.950

Michael Palumbos: estate deals and the business deals and the things that they put together.

 

518

00:46:44.400 --> 00:47:00.090

Michael Palumbos: And there are times there are times when that's okay. And then, but I think it's more rare that somebody who is a general attorney and practice many areas of laws with the family through out you know their timeframe.

 

519

00:47:01.470 --> 00:47:10.740

Michael Palumbos: Has the expertise that someone like one of you know either one of you brings to the table when you're doing this kind of design work would you

 

520

00:47:11.250 --> 00:47:17.400

John Warnick: Would you agree with that statement. I would totally agree with that and just add that

 

521

00:47:18.990 --> 00:47:31.350

John Warnick: Yeah, that that person who's been there on the front lines for the family that lawyer has a wealth of experience insight and knowledge that is irreplaceable.

 

522

00:47:31.740 --> 00:47:46.860

John Warnick: So bringing in quote a trust tax expert from 600 or 1000 miles away may add something but i i would favor a system that we keep that individual very much part of the team.

 

523

00:47:48.180 --> 00:48:00.030

John Warnick: There then try to impose the vision and the framework that the outsider from a couple, three states away brings which it can be very helpful and insightful.

 

524

00:48:00.420 --> 00:48:13.320

John Warnick: And their expertise may be absolutely critical, depending on the level of complexity level of wealth, but there is a lot to be said for honoring the professional relationships that are already in place.

 

525

00:48:14.760 --> 00:48:17.580

John Warnick: And I think too often there's a power.

 

526

00:48:18.900 --> 00:48:31.590

John Warnick: You know, the client is like the rag doll in the middle of this power struggle between competing professionals and we need collaboration. We don't need competition and

 

527

00:48:32.010 --> 00:48:33.510

Michael Palumbos: Hundred percent ray. Go ahead.

 

528

00:48:33.840 --> 00:48:55.770

Raymond Odom: Yes, I think it's really to the whole role and control issue that we kind of surface, just briefly, is that when you get a your why question really in place what john. I said, really becomes critical because the person who was a part of that, why now has the best in capital.

 

529

00:48:55.860 --> 00:48:58.350

Raymond Odom: That will always be valuable to the organization.

 

530

00:48:58.860 --> 00:49:03.870

Raymond Odom: Because when you're based on the why you have to have the person who was a part of that. Why always

 

531

00:49:04.080 --> 00:49:12.630

Raymond Odom: Present and available. And so what happens is you just simply change the roles and you don't get confused.

 

532

00:49:12.990 --> 00:49:13.980

Raymond Odom: By professionals.

 

533

00:49:14.040 --> 00:49:32.820

Raymond Odom: Who are trying to control. And I think that's what really Johnny's really making a strong point on is once you turn the family business and settings and transactions into who gets to make some decision and you boil it down to some kind of transactional control, you've lost

 

534

00:49:33.480 --> 00:49:34.530

Raymond Odom: Everything in terms of

 

535

00:49:34.530 --> 00:49:45.420

Raymond Odom: What we're trying to advise here. And I think that absolutely Johnny sort of mid major point is that that person who has outgrown the transactional capital.

 

536

00:49:45.510 --> 00:49:48.360

Raymond Odom: Is the person who has increased.

 

537

00:49:48.720 --> 00:49:54.030

Raymond Odom: In relational and in historical capital and we need that.

 

538

00:49:54.360 --> 00:50:06.180

Michael Palumbos: Yeah, it becomes a not an either or situation, but a both and situation and learning to collaborate on a is really good, I think.

 

539

00:50:06.780 --> 00:50:25.020

Michael Palumbos: Yeah, I feel that the a lot of advisors my, you know, myself included, I have been in a situation where you know you're working with a family, and then you just know that the attorney doesn't have the

 

540

00:50:26.100 --> 00:50:36.300

Michael Palumbos: The expertise, the mastery of the document itself. I'm just talking about the tactical side of pieces to be able to bring in that expertise that's needed

 

541

00:50:36.630 --> 00:50:43.290

Michael Palumbos: But we that that advisor has to be very careful that it's not a displacement

 

542

00:50:43.650 --> 00:50:54.930

Michael Palumbos: It's a, an, in addition, we just need to add a member of the team. It's like having the designated hitter. It's, you know, you don't have the picture running it, you know, doing everything the quarterback doesn't do everything in the play.

 

543

00:50:55.140 --> 00:50:59.040

Michael Palumbos: It's being able to know when to bring those right players in and and and

 

544

00:50:59.100 --> 00:51:00.000

John Warnick: And to honor

 

545

00:51:00.180 --> 00:51:04.620

Michael Palumbos: You know, both of you mentioned that we really need to honor that relationship.

 

546

00:51:04.920 --> 00:51:06.270

John Warnick: That the

 

547

00:51:06.360 --> 00:51:07.770

Michael Palumbos: Family attorney.

 

548

00:51:07.830 --> 00:51:10.020

Michael Palumbos: The general attorney has had with that family for

 

549

00:51:10.050 --> 00:51:11.100

John Warnick: All these years because the

 

550

00:51:11.100 --> 00:51:12.480

Michael Palumbos: Knowledge is irreplaceable.

 

551

00:51:12.510 --> 00:51:21.090

Michael Palumbos: May need to know that that's I appreciate that. There's a little wasn't in our pre in our pre meeting, but that's why I you know like to do this stuff.

 

552

00:51:21.750 --> 00:51:33.990

Michael Palumbos: Um, we've got two other topics that I want to make sure that we have time to hit both of them and they're so closely related. I start with you, Ray. And, you know,

 

553

00:51:34.380 --> 00:51:36.000

Michael Palumbos: We talked about the gold.

 

554

00:51:36.210 --> 00:51:50.700

Michael Palumbos: Standard G. O. L. Not the not the gold standard, which I think a lot of people when you hear that the first time you just want to say what's the gold standard for a trust. But when you talk about is the gold standard. So walk us through the gold standard for a little bit.

 

555

00:51:51.240 --> 00:52:02.490

Raymond Odom: Right. I think the key idea is that when you think about how everybody in business is successful, it's because the business has a goal. Now we measure that goal by profit.

 

556

00:52:03.030 --> 00:52:05.670

Raymond Odom: But the point is, is that they had a goal.

 

557

00:52:05.820 --> 00:52:17.250

Raymond Odom: And that's why all of our business related clients understand the idea that you're trying to get an accomplished in objective that has some you know byproduct of wealth connected to it.

 

558

00:52:17.760 --> 00:52:29.910

Raymond Odom: And then what we do in estate planning and in a lot of our business plan, we try to do is back them away from that goal. And we get them into some kind of a much more nebulous world of saving taxes.

 

559

00:52:30.570 --> 00:52:39.600

Raymond Odom: From laws that aren't even created yet for future administration's that haven't even taken office and all of a sudden, we're now into kind of like crystal ball stuff.

 

560

00:52:39.960 --> 00:52:55.800

Raymond Odom: And the client gets lost in the acronyms and all these things. But with that, the idea of a goal, what I've tried to do is really talk about almost the virtuous company. It's like the just cause when I use

 

561

00:52:56.400 --> 00:53:05.580

Raymond Odom: The, the virtuous family. What we're really trying to do. The goal is to do good to have a good company. You know, I

 

562

00:53:05.610 --> 00:53:07.620

John Warnick: You say that. And sometimes people come, you know,

 

563

00:53:07.680 --> 00:53:09.600

Raymond Odom: Say, Oh, that's a little bit too soft me but

 

564

00:53:09.630 --> 00:53:10.620

Raymond Odom: Now you look at

 

565

00:53:10.920 --> 00:53:12.600

Raymond Odom: The SG and

 

566

00:53:12.660 --> 00:53:22.110

Raymond Odom: All the public companies who are getting tremendous pressure around these issues and you realize that these smaller companies have a better opportunity to do that.

 

567

00:53:22.260 --> 00:53:23.220

John Warnick: And so for me.

 

568

00:53:23.550 --> 00:53:30.600

Raymond Odom: That whole idea of goal is to have a purposefulness that's transcendent to the day to day operations.

 

569

00:53:31.200 --> 00:53:54.780

Raymond Odom: And that allows everybody to we center and something you said earlier, Michael is the kind of goal that allows an individual or family to decide that selling actually is the right thing to do. And I am so tired, people say, oh, we don't serve sleeves and services.

 

570

00:53:54.780 --> 00:53:55.890

John Warnick: Insurance well

 

571

00:53:56.100 --> 00:53:56.730

Raymond Odom: If certainly

 

572

00:53:56.760 --> 00:53:58.170

Raymond Odom: What's your goal. That's not bad.

 

573

00:54:01.980 --> 00:54:04.020

Raymond Odom: Some business owners and say, Look, I want my my

 

574

00:54:04.140 --> 00:54:23.760

Raymond Odom: Grandchildren I have certainly, you know, certainly they learn how to how to build towards getting a suit but the reality is, for me the key aspect of goal is to define purpose in a succinct transcendent way that encompasses the virtue of doing good in the greatest sense possible

 

575

00:54:25.740 --> 00:54:26.220

Michael Palumbos: Thank you.

 

576

00:54:27.810 --> 00:54:28.890

Michael Palumbos: John a

 

577

00:54:29.970 --> 00:54:39.060

Michael Palumbos: I think you know where you and I really you struck a chord with me. Many, many years ago when I

 

578

00:54:39.060 --> 00:54:40.890

Michael Palumbos: took your purposeful trusts.

 

579

00:54:40.920 --> 00:55:00.540

Michael Palumbos: Program and and I have utilized the purposeful naming of a trust with many clients and it's been, you know, for me, it's been very, very fulfilling. Some of the stories that we have heard

 

580

00:55:01.860 --> 00:55:06.060

Michael Palumbos: Are great. One of the things that I'm going to ask you to do is talk about the purposeful naming of a

 

581

00:55:06.060 --> 00:55:06.780

John Warnick: Trust.

 

582

00:55:07.230 --> 00:55:07.950

Michael Palumbos: But it also

 

583

00:55:07.980 --> 00:55:19.890

Michael Palumbos: You had talked about the purposeful naming of the family enterprise or the holding company and how that can work together. And I think for, you know, our family businesses listening. That's important.

 

584

00:55:20.400 --> 00:55:34.890

Michael Palumbos: Um, the other thing that I'd like you to hit on you know so there's a bunch here and re at anytime you want to jump in, or add something. Feel free is, where is this will be a little back and forth, because I think this will be fun. The other piece Johnny is

 

585

00:55:36.180 --> 00:55:39.900

Michael Palumbos: If it's your trust or if it's a client of yours.

 

586

00:55:40.200 --> 00:55:43.950

Michael Palumbos: And they've come up with the name. How do you help them.

 

587

00:55:44.340 --> 00:55:47.490

Michael Palumbos: You know, whether it's the trust or it's the holding company.

 

588

00:55:47.670 --> 00:55:49.020

John Warnick: How do we dig deep to

 

589

00:55:49.020 --> 00:55:49.650

Michael Palumbos: Make sure that

 

590

00:55:49.710 --> 00:55:59.730

Michael Palumbos: A generation from now or two generations from now after that person has gone that we've imbedded that that name. And then how do we bring out that

 

591

00:55:59.730 --> 00:56:01.140

Michael Palumbos: Flavor, so to speak.

 

592

00:56:01.320 --> 00:56:03.960

Michael Palumbos: How do we marinate it so that it's always there for them.

 

593

00:56:06.510 --> 00:56:06.870

Well,

 

594

00:56:09.060 --> 00:56:27.330

John Warnick: That's like Ben Michael a lot. The two on and I'll try to do it quickly. And I do think if it's possible. One of the things that we can do to make this more concrete and for everyone is I do have some sample.

 

595

00:56:28.620 --> 00:56:41.670

John Warnick: Clauses that show the variety of purposes. The linkage between purpose, meaning and name and how that plays into family enterprise or a trust but

 

596

00:56:42.150 --> 00:56:53.460

John Warnick: If we think about it from the trust standpoint, the reason I think that name is an overlooked, it's the most often overlooked opportunity to make addressed.

 

597

00:56:53.850 --> 00:57:15.090

John Warnick: Purposeful, it is in my mind, the simplest, most powerful way to do it. And it really just takes to kind of ingredients. One is a purposeful name. So what is a purposeful name or a purposeful name would be choosing a name that has symbolism, meaning

 

598

00:57:16.140 --> 00:57:32.460

John Warnick: Purpose associated linked into it and then to help everyone understand what that symbolism meaning or purpose is to create what I call a statement of meaning that statement of meaning can be just

 

599

00:57:33.870 --> 00:57:35.400

John Warnick: You know, it can be just

 

600

00:57:37.020 --> 00:57:49.020

John Warnick: A paragraph two or three paragraphs. It doesn't have to be pages. Some of the most powerful opportunities or examples that I've seen have been very

 

601

00:57:51.300 --> 00:58:02.790

John Warnick: Very short and powerful. So let me see if I can apologize, but I'm going to try to see if I can quickly find an example and just share it, read it.

 

602

00:58:03.420 --> 00:58:18.060

John Warnick: To you. I think one of them that really strikes me as the most powerful is the red Corvette opportunity trust. Now this was a name that was given to a trust.

 

603

00:58:19.560 --> 00:58:48.420

John Warnick: By a client about 12 years ago when I was working with her and her key purposes for the creation of this trust gift that she was making for her family members was one she wanted to prepare train, equip her children. So they would be able to manage and direct their trust inheritance.

 

604

00:58:49.590 --> 00:58:58.800

John Warnick: This second very, very important purpose was she wanted to give them opportunities to become all that they could become

 

605

00:58:59.490 --> 00:59:07.380

John Warnick: And a third opportunity that the name doesn't necessarily directly hit, but was in the statement of meaning.

 

606

00:59:07.920 --> 00:59:23.940

John Warnick: Was she hoped that through this trust, even though she was giving them independence and allowing each of them to find their own path that they would be a support to each other and that the family.

 

607

00:59:25.350 --> 00:59:34.860

John Warnick: The family fabric could remain very cohesive and strong and not fracture at her death.

 

608

00:59:35.310 --> 00:59:46.980

John Warnick: So she called it the red Corvette opportunity trust. I'm going to paraphrase because I haven't found my example here as quickly as I hope she said something like this. JOHN warning taught me the story of the red Corvette.

 

609

00:59:48.030 --> 00:59:55.710

John Warnick: How smart, would it be for a parent on their child's 16th BIRTHDAY TO SAY, sweetheart. There's a brand new.

 

610

00:59:56.190 --> 01:00:11.880

John Warnick: shiny red Corvette in the driveway. Here are the keys. I want you to take that that out on I five and have the ride of your life. In fact, invite as many of your friends as you can pile into that that

 

611

01:00:13.710 --> 01:00:27.930

John Warnick: And she then said, just as it would be unwise for a parent to entrust a powerful vehicle like a Corvette to their child without it, getting the car insured without

 

612

01:00:28.650 --> 01:00:39.300

John Warnick: Making sure the child had been to driver's education without familiarizing the child with all of the features in power of that vehicle.

 

613

01:00:40.410 --> 01:00:57.450

John Warnick: So if I were to make you trustee of your trust immediately upon my death. That would be like giving you the shiny red Corvette on your 16th birthday, so I've prepared a trustee beneficiary training program that you will be

 

614

01:00:58.440 --> 01:01:07.710

John Warnick: Given the opportunity to go through and you can learn at your own pace move as fast as you want but when you've completed and been certified as being ready

 

615

01:01:08.280 --> 01:01:24.450

John Warnick: To drive your trust the keys will be given you will have full control over your trust. At that point, and then she went on to talk about the opportunity and how she hoped they would support each other and she close with something like enjoy the ride.

 

616

01:01:26.430 --> 01:01:37.380

John Warnick: So that's, that is, you know, the idea behind that name is that every time her children received a quarterly trust statement.

 

617

01:01:37.890 --> 01:01:45.570

John Warnick: The name of the trust with flash up there, they would have been introduced to the statement of meaning. It was at the very beginning of the trust.

 

618

01:01:45.930 --> 01:01:56.430

John Warnick: They every time they saw the name they would instantly red Corvette opportunity trust they would understand the red Corvette, the training preparation.

 

619

01:01:56.940 --> 01:02:08.910

John Warnick: Stewardship side of it and they would also understand the key of the importance of opportunity and so they'd be reminded, with every statement. Every time they were

 

620

01:02:09.330 --> 01:02:14.070

John Warnick: Looked at that name. It would trigger a reflection back on what mattered most to their mom.

 

621

01:02:14.490 --> 01:02:32.580

John Warnick: In the creation of this trust. So that's just a possibility and the beauty of this is, is that we can do the same thing with holding companies investment LLC even operating businesses. I've seen renamed to carry a name that the family felt very, very tied to

 

622

01:02:34.950 --> 01:02:49.470

Michael Palumbos: I think you know we all all know of one, you know, a company called Whole Foods, you know, just, it really simple. They did a great job with those, you know, with the name and

 

623

01:02:49.530 --> 01:02:50.850

John Warnick: If you look you that that's

 

624

01:02:50.850 --> 01:02:53.310

Michael Palumbos: A really interesting company might be a good example for you.

 

625

01:02:53.310 --> 01:03:06.630

Michael Palumbos: Guys to take a peek at some time, they look at their values and their purpose. And when the year they started. They were in Austin, Texas.

 

626

01:03:07.230 --> 01:03:12.930

Michael Palumbos: I can't remember john and Renee. And I don't remember the rest of the story. But basically,

 

627

01:03:13.230 --> 01:03:24.090

Michael Palumbos: Austin, Texas was experiencing floods the store got flooded, but because of their core purpose was so big and so meaningful to the people that they served

 

628

01:03:24.300 --> 01:03:36.210

Michael Palumbos: They had customers show up at their store, the day after the storm with mops and buckets and cleaning supplies to help because the volunteerism was driven by

 

629

01:03:36.240 --> 01:03:37.800

Michael Palumbos: The core purpose of that.

 

630

01:03:37.830 --> 01:03:39.270

Organization, so

 

631

01:03:40.290 --> 01:03:50.880

Michael Palumbos: Ray, when we talk about namings, you know, naming of a trust I don't be I never asked you this, but is that something that that you do as well. Have you been down that road.

 

632

01:03:51.180 --> 01:03:58.290

Raymond Odom: No question. I don't have didn't make as powerful and has clearly delineated kind of

 

633

01:03:59.190 --> 01:04:15.960

Raymond Odom: You know statements and things as as Johnny did but it's interesting. I actually would would put more time into the name when as john a was talking, I thought about the trust I opened up talking about in my own experience.

 

634

01:04:16.890 --> 01:04:25.350

Raymond Odom: In terms of how I came to be where I am right now in the trust business. And what happened was we named the core trust.

 

635

01:04:26.580 --> 01:04:49.740

Raymond Odom: That had a operating business in it. After the name of the ranch. Well, the name of the ranch was a very personal and really quite spunky little name and that literally for everyone involved said we're family.

 

636

01:04:50.880 --> 01:05:00.510

Raymond Odom: Where we have a long and rich history that was designed to benefit our family for the benefit.

 

637

01:05:01.620 --> 01:05:02.640

Raymond Odom: Of the community.

 

638

01:05:03.960 --> 01:05:12.090

Raymond Odom: And so, literally, and of course the one of the things that you know the ranch wind up having on it was talk of a conservation easement.

 

639

01:05:13.230 --> 01:05:24.180

Raymond Odom: You know, there was certain other kind of, you know, ecological things that were done, but all of it flowed so nicely from the concept

 

640

01:05:24.480 --> 01:05:33.150

Raymond Odom: Of why the the ranch was in place and as the business which was within the trust that was named after the ranch. Now I think about it.

 

641

01:05:33.390 --> 01:05:51.480

Raymond Odom: And I listen listen to Johnny's kind of talk about the Corvette, literally. There were stories in rules that allowed the people who are involved in the business to actually mature and grow my one quick example is this

 

642

01:05:51.870 --> 01:06:06.480

Raymond Odom: When everybody has a little child that's under 345 you say don't go in the street. It is an absolute rule and that rule will save their life and you must enforce it and make it a big deal.

 

643

01:06:06.930 --> 01:06:18.180

Raymond Odom: However, if they are still following that rule when they're 25 years old, you're going to put them in some kind of structured institution for mental health. Okay.

 

644

01:06:18.660 --> 01:06:23.670

Raymond Odom: And so, what changes. What changes is you have a core purpose.

 

645

01:06:24.000 --> 01:06:37.260

Raymond Odom: That the rule was designed to effectuate and if you're not clear about what that is. I eat. We're trying to save your life from being struck by cars that may not be watching, if you don't get that that bigger why involved.

 

646

01:06:37.530 --> 01:06:43.710

Raymond Odom: You're going to have someone who's going to be dysfunctional at the greatest extent. And that to me is what happens with a lot of

 

647

01:06:44.250 --> 01:06:49.650

Raymond Odom: trust companies with interest, where there's not this kind of is Johnny's come up with

 

648

01:06:50.250 --> 01:06:57.510

Raymond Odom: A naming sort of convention that ties to a purpose that ties to a story that ties to the distributions and ties.

 

649

01:06:57.810 --> 01:07:03.090

Raymond Odom: To eight individuals who are trying to balance, something that's very difficult to balance.

 

650

01:07:03.390 --> 01:07:15.120

Raymond Odom: The good of the beneficiaries versus the good of the company versus the good of the community versus the good of future generations those considerations are best judged and

 

651

01:07:15.660 --> 01:07:24.510

Raymond Odom: transitioned to the biggest and best ongoing purpose statement and and naming and reminder that you can have. Yeah.

 

652

01:07:25.590 --> 01:07:35.760

Michael Palumbos: THANK YOU, JOHN AND I'LL GIVE YOU A props for this one I remember hearing you say this, you would never allow the doctor or nurse to name your child.

 

653

01:07:37.170 --> 01:07:47.550

Michael Palumbos: So if you, if that's the case, then why would you do that with your trust or with your business or your, your entity, it's just a great statement.

 

654

01:07:49.350 --> 01:08:04.230

Michael Palumbos: Oh, gentleman like you said Johnny and Ray I think the three of us need to do this again another time. There's so many avenues that we could have gone down that we didn't. This is just a great teaser to be talking about

 

655

01:08:04.560 --> 01:08:05.220

John Warnick: You know,

 

656

01:08:05.370 --> 01:08:08.070

Michael Palumbos: Putting the gold standard to a purposeful trust.

 

657

01:08:08.100 --> 01:08:15.540

Michael Palumbos: And and making sure that you're naming them properly and I really appreciate the time that you spent with all of us today.

 

658

01:08:16.920 --> 01:08:31.560

Michael Palumbos: What I'd like to like you to do is just kind of close out and let people know you know if they wanted to reach out, you know, and work with either one of you how do they get ahold of you, where do they find you know information about

 

659

01:08:31.650 --> 01:08:35.400

Michael Palumbos: About you, as we're out in the world and what part of the

 

660

01:08:35.460 --> 01:08:37.740

Michael Palumbos: Geographically, what part of the world are you

 

661

01:08:40.770 --> 01:08:41.730

John Warnick: Ready. Do you want to go first.

 

662

01:08:42.570 --> 01:08:43.650

No, why don't you go first.

 

663

01:08:45.390 --> 01:09:00.180

John Warnick: Well, I think the best way to reach me I'll give my phone number area code 720-458-7777 Extension one that's my number of the purposeful planning Institute.

 

664

01:09:01.530 --> 01:09:14.130

John Warnick: You know I do. I'm very selective and who I work with, I try to make sure that I'm keeping my professional time and energy focused on purposeful projects, but I do

 

665

01:09:14.760 --> 01:09:25.650

John Warnick: Work with clients all over the country and that generally means I'm collaborating with great lawyers all over the country and other advisors all over the country so

 

666

01:09:26.160 --> 01:09:38.970

John Warnick: I'd be happy to talk to anybody. You can also email me at john a at purposeful planning institute.com or just Google purposeful planning Institute.

 

667

01:09:39.420 --> 01:09:50.460

John Warnick: And you'll, you'll be able to see PPI the, the, the community that I founded and you can see a contact us there that you can leave a message for me as well.

 

668

01:09:51.480 --> 01:09:52.080

John Warnick: Thank you, sir.

 

669

01:09:52.950 --> 01:09:53.340

Right.

 

670

01:09:55.080 --> 01:10:12.690

Raymond Odom: I would give my email. It's relatively simple are all are for Ray old for Odom seven. I guess I was the seven are oh at Northern Trust Our oh seven at n te R s.com

 

671

01:10:13.020 --> 01:10:23.040

Raymond Odom: And as a Nancy T as in Tom ours and Roger S as in SAM and TRS as Northern Trust NASDAQ symbol and that will come right to me.

 

672

01:10:24.240 --> 01:10:36.960

Raymond Odom: There so I don't have any palm giving my phone number out. It's a 630-656-2476 that's my business and actually a little bit of my personal number so they'll come

 

673

01:10:36.960 --> 01:10:38.520

John Warnick: Right. To me, the

 

674

01:10:38.700 --> 01:10:54.510

Raymond Odom: biggest advantage of that I can offer to people that I talked to, is I'll be very quick to wherever you are, whatever your situation to try to connect you with people like Johnny and Michael who are able to

 

675

01:10:55.050 --> 01:10:57.030

Raymond Odom: Come aboard and be a part of a collaborative

 

676

01:10:57.030 --> 01:11:09.570

Raymond Odom: Team to get clients into that gold standard. And that's why I really will try to be helpful in that regard and often Michael I get calls the people who simply want to say

 

677

01:11:10.110 --> 01:11:20.520

Raymond Odom: Where do I start. What's the first thing I do. And sometimes I hate to say this. I know john is soon as to if you start poorly.

 

678

01:11:20.700 --> 01:11:21.960

Raymond Odom: It's hard to recover.

 

679

01:11:21.990 --> 01:11:23.100

Raymond Odom: Even if you bring the right

 

680

01:11:23.100 --> 01:11:23.670

Raymond Odom: People in

 

681

01:11:24.750 --> 01:11:25.290

Raymond Odom: So,

 

682

01:11:25.500 --> 01:11:28.380

Raymond Odom: Getting the context and setting up

 

683

01:11:28.440 --> 01:11:42.030

Raymond Odom: This whole idea is so critical. And you've got to have the right store and Michael frankly I think that's why the book, you know, infinite game so good. He starts off by talking about the Vietnam War Tet Offensive where the Vietcong. You know,

 

684

01:11:42.930 --> 01:11:50.880

Raymond Odom: You know, one every we're supposed to win every battle one of losing every battle. Well, how do we lose the war if we, you know, 3 million of them. And of course,

 

685

01:11:51.210 --> 01:11:57.600

Raymond Odom: He sets the whole book up by saying that because now you're listening. I think it's the same thing and our friends, we have to have stories.

 

686

01:11:57.990 --> 01:12:01.110

Raymond Odom: That dramatically show what we're trying to accomplish.

 

687

01:12:01.200 --> 01:12:03.690

Raymond Odom: And what the negatives are if you don't attempt to do it.

 

688

01:12:05.520 --> 01:12:10.830

Michael Palumbos: Having you both was wonderful. I really appreciate your time and sharing

 

689

01:12:11.070 --> 01:12:16.650

Michael Palumbos: All that you did today. Thank you everyone for joining us again. I'm Michael Columbus from

 

690

01:12:16.650 --> 01:12:30.510

Michael Palumbos: Family wealth and legacy in Rochester, New York. And if there's any way that we can help you in your journey and helping you to become more purposeful helping you to grow your business to work with your family, whatever.

 

691

01:12:30.570 --> 01:12:31.830

Michael Palumbos: We can do to help you.

 

692

01:12:32.040 --> 01:12:33.420

Michael Palumbos: Feel free to reach out to us.

 

693

01:12:33.480 --> 01:12:39.570

Michael Palumbos: On our website family wealth and legacy com Have an awesome day, everybody. Thank you so much.

 

694

01:12:40.260 --> 01:12:42.900

John Warnick: Thank you, Michael. Thank you. Right. Thanks.

 

 

If you’re a family business or a family business consultant and want to be on the show, share your story and help other family businesses, send us an email to producer@thefamilybizshow.com or fill out a contact form here!

*not affiliated with Lincoln Financial Advisors Corp.

Michael Palumbos is a registered representative of Lincoln Financial Advisors Corp. Securities and investment advisory services offered through Lincoln Financial Advisors Corp., a broker/dealer (member SIPC) and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. Family Wealth & Legacy, LLC is not an affiliate of Lincoln Financial Advisors Corp. Lincoln Financial Advisors Corp. and its representatives do not provide legal or tax advice. You may want to consult a legal or tax advisor regarding any legal or tax information as it relates to your personal circumstances.

CRN-3405779-011421