The Dangers of Delay: Asset Protection and Estate Planning

TRANSCRIPT

Mike Pine: [00:00:00] Welcome to the Hidden Money Podcast. Today, Kevin and I are super excited to have Elizabeth Tresp. Elizabeth has a couple of law firms. She's an entrepreneur at heart, even though she is an attorney and that's the subject material we want to focus on today with her. She has got so many different things going on and

Kevin and I thought it would be a really good idea, as he and I are starting to learn more about asset protection for our own personal lives, as I'm personally dealing with some issues with estate planning  This is an issue that hits every single one of us at some point and unfortunately, all too often like me today, this very morning, I wish I had thought about this and worked with an attorney a couple of years ago on some specific things I'm working with. And Elizabeth has just got a breadth of knowledge and we're so thankful to have you, Elizabeth. Thank you very much for being here.

Please tell us a little bit about you and maybe just a few of your businesses, not all of them.

Elizabeth Tresp: Okay, good morning. Thank you for that [00:01:00] introduction.

So, yes, I'm an attorney, and I have two of the law firms that I run currently. I have Tresp, Day & Associates, and our focus is asset protection, like you previously alluded to. Asset protection is near and dear to my heart, so I can't wait to get into that,

and then, I also have Tresp Law, and that is a law firm that I started 10 years ago. This was actually a second career for me after I was handling death and dismemberment claims at an auto insurance claims department for a long time, and so, again, dealing with a lot of litigation, and so, that brought me to this career with the law firms.

And Trust Law- we do a lot of trust and probate litigation, so, when you're doing estate planning, that really colors how I see things, because I, myself, do the depositions and do the cases, and I know intimately, the things to think about when you're doing not just asset [00:02:00] protection, but estate planning.

Completely different, I have a coffee shop with my husband in a tiny town in Kemmerer, Wyoming. I fell in love with Wyoming a long time ago, so my firms are in Solana Beach, California, and on Cedros Avenue. Great area, but life gets busy, and life gets to be a lot, especially while you're building businesses,

and so, I was craving wilderness and Wyoming has it, and has a lot of it. So, just logistically, the southwest corner was something that was attractive to me because we could still drive, and this little town, Kemmerer, Wyoming, it took our heart. We found a cabin completely off the grid, on a mountain, and just with wind, solar, propane...

fantastic views, and just quiet like you've never seen. The first time we stood outside at night and looked up, my son was actually overwhelmed. We had to take him in. He was younger at the time, but just because you see absolutely everything... [00:03:00] and it's pretty amazing, antelope... and then, the little town itself is a fantastic town.

It's actually the flagship JCPenney store. Mr. Penney and his wife started JCPenney's there, and there's a town triangle with a statue of him, and that's pretty amazing. And then, there's a national park- the Fossil Butte, which is there, where it's really the fossil capital of the world.

You can go dig your own fossils, and we just loved it. So, we built a coffee shop, Fossil Fuel Coffee Company, and it is really fantastic. It's been very successful. There was not a coffee shop in the town. There's only 2,500 people, so it was an opportunity to add to the community and give a meeting space.

And then we started a bakery. We have a bakery too.

Kevin Schneider: I mean, why not? Yeah.

Elizabeth Tresp: Why not? You need some baked goods, fresh baked goods with your coffee. We do paninis... and then, I don't know, we just couldn't stop ourselves. We bought the building next door, too, on the town triangle, and so, we're building... that's almost done, [00:04:00] so we had to renovate it quite bit because these buildings are over a hundred years old.

Pretty fascinating. In the basements the floor is cool. So, just very cool buildings, but we have a Tresp Corporate Services office there now, too. And then, I'm expanding my law firm there, too. So, just a lot going on. That's just a little bit about me. We have a lot of angles to look at things.

Mike Pine: Do they have a CPA firm up in this town? Because we might need to open an office there too.

Elizabeth Tresp: You should I'm serious. This town is a fantastic spot.

It really is. It's amazing. We had Bill Gates come to our shop because he chose this town for his TerraPower. It's going to be a clean nuclear power plant, and so, just through the process and the integration with the planning, we were able to meet him, and he came to our coffee shop, and it's great.

You should go.

Mike Pine: It sounds like a happening place. If I can convince my

Elizabeth Tresp: And, One of the [00:05:00] best music festivals, Oyster Ridge Music Festival- it's free, and amazing artists come once a year.

Mike Pine: Awesome.

Elizabeth Tresp: Wilson Jr., one of my favorites.

Kevin Schneider: That's really cool.

Mike Pine: I'm hooked. Wow.

Kevin Schneider: A lot more happening than where we are, and as a CPA, I'm kind of cursed when I meet new people

to where when they tell me their story, all I think about are the tax implications of all your decisions, and I don't know if you get that as an attorney when you talk to somebody, you're like- you need this, you need... like in the back of my mind, I'm just hearing real estate,

business, depreciation, all that's screaming to me is tax, and it's a curse, but it's a blessing too, but I love it. Do you feel that way when you're so invested and deeply just rooted in your profession like this, when you talk to somebody alarm bells, certain things trigger in

you?

Elizabeth Tresp: I do. Not just for them, but for myself. So every time you're like, taxes, taxes. So I'm a tax attorney too. I have a legal Master's in tax from here, but just like the carpenter's house is falling down, I know that there are different things that I should be doing.

[00:06:00] I'm working with entrepreneurs or syndicators, people that are just really building themselves and they don't have their personal planning done. One of the first things as an asset protection attorney, a firm, that we ask is- Okay, we're going to talk about your businesses.

We're going to talk about your structuring. We're going to talk about how to protect what you're building. But do you have an estate plan? Do you have a trust? Do you have a power of attorney? And huge portions of the time, people don't.

Being honest, it's not a fun.. we're not walking around every day saying, Oh, let's think about what happens if we help or...

Kevin Schneider: If that bus hit me, what's going to happen? What's a daydream on that?

Elizabeth Tresp: Right. But it's so important to, at least, sit down and get it started and get it done because then, you can, you want to revisit it every three to five years or when you have big changes. But you really do need to have it done because I see in my practice very often, that people have come to us when it's too late.

So, we know that [00:07:00] people are living a lot longer these days, which is fantastic, but there are a lot of cognitive issues that come up. We actually just were talking to a neurologist the other day, and we were talking about the different stages and levels of cognitive decline and how difficult it is to recognize and accept, especially when it might be you.

And so, we get calls all the time where mom passed, dad has dementia. He's falling victim to scams on the telephone. There's always those types of things going on, or there's this person that's gotten just a little bit too close, really involved in their finances and capacity to

draft estate planning documents is different than other levels of capacity. And so, having that assessment done and getting those documents done before it's too late so thatyou're not lost... [00:08:00] because once it's too late, it's too late. Then you have to go through the courts. You have to do a conservatorship and that's expensive and time consuming.

It's hard enough when you get older. It's hard enough when your parents are getting older, it's sad, and no one wants to accept that, no one wants to lose their independence, and so, regardless it's a difficult process, but getting those estate planning documents done- 100%.

And it actually, in addition to, not just the powers of attorney and healthcare decisions, but trust... I don't know, have you guys ever had someone go through probate?

Mike Pine: Yes, it is not fun.

Elizabeth Tresp: It is not fun. Now, we handle probates at my law firm. I love probates, but I want all my clients to make sure that they avoid it because it's just going to save so much time and money. And we actually have people that try to do it themselves.

Don't do that. It's just like everything else.

Unless that's your gold and that's your magic, that's your strong [00:09:00] suit, don't do it yourself, because you're going to end up on my litigation department, and someone's going to be litigating that- this part says I'm supposed to get this amount, but then this part says everything's supposed to go to so and so, and... just keep it clean.

Pay the extra money to have someone do it that knows what they're doing.

Mike Pine: I'll also add, usually probate never comes at a good time in our lives. Never. It's always after some horrible life experience that is a struggle enough and then to find out you have to go to court, you have to do filings, you have to go find an attorney in the right state, and it could have all been avoided.

I think, just about every one of us entrepreneurs and business owners, and probably everyone else too, It's hard to focus on the contingencies that even though you know it's going to happen eventually, It's never going to happen soon enough, and in my mind, my estate planning issues- It'll be an issue 20 years from now, maybe 10 years from now...

certainly not tomorrow, but when it happens It sucks. It's going to suck. There's no way to avoid it sucking, but working [00:10:00] with an attorney ahead of time can make it suck a little bit less.

Elizabeth Tresp: And

there are other things that you can think about too. So, I try to tell my clients- be specific about the certain things you want. Do you want to stay in your home? I know me personally- if I start losing cognition, first of all, I don't want someone constantly telling me it-

'Don't you remember..?' or 'No, remember..?' Just let me live in my happy spot! Just make sure that I'm taken care of, and I want to stay in my home. So, making sure that I'm planning for that kind of stuff now, that that's going to be possible financially, and then also that they know that, is super important.

If you want to go to assisted living, check it out. If that's where you're going to want to be, look at them. Take control of it.

Kevin Schneider: So, for just a normal, average person that's starting to build up their wealth, maybe they're still just paying off their student loans, and just happy to have a month or two finally put away in savings, a month of cash flow, when does it make sense to go speak with an attorney about asset [00:11:00] protection if they don't own a business, or they just started one, but it doesn't have any money?

Mike Pine: Is that the time?

When should people talk to you?

Elizabeth Tresp: No, they should. They should talk to someone now because you want to have your structures in place, so that as you build your wealth, you can then have your wealth protected. So, as you're growing, instead of growing and being very attractive, and having everything in your personal name or your business' name, and then trying to transfer it to different types of structures (you can do that), but it's actually smarter to have the structures established, and then be using them and functioningwith them as you're growing your wealth.

Because plaintiff's attorneys are looking for people who have money. If I go out and I'm in a car accident and someone looks me up and it's my fault, or I have a renter in one of my properties and they get dramatically hurt, sure you can have insurance, but insurance doesn't cover [00:12:00] fraud.

I mean, there's all types of things litigators use to try to get around insurance, and there's a cap for insurance, and so, making yourself less attractive to plaintiff's attorneys when the litigator is going into their office and they're saying this happened, and unfortunately, there are lots of people who don't have valid claims, and they go in and plaintiff's attorneys, if the target is an easy target, and you're going to have easy wealth, tons of equity in your home that's visible,

businesses that have cash flow, they're going to file the lawsuit. And when they file the lawsuit, you have to defend yourself. That's actually one of the most frustrating things, a part of what I do, is you have to defend yourself. You're going to go through the discovery process.

Even if it's just a money grab, you're going to receive tons of discovery, written discovery. You're probably going to be deposed. I don't know if you guys have ever been deposed, but it's not fun at all [00:13:00] and your personal information is out there in the public record. You can go to court websites and do searches for people and pull down the pleadings with all of the allegations and information.

That's horrifying! So, the whole point of asset protection is to try to prevent that from happening before that even starts to defer that circumstance through estate planning.

Mike Pine: I don't know how easy we can make this a short example, but can you give us maybe, in a perfect world, two examples where someone, a client you've had or a client you've seen, if they would have met with you or someone else a year prior to them coming in and needing you and how things went so south for them, versus someone who had something similar happen to them, but thankfully, had consulted with someone before it was too late.

Could you give us a couple of examples like that?

Elizabeth Tresp: A hundred percent. So, unfortunately, there was a circumstance where there was an apartment building, [00:14:00] and the owner of the apartment building was not the one managing it. So, there was a property manager. That happens, right? If you own multiple buildings, you're not there on site, you're not checking the light bulbs and the electric yourself.

So, the property manager hired an electrician to come and do some work on the building, and the electrician was not licensed, and the property manager did not check that, and a young person was electrocuted by a metal fence that was attached to the building, because of the electric, and passed away, died.

So, the owner was sued, obviously, and there are all types of legal liability that happen, agency and type things, but ultimately, the owner of the building is responsible in those types of circumstances, and the amount of liability that they faced personally and through their business was [00:15:00] shocking. And so, that was an unfortunate circumstance that then you need to rebuild after that.

We've had situations where people have gotten their planning done prior to a lawsuit because some people come to us and think- Oh I've just got a lawsuit, I need asset protection- it doesn't work that way. There's a huge thing called fraudulent conveyance, and you cannot mess with that.

That will get you in severe trouble. If you come and you already have a lawsuit, there are certain things that we can do, but obviously that's not the ideal time. There was a circumstance where we had put together, not even extensive planning, there was a lot of business planning going on, but as far as the asset protection, it was one of our more basic structures,

and the statute of limitations for fraudulent conveyance had already passed- great, depending on the jurisdiction, two years, three years, it just depends, and [00:16:00] they were protected. The lawsuit was still filed, unfortunately, because of some equity that they had in their home.

They hadn't done some of the planning that we generally do with people, and the case settled, and it settled for not a lot. So, that was definitely a situation where they were very glad that they had the planning. There are people that have properties internationally- more and more of our clients are buying properties in Costa Rica or Belize, all these different types of things,

and so, sometimes you'll also have cross border issues, but those get really interesting. But I definitely think that we've had people that have come to us, unfortunately, when it's been too late. You also have IP IP litigation that people are dealing with now, so often.

So, when you're doing these types of asset protection structures you need to consider that type of planning too.

Mike Pine: So, if someone earlier on in their career or life says, I just don't have the money [00:17:00] to deal with asset protection or estate planning right now, would it be too mean or very accurate to say- You don't have the money not to plan with it and pay for

Elizabeth Tresp: Now,

That's absolutely right. You have the money, you just don't want to spend the money, and that is a big point. I get it. I 100% get it. But I would hate to see you in my office when you've got a lawsuit against you for $5 million because there was a crack in the pickleball court at your RV park and someone fell and they were a dancer and now they can't dance anymore.

Kevin Schneider: I'm just curious, because one of our common questions we get as CPAs, the first thing off the bat when I'm talking with somebody is how much is this going to cost? Because with you and me both, we're in the professional service industry. I'm guessing somewhat y'all bill by the hour. So, my answer always to my clients is it depends...[00:18:00]

Elizabeth Tresp: Yeah.

Kevin Schneider: But,

Here are my averages, and I try to lay out the land for them and just try to give them some sort of ballpark to be in of what they can expect. So generally, what would a very basic, like you said, kind of cookie cutter- a husband, wife, two kids, self employed... what would that look like to somebody who maybe, you have multiple business, offshore real estate, very more high net worth complex,

what did those two ranges look like from your end to get a really good plan in place?

Elizabeth Tresp: So, we actually generally do flat fee arrangements for our asset protection and our estate planning.

Just depending on the complexity and how involved... because we also do corporate compliance, which is a whole other thing. Hire someone to do your corporate compliance if you're not doing it, and you're probably not- hire someone to do your corporate compliance.

Estate plans generally range for just basic mom and pop estate plans around $5,000. Once you're starting to get into asset protection, depending on the complexity, what type of funding of the trusts and the [00:19:00] underlying companies, and how many companies, asset protection can vary.

With us, you're going to probably be dealing with $12,000 to $60,000. Sometimes, I've had quotes come into my office from other asset protection attorneys that are upwards of $300,000. It really just depends on who you're working with. We definitely don't want to over structure you so that then it's prohibitive- you're not going to keep it up. Keeping up the way that you have your structures, making sure that you're not commingling, and that you're keeping everything the way that it needs to be is critical, and we see people, a lot of people that don't have that understanding.

And then also, you really should be working with someone that will help you maintain your structures, not just do the drafting and then you're on your own, and I don't want you to accidentally negate the entire point of your structures.

Kevin Schneider: Yeah, we encounter that so many in our [00:20:00] field too. We can lay out the perfect tax plan, give you out the perfect tax law- here's why you do it, here's how you keep yourself safe doing this tax plan. And if they don't follow it, then they're in danger, it's bad for them.

Mike Pine: Yeah, let me just add on.

I think what Elizabeth was discussing some of the problems where people do get these nice asset protection / estate plans, we have a good friend of mine. He spent $25,000 with this attorney here in D/FW and they just had these boilerplate asset protection estate plans.

They didn't get into any of the nitty gritty of the difference in all their clients. It's all the same plan for hundreds and hundreds of clients, and they set up this trust, and a family trust and a survivor trust, but the basic tenets of this guy, is doing a lot of business development, has a lot of different. syndicated investments out there,

and when you read the plan, the estate plan and asset protection plan, he was supposed to have all of his one type of investments go through one trust. That trust [00:21:00] was supposed to be the owner of it, and he set up and made all these investments in the name of that, and then as he started getting distributions from all these investments, he just received them and cashed them directly in his personal account.

Been doing it for years, and I asked him, 'Why aren't you following these plans?'-- He's like, 'Man, it's just too much of a hassle.'-- And I said, 'Why'd you pay the $25,000 for this asset protection plan?'-- He's like, ' They told me it would protect me.'-- And in such a case, if you litigate, Elizabeth, if you were litigating and trying to get a judgment against someone who has done that, would you have a problem arguing commingling and getting the structure just thrown out because it wasn't used?

Elizabeth Tresp: The whole point would be to get it pierced. And so, if there's a string and tracing so that I can see that it even exists, which one would be unfortunate, and that it's being used, personally, in a way that he owns it, yeah, that's definitely what I would do.

I'm sure that's what what any other plaintiff's [00:22:00] attorney would do too.

Mike Pine: Yeah, so on that note, I also know this guy is an incredibly busy entrepreneur, and there was supposed to be an hour exit-consult once the plan was set up, to explain this is how you do stuff. I asked him if he went to it. He said, 'No, I was too busy. All the structure's in place, I'm fine!' --So even if you pay $25,000 or $300,000, if you don't understand or have someone working with you that can help direct all of your activities going forward so that you're implementing and executing this plan, it doesn't help. You can hire the best attorneys, but if you're not working with your attorneys, if you're not listening to them, same thing- if you're not listening to your CPAs, it doesn't do you any good.

It takes a partnership. You've got to have a client that's doing their job for you to be able to do your job well.

Kevin Schneider: And what's weird is in our own accounting firm here, we had an employee who was an employee at another firm prior to coming here. This is how crazy this is. So, his old client [00:23:00] who he probably hasn't spoken to in over a year or two years or something like that, their business partnership basically went at ends, that client, old client.

So, they started suing each other. They just blew up the network and they're just reaching for straws, grabbing and everything. They basically found our employee, traced him to here, and then, we got served..

Mike Pine: got

subpoenaed from some company I'd never heard of, and the subpoena guys that deliver them are really funny. This guy was stalking in the parking lot in our office, and we're like, 'What is this guy doing? Call the Cops..

Elizabeth Tresp: Sometimes you have to chase people.

Mike Pine: Yeah, he didn't chase me. I went and confronted him, and I was like, 'What? You're giving me a what? That's subpoena, and I never heard of this.'-- And then it took us going back and forth and I had to hire my attorney to go after this attorney to say, 'We don't even know these people.'-- And after hours with my attorney and writing responses, it came back, and then they write back and say, 'Actually, it's about one of your employees.'

--And I'm like, 'He just started here six months ago.'-- They're like, 'You're going to have to produce this stuff related to him.'-- [00:24:00] I'm like, 'We don't have that.'-- It's still ongoing right now. It's ridiculous, and my employee didn't do anything. He was just an employee on a 40 person team that worked with these clients, but they're not getting anywhere with the old CPA firm...

so, people pull you into lawsuits when you have nothing to do with it, and

it added stress to us, and our poor employee is this awesome guy. He's freaking out, and he didn't do anything.

Elizabeth Tresp: I hear that a lot and I understand it. I think that's very helpful for people to understand that there are attorneys out there like us, who do that type of planning as well as asset protection. Really, it's all in the same family when you're doing planning, you can plan for your personal life and you can plan for your businesses and your wealth,

and I think that finding a good fit, a good relationship with a firm and an attorney that can walk you through those very personal circumstances is really critical. We talked about stress levels before and this is a situation where it can be very [00:25:00] stressful, or not, and I would choose the not.

I would choose the open conversations and retaining an attorney that you feel comfortable with, and that can really help you in these circumstances.

Mike Pine: Ahead of time when you don't need them. Kevin and I see this with prospective clients, and clients all the time, that It's so funny to be on the other side of things, but we call them penny wise and pound foolish. They go to use Turbo Tax or they go to H&R Block for tax returns that don't seem very complicated,

but then, we look at them and we realize for the last 10 years you've been over paying your taxes by $20,000 a year, and you did that to save a $2,000 tax preparation bill. Honestly, I did not hire this attorney because I didn't want to spend a few thousand dollars it might have cost at the time, or ten thousand.

We're spending a lot more than that now, and we are. We're spending out of pocket when it could have been covered by Medicaid, and we didn't even realize that, but we didn't file the right applications. We didn't know that. We were very penny wise and pound foolish, but I will not [00:26:00] make that mistake again with attorneys.

Elizabeth Tresp: Good. We hear that too all the time when it comes to asset protection. If a structure is going to cost you $35,000, but you're protecting $2 million, how does that not make sense? That's just smart planning.

Mike Pine: It is, but I don't want to spend $35,000 right now...

Elizabeth Tresp: I know, but you don't want to lose it tomorrow.

Kevin Schneider: You're like a kid. You're like- But I don't want to!

Elizabeth Tresp: Yeah.

it's not fun. I could go buy a car or a jet ski.Yeah, I get it. Until it's too late and it's gone. Then you'll spend it.

Kevin Schneider: That's right. That's right.

Mike Pine: Ouch, Elizabeth!

Kevin Schneider: Well, it's great chatting with you. I think this topic, for me, I like to nerd out on this.

This is so interesting, and this is such a common area that as CPAs, we get asked these questions, and at that point we have to raise a hand because I am not an attorney. Mike is not an attorney.

We know enough by talking to smart people like Elizabeth, where we know enough to be dangerous, but at the end of the day, to seek proper legal advice, you're going to have to reach out to a qualified [00:27:00] attorney, and Elizabeth, if someone wanted to reach out to you, what's the best way for them to contact you and your firm?

Elizabeth Tresp: So through our website, it has all of our information. So, Tresp, Day & Associates (https://www.trespday.com) and you can reach us through contact forms, you can call us, you can email us. My email is elizabeth@trespday.com and we'd be happy to help. I feel very passionately about this area of law, and we'd be honored to help you through it.

Kevin Schneider: Can't Can't guarantee the best coffee at your law firm, huh? If someone's local and they come in, they're not going to get that Fossil Fuel?

Elizabeth Tresp: I tell you, our Fossil Fuel Coffee is really good.

Kevin Schneider: Yeah, I want to try that. I wanted to visit that town...

Elizabeth Tresp: You should! Come visit us. You, at least, should go to the music festival. It's every year near the end of July. It's fantastic.

Kevin Schneider: Thank you so much for being here.

Mike Pine: Thank you, Elizabeth. Grateful

Elizabeth Tresp: Yeah, thank you so much

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