Trusts, Taxes, and Wealth Preservation Secrets with Andrew L. Howell – EP 142

Interview with Andrew L. Howell

Trusts, Taxes, and Wealth Preservation Secrets with Andrew L. Howell

In this episode, you’ll learn:

✅ Tax-efficient strategies for estate planning and asset protection.

✅ Smart strategies for avoiding the mess of asset-related lawsuits.

✅ Techniques to facilitate a smooth multi-generational wealth transfer.

Featured on This Episode: Andrew L. Howell

✅ What he does: Andrew L. Howell is the Co-Founding and Managing Partner of the law firm York Howell. For more than 21 years, Andrew’s legal practice has focused exclusively on estate planning, asset protection planning, business structuring, tax planning, charitable giving, and estate administration. He assists his high-net-worth clientele in creating tailored estate plans, focusing on what families should consider increasing harmony and purpose in their family planning.

He is the co-author of Entrusted: Building a Legacy That Lasts, which has led to speaking engagements throughout the country on the future of estate planning. His follow-up book, Riveted: 44 Values That Change the World achieved the title of #1 Best Seller in Business Ethics on Amazon. In 2015, Andrew was presented with the prestigious “Forty Under 40” award by Utah Business Magazine.

York Howell is the fastest-growing law firm in Utah and was celebrated as one of Utah’s Fast 50: Emerging 8 companies in 2016. In 2022, the firm was named one of Utah’s 100 Fastest Growing Companies, the only law firm in Utah to receive this award.

💬 Words of wisdom: “You never truly know a person until you share an inheritance with them.” – Andrew L. Howell

🔎 Where to find Andrew L. Howell:  LinkedIn

Key Takeaways with Andrew L. Howell

• If you’re not doing estate planning, rest assured someone else is doing it for you.
• Why you don’t need a massive net worth to start building your trust.
• Leveraging trusts to shut down lawsuits and avoid family inheritance disputes.
• Optimizing asset protection by leveraging different jurisdictions that align with your specific goals.
• The three pillars of a tax-efficient trust designed to endure for generations.
• Providing your family an amazing life without creating “trust fund babies.”
• The blueprint for your Family Declaration of Independence.

Free Strategy Session 

The Lifestyle Investor Insider

Resources

• York Howell
• Andrew Howell on LinkedIn
• Adam Stock
• Front Row Dads
• COREnology.com
• Entrusted: Building a Legacy That Lasts by Andrew L. Howell, David R. York
• Riveted: 44 Values that Change the World by David R. York, Andrew L. Howell
• The Men Who Built America
• Wealth in Families by Charles W. Collier
• Beating the Midas Curse by Perry L. Cochell & Rodney C. Zeeb
• Warren Edward Buffett
• Sinclair Oil
• Dentons Durham Jones Pinegar
• David York
• Jonathan Blattmachr
• Chris Smith
• Family Brand

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Read the Full Transcript with Andrew L. Howell

Justin Donald: Hey, Andrew. So glad to have you on the show. Welcome.

Andrew Howell: So excited to be here. Thanks, Justin, for having me. And I’m always excited when I can hear myself speak. My wife usually pays me to not speak. So, anytime somebody wants to hear me, it’s a good thing.

Justin Donald: I love it. I love it. Well, here’s the thing. I have learned a ton from you on the side of estate planning. You guys do brilliant work, and I feel like most people work a lifetime to build up their net worth and accumulate assets and really create an estate but they don’t recognize or fail to protect that estate. They fail to structure it in a way where it can be handed down to generations or even just go to whatever passions or legacy that they want it to go to. And the reality is if it doesn’t, if you don’t have trust, it is likely going to probate except for a few different ways that you can circumvent it. So, I’d love to get into estate planning but before we even go there, you’re just one of the foremost experts in the space. We are connected through a mutual friend, Adam Stock. We were connected via Front Row Dads because you know several people there and have spoken with that group. I’m excited to have you be a major presence in the lives of those in The Lifestyle Investor community because I think of all estate planning attorneys out there, you are one of the foremost experts in this space, period. So, welcome to the show.

Andrew Howell: Well, now, I’ve got to live up to that but, no, I appreciate the kind words very much. I mean, you’re absolutely correct. We work on average, what, 2,000 hours a year to make money and provide for our families and put food on the table and all of these various things. And only 30% of the population does any kind of estate planning. I mean, I don’t know. It’s not fun meeting with some bloodsucker like me and talking about death and taxes. Who wants to do that? You’re raising families, you’re running businesses, and so forth. And I was like I need to do that. And you go on a trip and you’re like, “I wish I had it done,” or you’re having a medical procedure being done, “I’ve got to get my estate planning done.” But no, like you, I’m always amazed that people don’t want to take that level of control that they can take. I mean, you mentioned if you don’t do your estate planning, it’s already been done for you and every state in the nation has a probate code that says how your estate is going to pass. And I would say in a typical husband and wife with two kids situation, the probate code is going to basically do what they want in terms of turning the assets over to who they intended it to be, basically their children. But there’s no direction. And so, I always tell people that estate planning is taking that level of control. I mean, the probate code is unless you plan otherwise.

And with estate planning, you’re planning otherwise. You’re taking control of who you want the guardians of your minor children to be and how your estate should pass, and who’s talking to your doctor. And I’m amazed. I know this is my area of law but I’m always amazed that more people don’t want to do it. And then you also mention something that made me think of something we talk all the time about. The people, you know, especially some of the people that we work with are very good becoming wealthy. They can become rich but they’re not very good at being rich, right? Once they’re there, they don’t know what to do. So, we have both of those kind of scenarios that come into play, and whenever you don’t know what to do, a lot of times that will cause stagnation. You’re frozen. You can’t do anything. So, yeah, I’m preaching to the choir but I agree with you 100% on that issue.

Justin Donald: Yeah. I think a lot of people that they work so hard at building this net worth, building this estate, but they don’t do the basic foundational things to protect it. So, a lot of people, they get rich but it’s actually really easy to lose that money and that wealth in those assets if it’s not structured in the right way. And I heard a stat the other day that was once your net worth is over $3 million, there is an 80% likelihood that you will be sued at some point in your life. So, I don’t know how accurate that is. I’ve heard other stats in that vicinity in that range but the greater your net worth, the more of a target you are. Would you agree with that?

Andrew Howell: I’ve never heard that statistic but I would definitely agree. Now, the reason that I would agree is because not necessarily you’re wealthy, although that’s a bull’s eye on your forehead, right? Those bloodsucking lawyers when they sue people, they sue everybody and they want to go after whoever’s got the deepest pockets and all that kind of stuff. So, yeah, I agree with you that that doesn’t reach the bullseye. But more important or I think more appropriately, what it is, is a function of where that money came from. I make a good living but it’s because I speak with thousands of clients about very important issues and not perfect. I could screw something up and it makes me more likely to get sued. How many people, Justin, do you network with and do you have fingers in and do you have the potential to create some sort of a contract whether you knew it or not that was going to be breached? I mean, I always tell people when they get involved in business in general, owning your own business, becoming a professional, whatever it is, plan to get sued. I mean, it’s sort of part of the game.

I mean, in fact, somebody that we were before the recording started talking about, he got sued. It’s a mutual friend of ours, for people who are listening. He got sued for the first time. He’s a good friend and I called him up and I said, “You know, guess what, pal? You just got to get used to it. And it’s going to happen. It’s going to continue to happen. You’re an influencer. You’re out there. You’re offering advice.” Well, fast forward about three or four years, I actually wound up getting sued. Luckily, it got dismissed. So, I get a phone call from this mutual friend of ours and he calls me up and he says, “Guess what, pal, you join the club.” Absolutely no sympathy because… But no, I agree with you. It’s much, much more likely because of the things that you’re doing and the contracts that you’re in and the people that see you. One of my favorite clients was sort of like he said to me, “Look, you don’t want to be rich and famous. If you can avoid being famous, there’s nothing wrong with being rich but it’s the famous part that has a tendency to bring more, I think, scrutiny to people than necessarily their overall net worth.”

Justin Donald: Yeah. I think that makes tons of sense. And top down, when I think of estate planning and I think of asset protection and I think of attorneys that specialize in this space, there are a couple of different lenses that I look through because there is an asset protection aspect to it, like, why do you need to do estate planning? Well, let’s protect the assets that you own. Let’s set this up the right way. But then there’s also the side of thing that’s like let’s get the estate in play so that way there’s potentially tax savings and maybe the tax savings are on dollars today. Maybe the tax savings are on dollars tomorrow. Maybe the tax savings are on future generations in the way that those dollars transfer but there’s an element of the taxation piece that we want to solve for and then the asset protection piece that we want to solve for. And I’d love to hear your thoughts there.

Andrew Howell: Yeah. I don’t know how you cannot do one without the other. And there are attorneys out there that all they’ll do is your will and your trust for you or there’s attorneys out there that all they’ll do is set up an LLC for you. Now, I’m very, very much a fan of using an attorney that specializes in a given area. You don’t want a generalist. You don’t want the lawyer that’s going to do your divorce and then also help you with the litigation matter, and they’ll draft your will and trust. But to me, it’s sort of a question of how do you define estate planning. And estate planning, I think is much broader than what people think of when they hear that topic, right? When you hear estate planning, a lot of times people will go to wills and trusts and power of attorneys and providing for the family if you die. That is definitely a part of estate planning but a lot of ways it’s the end, right? What are you doing with your estate at death? And it misses this whole other aspect of what are you doing with your estate while you’re still alive and how is that estate functioning in the most tax-efficient manner? I certainly consider myself a tax attorney, and I’m not beating around the bush. I hate taxes, I’ll admit it. I think that’s a good thing.

If you ever work with a tax attorney that loves taxes, you’re working with the wrong lawyer. But I hate taxes and that brings in business structuring and charitable giving and all of these various things. And then this estate that you worked so hard to create and are continuing to build, how do we protect it from this litigious society? And that’s the concept of asset protection. And asset protection is an animal in and of itself. And there are so many different ways to do it. Like in my case, living here in Utah, which is a separate property state. You down there in Texas is a community property state and we do things a little bit differently. My wife and I have separate revocable living trusts, and because of that, our home is owned in my wife’s trust because I’m a bloodsucking vampire lawyer. She’s a stay-at-home mom or she’d prefer the term domestic engineer and I’ll call her whatever she wants me to call her because I could never do what she does, nor would I want to. But our chosen professions carry different liability risks. And then beyond all of that, my wife’s so much better looking than I am and people like her a lot more, I’m getting sued before my wife. So, by us owning our home in her trust, we get to have an argument of protection.

Again, unlike Texas where you guys have an unlimited homestead exemption, here in Utah, there’s only about 100,000 of equity that we can protect on our home. But if it’s in my wife’s trust and you now sue me, I’m going to look at you and say, “Justin, you can’t go after that home.” Is that a winning argument? I don’t know but it’s an argument. And by the time the court decides the winner of that argument, you will have spent years out of your life and hundreds of thousands of dollars in legal fees chasing me, and what loss of control or enjoyment have I had over the home? None. My wife still lets me live in our home rent-free, which is pretty nice of her. And that’s the downside of asset protection. I think the more protection you want, the greater the loss of control you can plan on dealing with, right? You want to go to the Cook Islands and set up an offshore trust there? Well, you do it correctly. You put your assets in the trust. After a year of keeping your nose clean, the assets in that trust are protected from creditors. But you’re now dealing with international trustees. You have to ask them for the money back. You have to repatriate it with the United States. It’s a big pain in the, you know what. A lot of protection and people might be willing to get there at some point. So, with asset protection kind of a subset of how do you protect your estate, it’s a game and you’ve got to find the sweet spot where you’ve done enough planning that you’re sleeping well at night, but not so much that you’ve lost control and enjoyment.

Now, out of all of that and all coincides because let’s say that we form a limited liability company in a state like Wyoming that offers charging order protection for a client. How is the client going to own that LLC? Well, to avoid probate, they need to own it in their trust, right? So, that’s how this all comes back and kind of layers on top of each other. So, yeah, I think it all has to be done in tandem and it all has to be done in connection with the overall team, meaning the accountants need to be involved, attorneys need to be involved, financial advisors, insurance agents, you name it. Anybody that is advising a client on their finances should be at that team making the decision together. And everybody ought to be very clear about what lane they’re playing in. It’s the way they get the best result.

Justin Donald: That’s awesome. So, one thing that I’ve learned is if you at least have some sort of asset protection in place, like some sort of estate plan, some sort of trust, and by the way, I think everyone should have a trust. I really do. Like, that’s my personal opinion. I don’t think anything less than a trust is, I don’t think that that protects your estate the way that you want it protected. And a lot of people think, well, I need to be of a certain net worth to have a trust. I don’t believe that. I believe you want your assets protected and I believe that you want to direct what happens with your assets no matter what with vivid technicolor in exquisite detail and you can only do that inside of a trust. And so, that to me is really important but I also think when you have this set up and someone looks to sue you, they’re going to be like, “Well, do I want to do this? This is actually harder than the person who doesn’t have a trust.” And so, you’ve got some protection right there where a lot of people just say, “Ugh, I don’t want to hassle with it.”

Andrew Howell: Well, let me agree with you on one thing and disagree with you on another. So, I agree 100% that most people ought to have a trust. Now, a young adult turned 18 going to college, they probably don’t need a trust but they are an adult so they ought to have a simple will and then they ought to have power of attorneys for health care decision making. Your son or your daughter goes to college and they get admitted to the hospital. You don’t have the right to make their legal decisions any longer. They’re legal adults. So, having some of those things in place but I agree with you, most people ought to have a trust and we hear it all the time. Probate isn’t that big of a deal. I hear it from back East clients a lot, “It’s not that big of a deal.” Yes, it is and it can really turn into a big deal. We have a saying in the estate planning world that you never truly know a person until you share an inheritance with them. And I have seen the best families that I thought would just sell through somebody passing and finalizing the estate like it was cake, no problem at all, I’ve seen them decide to roll up their sleeves and fight. And the more it is planned out, the less likely that that’s going to occur, avoiding probate, not even just the expense of going through it and paying a bloodsucker like me some legal fees. You’re also avoiding all the time and expense of having to deal with it and you’re also creating much more privacy.

Probate happens in court and court is a public forum. I can go down to the courthouse and get copies of anybody’s probated documents, and there’s a lot of personal information in there, who you are, where you live to the beneficiaries of your estate are. So, I agree with you a lot that a trust is necessary. Now, when it comes to the asset protection piece, there’s all different types of trusts from revocable living trusts to offshore trusts like we were talking about in the Cook Islands. And each of those different types of trusts have varying degrees of liability and asset protection. It’s usually a revocable living trust doesn’t have a whole lot of liability protection in and of itself but remember what I was saying in my situation, it’s my wife’s trust that owns our home and it’s because she’s not a lawyer that we get that protection. But I also do agree with you heavily on asset protection planning’s goal. 95% of lawsuits are settled before they ever get to trial. I mean, that’s the settlement rates here in the United States and it’s because our system is so slow and expensive and it’s been set up that way on purpose. They think that, Justin, if you and I get in a fight, we ought to be able to work it out ourselves that we shouldn’t clog up the court system and so they encourage settlement.

And if you go to that settlement negotiation table and you’re able to say to somebody, “Here is my structure. Try to break through it,” that is so much more powerful than not having a structure at all. And then another thing on that that I want to kind of make clear for the audience because we’re hearing a lot of these days is this idea of keeping your assets anonymous. Flying under the radar this one guy uses all the time when it comes to asset protection. I don’t know what the heck that means. When it comes to asset protection planning, if you and I get in a lawsuit, everything comes out. I’m going to find out about all of your assets. The court is going to require you to report all of those assets to me. And now there are all these new laws coming out called corporate transparency that’s going to require you to report about ownership of companies. So, yeah, what you said before is entirely true. Going to battle with a good, solid plan that you’re totally transparent about, that is the ideal when it comes to asset protection planning.

Justin Donald: Yeah, and that’s interesting because I’ve always looked at estate planning and creating trusts with this idea that I want some anonymity, right? I like actually having LLCs in states where they protect your privacy and they don’t disclose who it is. And you can use your law firm to have the only address and representative listed so people can’t connect the dots to you. I’ve also used trusts in the past where instead of saying like the Donald Family Trust or where it’s like, “Oh, well, now, let’s put a target on exactly where the assets are.” I’ve always heard that it makes sense for it to be some random name or whatever it is that you want to create your trust name that doesn’t have a direct link. You know, if your favorite color is this or your favorite animal is that or a landmark, whatever it might be that that is harder to link up. So, I’m curious if that is accurate or if not. I mean, I guess it’s accurate.

Andrew Howell: It’s totally accurate. Look, we’re not saying different things. We’re just saying different things. I’m saying have a good, solid structure in place that if you have to disclose it to somebody is protective, right? And what you have to disclose is going to become more and more prevalent based upon these corporate transparency laws. In fact, your attorney, if they set up the company for you, they’re going to be required to report to the agency. Your accountant, as they’re preparing tax returns for you, they’re going to have to report to the agency. But that doesn’t mean that you purposely put your name out there. And go tell Trump he can’t use his name in one of his companies is a punch in the nose, right? But no, my family holding company in Wyoming is not Howell Enterprises, I promise you. It’s some innocuous name that if somebody will look through the title reports for the properties, just that low-hanging fruit kind of person who wants to cause me problems, they’re not going to be able to find me easily. But if things go to books and we are serious about suing each other, there’s no such thing as staying anonymous.

I mean, the court, through the process will do so much as not just requiring you to, “Tell me everything that you own. You’ll have to disclose to me anything that you moved out of your name in the last year, three years, five years, ten years,” depending upon what’s going on in the court system. So, it’s one of these things that I just impress upon my clients total transparency. Definitely don’t put your name out there. Call it something different because we want to try to keep private as much as we can. So, I think it’s just two different things but they’re not necessarily mutually exclusive.

Justin Donald: Yeah. That’s good, Andrew. And something else that I think would be great to share with our audience today is the power of different state protections for different entities. So, for example, there are certain states that are way more business-friendly, and it makes sense to have an LLC or some entity in that state like Delaware is very pro-business. There’s a lot of case law. So, you’ll find that a lot of companies use Delaware LLCs or Delaware C Corps. And also, Nevada has some really nice protections and Wyoming has some nice like anonymity protections. Some states require one filing ever. Other states require annual filings. So, there are pros and cons there on the LLC or entity side. There’s also pros and cons on the trust side with different states, right? So, you’ve got some states like South Dakota, in Alaska, in Nevada that have very good trust law and case law to support having trusts there in those states. So, I’d love to hear you talk a little bit about each of those so people cannot just default to the state that they’re in or default to a state that actually is a really… Like, California is like one of the worst places to incorporate, right? So, let’s talk about that a little bit.

Andrew Howell: You said it very, very well. And so, let’s kind of go through the various entities that you may have mentioned, starting with corporations. Now, it kind of depends on what kind of corporation you’re going to have. If you, Justin, you come to me and you say, “Andrew, I’m going to start some company that I know in ten years from now I’m going to sell for a gazillion dollars. There’s income tax reasons to setting it up as a C corporation, right? 1202 QSBS stock would allow that after five years from now if you sell the company, every shareholder could get a $10 million deduction from federal taxes or ten times basis, whichever is greater. So, we would look at taxation issues that go along with that. And then if it’s a C Corp, I would absolutely choose Delaware. Delaware, without question, has wonderful corporate laws. Basically, it’s less duties that the officers and directors of a corporation owe in Delaware to their shareholders. Okay. That sounds bad because most publicly traded companies are C corporations and formed in Delaware but that’s the reason.

So, you’re absolutely correct. LLC is interestingly enough, there’s a number of states that we could choose. I have chosen Wyoming as my state to do it in. Wyoming was the first state in the nation back in 1977 to authorize for LLC, this new entity that now all states use and use extensively. And Wyoming, Nevada, Delaware, South Dakota, Tennessee, Alaska, the states that you’ve mentioned, they’re also similar with this. In those states, if I were to come after you, Justin, for let’s say your 50% interest in a limited liability company in Wyoming, what I would get under Wyoming law is charging order. And all the charging order is an order from the court to the LLC that says, “LLC, if you ever slip up and pay Justin something, it needs to be paid to Andrew, his creditor, and then of course, we pay everything to your wife,” and I don’t get anything. And other states like my home state of Utah, that’s not the end. That is as far a charging order is as far as a creditor can go in a state like Wyoming but in Utah, a creditor can actually foreclose that charging order and become a member of the company. So, yeah, absolutely. Nevada is another great state to do it in. Problem in my mind with Nevada is they’re just way too close to California and they’re developing all of California’s bad habits. California, to keep a company just in good standing in that state, it’s $800 a year and in Nevada, it’s about $700 a year and you have to get a business license and so forth, even though you’re not really doing business there. So, I’ve personally chosen Wyoming.

Now, on the trust planning side, we get into a whole nother ballgame. It used to be prior to 1997, if you wanted to create a trust for your own benefit, put your assets inside of that trust and expect any kind of creditor protection then you had to go offshore, the Cayman Islands, Switzerland, whatever it might be. Well, in 1997, Alaska, which was the first state in the nation, allowed people to do this domestically and we call these domestic asset protection trusts or the acronym DEPTs. And in Alaska, now you can form a trust there, put your assets inside of it, go for a three-year period of time keeping your nose clean. Remember what I said earlier about the Cook Islands that you’ve got to keep your nose clean for a year there. In Alaska, it has to be for three years. But after that three years, the assets were forever protected, even though they were here in the United States. Well, as soon as Alaska adopted that law, a bunch of states jumped on board, Nevada, Delaware, South Dakota, the companies that are the states that have been trying to be really protecting. Now, out of all of those states, Nevada is actually my favorite for trusts. The reason is I think they have the best case law of any state out there. They were pretty clueless on Alaska’s use to adopt this statute so they’ve had it for a long time. And then they tried to one-up Alaska by saying instead of keeping your nose clean for three years like you have to in Alaska, you’ll only have to keep your nose clean for two years if you do it in Nevada. So, you could keep your assets in the United States. That’s not something to squawk at. Yes, we’ve got issues here in the US, banking things going on lately, but we’re still the most stable economy in the world. And if our economy goes down, the rest of the world has major problems. But you can keep your assets stateside and after two years, keep it protected.

Now, if we were to look at the jurisdiction in the entire world that has the most advanced asset protection statute, it would actually be Utah, my home state. If you create a trust here in Utah and do it the right way, creditors only have 120 days to make a claim against your assets. Four months, I mean, that’s nothing. So, why wouldn’t I want people to do it here? Well, the most recent version of our bill was passed in 2013, and I think I was chair of the estate planning section of the bar in Utah here at that time. And I would get these calls from these Utah state legislators who thought this was an abhorrent idea that you could get out of paying your creditors in 120 days and how immoral that was. We’re a very moral state here in Utah. Our neighbors to the west, Nevada, have no problem being completely immoral. And they love this statute. And they now have two Supreme Court cases, Nevada Supreme Court cases, that say this statute works if you do it the right way and there isn’t a jurisdiction out there that can say that in terms of their case law. South Dakota, definitely close on Nevada’s heels. South Dakota, there they can have trust that last 999 years now. So, there’s a bunch of different reasons to pick different jurisdictions really based upon what you’re trying to accomplish.

Justin Donald: Yeah. And by the way, this is all so good from a strategy standpoint so that you can make the best plan for your family and for legacy purposes. I love it that we’re kind of opening the window or kind of going behind the curtain to learn more about this stuff. Now, one of the big catchphrases or buzzwords that’s happened here recently, people are talking a lot about a legacy trust or a dynasty trust. And I would love for you to share kind of what that is. Is that a DEPT? Is that different? Does a DEPT fall under that? Is that a separate thing? Why would you or wouldn’t you use it in your opinion?

Andrew Howell: Yeah. So, it’s hard because different planners use different words and you’ll even see people trying to trademark or patent the name of a trust or something like that. When I hear Legacy Trust or something like that, what it says to me is it’s a multigenerational plan, meaning that mom and dad have assets they don’t just want to with their death dump, divide, and dissipated upon their children. They want to make sure that it lasts for multiple generations. It’s a legacy. And how do you do that? And you can do that with many different types of trusts. I mean, let’s just talk fundamentally about what a trust is because there’s a lot of misconceptions about trusts. And the reason for that is there’s many different types of trust that are out there. I mean, how many we talked about already on our call but what a trust really is, is an agreement. That’s it. And it’s an agreement between three players. The first person involved in a trust is we call the grantor or the settlor or trustor of the trust, the person who creates it. And you create a trust really easily. You do so by taking assets and turning them over to the second person involved in the trust called the trustee. And the trustee is in control of the trust and its assets and has the obligation of managing those assets in the trust but using the assets for the benefit of the third player, the beneficiary in that trust, and all trust can be boiled down to simply being this agreement.

So, when people start talking about dynasty and legacy trusts, I don’t know necessarily what that means. I’ll tell you this. My domestic asset protection trust in Nevada that I set up for myself, I would absolutely consider that a legacy trust. Something happens to my wife and myself, first of all, through the estate planning work that we’ve done, it’s out of our estate for estate tax purposes, and I hope it grows to be worth millions and millions and millions of dollars. But if I ever have an estate tax problem, I don’t have to worry about the assets that are underneath that trust. So, I have preserved one of the erosive effects of wealth transfer. You mentioned this earlier. There’s actually three. Number one is the division of the estate. If you take a husband and wife and they’re worth $100 million and they have four children who have four children who have four children, by the time you get down to that great-grandchild level, everybody from division alone is getting $333,000. And it’s just not as powerful as 100 million. You can do a lot more with 100 million than you can do with 333,000. The second erosive effect on wealth transfer are taxes, right? Every generation under current law gets a 40% haircut. Now, meaning what goes to the government in taxes and some states have it themselves. Now, under current law, federally, everybody can give 12,920,000 without it being subject to an estate tax but I promise you that law is going to change.

I mean, as recently as January 1st of 2013, if you remember back then, we fell off the fiscal cliff and we had a $1 million credit against the estate tax with a 55% tax on anything over and above that. If every generation is having to take a haircut of 50%, that wealth is going to be dissipated. And then finally, the last erosive effect are third-party attacks, making sure that people aren’t coming after the assets that you leave your kids and also that they don’t use them unwisely. So, to me, a legacy or a dynasty plan needs to address those three things. So, like with the asset protection trust, I’m dealing with not dividing the estate. It’s all going to be held in trust for the benefit of all of my kids because I believe in equality of opportunity, not equality of outcome. My kids are not going to have the same outcome but I’m going to give them the same chance. I have a daughter that’s going to Austria this summer to dance because that’s what she wants to do. My oldest son wants to be a game warden. He doesn’t want to go to Austria. I mean, if he wanted to dance, I’d pay for him to go to Austria. But we keep it all together for the family as a collective and it now has the power of the entirety. We also keep it out of our estate so it’s not being attacked every generational level with a 40% estate tax.

Plus, the way that I do it for my kids is when something happens to my wife and myself, my kids don’t get anything outright. I mean, even when people have an estate plan, most people don’t, but when I review a trust that has been done, what I’ll see is that if mom and dad dies, there is a trust that is established for each child. And when the child reaches 25, 30, 35, whatever, it’s going to be distributed outright to him. Well, now all of a sudden, you’ve made it available for them to commingle it with marital funds, it gets taken in a divorce, and it certainly would be taken by a creditor. By leaving it in the trust for their entire lifetime, you keep it away from creditors for their entire lifetime.

And then beyond that, you get to put more of who you are as a family. And this is where the books that we’ve written come into play, Entrusted and Riveted, where we really go through and talk about what families do to successfully navigate this wealth transfer from one generation to the next and not create trust fund babies or what we call in our book trust of parents. So, to me, a legacy plan, a dynasty plan has to have all of those things encompassing it, and it could take many different forms.

Justin Donald: Yeah, that’s a great rundown and really kind of highlights the value of doing this, of creating an estate plan and creating the trust structure, and then also, thinking through from a charitable standpoint what you want that to look like. And there’s a lot of ways to weave that into the trust, but also just into various different charitable entities and structures that you can use. And so, I think that’d be fun to talk about.

Before we go there, though, I think what’s really fascinating is most families can’t even go three generations without all the money, all the wealth eroding down to nothing. So, if you pay attention to the great founders and builders of the United States, if you go way back and there’s a great documentary on this or docuseries called The Men Who Built America and you look at the greats from Vanderbilt to Rockefeller to Carnegie, J.P. Morgan, Ford, like all the Titans that had the largest net worth, like at one point in time, the Morgans or J.P. Morgan., Carnegie, and Rockefeller had over a trillion dollars in net worth, a trillion, in today’s dollars.

And today, it takes at least 40 of the wealthiest families in the U.S. to accomplish that. So, when you talk about great wealth, that’s tremendous. But you’ve got the Rockefellers who still, generations later, have a tremendous amount. You’ve got the Carnegies that it’s all gone. And then, if you look worldwide, the greatest probably depiction or representation of a family that did it right, it’s the Rothschild family who has amassed the largest net worth or some or total is a family of anyone, right? Puts everyone else to shame, but you can count these families that have actually made it three generations. I’m like one or two hands. That’s it.

Andrew Howell: Yeah, exactly right. I mean, our favorite examples of them are actually the Vanderbilts. When Cornelius Vanderbilt passed away, I think it was 1870, something like that, he was the, he himself was the wealthiest man on the face of the earth. His net worth in today’s dollars was $158 billion. That’s what Cornelius Vanderbilt was worth.

After he died, and what all he did with his estate planning is just dump it onto his kids. Thirty years after he passed away, there was not one of the Vanderbilts that was amongst the wealthiest in America. Now, they were still wealthy, but they weren’t amongst the wealthiest. And then in 19– I think it was 1973 or ‘76, there was a reunion at Vanderbilt University with all the Vanderbilts, well, supposedly all the Vanderbilts, but there wasn’t a millionaire amongst them. It had all been gone. Now, it probably does mean that the millionaire Vanderbilts didn’t attend the Podunk family reunion, right? But no, it goes right into what you were saying.

People talk about the Rockefellers a lot and how they do this. But no, I think the Rothschilds is a far better example. Commodore Rothschild, born on the streets of Amsterdam in the early 1800s or 1700s, he had nothing. And what he developed was this system of bartering where you have a horse, I have a cart. He’s going to put us together and make some money for having done so. And he developed it into an amazing banking system on his own.

And then as each of his children were born and he was educating them, and of course, in the best schools and so forth, as they became of age, he would send them off to some European capital and set them up with their own banking industry. And somewhere, I had seen this. And they’re probably listening to our call right now, the Rothschilds, right? But somebody told me once, it was like $3 trillion that that family controls.

Justin Donald: Wow.

Andrew Howell: I mean, Bill Gates had now got the divorce, $50 billion, red-headed stepchild compared to the amount of wealth. And it was because of the intention that was put in Vanderbilt as he raised his family and what he expected of the family. With higher net worth families and higher income families, it is always important for the children of those families to know three things. First of all, they need to know what can they expect as being part of this family.

I’m a child. I’m in the Donald family. Does that mean, hey, we have a family vacation place that I get to use? What does it mean? What are the privileges? And what can I expect to be part of this family? I also need to know what I cannot expect from being part of the family. No, you don’t get to use the vacation property, right? You’re not going to get a big payday when you turn 18 years old. We expect you to go to school. We expect you to start a business, whatever it might be.

And then, again, the third thing being is they need to know what’s expected of them. So, what can they expect from being part of the family? What can they not expect from being part of the family? And what is expected from them? And I don’t know how many families have that conversation. We have. That’s because this is what I do. I would suspect that most families don’t have any clicking close to that conversation.

Justin Donald: Yeah, I love that. And I actually want to get into some of the differentiating factors that I think you and your firm– one of the things that I want to do is I want to highlight you and your firm and some of the things that I think that you do differently. And before I had read Entrusted, and by the way, I love your books. I think you have taken complex topics and you’ve really made them easy to understand and much more simplified for your average person.

And so, before I knew anything about your writing, your firm, anything, for me, the benchmark or the framework of books, like I thought Complete Family Wealth was just the book. And by the way, I still think it’s an incredible book. It’s a deep dive. It’s a fantastic book on the history of where the trusts come from and it just does a great job.

Andrew Howell: The Wealth in Families is a great book. The Midas Curse is a great book. There’s wonderful books about this. I mean, there’s fabulous books that go into the touchy-feely side of all of these things and how you need to give your kids accountability, and Warren Buffett, give your kids so much they can do anything but not much that they can do nothing. What we try to do with Entrusted is to not just talk about the philosophy, but then give some meat on the bones as to how you can actually do it and what are those disciplines that our families that have embraced this have really accepted in their lives to make it successful.

Justin Donald: And so, yeah, I want to talk about that because you guys have really created a different formula. So, I think, most attorneys say, “Okay, tell me your estate. Here’s how we plan for it. Here’s how we envision things. Or what do you envision?” “I don’t know.” “Well, here’s what I recommend.” Whereas you guys, your firm says, “Well, let’s talk about values. Let’s talk about family values, Let’s talk about personal values. Let’s talk about long term, what do you want to be known for? How can you guys do things together while you’re alive? What are things look like after you’re gone? What are the values you want to instill in your kids?”

And so, I’d love to give you an opportunity to share a little bit about that, a little bit about core values and COREnology, which is something brand new that you guys have created and are rolling out, that I think is the biggest differentiator and biggest value add for someone to work with you, because this is the foundation that I think all estate planning should be built on.

Andrew Howell: Yeah. And thank you very much for the question. And I have to give you a little bit of a background as to why it came to this. I mentioned my grandfather before. He was a Harvard Law grad and estate planning attorney. People still call him the dean of estate planning. He passed away in 2006.

But he was very active in my life, and I was at a very early age working down at his law firm as a gofer. And he was an estate lawyer. His clientele included Disney, the Hearst family, the Durst family, the entire Browning family, worked with my grandpa, and he did very, very well. But he was really good about exposing me to the practice.

One time he was meeting with an existing client. It’s a gentleman by the name of Earl Holding who’s passed away, that he used to own Sinclair Oil. And Earl came in to meet with my grandpa, and he was talking about a new asset that he had purchased. Now, a client usually comes into my office and says, “Hey, I bought a new vacation property in Florida,” something like this. This was a four-mile oceanfront parcel in Santa Barbara, California. I mean, just this tremendously well– a valuable piece of property.

And I watched my grandpa and Earl have a conversation, and I don’t remember. I’m sure he did. But I don’t remember once my grandfather asking how much that property was worth, what did it cost? Or it was, what does this mean? How is that going to fit into your other real estate holdings? Who’s going to control it within the family? It was just a much deeper discussion. And that’s how I thought estate planning was done.

Getting out of law school, I started with a large law firm here in Salt Lake. It’s called Durham Jones & Pinegar. They’ve since been acquired by the largest law firm in the world, Dentons. But they had a process and it’s what I call a trust email. You would be introduced to a client, somebody would get referred into you. You’d reach out to the client, you’d get their financial information, you’d meet with the client. You would tell the client what they needed to have. You need a will, you need a trust, you need this. You would prepare it. You drag them into your office, they’d sign it. You never talk to them again, right? And it was a matter of volume. How many?

And it didn’t make any sense to me. There wasn’t any discussion about purpose and what the family was trying to build. It’s like going and hiring a contractor to build your house, but you don’t give them any blueprints, right? How can I tell you, Justin, what you want to have in your estate plan? So, no, we definitely spend a lot of time doing that.

And that’s where David York and I met at a later law firm that we were both at, and he was coming from a different background than I was, but we came to the same conclusion, which were most of our colleagues were missing the point. And that’s where we started kind of collecting the ideas for Entrusted, the book we wrote in 2015. I thought two people were going to read that book, Justin, my mom, maybe, and then my high school English teacher just because she couldn’t believe that I actually wrote a book, a letter, and read a book. But it actually had a really big– it had sort of a big ripple in our nerd world of estate planning. People liked it, but they were sort of left with, okay, this is great, but now what? What do we do now? What’s the call to action?

So, we actually developed a game for families to play called Rivets. The idea behind Rivets is that we use a bridge as the analogy, bridging the gap from parents to kids. And bridges are held together with rivets. And the rivets are the values that the family holds dear. And so, basically what it was, was a trading card game where, at the end of the game, every family member has their five core values. And then as a family, you build the five core values of the family.

Now, that started in 2015. We wrote our follow-up book Riveted in 2018 that dives more into values and life experience and how that affects all of those things. And then, since 2018, when we wrote that book, for the last five years, we’ve been developing software and we have a whole online software. It’s a software as a service product that we’re licensing to seven different financial institutions throughout the country right now. And it’s their intake for their clients.

Their clients have to go through this before they meet with any advisor at the firm, because now what the advisor will have, and this is something that we had talked about, potentially me providing you an example of, Justin, is a report of that family, meaning it will tell the advisor, of course, the family, but also the advisor, what is dad’s five core values, what is mom’s five core values, what is Bobby’s, what is Susie’s? And then what is the family collectively think of their five core values?

And then also, it goes into personality style and if one child is productive versus autistic. And think about that, if you as an advisor, I don’t care if you’re a financial advisor, an attorney, an insurance agent, whatever, a coach, a life coach, and you’re meeting with this family to try to help them through their issues and you know a whole lot more about them, well, the conversation is going to be completely different. So, I definitely think that that’s what makes us different, is concentrating on first identifying what the family is trying to build, and then using all of the tools, wills, trust, stuff like that, that we have at our disposal to be able to put together the actual structure, the actual plan that the family is trying to build.

And this is something that is being demanded of us. It’s not just something that we came up with. I mean, we both believe it, but our clients were demanding it. They’re saying, “Look, we don’t want to have trust fund babies. We worked hard. We want our kids to work hard. You get a lot of self-satisfaction from creating something on your own. And how do we do that?”

And in the old days, it was, “Well, I’m not going to give the kids anything. They didn’t earn it, so I’m just going to give it to charity.” What’s interesting to me about that is the charity didn’t earn it either, right? And really, what you’re doing is you’re just shifting the stewardship. You’re saying, “I don’t want to be a steward over my assets. I’m going to leave it to some charity. I don’t want to put in the hard work.” So, no, I think that we’re very different from a lot of our colleagues in really stressing the importance of that in planning.

Justin Donald: And by the way, thinking even that the charity has to know how to manage those finances and do a good job with it is a far reach, like charities are great in whatever their wheelhouse is. There are specific areas and arenas where they have expertise, but managing money…

Andrew Howell: They’re not even good at that.

Justin Donald: For most charities, that’s not it.

Andrew Howell: No, they’re vastly inefficient. I think I saw once and I could be wrong on this, and I have nothing to back it up. But from my memory, Red Cross is 40% efficient, meaning if you pay or you donate a dollar to the Red Cross, 40 cents of your dollar is going to go to their charitable purpose. Sixty percent of it is going to go to their overhead and paying their CEO. And the estate tax is only 40%, but the charity’s taking 60%, right? So, no, I’m not against charity. In fact, one of our principles in Entrusted that our entrusted families do well, is that entrusted families are generous and that they do implement some sort of charity or generosity, something that’s bigger than the family that everybody can strive for it. So, I’m not against it at all, but I don’t think it’s the main beneficiary of your estate, or it should be.

Justin Donald: Yeah. Yeah, that’s great. And I think that’s great perspective because now, the onus is on us. We need to take responsibility for helping to create that legacy piece. And when I say legacy, I don’t mean putting your name on a building. That doesn’t have to be legacy like that. That’s probably more vanity than legacy. I think, legacy is like teaching the tools, teaching the wisdom, giving knowledge, and then equipping the future generations for how to deal with and use wealth for good, right? So, I think you guys do that well and you’ve pioneered something that I don’t know of anyone else still doing. So, I think that’s really fine.

Andrew Howell: Yeah. The website is COREnology.com, and that’s COREnology.com. And people are welcome to go look at it. It’s a login website because you have to be a licensee to be a part of it, but you can get kind of a flavor of it. And I don’t know anybody out there that is doing what we are doing on that end.

Justin Donald: And I think you guys have received high praise and endorsement from some big names. And so, I’d love to just mention Jonathan Blattmachr who is kind of like an OG, he is the godfather of kind of like estate planning trust, is an authority and an expert. You could probably do a much better job of talking about him and telling the story. I know he’s a friend and a huge supporter, but he has laid out his praise for you guys and he’s responsible for kind of stepping and running the family office that Rockefellers started in Milbank, Tweed, correct?

Andrew Howell: Yes. Jonathan endorsed. He’s one of the endorsers of our book Entrusted. And I’ve known him for a long time. He actually had done work with my grandpa way back in the day. But yeah, he was head of trust in the States for the New York firm of Milbank, Tweed. And Milbank represents the Rockefeller family.

So, Jonathan had done that work. And he’s one of the keynote speakers at every conference we go to. And he’s a prolific author. He’s since retired. Milbank actually made him retire. And now, I think he’s busier than he’s ever been. But no, he’s been a great supporter of us. The best, though, had been– I mean, we’ve had 2,000 people go through COREnology. I think it’s like 450 families have now gone through it, and most of them have been just David’s and my high-net-worth clients.

We have had zero negative responses. We have had zero requests for refunds, and multiple just impactful letters thanking for the return of the family and the dynamics and being able to communicate. Now, it’s a very, very powerful tool. We’re really excited about it. And this year, we’re traveling to New York in about two weeks to go present to a couple of other groups as well. And so, we really do think this has the potential to be the game changer because it’s the tool. It’s when somebody says, “Hey, how do I do this? How do I be more purposeful with my planning?” This is where you start.

Our first principle in Entrusted and entrusted families are entrusted families know who they are and what they believe. And I don’t think many families can articulate that. You probably can. But if I said, “Smith family, tell me who you are and what you believe. And can every member of the family state the same thing?” We’ve lost that somewhere in our culture, right? In the old days, we had family crests and all of these various kind of things.

And a good friend of ours, somebody we were talking about earlier, he calls this putting together a family constitution. And I don’t have a problem with that, although that’s not necessarily how I view it. When I think of the Constitution, I’m thinking of the United States Constitution. And that’s the one, three branches of government and checks and balances.

That’s not really what I think of when I’m thinking of this. If I were to equate what I’m talking about here to the historic document, this is more of the Family Declaration of Independence. It’s the why. We’re starting this new country because we want to be free from King George and we don’t want to pay taxes and all people are created equal and all of these kind of things. That’s the why. And that’s one of those things that holds true many, many years from now. So, developing that Family Declaration of Independence, if you will, and having that now be the centerpiece to somebody’s estate plan makes it just so much more dynamic.

Justin Donald: Well, I love it. And it’s actually quite ironic that you mentioned the Smith family and what’s your– could you name your values and everything? Because I just interviewed, this just came out. This is so funny that you guys are side-by-side episodes. Chris Smith, who came up with the Family Brand, and so, in that reference, that Smith can actually do a great job and his model is brilliant and I think everyone should go through this.

And what I think is there are different levels to it. He’s providing an identity for the family, and I think everyone needs that. They need that brand. And you guys are providing that identity on the family, but with the values that they have and then the legacy of that family. So, it’s like an extension of it. And I love that you’re doing that.

I highly recommend that people read your books Entrusted and Riveted and really get plugged in. Where can our audience go to find out more about you and about your law firm in the event that they want to take some steps and take some action to be able to learn more about their estate and how they can set it up in a good and favorable way for their family?

Andrew Howell: Yeah, our website, it’s YorkHowell.com, Y-O-R-K H-O-W-E-L-L dot-com. That has a lot of information, obviously, all of the lawyers in our firm and what everybody does. If somebody wants to speak to me directly, I’m happy to. And the easiest email for me, it’s a corny one, it’s teamandrew@yorkhowell.com. Andrew@yorkhowell.com com will work, but it will just come to me and I’ll probably miss it. The team one goes to my paralegals and my assistants and me, and so, nobody misses an email.

And then, we’ll definitely respond, if somebody says, “Hey Andrew, we want to talk to you about our estate planning,” if it’s me or somebody else in the firm that might have quicker availability, we’d love to speak to anybody that way. Our website, COREnology.com, talks a little bit more about that. And then our books, Riveted and Entrusted, those are both on Amazon. They’re also on Audible. The first book Entrusted, I read it, so it’s four and a half hours of my horrible voice. But then Riveted, I had one of my clients who’s an Emmy award-winning voice actress read it. And that’s actually pleasant to listen to. So, those are good resources as well.

Justin Donald: I love it. And I’m excited for you to join us. I mean, one of the things for me that is important is that for the Lifestyle Investor community that I’m finding best in class to advise and help create really whatever it is, so in this case, a killer estate that has a great plan and a legacy plan that envelopes in core values and family values. And so, I’m just excited about what you’re doing. And I’m thankful for your willingness for lifestyle investors to give a free consultation for those that reach out. And I’m excited to share some of the other things that we discussed, where they can get a feel for what COREnology is and what one of these reports looks like. And so, I love the work you’re doing. I’m excited to hang with you when we do our Lifestyle Investor event in Park City.

Andrew Howell: Exactly.

Justin Donald: Yeah, we got a whole bunch of cool things. And you’re going to be joining the mastermind here soon for a session.

Andrew Howell: There’ll probably be enough snow by the time you get here as well with how much we’ve had, so.

Justin Donald: Yeah, you guys have had quite the winter. There’s no doubt.

Andrew Howell: Oh, it’s been a record-breaking year. It’s been insane.

Justin Donald: Well, I am just so thankful for the time here, Andrew, for just the time that you spent educating me and helping me learn more about the process and just the important things beyond the actual estate planning, the things that matter the most and the things that actually bring the family together. And I like ending every episode with a question to my audience that hopefully invokes some sort of action. So, here’s my question for you. I’m wrapping things up today. What is one step that you can take today to move towards financial freedom and move towards a life that you truly desire, one that’s on your terms, not by default, but by design? And I have to imagine, for many of you, getting your estate in order could be that next step. So, thanks for tuning in this week and we’ll catch you next week with another episode.