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Inheritance in a Blended Family: Senator Feinstein vs. the Blum Girls

For 50% of today’s wedding couples, it’s not their first trip to the altar. Moreover, 65% of those remarriages involve children from a prior marriage. Even in the best of blended families, it sets the stage for potential conflicts. As an estate planning attorney, my advice is to get in front of it. Plan ahead and be specific, reducing the risk of later friction among family members.

One such high profile battle involves Senator Dianne Feinstein. A recent New York Times article describes it as a “bitter legal and financial conflict that pits her and her daughter, Katherine Feinstein, against the three daughters of her late [third] husband Richard Blum” (no relation to me). Though Feinstein and Blum were both rich in their own right, that still doesn’t prevent fights over money. Feinstein’s daughter has filed two lawsuits on her mother’s behalf against trustees of trusts established by Blum: (1) to force the sale of a beach house, being used by Blum’s daughters at Feinstein’s expense; and (2) to compel distributions from Blum’s life insurance proceeds to pay Feinstein’s significant medical expenses. Blum’s trustees dispute the lawsuits as “a stepdaughter engaging in some kind of misguided attempt to gain control over trust assets to which she is not entitled.” They attribute this feud to a “long-standing animosity” between Feinstein’s daughter and the daughter’s three stepsisters.

At issue is how to interpret language in a marital trust established by Blum for his wife of 40 years. At Feinstein’s death, the assets will pass to Blum’s three daughters. That creates a natural tension, as anything spent now will reduce what the Blum daughters inherit later. As Dustin Gardiner discusses in a recent Politico article, questions arise: Does Feinstein need to spend her own money before she can access money in the trust? Does Feinstein’s “medical care” include paying for a security guard and a caretaker? When the trust is silent on questions like these, the trustees are left trying to determine what Blum intended. The more explicit the trust language is, the better. Don’t make the trustees have to guess which sets the stage for an ugly blended family feud like this one.

Unfortunately, such family feuds in today’s modern family are not uncommon. The perils of inheritance are especially acute in a blended family. In addition to friction involving stepchildren and stepsiblings, the spouses themselves are at higher risk. Consider this sobering statistic: 60% of remarriages end in divorce. As an estate planner, I urge couples about to marry again to cover as many hard questions as possible in a prenup, and to be explicit in drafting trust provisions.

Many of the solutions involve life insurance. In a recent speech I gave on Life Insurance Planning Opportunities, I included a section called “Blended Families Require Extra Considerations” addressing five scenarios:

  1. Don’t Pit Stepchild Versus Stepparent
  2. My Spouse Would Never Cut Out My Kids (Right)?
  3. Equal or Equitable Between Sets of Children?
  4. Use of Life Insurance and Prenup Planning
  5. Quandary Over IRA Beneficiary

Click here to review that PowerPoint.

The Blum Firm is committed to helping families thrive from generation to generation. Our family legacy planning initiative is especially critical in helping non-nuclear families navigate the challenges. We would be honored to help your family protect its most precious assets—not just your financial capital but also your human capital.

Marvin E. Blum

Senator Dianne Feinstein’s public battle with her third husband’s daughters highlights the perils of inheritance in a blended family.

Congratulations to our 2023 Super Lawyers

Super Lawyers has named 6 Blum Firm attorneys to the Texas Super Lawyers list!
 
Super Lawyers recognizes the top attorneys nationwide. Their selection process involves the creation of a candidate pool, evaluation of the candidates by the Super Lawyers’ research department, and peer evaluation by practice area. Each candidate is evaluated on 12 indicators of peer recognition and professional achievement. Super Lawyer is a distinction earned by only 5% of the lawyers in Texas.  
 
Marvin E. Blum, Estate Planning & Probate Law
R. Dyann McCully, Estate Planning & Probate Law
Len Woodard, Business & Corporate Law
John R. Hunter, Estate Planning & Probate Law
David C. Bakutis, Estate & Trust Litigation 
Jennifer P. Sibley, Estate Planning & Probate Law
 
Congratulations to these talented attorneys!

Out of the Mouths of Babes: Lessons from My Granddaughter Stella

Stella Savetsky is the first born of our five grandkids. Each is equally precious, but for several reasons our 10-year-old granddaughter Stella is truly a special soul. Laurie and I are grateful for having recently spent lots of quality time over the summer with Stella, during which time she taught us many important life lessons.

Let me roll the clock back to the significance of Stella’s birth. In the family tree that starts with my mother’s parents, Meyer and Pauline Oberstein, I fall in generation three (G-3), along with 17 others. Our daughter Lizzy is one of 62 descendants in G-4, a number that will surely grow much larger as the 12 G-3 kids of my uncle Rabbi Leonard Oberstein continue to have a lot more babies. G-5 will one day likely be filled with hundreds of cousins, but the fact will always remain that the very first member of G-5 was Stella.

To appreciate the significance of a G-5 with hundreds of Jewish cousins, you have to realize that it’s a miracle there’s a G-1 with Meyer and Pauline at all. They both barely escaped Hitler when they came to America in some of the final waves of Jewish immigration before World War II. Hitler’s plan was to wipe out the world’s Jews, and indeed he killed one-third of us, including some of our relatives who weren’t as fortunate as my grandparents. In the words of my son-in-law’s “Unkie” (a Holocaust survivor) upon seeing Stella, her birth proves that “We beat Hitler.”

Last week in New York, I attended a profound Sabbath class by Rabbi Shlomo Farhi of the Safra Synagogue. Amplifying the significance of Stella’s birth, Rabbi Farhi taught that, while marching to their death, Jewish Holocaust victims sang in Yiddish: “mir veln zey iberlebn,” which translates to “we will outlive them.” Nazis stole those marchers’ lives but not their spirit. Five generations later, Stella is living proof that indeed “we DID outlive them.”

As the leader of her generation, Stella bears a heavy responsibility. I’m proud to say she’s setting quite an example. Each week on Instagram she posts “Stella’s Torah Corner.” In that short video, Stella teaches that week’s Torah portion, in her own creative way with her own dramatic flair. She reaches thousands each week who would otherwise miss out on important Torah teachings. If you haven’t seen it, check out Lizzy Savetsky on Instagram and learn along with me from “Stella’s Torah Corner” every Friday. I had to substitute teach for her once, and let me tell you, it’s a lot harder than it looks!

Stella makes it a point to open her heart to everyone she meets. She once told me that at school she pays special attention to those who are alone, seeking out the kid who has no one with whom to talk. She is a very loving and devoted friend.

On the final day of her last visit to Fort Worth, she said to us “Let’s make it count.” I asked what she wanted to do, expecting some kid entertainment activity. Her answer: “I want to go see Bobbie,” the name we call my mother Elsie, her 92-year-old great grandmother. Visiting her great grandmother was Stella’s idea of making the day count.

Stella is growing up way too fast for us. She recently reminded us that her childhood is mostly in the rearview mirror when she no longer needed her lovey “Ray Ray,” from whom she used to be inseparable. Her words “I don’t need Ray Ray anymore” still sting in my heart and bring tears to my eyes.

In Jewish tradition, a girl takes on adult Jewish responsibilities at age 12 at her Bat Mitzvah. Boys do the same at age 13 at a Bar Mitzvah. Stella’s Bat Mitzvah is only about a year away. The date is already set—November 10, 2024. No doubt her Bat Mitzvah year will be filled with meaningful moments and lessons. Stay tuned. I’ll keep you posted.

Yes, Stella is growing up fast, but what a caring and beautiful young lady she’s becoming. Laurie and I are a very proud and grateful Mimi and Zaidy. We look forward to continuing to learn from Stella’s gigantic heart as we watch her future unfold. Little ones can teach us very big life lessons.

Marvin E. Blum

Marvin and Laurie Blum’s granddaughter Stella teaches important life lessons through her words and actions, such as her weekly “Stella’s Torah Corner.” This episode received 56,500 views.

Attorneys Blum, Bakutis, Morris, and Light Recognized by ‘Best Lawyers in America’

We are proud to announce that four of our attorneys have been selected by their peers for inclusion in the 30th edition of The Best Lawyers in America®– Marvin E. Blum, David C. Bakutis, R. Keith Morris III, and Austin B. Light.
 
The Best Lawyers in America is one of the legal profession’s oldest and most respected peer-review publications.
 
Marvin E. Blum founded The Blum Firm over 40 years ago and has broad industry experience in estate and tax planning, asset protection, business planning, business succession planning, charitable planning, and family legacy planning. This is Marvin’s ninth year being selected for inclusion in The Best Lawyers in America for his work in Trusts and Estates Law.
 
David C. Bakutis is widely recognized as a leading fiduciary litigator in the Dallas/Fort Worth metroplex. David has consistently been recognized as among the Best Lawyers every year since 2006 in Trusts and Estates Law.
 
R. Keith Morris, III is a leading probate and guardianship litigation attorney, practicing across Texas including the Houston and Dallas/Fort Worth areas. This is Keith’s third year being recognized for his work in Trusts and Estates Litigation.
 
Austin B. Light was selected for the second year in a row for inclusion in Best Lawyers: Ones to Watch® in America in the areas of Corporate Governance and Compliance Law and Mergers and Acquisitions Law. Austin is experienced in advising clients on a variety of compensation-related plans as well as compensation and employee-related aspects of public and private transactions, including mergers, equity and asset acquisitions, restructurings, and private equity transactions, in addition to estate and tax planning.
 
Best Lawyers lists are compiled based on an exhaustive peer-review evaluation. Lawyers are neither required nor permitted to pay a fee to be listed. Best Lawyers: Ones to Watch in America recognizes lawyers who are earlier in their careers (in private practice less than 10 years) for their outstanding professional excellence.
 
Please join us in congratulating Marvin, David, Keith, and Austin!

Family Travel Opportunity? Say Yes!

Laurie and I were invited to a cousin’s wedding in Baltimore and debated whether to go. You know the narrative: we’re so busy; we’ve been doing so much traveling lately. It’s easy to talk yourself into saying no. Then a friend said, “You’d go if this were a funeral. The groom is the grandson of your uncle Rabbi Leonard Oberstein, your mother Elsie’s brother. Go and visit with your family. This is a no-brainer.” The practical voice in my head succumbed to the passionate voice in my heart. We went to the wedding, and I’m so glad we did.

The rewards of going began immediately upon entering the synagogue. Arriving early, I grabbed a visit with Uncle Leonard, an Orthodox Rabbi with 12 kids. I asked: “How many grandkids do you have now?” His answer: “I think it’s 52.” His wife Feigi confirmed the number, but no doubt that number will continue to grow as his kids keep having more kids. Great grandkids were also actively arriving. Every person in this growing multitude is my cousin.

As my dozens of cousins began arriving, I began catching up with them. There were so many meaningful updates, but I’ll share one that really grabs my heart. A first cousin, Eliezer, one of the world’s leading oncologists who is researching early detection of pancreatic cancer at NYU, has an eight-year-old daughter battling cancer in her neck. The family has been consumed with prayer and efforts to save her. Talking with another first cousin, Chaya, the mother of the groom, we learned of her own efforts to pray for her niece’s recovery. Only weeks before her son’s wedding, Chaya donated a kidney to a stranger, praying that G-d would hear her prayers and heal her niece. Soon thereafter, the family received word that the cancer is in remission. Here’s to medical wonders and the power of prayer!

There were so many more stories, including my visit with another first cousin now seven years sober after battling addiction. Every Saturday night he hosts a gathering in his home of men struggling with all forms of addiction, so they can provide each other with some group support.

The wedding was off-the-charts festive. This branch of my family is very religiously observant, preserving the traditions of my grandparents from Eastern Europe. Men and women were seated separately at both the ceremony and the dinner, followed by energetic circle dancing (men dancing with men and, on the other side of a high curtain, women dancing with women).

Upon leaving, my uncle invited us to his home the next morning for bagels and schmears, “immediate family only.” Laurie and I arrived to dozens and dozens of bagels and dozens and dozens of cousins. We spent three hours gathered around the kitchen table with revolving waves of bagel-eating relatives. I huddled with my uncle and learned family heritage stories I’d never heard before.

I knew that all my grandparents came to America before World War II, barely escaping Hitler. What I didn’t know is that Leonard found my grandmother Pauline’s passport and the story it revealed. Pauline’s passport claimed she was a citizen of Poland, even showing her name is Pola to sound more Polish. But Pauline lived in Ukraine; she never lived in Poland. When Ukraine wouldn’t allow them to leave, the family smuggled across the border into Poland and paid bribes to get Polish passports so they could come to America. Moreover, they got in under the wire as one of the last waves of immigration before the borders closed. It’s a miracle my family and I are alive. This heritage of miracles brings me so much perspective and gratitude.

I’ve previously written that author Mitzi Perdue says the number one most important contributor to family connection (and even successful business succession) is family travel. I’m a believer. With my loud internal practical voice, I almost missed out. Yet by going, I came away enriched by strengthened family ties and an expanded awareness of my heritage.

So now my daughter Lizzy is asking Laurie and me to join her family later this month on a trip to Israel to celebrate her son Ollie’s third birthday and first haircut (“upsherin”). The answer is an enthusiastic “yes!” Stay tuned. I’m sure I’ll have some lessons to share.

Marvin E. Blum

Left: Marvin and Laurie Blum with Rabbi Leonard Oberstein (Marvin’s uncle) at the wedding of one of Rabbi Leonard’s grandsons. Right: Rabbi Leonard and Feigi Oberstein with some of their 12 kids, 52 grandkids, and 6 great-grandkids (so far).

Estate Sale Leftovers Become Another Person’s Treasures

Last week’s post, “Don’t Sweat the Small Stuff,” addressed the challenges of dividing personal effects among the heirs and concluded that in a Will, there’s no “small stuff.” Even mixing bowls and fishing poles can become precious family heirlooms. However, after all the precious items have been claimed by one heir or another, what becomes of the leftovers? Solution: An estate sale.

Don’t jump to the conclusion that estate sales are a bunch of junk. Indeed, stories abound how one man’s “junk” becomes another man’s “treasure.” Such are the revelations from Janelle Stone in “The Opulent World of the Estate-Sale Queen of Dallas” (Rachel Monroe, The New Yorker, Nov. 4, 2022). For Janelle Stone’s estate sales, people have been known to camp out for four days to be first in line. “Her sales typically last two days, during which she might sell more than a million dollars’ worth of antiques, vintage couture, and tchotchkes.”

Stone admonishes that there are no more “garage sales.” She describes her work as “treasure hunting.” In her second sale, she actually found a long-lost diamond in a sock. Stone even discovered an 18-karat pocket watch in the back of a drawer and $10,000 tucked between the pages of a book. “The most scandalous things that she has found are, alas off the record.” (That has my imagination in overdrive.)

Boston art dealer David Kantrowitz describes more “‘Antiques Roadshow’-type moments” where tchotchkes turned out to be treasures: “a $15,000 gold cuff bracelet that a son almost threw away, a $20,000 pair of midcentury armchairs from an attic home office, and a $25,000 silver-plated box on a hall shelf. One of his latest finds: A tchotchke on a kitchen counter in an apartment of a 98-year-old man turned out to be a sculpture appraised at $4,250.” His daughter didn’t even like it, and was happy to sell it and buy a pair of earrings, “something meaningful to her to remember her dad by. ‘They’ll be from him,’ she said.” Kantrowitz also found a diamond wedding ring and band in a hazardous-waste bag in the back of a closet. (Ashlea Ebeling, “Pass On Your Heirlooms, Not Family Drama,” Wall Street Journal, July 30, 2023).

I have my own estate sale stories. When I served as an executor of an estate, my law firm had a similar treasure hunt as we prepared for the estate sale. There was a massive book collection requiring us to turn through each page, as we regularly discovered money hidden between the pages. We even found a folded piece of paper that looked like a kid’s “fold, cut here, and paste” project from school. It turns out that “art project” was the real deal, a piece of “art” valued at $400,000!

A word of advice: Prepare a “Red File” revealing information your executor needs to know, such as valuable art objects and where you hide your buried treasure.

Proceeds from the estate sale pass to heirs under the residency clause of the Will. As for the final items that no one buys, donate the leftovers to charity. No doubt, someone will later discover yet more treasures at the local Goodwill or Salvation Army store.

Marvin E. Blum

Marvin Blum’s wife Laurie displays some estate sale treasures (antique chest, cloisonne horses, and china) acquired over the years by the Blum family.

Don’t Sweat the Small Stuff? There’s No “Small Stuff” in a Will

Grandma’s mixing bowl. Grandpa’s fishing pole. We’ve all been told: “Don’t sweat the small stuff.” Isn’t this just “small stuff?” Wrong! According to Kansas attorney Tim O’Sullivan, when someone dies, the disposition of personal effects is the “second greatest risk to family harmony,” second only to choosing the right fiduciary. (“Why Family Harmony is a Frequent Casualty of Most Estate Plans,” The Journal of the Kansas Bar Association, Feb. 2020). Stories abound of heirs fighting mercilessly over how to divide nostalgic possessions like bowls and poles.

O’Sullivan’s article offers a treasure trove of advice about handling a decedent’s personal treasures. Here’s a “baker’s dozen” of the best tips:

  1. Create a “Personal Effects List” with detailed instructions. My mother-in-law had quite a collection of family heirlooms with sentimental value. We’re grateful she left a detailed list to allocate them among Laurie and her three sisters. Unfortunately, in spite of good intentions, most never get around to preparing such a list. When you do make the list, be sure to update it periodically.
  2. Send a copy of the list to your estate planning attorney and keep the original in a sealed envelope with your other original documents. Otherwise, such lists “sometimes have a habit of coincidentally ‘disappearing.’“ If more assurance is desired, the list can be formalized as a Codicil to a Will or as an Addendum to a Living Trust.
  3. Even better than a list (or in addition to it), consider making a video of such items for identification purposes and tell the provenance and family heritage of such items in the audio portion of the video.
  4. The executor should change the locks on the residence soon after death. If not, “a child may ‘jump the gun’ and employ ‘self-help’ by surreptitiously taking items from the parent’s residence.” O’Sullivan’s partner calls this the “pickup doctrine,” referring to the pickup truck that is commonly used in this “pick up” process.
  5. Avoid an overly broad definition of tangible personal items that pass outright to your loved ones, limiting the definition to items of personal usage or those with sentimental value. “Big ticket” items, especially those with little emotional attachment (such as “cars, airplanes, and boats, as well as valuable paintings, artworks and collections”), are usually best distributed under the residuary clause.
  6. Ask each child for a list of items they want, in order of preference, with the understanding that honoring such requests is not assured. Parents can take such preferences into account in preparing their Personal Effects List.
  7. Create a distribution procedure for items not on the list. First, give the children 90 days to reach a division by agreement among themselves. Failing such agreement, or for the leftovers, consider one of the following procedures.
  8. For undistributed items, one option is the “random sequential lottery method, with the sequence being reversed in each subsequent round having the same participants.” One by one, each participant selects one item. Make sure a minor child is represented by a trustee or guardian. If the parent desires financial equality, have an estate salesperson put a value on all such items, and any overall differential among the children in the value each received can be adjusted out of the children’s shares of the residuary estate.
  9. Another option is distribution by auction, either public or (more likely) private. Consider giving each child an equal amount of “virtual money” to use in bidding on items. Bidding can either be an open process or done by sealed bids.
  10. Appoint an independent fiduciary to make the division. Although “probably the most protective of family harmony, …independent financial fiduciaries would not be expected to welcome being burdened with this degree of discretion.” I describe this method as appointing a “King Solomon” to divide the personal effect “babies.”
  11. Second marriages create especially delicate situations for children and a stepparent dividing the personal assets. If dad leaves his estate to his kids, the surviving stepmom may have a homestead right to reside in an empty house if the furniture in it went to his kids.
  12. Clarify in the Will if the estate is expected to bear the cost of packing and shipping such items to the child. If silent, the child should be required to pick up the items within, say, 45 days or else either (i) the child would bear the cost of packing and shipping or (ii) the fiduciary can sell the items and distribute the proceeds to the child.
  13. Authorize the executor to electronically duplicate family pictures, videos, letters, and personal records and disseminate among all heirs who want them, with costs borne by the estate.

There are no perfect solutions, but following O’Sullivan’s tips improves the odds of avoiding sibling warfare over that mixing bowl or fishing pole.

Marvin E. Blum

Marvin Blum’s wife Laurie with her grandmother’s silver tea service. Laurie’s mother left explicit instructions for the disposition of her personal effects among her four daughters. Let’s follow her example.

Take a Walk – Alone, No Phone

On a recent Austin weekend to babysit our grandkids Lucy and Grey, I took a walk along Lady Bird Lake while they were napping. Remarkably, a simple thing like an afternoon walk, alone with no phone, opened my mind to powerful revelations. I highly recommend it.

Our lives are busy and hectic. We rarely take a moment to be in the moment, to just “be” and not “do.” My afternoon stroll calmed my ever-racing mind.

During the pandemic, I heard a virtual presentation “Mind in Motion” by psychologist, Leigh Weinraub that resonated with me. She said, “The mind is a hurricane, always racing forward and backward.” It requires intention to stop the racing and be in the moment. Being present in the “now” is comforting. We are free from worrying about the future “might be’s” and free from regret over past “might have been’s.” On my walk, I found that peace of being totally in the present. My mind slowed down.

Author Ryan Holiday echoes this theme in his book, Stillness Is The Key. Coincidentally, he recommends taking a walk, without a phone and without music, to find the stillness. Per Holiday, epiphanies only come when you are quiet. The most meaningful thoughts come to us when we’re in silence. Songwriters Hank Williams and Vince Gill both expressed how their creative juices ignited in stillness; they could just sit down and let the pen flow.

Holiday also advocates how a deep appreciation for nature’s beauty nourishes us: “Drink it in, and achieve stillness for the soul.” Walking along Lady Bird Lake, I found that nourishment. I noticed the purple wildflowers and thought of Alice Walker’s line, in The Color Purple: “I think it pisses G-d off if you walk by the color purple in a field somewhere and don’t notice it.” I noticed.

What else did I notice? I noticed the calm that came over me, accompanied by abundant gratitude. Looking at the Austin skyline, I reflected on all the good in my life associated with that city. Austin is where:

  • I met my wife Laurie, the love of my life.
  • I forged a lifelong best friendship with Talmage Boston.
  • I connected with wonderful friends who still are a part of my daily life.
  • I received a superior education in law and accounting.
  • With that education, I embarked on a dream career as an estate planning attorney.
  • My son Adam and his family live a beautiful life in Austin.
  • Laurie and I have the privilege of enjoying two precious grandchildren here – Lucy (4) and Grey (2).
  • The Blum Firm opened an office in Austin that is vibrant and thriving, thanks to a stellar team running it and the terrific support of the Austin community.

I am filled with gratitude for the blessings that came to my mind in the stillness of my walk. One final expression of gratitude came to my mind: my thanks to Lady Bird Johnson for her commitment to beautifying America, in whose memory Town Lake was renamed Lady Bird Lake. Her spirit lives in every wildflower that blooms along that trail. Lady Bird’s legacy is forever a gift to us. May we all search for a way to leave behind a legacy that will be a gift to future generations.

Marvin E. Blum

Left: Marvin and Laurie Blum are grateful for all that Austin offers, especially the privilege of babysitting grandkids, Lucy, Grey (and Basil!). Right: A walk along Lady Bird Lake provides Marvin with the stillness to soak up all the blessings that Austin represents to him.

Rock Star Fiascos: Lessons from Elvis Presley, Prince, & Michael Jackson

Celebrities captivate us. Some are good role models who live exemplary lives and inspire us to emulate them. But unfortunately, big fame often leads to self-destructive behavior. The self-destruction of rock stars is nothing new. In fact, it was the subject of my daughter Lizzy’s thesis at New York University titled “Archetypes and Antecedents of the Rock Star.” Lizzy studied cases of famous lives who imploded over the centuries, and she drew parallels about fame contributing to their downfalls. The estate planning world is replete with rock stars whose messy lives carried on after their deaths, leaving behind messy estates. Let’s turn their sad stories into teachable moments.

I recently posted about the Queen of Soul Aretha Franklin’s estate planning disaster. After five years of battling by her four sons, a Michigan court declared Aretha Franklin’s notebook scribbles (found months after her death, buried under couch cushions) to be her Will. In leaving behind a mega-sized mess, Franklin is in the company of many of her entertainment colleagues. Let’s learn lessons from the estate fiascos of three other rock stars: Elvis Presley, Prince, and Michael Jackson.

I’ll begin with “The King,” Elvis Presley, truly a gift that keeps on giving us estate planning lessons. At his death in 1977, Elvis left an estate of roughly $5 million. “His spending had drained his earnings, which had long been limited by his business arrangement with this longtime manager Col. Tom Parker.” In desperation, Elvis had even sold future royalty rights from his recordings to RCA for $5.4 million, half of which went to Colonel Parker. Elvis’s estate went into a trust for daughter Lisa Marie, with her mother Priscilla Presley as a trustee. Lisa Marie began what “her lawyers have called her ‘11-year odyssey to financial ruin.’” Co-trustee Barry Siegel explains that “‘Lisa’s continuous, excessive spending and reliance on credit’ drove it into significant debt.” Consequently, the family today owns only 15% of Elvis Presley Enterprises, which operates Graceland (Elvis’s Memphis home).

Lisa Marie died on January 12, 2023, at age 54, estranged from her mother. Following her daughter’s death, Priscilla discovered that in a 2016 document Lisa Marie removed Priscilla (as well as Siegel) as co-trustees, replacing them with Lisa Marie’s daughter Riley Keough (age 33), son Benjamin Keough (who died by suicide in 2020 at age 27), and twin girls Finley and Harper Lockwood (age 14). Priscilla filed a petition challenging the 2016 amendment, as she failed to receive notice while Lisa Marie was alive (as required by the trust), her name is misspelled, it was neither witnessed nor notarized, and she questions the authenticity of Lisa Marie’s signature. Just recently, Priscilla and her granddaughter Riley have reached a settlement whereby Riley will serve as sole trustee and Priscilla will be a “special adviser” to the trust for an undisclosed annual amount. Although the Elvis brand takes in more than $100 million a year, the Presley family receives only 15%. It’s a shame that Elvis’s music legacy continues to be marred by financial disasters, even decades after his death. Lesson: it’s critical to select the right trustee. Imagine if Elvis had named a professional trustee with the skills to manage this situation prudently.

Let’s turn now to another “King,” the “King of Pop.” Michael Jackson’s popularity has soared since his death in 2009 from a fatal overdose of propofol and lorazepam. Based on his rising post-mortem fame, the IRS challenged his estate’s claim that at the time of his death, Jackson’s name and likeness was worth only $2,105. The IRS asserted the publicity rights associated with Jackson’s image were worth $434 million. On this issue, the Tax Court largely sided with the estate, valuing that asset at only $4.15 million. The court held that post-death success was irrelevant, as the value depended on Jackson’s reputation at the time of his death, when he was at a career low. The estate asserted “that his image had been rendered all but worthless by stories about skin bleaching, his obsession with plastic surgery, prescription drug abuse, odd parenting choices—such as covering his children’s faces in black veils or Spider-Man masks in public—and allegations that he molested young boys who visited [his home] Neverland.” Furthermore, he owed $500 million, was on the verge of bankruptcy, hadn’t filed personal income taxes in three years, and more than 60 creditors surfaced claiming he owed them money.

The Michael Jackson IRS tax case hung over the heads of his children until it was finally resolved in 2021, some 12 years after death. In a 271-page opinion, Tax Court Judge Mark Holmes grappled with the issues. “At the peak of his career, Jackson was one of the most famous people on Earth, with some of the most popular records ever released. And since his death, he has been one of the world’s top earning celebrities…. But the tax case turned on the value of Jackson’s public image at the time of his death. His reputation had been badly damaged, and since 1993, Judge Holmes noted, Jackson had no endorsements or merchandise deals unrelated to a musical tour or album.”

Although Jackson’s estate prevailed on the value of his image rights, other famous people should take note. In doing their estate plans, celebrities need to pay attention to Jackson’s “name-and-likeness fight” and recognize that his case “has tax-planning consequences for any actor, musician, politician, or athlete famous enough to earn beyond the grave.” Such is the “toughest issue” in the estate of Prince. “Estate-tax attorneys for Prince…must attempt to put a precise financial value on his name, image, and likeness…. The estate-tax challenge is setting a cumulative value on Prince’s profit potential on the day he died.” Indeed, Prince’s estate went to war with the IRS, as the government asserted that his estate was worth double what the estate’s administrator reported ($163.2 million vs. $82.3 million). They finally settled on a $156 million valuation.

Prince died in 2016 from a fentanyl overdose, setting up not just the IRS war, but also a six-year battle over who would inherit his estate. Why? Because, remarkably, Prince died without a Will. More than 45 people reportedly came forward as potential heirs to the estate, with many claiming to be a wife, child, sibling, half-sibling, or other relative. Suffice it to say it’s been a circus at the courthouse.

In stereotypical fashion, Prince lived a turbulent life. “Like his character in Purple Rain, ‘The Kid,’ Prince clashed with his father.” A young Prince even had to move out of his family home and live with a friend, to get away from his father. “Prince’s relationship with his family was never simple. His parents had children from several marriages, and over the years these eight brothers and sisters fell in and out of favor with their famous family member.” By leaving no Will, it’s highly unlikely Prince’s wealth passed into the hands he intended.

The obvious lesson from Prince’s death is to create a Will. In her Washington Post article “Don’t Do Your People Like Prince Did. Leave a Will,” Michelle Singletary puts it bluntly: “If you don’t have a will, you are being selfish and irresponsible. I know. I’m being harsh. And I mean to be.” She continues: “But get over your misgivings and stop procrastinating. This isn’t just about you…. Prince opens [“Purple Rain”] by saying, ‘I never meant to cause you any sorrow. I never meant to cause you any pain.’ Well, what do you expect will happen when you die not having taken care of your business? Your love song to your family should be your own will.”

Singletary says it so well and persuasively, I won’t even try to improve on her words. Let’s learn from the mistakes of these rock stars and get our estate plans in order.

Marvin E. Blum

Sources:

  • Matt Stevens, As a Film Revives Elvis’s Legacy, the Presleys Fight Over His Estate, N.Y. TIMES, Mar. 9, 2023.
  • Devin Leonard, Michael Jackson Is Worth More Than Ever, and the IRS Wants Its Cut, BLOOMBERG, Feb. 1, 2017.
  • Ben Sisario, Michael Jackson’s Estate Is Winner in Tax Judge’s Ruling, N.Y. TIMES, May 3, 2021.
  • Richard Rubin, What Is Prince’s Legacy Worth? The Tax Man Wants to Know, WALL STREET JOURNAL, Apr. 27, 2016.
  • Keith Harris, Prince’s Heirs Apparent: A Look at the Siblings Who Stand to Inherit His Fortune, BILLBOARD, May 11, 2016.
  • Michelle Singletary, Don’t Do Your People Like Prince Did. Leave a Will, WASHINGTON POST, May 3, 2016.
  • Matt Stevens, Riley Keough to Pay Priscilla Presley to End Family Trust Dispute, N.Y. TIMES, Jun. 13, 2023.
  • Chloe Melas and Alli Rosenbloom, Lisa Marie Presley Leaves Behind a Music Fortune and a Family Dispute, CNN, Feb. 3, 2023.
  • Anousha Sakoui, Priscilla Presley Agrees to Settlement in Dispute Over Lisa Marie Presley Estate, L.A. TIMES, May 16, 2023.
  • Ben Sisario, I.R.S. Says Prince’s Estate Worth Twice What Administrators Reported, N.Y. TIMES, Jan. 4, 2021.
  • Adrian Horton, Prince Family and Advisors Settle Distribution of Singer’s $156M Estate, THE GUARDIAN, Aug. 2, 2022.
  • Daniel Kreps, Prince Estate: Sister, Five Half-Siblings Named Heirs, ROLLING STONE, May 20, 2017.

Elvis Presley, Prince, and Michael Jackson lived messy lives and left behind messy estates. Let’s learn from their fiascos.

Retire? Not me!

Today is my 69th birthday. Growing up, I thought I would have retired by now. Everyone was supposed to retire at 65, right? It seems that almost every day someone asks me when I plan to retire. But as I celebrate this birthday today, I have no intention of retiring, ever!

Of course, I’m realistic. When the day comes that my mind or body gives out, I’ll hang it up. I have empowered my partners John Hunter and Amanda Holliday to make that call if I’m unaware. So far, so good. I’m hoping the gene pool I’ve inherited from my mom allows me to mimic her. Thankfully, my mom, Elsie, is 92 and still 100% sharp and going strong!

Since I know I won’t be here forever, I’m making sure my business has a succession plan in place, unlike Logan Roy of HBO’s “Succession” series that I’ve written about. Speaking of “Succession,” WealthManagmement.com ran a follow-up article I wrote about the succession planning failures in the show where I proposed the Mara family, owners of the New York Giants, as basis for the next succession drama. The family and the football franchise have certainly had plenty of sensational headline-worthy happenings to use as inspiration. To read the article, click here.

The U.S. retirement age was set at 65 in 1935. Of course, lifestyles and longevity in 2023 are a world away from 1935. My best friend, Talmage Boston, makes this point in his article, “Baby Boomers are Delaying Retirement, and it’s Not Just Because of Finances” (Dallas Morning News, Nov. 8, 2020). Talmage’s thesis is that “60 is the new 40.”

Furthermore, those fortunate enough to be engaged in a fulfilling career aren’t inclined to walk away while still healthy. Talmage cites examples: cellist Yo Yo Ma, Saturday Night Live producer Lorne Michaels, investment guru David Rubenstein, infectious disease specialist Dr. Anthony Fauci, media mogul Oprah Winfrey, and Supreme Court Justice Ruth Bader Ginsburg (who worked until her death at age 87).

Per Talmage, “deciding when to retire is an issue still on the table, though clarity about it has recently kicked in, thanks to my law school best friend Marvin Blum. Marvin has been one of the leading estate planning lawyers in the country for decades and has a thriving firm. He continues to love his work and enjoys warm-hearted fellowship with his colleagues at the office. Here’s his explanation for why retirement is not on his radar. ‘Staying present and engaged with my estate planning practice and law firm brings me energy and peace at the same time.’” I’m grateful to be able to keep doing what I love. Thanks, Talmage, for including me in such esteemed company and telling my story so generously.

The Wall Street Journal echoes this theme in “When Will I Retire? How About Never” (by Demetria Gallegos, April 20, 2023). Gallegos tells the stories of 16 people who have no intention of retiring, still finding meaning in their careers. I’ll add one more to the list: Stanley Johanson, my UT Law professor and mentor and the man responsible for my own fulfilling career.

It was 45 years ago that I had a “eureka” moment in Johanson’s class and discovered my destiny as an estate planning lawyer. Johanson, about to start his 61st year as a UT Law professor, is still as sharp and charismatic as ever. Like me, the word “retirement” isn’t in his vocabulary. Professor, thanks for turning me onto estate planning and thanks too for the inspiration to follow in your footsteps and wake up every day energized with a purpose.

Marvin E. Blum

Marvin Blum (front row, left of center) is following the example of his mentor, Professor Stanley Johanson, pictured at the celebration of Johanson’s 50th year on the University of Texas Law faculty. Ten years later, Johanson is still going strong and shows no intention of retiring.

Getting Real—My Daughter’s Sobriety Journey

One week from today is my 69th birthday. But today, August 1, 2023, marks another special family “birthday.” I’m proud to announce that today marks my daughter Lizzy Savetsky’s two-year sobriety birthday, 24 months since her last drop of alcohol. It may shock some for me to express this so openly, but I do so with my daughter’s blessing and encouragement. Lizzy publicly shares her sobriety journey in hopes of reaching and helping someone who also struggles with this disease.

For those who don’t know Lizzy, I urge you to check out her story on Instagram (@lizzysavetsky). Lizzy is an open book. She dedicates her life to speaking out on important causes, especially all things Jewish and all things Israel. She is known internationally as social media’s leading voice to fight antisemitism.

Lizzy even turned her own difficulties with infertility and pregnancy into a movement to destigmatize pregnancy loss. Fueled by her three miscarriages, Lizzy founded Real Love, Real Loss and raised funds to dedicate a Torah to Israel’s front-line soldiers in memory of all the lost souls that mothers carried but never got to meet.

While pursuing her activism, Lizzy became aware that alcohol was not her friend. Lizzy found the inner strength and courage to take up the fight against her demons. In typical Lizzy fashion, she uses her story to spread awareness. Hitting the speaking circuit, Lizzy’s openness is giving hope and saving lives.

In my estate planning work, I am aware that many families are dealing with addiction. I shared previously of a wake-up call I had while attending an annual conference for Family Office Exchange (“FOX”). In the day-long seminar on tax planning, estate planning, investing, and money management, the family office topic that attracted the most interest was addiction. Almost every family attending the conference was dealing with the problem of substance abuse at some level.

I was astounded by the revelation, and it contributed to me shifting my estate planning practice from “head” to “head and heart” planning. Families are hurting. Estate planners have a unique seat at the table to help. The estate planning process is more than a Will. My mission is to expand estate planning into legacy planning and use our tools to help strengthen families.

I join my daughter in being a champion to help families face issues and resist sweeping them under the rug. Lizzy’s courage helps me be a better lawyer. As a grateful dad, I salute you, Lizzy, for living a purposeful life. Your mom and I couldn’t be more proud.

Marvin E. Blum

Marvin Blum salutes his daughter Lizzy Savetsky, today two years into her courageous sobriety journey.

What I Learned from the Deaths of My Father and Brother

What positives could possibly come from losing both my father and my brother to pancreatic cancer? A recent column by acclaimed author Arthur Brooks poses an intriguing oxymoron: thinking about your death can actually increase your happiness. Per Brooks, “contemplating your mortality might sound morbid, but it’s actually a key to happiness.” How is that possible?

Brooks says, “Death is hard to think about. We tend to avoid the subject…But when we focus on death, that increases the stakes at play in the present, and clarifies what we should do with our time.” Realizing our days are limited makes us realize how precious they are. It helps us focus on filling our time with joy and meaning. Brooks promotes prioritizing “love and relationships.” He asks, “Are you neglecting your family life today? Your friendships? Your spiritual development?”

Brooks begins his column with the inspiring story of Randy Pausch, the Carnegie Mellon professor who taught his last class on September 18, 2007. In that last lecture, Professor Pausch announced his diagnosis with terminal pancreatic cancer. Although he would soon leave behind a wife and three young kids, his message was “a celebration of life and love…” Pausch was putting on a masterclass in happiness by leaning into the reality of his own death.”

Here’s another story of a 43-year-old who is turning his terminal cancer diagnosis into something positive. In his final weeks, Nick Hungerford, co-founder of Nutmeg which sold for $700 million, is creating the charity Elizabeth’s Smile (named for his young daughter) to support children who lose a parent to terminal illness. He described it as a “‘great privilege’ to ‘feel the love’ of his family and friends despite facing death.”

This gets very personal for me, given that my father and my brother Irwin also died too young from pancreatic cancer. As a parting gift to me, Irwin held onto life long enough to provide blood for genetic testing, dying only moments later. Thankfully, comparing my blood to Irwin’s revealed no known gene predisposing me to cancer. Nevertheless, losing two first-degree relatives to pancreatic cancer still puts me in the “high risk” category. I enrolled in an early detection program at UT Southwestern, and so far my seven annual MRIs have come out clean. As I approach my 69th birthday in two weeks, I don’t take my health or my life for granted. As Brooks teaches, I’m filled with gratitude, and my top priorities are spending time with loved ones and creating memorable moments.

At this year’s Berkshire Hathaway Annual Shareholders Meeting, I asked Warren Buffett to share estate planning advice, and his answer shows he and Arthur Brooks are aligned. Buffett suggests writing your own obituary now and “reverse engineering” to live life in a way that will make that obituary come true. As an assignment from my TIGER 21 group, I actually wrote my obituary. Like Buffett, I recommend it. It’ll set your priorities straight.

In writing my obituary, I was guided by another author by the name of Brooks—David Brooks—and his book The Road to Character. David Brooks helped me distinguish between “Resume Marvin” and “Eulogy Marvin.” The focus of my obituary is not on my resume lines, rather on what really matters in living a meaningful life. On their deathbed, people don’t say they wished they’d worked harder or had more things. According to Arthur Brooks, what they care about is “activities that yield meaning, such as practicing religion, appreciating beauty, or spending more time with loved ones.” I’ve also actually been told by clients on their deathbed that having their estate plan in order provided them peace of mind, the feeling of a parting gift to their family.

Being aware that each of us will one day be gone doesn’t have to be morbid. Let’s use that awareness to make the most of each day, get our affairs in order, and work on creating a lasting legacy. As Arthur Brooks concludes: “Look at the sapling you plant today, and imagine your great-granddaughter sitting under the mature tree.” Let’s go plant a tree that will one day yield fruit and shade for our loved ones, known in Hebrew as an “etz chaim”—a tree of life.

Marvin E. Blum

This old Blum family portrait shows Julius, Elsie, Irwin, and a very young Marvin Blum. Daddy and Irwin both died way too young from pancreatic cancer. Now it’s just Mama and me.

Does This Look Like a Will to You? A Jury Says It’s Aretha’s

It’s alarming how many people die without a Will. I’m particularly shocked how many people of high net worth put off estate planning. By failing to plan, they leave behind a mess for their family. Such is the case with the “Queen of Soul.” Aretha Franklin’s four sons have been battling over her estate since her death five years ago.

At issue is whether any of these were Franklin’s Will:
#1 – 2010 handwritten papers (signed on each page and notarized) found in a locked cabinet.
#2 – 2014 handwritten pages found in a spiral notebook under couch cushions, with multiple scrawlings, crossed-out words, and insertions.
#3 – A draft of a Will she was preparing with her estate lawyer, to which she referred in three voicemail messages months before she died.

If none qualifies as a legitimate Will, Michigan law would divide the estate equally among Franklin’s four sons.

The case went to trial last week. Jury verdict: the document behind “Door Number Two” wins—the 2014 scribbles which her niece discovered under the couch cushions (many months after Franklin’s death) is the official Will.

Now the work begins to decipher and interpret it. To get an idea of the task at hand, look at this excerpt:

The jury concluded that the smiley face paired with “Franklin” represents her signature. “The process of interpreting a deceased person’s intentions from the lines of a handwritten document can be a confusing, contentious process, one that made for a gripping story line in the HBO series ‘Succession.’ In the show’s final season, the family patriarch’s heirs struggled to decode penciled-in addendums to [patriarch Roy Logan’s] last wishes that were found locked in a safe.”1

The 2014 Will changes the outcome from what Michigan law would dictate if no Will were deemed legitimate. The 2014 Will excludes eldest son Clarence Franklin, suffering from a mental illness and under a legal guardianship (though a recent settlement provides him an undisclosed percentage of the estate.) Youngest son Kecalf Franklin is the big winner, receiving more of his mother’s personal assets, including two of her four houses and her cars. Furthermore, the 2014 document omitted a requirement from the 2010 version requiring that sons Kecalf and Edward “‘must take business classes and get a certificate or a degree’ to benefit from the estate.”2

Franklin’s third son Ted White II asserted that the 2010 document signed on each page, notarized, and kept under lock and key should take precedence over papers found in a couch. The jury disagreed. Unsurprisingly, Ted and Kecalf did not appear to speak to each other at the trial.

Consider the pain and disharmony that could have been avoided if only mom Aretha had left a clear expression of her wishes. Out of “R–E–S–P–E–C–T” for your heirs, please do thoughtful, legally-documented estate planning as a gift to your family.

Marvin E. Blum

1 Julia Jacobs, Is Aretha Franklin’s True Will the One Found in the Couch or a Cabinet?, N.Y. TIMES, Jul. 9, 2023.
2 Ed White, Jury Decides 2014 Document Found in Aretha Franklin’s Couch is a Valid Will, ASSOCIATED PRESS, Jul. 11, 2023.

Out of “R–E–S–P–E–C–T” for your family, learn from Aretha Franklin’s mistake and create a clear, legally-documented estate plan.

“I’m Leaving Nothing to My Kids” – Really?

In last week’s post, I conveyed my concerns about the upcoming $84 trillion transfer falling into unprepared hands. This topic was a particular focus of the legacy planning workshops Tom Rogerson and I recently presented in Detroit and Houston.

In those workshops I reported that many parents respond to the concern of wealth ruining their kids by saying they won’t leave anything to their kids. A recent example is a power couple from the entertainment world, Ashton Kutcher and Mila Kunis. Kutcher’s Twitter post that they don’t plan to leave any money to their children ignited a “nepo baby” stir. The debate is that nepo babies born to famous parents benefit from nepotism and get an unfair advantage, risking entitled behavior.

Accordingly, Kutcher “said he and Kunis plan to give their reported combined net worth of about $275 million away to charity rather than their children.” They “don’t want their children to become spoiled and entitled, and want them to be motivated to work hard.” (“Aston Kutcher and Mila Kunis’s plan to leave no money to their children is causing a stir on social media amid the ‘nepo baby’ debate,” available here).

Discussing the concept of disinheriting kids with the workshop attendees, here’s what I reported. I hear this statement from parents often. Though many parents profess that they’ll leave little or nothing to their kids, the reality is that when I read their Wills, it still leaves the bulk of their wealth to the kids. It appears easy for parents to say they’re leaving their kids nothing, but hard to actually pull the trigger. A case in point is Anderson Cooper saying over the years that his mother Gloria Vanderbilt was going to leave him nothing, yet Gloria’s Will said otherwise when she died. Even Warren Buffett admits he’s leaving his children a larger inheritance than he originally claimed.

Given that most parents indeed leave their wealth to their children, the focus needs to be how to prepare heirs for the inheritance coming their way. Leaving money to kids doesn’t have to disincentivize them and steal their drive, if you follow certain steps. Charlie Carr recommends these steps in “How to Avoid Entitlement” (available here).

  1. Help your kids develop a work ethic. Make them work, starting in their childhood, whether in the family business or doing the lawn.
  2. In order for the next generation to gain such a work ethic, they must first see it modeled in the older generations. Take them to work with you to see you have a real job and really work hard.
  3. Make your kids earn their way in the business, working their way up into senior positions.

The other aspect of battling entitlement is to pass down strong family values. I recently attended a Northern Trust Wealth Planning Symposium where Barbara Bush (granddaughter of Pres. George H. W. Bush and Barbara Bush) illustrated how the Bush family instilled values in their heirs. Although famous and powerful, the Bush grandparents modeled humility and service, as well as love of family and gratitude. In restaurants, granddaughter Barbara noticed that George and Barbara would stop and interact with each person on the waitstaff. She shared a powerful story that as children, twins Barbara and Jenna (daughters of Pres. George W. Bush and Laura Bush) were bowling in the White House bowling alley and called the kitchen to bring them two peanut butter and jelly sandwiches. Grandmother (and First Lady) Barbara Bush soon appeared and said furiously, “This is not a hotel; it’s a home!” She made them go straight to the kitchen to apologize. Children of privilege don’t have to grow up spoiled.

For those of us who haven’t consistently delivered the Barbara Bush message to our children, Adrienne Penta offers words of encouragement for “Raising Kids With Wealth” (available here). Penta says it is never too late. “The question is: How do you stop a pattern and change course? The first step is acknowledging that we are on the wrong path. The second step is communicating course correction: ‘As your parents, we don’t think we have set the right tone for how we think money should be used. Let’s rethink it, starting with what matters most to us as a family.’ The conversation starts with values, which can then serve as a north star for a family’s financial plan, including allowances for young children, estate planning, and philanthropy.”

For those of you out there like me who haven’t always delivered the right message to our kids and grandkids, Penta’s words bring comfort. It’s never too late.

Marvin E. Blum

Marvin Blum and Tom Rogerson at Houston workshop, guiding parents on estate planning to create empowered, not entitled, heirs.

When It Comes to Your Family Legacy, Don’t Wish, Don’t Hope, Don’t Dream—PLAN!

Watching an Avis Car Rental television commercial, I heard these words that got my attention: “Don’t wish, Don’t hope, Don’t dream…PLAN!” Ironically, that message also applies perfectly to my initiative to work with families to plan a lasting legacy.

I recently teamed up with my colleague Tom Rogerson to present Family Legacy Planning workshops in Detroit and Houston. In researching and preparing to teach these workshops, I always become the student, learning even more in this vast landscape of helping families build a legacy.

My research focused on the massive wealth transfer that is coming. As members of two aging populations—the “Greatest Generation” and “Baby Boomers”—die over the next couple of decades, it’s projected that $84 trillion will pass down to the next generation. Statistics show that, by and large, this largesse is passing into unprepared hands.

For the first 35 years of my career, my primary focus was to help clients avoid paying the 40% estate tax. Indeed, the opportunities to do so are so effective that many dub the estate tax a “voluntary tax” paid only by those who volunteered to not plan around it. As I said in last week’s post, my poster child for this proposition has often been the Sam Walton family, founder of Walmart and Sam’s Club. If one of the world’s richest families can avoid estate tax, then so can a family of any size of wealth.

In all candor, The Blum Firm has become so good at helping families avoid estate tax that our planning has effectively almost doubled the sizes of inheritance. That’s a good thing as long as the inheritance is put to good use. But, I had some wake-up calls as all too often I witnessed inheritances tearing apart families. So, over the last decade, I have expanded my focus to helping strengthen families and prepare heirs for the inheritance coming their way, what I often call “head & heart” estate planning.

That focus was the driving force behind the Detroit and Houston workshops I taught with Tom Rogerson. I started by reflecting on how estate planning has evolved since I graduated from UT Law School 45 years ago. In illustrating that “It’s Not Your Daddy’s Estate Planning Anymore,” I stressed that estate planning is more than having a Will. Modern estate planning also includes:

  • Planning for incapacity
  • Protecting assets from creditors/divorce
  • Minimize tax (income tax and estate tax)
  • Business succession planning
  • Prenup planning
  • Special needs trusts
  • Charitable planning
  • Living Trust to preserve privacy and avoid probate
  • Ancillary documents (Powers of Attorney, Healthcare Proxy, Living Will, HIPAA Waiver, Declaration of Guardian, Beneficiary Designations)
  • Elder law
  • Red File

After describing how an Estate Plan has expanded, I built on that theme to illustrate how to “Supercharge Your Estate Plan into a Legacy Plan.” Just like an Estate Plan is more than a Will, a Legacy Plan is more than an Estate Plan. Legacy planning is a holistic process aimed at strengthening the family. Aspects of legacy planning include:

  • Identifying family values, purpose, and vision
  • Building the estate plan around the family purpose instead of around money
  • Creating trusts that mentor the beneficiaries to become empowered rather than entitled
  • Preparing heirs to be responsible inheritors
  • Engaging in family enrichment activities and education
  • Opening up communication channels and building trust
  • Establishing a family governance structure
  • Preserving family heritage and traditions
  • Onboarding in-laws and next generations
  • Creating a meaningful family legacy to pass from generation to generation

Legacy Planning recognizes that there’s more to family wealth than money.

Tom and I continued the workshop by offering practical solutions to help families build a Legacy Plan, sharing best practices from successful families. In upcoming posts, I’ll share some of those best practices, along with other highlights from our presentations.

I’ll close this post by sharing how gratifying it is to work with families and witness their success. With permission from a long-time valued client, I’ll share this message Jane sent me:

“Thanks to you, Marvin, for helping our family get off on the right track all those twenty plus years ago. I am so proud of our four children and how they are using their inheritance as well as their own resources to ‘do the most good’ in their own communities—with adult grandchildren following closely behind. My deceased husband would be blown away to know how many people, programs, and projects he has helped as we all used his resources to begin this journey. I especially realize how very fortunate we are to have benefitted from your counsel when I observe and hear the sad tales of others, who apparently received no preparation at all. Thank you for helping our family be a success story!”

Jane also shared that her family, now numbering 34 in size, conducts an annual family retreat each June with close to perfect attendance. Jane, this is music to my ears, and gives me the juice to propel me forward in this important work to help families succeed.

Marvin E. Blum

Marvin Blum with Tom and Cathy Rogerson of GenLeg Co., co-presenting workshops in Detroit and Houston on “Supercharging Your Estate Plan into a Legacy Plan.”

Welcome Shawn B. Williamson, J.D.

We’re proud to introduce the newest addition to our fiduciary litigation team—Shawn B. Williamson!

Shawn is based in our Houston office. He earned his law degree from South Texas Collee of Law cum laude. Prior to pursuing his law degree, he taught public school in the Houston area for ten years.

He is an experienced negotiator with a focus on probate/fiduciary litigation. His experience also includes probate administration, guardianship matters, a broad range of civil litigation issues, appeals, and property divisions involving agriculture and mineral rights.

Shawn’s expertise has been recognized by Houstonia magazine, most recently as Business Litigation Lawyer of the Year for 2022.

Shawn serves on the Board of Directors for the Henderson Charitable Foundation which serves to enhance the local community through performing arts.
 
Shawn and his wife Kim have two children. In his personal life, Shawn enjoys trying new coffee shops, hiking, metal detecting, competitive board games, and cheering on the Houston Astros—that is, when possible while keeping up with two young children!
 
Please join us in welcoming Shawn!

Learn All About Marvin and Estate Planning in One Hour Podcast

I was recently asked to be interviewed for a one-hour podcast, and I said yes. I’m glad I did. The interviewer is David Spray, a Houston CPA and fellow Longhorn, President of Export Advisors. David created a “get to know Marvin” experience, starting with my eureka moment at UT that directed me into estate planning, my early “big law” days when I saw a gap I wanted to fill, and the creation of The Blum Firm to fill that gap. The podcast tells the story of my career journey from solo practice to now, diving deep into the current “Golden Age of Estate Planning” with tips on how to create a lasting legacy. If you want a snapshot of who I am and what’s hot in the world of estate planning, take a listen at https://www.IC-DISCShow.com/043 or watch the video here.

David’s thoughtful questions gave me an opportunity to share my unique approach to estate planning that gets to the head and the heart of the matter. We talk about the impact of politics and policy, lessons learned from Congress’s recent efforts to empty out much of our toolbox, and the current two-year window before Trump tax cuts vanish. We discuss the “Use it or Lose it” deadline when the $12,920,000 exemption sunsets in half, and how you can “have your cake and eat it too” with trusts that preserve access, control, and flexibility. We make lemonade out of the rising interest rates by revealing tools that actually work better in a higher interest rate environment. We talk about the “win-win-win” world of philanthropy that benefits society, keeps a family connected, and saves taxes, using real-life stories to show how. I’m amazed how much territory we manage to cover in an hour; it’s really a crash course in estate planning.

David also pulls out some personal reflections and stories I rarely share. I reveal some communication challenges that surfaced in our own home during the pandemic, and how Tom Rogerson of GenLeg Co. came to our family’s rescue. Admittedly, I’m a cobbler who discovered my own shoes needed some repair.

David surprised me with this question: “What advice would you give to your 25-year-old self?” I would have told that Marvin to fight the temptation to let my mind race forward and invent lots of “what if’s” to worry about. I had lots of sleepless nights over “what if’s” that never happened. Think of all that wasted energy. And as to the challenges that I never anticipated but actually happened, I worked through all of them just fine. Maybe this hits home with some of you?

The final question is a profound one: “Barbeque or Tex-Mex?” Listen to my shout-out to Joe T. Garcia’s Mexican restaurant where we celebrate many Blum family special times.

I closed the podcast with a thought that I’ll use to close this post: Ten years from now, I hope you’ll look back on 2023 and be proud of the estate planning you did to set your family up for success. The opportunity has never been better. Let’s seize it!

Marvin E. Blum

Marvin Blum was honored to be interviewed on David Spray’s IC-DISC show, providing a heartfelt reveal about estate planning and his own career journey.

Make the Economic Downturn Work for You

When I spoke recently at a Business Owners Conference sponsored by Bank of America/Merrill Lynch, I learned that 50% of owners will sell their business over the next 10 years. Much of the conference was devoted to one primary goal: how to maximize the sales price. When it was my turn, I built on that with a corollary goal: how to minimize the tax bite. The two goals work together, as maximizing the sales price and minimizing tax both operate to leave more in the family’s pocket at the end of the day.

Minimizing tax is aimed at saving both income tax and estate tax. To reduce income tax: we explore Section 1202 Qualified Small Business Stock (QSBS), charitable remainder trusts (CRTs), installment sale techniques, transfers of business interests to charity prior to sale, investing proceeds in Qualified Opportunity Zone deals, and other tools. To reduce estate tax: we turn to “squeeze & freeze” planning. The “squeeze” comes from business entity structures that achieve valuation discounts. The “freeze” involves transferring discounted business interests to trusts, such as Defective Grantor Trusts (DGTs), Spousal Lifetime Access Trusts (SLATs), 678 Trusts, Grantor Retained Annuity Trusts (GRATs), and charitable trusts.

In my speech, I used the Walton family (founders of Walmart and Sam’s Club) as a poster child for avoiding estate tax. Because of the Walton family’s success, many dubbed the estate tax a “voluntary tax.” My thesis is that if the Waltons (one of the world’s richest families) can avoid estate tax, so can you. I followed up with examples of our own clients who erased millions of dollars of estate tax by “squeeze & freeze” planning. Moreover, several of the techniques allow you to: (1) retain control, (2) retain access, and (3) retain flexibility so you’re not locked into an estate disposition that you later wish to change.

In talking to business owners who own 100% of their company, I admonished that unless they engage in tax planning, they actually have a silent business partner who owns 40% or more of their company: the U.S. Government.

Other speakers lamented that we are in an economic downturn. It isn’t October 2021 anymore. With interest rates soaring, the market has cooled considerably. I turned that lament on its head with the counter-intuitive announcement that today’s economic downturn makes now the perfect time to do “squeeze & freeze” planning. The market cooling works to our advantage, as we can now transfer assets out of the estate at lower valuations. This works for not only a family business but indeed any package of investment assets. Instead of being distressed over market conditions, use this as an opportunity. Don’t wait until a recovery to engage in planning. Pre-recovery planning beats post-recovery planning. It is far more tax efficient to plan when values are lower.

Furthermore, there’s no guarantee the techniques we use will be available in the future. Congress came within two votes of shutting many of these tools down in 2021. Had Congress passed that law, those who had already planned would have been grandfathered. Act now and lock in the benefit of today’s tools.

In estate planning, time is not our friend. The earlier you plan, the better. I illustrated this point with the following timeline assuming a $10 million sale with a $1 million gift to charity:

The earlier on the timeline you plan, the bigger the valuation squeeze. Furthermore, making the charitable transfer before the sale, you report $9 million proceeds, less the charitable gift. If you make the gift after the sale, you report $10 million proceeds, less the charitable gift. If you do squeeze planning now, years from now you’ll give yourself a big pat on the back and be proud of the dollars you saved your family by planning early.

My mission is to help families who wish to pass down a business legacy to future generations beat the odds and achieve success. About 90% of U.S. businesses are family-owned, yet the survival of these businesses shrinks to 30% after Generation 2, 12% after Generation 3, and 3% after Generation 4.

For those families who opt to sell the business, I want to help them reach the finish line. The biggest obstacles are not financial, but psychological. It’s hard to part with your business “baby.” For that reason, I closed by urging all sellers of family businesses to focus not only on the transaction, but also on the owner’s transition. As I so often preach, there’s more at stake here than money.

To view a copy of my PowerPoint, “Planning in a Perfect Storm for Business Owners,” click here.

Marvin E. Blum

Marvin Blum’s recent speech at a Business Owners Conference (sponsored by Bank of America/Merrill Lynch) stressed why lower valuations make this the ideal time to do estate tax planning.

I’m Fort Worth Proud!

I’ve always been one of Fort Worth’s biggest champions. Even going back to my youth when we were known mostly as a “sleepy town,” I was full of local pride. Legend has it that around 1875, a Dallas attorney claimed this place was so quiet that he saw a panther asleep on a downtown Fort Worth street. We embraced that sleepy image and even adopted the panther as a local mascot.

Perusing the Summer 2023 issue of Fort Worth, Inc. magazine which recognizes “The 400 Most Influential People in Fort Worth,” it’s evident that times have changed. I’m honored and humbled to be among this group of community leaders. Fort Worth is now a dynamic, thriving hub of activity. Texas Monthly acknowledges our “gaudy 4 percent increase in population since 2020, bringing the population to 956,709 (number 13 on the list [of the nation’s largest cities]). This makes Cowtown the fastest-growing big city in the country by a wide margin.”

Many may need to read that line again or feel the need to check the article for themselves. In fact, a recent survey asked a focus group to guess Fort Worth’s rank, and the response came in that they thought of us as 50th in size, rather than 13th.

Many long-time residents prefer staying under the radar. Like it or not, the secret is out. We’re still Cowtown but also so much more. A recent marketing campaign dubbed us “Cowboys & Culture,” spotlighting the happy marriage here of rodeo and the arts. I recently completed a 42-year stint as Treasurer of the Fort Worth Symphony, a world-class orchestra. On top of that, we have the Van Cliburn International Piano Competition and fabulous art museums. The list goes on and on.

Even with our growth, Fort Worth remains a warm and welcoming community where we are here for each other. As an estate planning lawyer dedicated to helping clients live a fulfilling life, I stress the importance of being part of a supportive community. Research shows that being connected to others not only improves the quality of life but even our health and longevity. For me, Fort Wort is such a community.

Though some still think we’re just a suburb in Dallas’ shadow, this town “where the West begins” has its own prominent identity. The next time you hear the country tune “Does Fort Worth Ever Cross Your Mind?,” the answer will likely be “Yes!”

Marvin E. Blum

Marvin Blum is proud of his Fort Worth roots and honored to be among the 400 locals recognized by Fort Worth, Inc. magazine. Let’s celebrate all that Fort Worth has to offer!

Succession Planning Tips for Your Business and Your Family

Last week’s post addressed the challenge of transferring an enterprise’s leadership to a successor, whether that enterprise is a business, a royal family, or any family. I gave Queen Elizabeth high marks for doing a better job than Logan Roy of the HBO series “Succession.” I also praised Bernard Arnault (“the world’s richest person”) for his thoughtful process “to pass on the baton, dividing up key roles in the LVMH Moët Hennessy Louis Vuitton empire among his five children.” (Andrew Ross Sorkin, “Family Drama,” The New York Times DealBook Newsletter, May 27, 2023.)

Now that HBO has aired the final episode of “Succession,” author Sorkin predicts that the search is on for the next family succession drama. Many speculate that the fictional Logan Roy was modeled after Rupert Murdoch. Sorkin suggests the aforementioned Arnault dynasty as a likely candidate for the next TV succession drama. He pictures a season finale “inspired by the glitzy reopening of Tiffany after LVMH bought the brand in a turbulent acquisition.” (See last week’s post where I hailed Arnault’s succession process as a role model approach.)

Per Sorkin, other real-life family dramas that could provide the needed dirt for a succession feud include:

  • •The Sacklers: Owners of Purdue Pharma which produced the painkiller OxyContin, who fell from grace for their role in the opioid crisis, even having the Sackler name stripped from a wing of the Metropolitan Museum of Art in New York.
  • The Maras: Owners of the New York Giants, whose split into two factions reached the point that a Venetian blind was installed to divide their stadium luxury suite.
  • The Safras: One of the world’s richest bankers, Joseph Safra cut out son Alberto from his Will, resulting in Alberto now suing his two brothers and his mother.
  • The Kushners: Real estate mogul Charles Kushner’s feud with his brother-in-law landed him in jail, while son Jared married Ivanka Trump and “then raised billions from the Saudis,” and son Joshua married a supermodel.

Speaking to the challenge of getting succession right, in his article “How to Do Succession Better Than Logan Roy,” Miles Nadal offers these tips to help the business leader pave the way:

  • Accept that a transition is inevitable.
  • There are no shortcuts; expect it to take at least three to five years.
  • Identify talent with a different skillset from the founder, as it’s different to maintain an empire than to create it.
  • Begin detaching and delegating.
  • Resist the temptation to intervene.
  • Let them fail; the learning process from solving problems is more valuable than being rescued and right.
  • Put more energy into strengthening the company culture than into teaching the nuts and bolts of running the business. (Remember, “culture eats strategy for breakfast” from my post of April 4th.

In closing, as an estate planner committed to not only helping businesses successfully transition but also helping families do the same, I submit that these same principles apply to every family. As family consultant Matt Wesley teaches, there comes a time when the patriarch and matriarch need to move from being quarterback to being coach.

Marvin E. Blum

Marvin Blum pays homage to Bernard Arnault, owner of Tiffany & Co. and other luxury brands, for Arnault’s thoughtful approach to succession planning.

Who Did “Succession” Better: Queen Elizabeth or Logan Roy?

Finding a successor to fill the business founder’s shoes is a challenge. In Texas, we often recommend choosing the heir apparent early and letting him “ride around in the truck” with the founder for several years. By the time the successor takes over the family “ranch,” he’s ready. Moreover, the rest of the stakeholders have been prepared to accept the successor in that key role.

The most compelling example of “riding around in the truck” is King Charles III. Then Prince Charles “rode around in the carriage” for more than 70 years, being groomed by Queen Elizabeth II for his role heading the monarchy.

Another family of business royalty also deserves praise for getting in front of the transition. It’s the family of Bernard Arnault, owner of Louis Vuitton, Christian Dior, Tiffany & Co., and other luxury brands. Arnault has been grooming his five kids since their early childhood. (“The World’s Richest Person Auditions His Five Children to Run LVMH, The Luxury Empire,” Nick Kostov and Stacy Meichtry, Wall Street Journal, Apr. 19, 2023.)

Arnault drilled the kids in math from early on, even himself studying a math textbook on a flight to Paris after a grueling trip to Asia. “I need to refresh my memory,” said Mr. Arnault to one of his top lieutenants.

The children were encouraged to attend top schools and study engineering. The goal was to develop a rational mindset allowing them to analyze a situation or problem very quickly. Arnault also pairs each of his children with executives who mentor them and keep an eye on their performance. The five kids watch Arnault in action, accompanying him on business trips and negotiations. Now that’s riding around in the truck (or jet)!

Arnault (age 74) is still in the driver’s seat in the truck. LVMH recently raised the retirement age for its chairman and CEO to 80. When the time comes to hand over the wheel, he will choose based on merit. The kids are expected to fall in line. They’ve been taught from a young age to work through disagreements and put the interests of the company first.

Here’s the status of Arnault’s five, each filing a key role:

  • Oldest child (and only daughter) Delphine (48) is CEO of Christian Dior.
  • Antoine (45) is CEO of the company that holds the family’s stake in LVMH.
  • Alexandre (30) is Executive Vice President of Tiffany & Co.
  • Frederic (28) runs Tag Heuer watch brand.
  • Jean (24) is Director of Marketing & Development at Louis Vuitton’s watches division.

Unfortunately, in the world of business succession, Arnault is an outlier. Most media accounts reveal stories of families in disarray after the founder dies, with no one designated or prepared to succeed. The HBO hit series “Succession” is a fictional case-in-point, which just aired its last episode on Sunday. Each week, millions tuned in “to watch the entire Roy family scheme, plot, and backstab their way to replacing the company’s patriarchal founder,” Logan Roy. (“How to Do Succession Better Than Logan Roy,” Miles S. Nadal, Quartz, Mar. 6, 2023.)

Author Nadal draws parallels to Shakespeare’s King Lear, Macbeth, Coriolanus, and Hamlet, other fictional examples of “the brutal realities of succession.” Perhaps Queen Elizabeth II learned lessons from fellow countryman Shakespeare and became determined to get it right. She was certainly a better role model for succession than “Succession’s” Logan Roy.

Marvin E. Blum

King Charles was groomed early on to be successor to the throne, shown here 54 years ago, following his investiture as Prince of Wales, riding around in the carriage (the royal version of a “truck”) next to Queen Elizabeth and her ever-watchful eye.

Grateful for My Strong Family “Stock”—The Story of My Uncle Joe Weinstock

My son Adam is a voracious reader. He often sends me articles that serve as inspiration for my own writings. One recent example was the obituary of an American immigrant success story, bringing me a rush of memories of another American immigrant success, my Uncle Joe Weinstock. May is Jewish American Heritage month. In honor of that observance, I write this tribute to a pillar of Jewish American Heritage, my Uncle Joe.

Uncle Joe had no kids, but without question, he was the patriarch of our family. My own success would not have been possible without my heritage from him. Indeed, I wouldn’t even be alive were it not for him.

The article Adam sent me was about the death of John Pappajohn, not the pizza guy but an insurance executive turned venture capitalist. Pappajohn emigrated to the US from Greece. “Showing an early entrepreneurial impulse, he scavenged for metal, rugs, building materials or other scrap he could sell,” (James R. Hagerty, “John Pappajohn, Iowa Venture Capitalist Who Focused on Medical Plays, Dies at 94,” Wall Street Journal, May 5, 2023.) His father died when John was 16, leaving John to support his mom and younger brothers Aristotle and Socrates. Pappajohn’s work ethic and ingenuity rewarded him with wealth, which he used for greater good by donating $100 million to philanthropic causes. In addition to Pappajohn’s immigrant work ethic and philanthropy, two more things about him conjure up Uncle Joe in my head: (1) Pappajohn wore a “PMA” lapel pin, standing for Positive Mental Attitude; and (2) he described himself as the “rah rah” guy, always inspiring and motivating others. In so many ways, Uncle Joe was the Jewish immigrant version of John Pappajohn.

Uncle Joe (actually Yosef, Hebrew for Joseph) was born around the turn of the 20th century in a tiny village in Ukraine called Polona, in the Volyn region, heartland of chasidic Judaism. He was the third of six children born to Eliezer and Leah Weinstock. It was a difficult time for Jews in Ukraine. After a pogrom roughing up the Jews and poking out Eliezer’s eye, Joe saw the handwriting on the wall and embarked on a ship for America. Instead of disembarking in Ellis Island, Uncle Joe’s ship was part of the “Galveston Movement,” funded by New York philanthropist Jacob Schiff to address overcrowding of immigrants in the Lower East Side and the resultant antisemitism. A young, penniless, Joe was met at the Galveston, Texas pier by Rabbi Henry Cohen and the Jewish Welfare, who placed him in Troy, Alabama. Imagine the challenges faced by a religious European Jew in Troy, Alabama, but Uncle Joe managed to remain an observant Jew his entire life. He got a horse and wagon, going from house-to-house peddling fruit. His “Positive Mental Attitude,” grit, and ever-present smile made him successful.

Ten years later, after World War I, Uncle Joe had saved up enough money to bring over his parents and three younger siblings (including my grandmother Pauline, my mother Elsie’s mother). He didn’t have enough money yet to bring over his two older siblings Elke and Enoch, by then married in Europe. Then it became too late. Although Joe’s mother Leah (who shared a bed with my mother Elsie) prayed nightly that Elke and Enoch were still alive, Hitler got to them before Joe could bring them to America.

Joe ran an ad for a wife in the Yiddish newspaper“Volyner yunger man zucht Voliner maidel,” (young man from the Volyn region seeks a young woman from the same area, in other words a religious wife). Rose Pass from Columbus, Ohio answered the ad. They married and settled in Montgomery. (While at it, they matched up Rose’s sister Ruth with Joe’s brother Moshe— two for the price of one ad!)

Joe started a furniture store and bought rent houses. He never worked on the Sabbath, and he opened and closed the synagogue every day. Uncle Joe always had a song in his heart and on his lips. He too was a “rah rah” guy, lifting up others everywhere he went. In my mind, I can hear him singing one of his favorites, “Adon Olam,” (Lord of the Universe). He was always happy, famously saying, “I never had a bad day in America.”

Beginning in the 1950s, Joe and Rose made an annual pilgrimage to Israel for the High Holidays. When the local newspaper, The Montgomery Advertiser, interviewed him about those trips, they asked, “Do you have family in Israel?” Joe’s answer: “Yes, all the children of Abraham, Isaac, and Jacob are my family.”

Joe supported Israeli businesses every chance he could. Once in Tel Aviv, he entered a tailor shop and asked the proprietor if he was a good tailor. The man rolled up his sleeve and showed his concentration camp number, answering that his tailoring skills were how he managed to survive the Holocaust. Joe bought a new suit from that tailor every year.

In 1967 at the outbreak of the Six Day War, Uncle Joe rallied the gathering at the country club in Montgomery. Uncle Joe’s pitch: “You all know the story of Joseph in the Bible. Joseph was a Jewish boy who went to Egypt and got rich. Did he forget his family in Israel? No, he took care of them. We, too, have to help our brothers and sisters in Israel.” Although Joe wasn’t rich, he started the pledging at $5,000 (a huge sum to him, especially in those days), and the crowd followed suit. They had to at least match Mr. Weinstock. He also regularly mailed small amounts to families all over Israel. “I want them to have a challah for Shabbos.” His favorite charity was the Jewish National Fund, site of a tree planting known as the Joseph and Rose Weinstock Grove in Israel. Joe was doing his part to make Israel’s desert bloom.

As part of my Family Legacy initiative at The Blum Firm, I speak often of the importance of preserving family heritage. Knowing stories of our ancestors’ resilience gives us strength to overcome adversity when it strikes in our lives. My daughter Lizzy Savetsky recently gave a speech with that message: “When heavy winds blow our way, it’s the deeply rooted who aren’t blown away. What does that mean to me? My deep roots come from my ancestors. That’s the source of my strength and survival, that I want to pass down to my three children.” Lizzy and I and our whole family are grateful to Uncle Joe for giving us deep roots. Our family has the roots to survive, because we know we come from “good stock,” WEINSTOCK.

Marvin E. Blum

Marvin Blum’s Uncle Joe Weinstock (left) was the family patriarch who passed down an empowering legacy to his heirs, seated here next to his father-in-law, Mr. Pass, and his wife Rose.

Winning the Lottery at “The Woodstock for Capitalists”

This past weekend, the Fort Worth Report published an article on my question for Warren Buffett at this year’s annual Berkshire Hathaway Shareholders’ Meeting—often called “The Woodstock for Capitalists,” according to reporter Bob Francis.

Francis equated my being chosen to ask a question—the first question, in fact—to winning the lottery. As soon as I was handed my numbered ticket for a chance to ask a question, I knew I would be lucky. I looked down at it and I told the guy right then, “This is my year.” I said, “I’ve got this.” And he looked at me and said, “How do you know that?” I said, “Because you just handed me my lucky number.” He’d handed me number 18.

My question for Buffett was about the problem of most parents failing to prepare their kids for the inheritance coming their way. In particular, if the estate includes a family business, most parents fail to do business succession planning to plan for who will run the business on the day when, not if, the founder is no longer there to run it.

The article, “Fort Worth attorney Blum draws a lucky number at ‘Woodstock for Capitalists,’” is here. My post upon returning from the meeting, with additional information, is available here.

Marvin E. Blum

Marvin Blum “won the lottery” at this year’s Berkshire Hathaway Shareholders’ Meeting.

Pearls of Wisdom from Omaha

For many years, our family has been enjoying an annual pilgrimage to worship at the altar of the Oracle of Omaha. Saturday is jam-packed with advice from Warren Buffett (92) and Charlie Munger (99), the sharp-minded and sharp-tongued duo. Each person attending draws his own pearls of wisdom. Here are a few of my golden nuggets.

The day begins with a hilarious video production. This year’s film featured Oscar-winning actress Jamie Lee Curtis, spoofing with Buffett about having a sexual obsession with Munger. Curtis chided that Berkshire Hathaway is a lousy name and should be re-dubbed “Mungeritaville.”

This year’s meeting was streamed live on CNBC. Buffett lamented that the telecast was airing alongside a competitive broadcast, the coronation of King Charles. As consolation, he anointed Berkshire Hathaway’s own royalty: “We’ve got our own King Charles,” the inimitable Charlie Munger.

As I wrote in last week’s post, I was honored with the opportunity to ask my third question, dealing with the importance of preparing heirs for the inheritance coming their way. Buffett delivered an answer I labeled a “Master Class in Family Legacy Planning.” See last week’s post for details (link).

In his typical sharp-edged tone, Munger opined that “a vast diversification of common stocks is an insane idea.” He considers it better to own your three best ideas, admonishing to “ignore advice that leads to the ‘de-worse-ification’ of portfolios.”

Continuing the theme of this year’s annual letter to shareholders, Buffett acknowledged he’s made a lot of investment mistakes, but got a few things right. “Try to get a few things right and sooner or later you’ll have a lollapalooza.” But try to avoid mistakes so big they take you out of the game. “Spend less than you earn, and practice deferred gratification.”

Speaking of making the right decision, Buffett announced my personal favorite of the day: “If you make the right decision on a spouse, you’ve won the game.” He also captured my heart with this investment advice: “Your best investment is always in yourself and in your own earning power.” Buffett added this advice for a meaningful life: “Write your own obituary and try to figure out how to live up to it.” He described the process as “reverse engineering,” writing your obituary now and then living so as to make your obituary come true.

Regarding artificial intelligence (“AI”), the duo acknowledged it’s good for searching all the legal opinions that have been issued over prior decades. But Buffett asserted that AI “can never replace Charlie” and can’t tell jokes (at least not as good as Charlie’s jokes).

Capitalism is a success story, versus an economy like Russia’s where, per Charlie, “they pretend to pay us and we pretend to work.” Moderate social safety nets are needed, but the growth from capitalism helps those at the bottom better than a wide social safety net.

Speaking almost as if directly aimed at me, Buffett warns that even if someone could sell their company at age 65 and make a lot of money, why would you want to retire at 65? Obviously, neither Buffett nor Munger ever wanted to retire, and neither do I!

I always enjoy their foray into lessons for living a meaningful life. Don’t do any unkind acts, or you’ll end up like plenty of people who die with money, but without friends. In being kind, “praise by name, criticize by category.” Avoid toxic people. “Get them the hell out of your life, and do it fast!” If the toxic person is in your family, “it’s a very tough problem,” but do your best to minimize them in your life.

Per Charlie, Elon Musk “likes taking on the impossible job. We’re different. We like taking on the easy job. We don’t want that much failure.” This was in response to a question quoting Charlie as saying he’d rather hire someone with an IQ of 130 who thinks it’s 120, than someone with an IQ of 150 who thinks it’s 170.

Discussing Berkshire’s investment in NetJets, Buffett teased about Munger’s frugality. Charlie used to fly coach from Los Angeles to Omaha for the annual meeting. He said he was surrounded by a lot of rich Berkshire shareholders also in coach, who would clap when Charlie entered the coach section. Warren joked that they couldn’t get Charlie to fly private on NetJets until they put a coach seat in the plane for him.

Charlie also quipped that he stopped practicing law in 1962. “The modern law practice in a big firm is like a pie-eating contest. If you win, you get to eat more pie.” He advised lawyers to stay away from that kind of law firm. I couldn’t agree more! That’s precisely why I created The Blum Firm, providing a quality of life and culture where our team can thrive.

This sampling gives you a taste of the quick wit and brilliance of the two geniuses. What a privilege to learn from them! Charlie turns 100 next year, and Warren will be 93. If you’ve ever considered going, I suggest you join us in Omaha next year. As my son Adam warns me whenever I’m tempted to skip a year, it could be the last one. I certainly hope not!

Marvin E. Blum

Marvin, Laurie, and Adam Blum with a cardboard cutout of Warren Buffett enjoying the 2023 Berkshire Hathaway Annual Meeting.

A First at The Blum Firm: Boston Attorney Christopher Beck’s Swearing-In Ceremony

We recently experienced a first at The Blum Firm. For the first time in the firm’s 43-year history, we conducted a swearing-in ceremony here to admit an attorney to the State Bar of Texas. It was a big deal, and we treated it as such.
 
Christopher Beck, a tax attorney practicing in Boston for the last 15 years, moved his family to Texas to join us at The Blum Firm. A member of the Massachusetts Bar, Christopher speedily completed the Texas requirements to add another Bar membership to his resume. Upon notification of his acceptance, the last step in the process was for Christopher to accept the oath of office to become a Texas lawyer. I was honored when he asked me to administer the oath. I’d never done that before. What a privilege to officially welcome a man of such outstanding character and skills to the Texas Bar!
 
We feel especially fortunate to add Christopher to our team. The Blum Firm specializes in estate and tax planning. As the IRS receives an $80 billion infusion to “beef up” enforcement, we saw the need to likewise “beef up” our tax controversy practice, in anticipation of a more active IRS. Christopher brings substantial experience to The Blum Firm in IRS audits and tax litigation, as well as skills in domestic and international tax planning. His expertise in cross-border transactions is especially timely and welcome, given the increase in the number of our clients engaging in inbound and outbound activities. In this digital age, it’s a smaller and more mobile world. The Blum Firm stands ready to advise on all the tax-related issues associated with that mobility.
 
The highlight of the swearing-in ceremony was witnessing the pride on the faces of Christopher’s wife, young daughter, and young son. Those kids absorbed the significance of watching their dad pledge to devote himself to an honorable career. It was a life lesson they’ll never forget and will undoubtedly influence their own career devotion someday. As I recently learned from Warren Buffett, our kids are watching us more than listening to us. Those two wide-eyed youngsters were clearly watching.
 
To top off the celebration in true Blum fashion, we ended with a dessert buffet. When I asked what his kids like for dessert, Christopher answered “anything chocolate.” Those are some smart kids! Maybe they’ll one day have their own swearing-in ceremonies at The Blum Firm. I hope I’m around to administer the oath.
 
Marvin E. Blum

My Third Question to Warren Buffett and “King Charles” Munger

Our family’s annual pilgrimage to the Berkshire Hathaway Annual Meeting includes an early Saturday ritual. Those wishing to ask Warren Buffett and Charlie Munger a question head to a lottery drawing. The few holders of winning tickets get the opportunity. This year was my third time to get lucky and be chosen to ask a question.

Ten years ago, my son Adam convinced me to enter the lottery for the first time. I had beginner’s luck. My first question to Buffett was about his estate plan, seeking an answer to his famous thesis: “I want to leave my children enough so that they can do anything, but not so much that they can do nothing.” I asked: “How much is that?”

Buffett answered: “I think that more of our kids are ruined by the behavior of their parents than by amount of the inheritance. Your children are learning about the world through you and more through your actions than they are through your words. From the moment they’re born, you’re their natural teacher. And it is a very important and serious job, and I don’t actually think that the amount of money that a rich person leaves to their children is the determining factor at all. In terms of how children turn out, I think that the atmosphere, and what they see about them and how their parents behave are more important.”

Two years later at the 2015 Annual Meeting, I got lucky again. Sticking with the subject of estate planning, my second question to Buffett was about the role of philanthropy in his estate plan, including his decision to sign Bill Gates’ “Giving Pledge.” I said: “Today, I’d like to ask about your decision to sign The Giving Pledge, promising to give away at least one-half of your assets to charity. Can you talk about your views on philanthropy and how to balance leaving an inheritance to your family versus assets to charity?”

Buffett’s answer was: “Well, that depends very much on the individual situation, and actually I’ve promised to give over 99% in my case, but that still leaves plenty left over. …So the question is, ‘where does it do the most good?’ And, I think limited amounts do some real good for my children, so I’ll be sure that they have that or they already have it to a degree. And on the other hand, when I look at a bunch of stock certificates in a safe deposit box that were put there fifty years ago or so, they have absolutely no utility to me. Zero. They can’t do anything for me in life. …So, here these things are that have no utility to me, and they have enormous utility to some people in other parts of the world. They can save lives. They can provide vaccines. They can provide education. They have all kinds of utility. So why in the world should they sit there for me or for some fourth generation of great-grandchildren or something when they can do a lot of good now? So that’s my own philosophy on it. But I think everybody has to develop their own feelings about it and should follow where they go. I do think they might ask themselves ‘where will it do the most good?’”

At the following year’s Annual Meeting and each one after that, I continued entering the lottery with no success, until this year. This year, my ticket number was “18,” and I knew it was going to be my day. Eighteen is my lucky number. In Hebrew, the number 18 is represented by the letters Chet (8) and Yud (10), which spells the word “chai,” the Hebrew word for “life.” Upon receiving ticket 18, I thanked the lottery guy and assured him it was my year to win. As I predicted, the number drawn was indeed “18,” and my adrenaline started rushing.

It is intimidating to stand in the spotlight in a room of some 50,000 people, with cameras rolling on live CNBC TV coverage and hear your voice echoing and reverberating as you nervously power through your question. While asking, I was twice interrupted with applause, boosting my confidence. My question this year continued the estate planning theme, focusing on preparing heirs for an inheritance. Even before I finished my question, Buffett jumped in to answer, eager to weigh in. He and Munger then spoke eloquently for more than seven minutes, providing a master class in Family Legacy Planning, my estate planning passion. I am gratified and honored by their enthusiastic response.

Here’s a summary of Buffett’s response to this year’s question as reported by Yahoo Finance: “Responding to a question from an estate planning attorney [Marvin Blum], Buffett said it was imperative to include your heirs in your estate planning. According to Buffett, if the first time children are hearing about the thoughts and wishes of the deceased [parent] is when they read the will, the parents have made a terrible mistake. Buffett went on to suggest that if you intend your heirs to act responsibly and ethically with your bequest, it’s important that you live the ideals you want to pass on to them.”

This year’s “Woodstock for Capitalists” meeting coincided with the coronation of King Charles III, the new monarch of the United Kingdom. Buffett had earlier teased that we had our own King Charles—“King” Charlie Munger. I tied into the other King’s crowning, citing then Prince Charles’ tutelage as the ultimate example of preparing an heir to take over the family kingdom. To use a Texas idiom, Prince Charles “rode around in the truck” (or should I say “carriage”) with his “mum” for more than 70 years, observing and learning from Queen Elizabeth’s commitment to duty and service. Let’s draw inspiration from the British Royal Family and follow advice from Berkshire’s royalty to prepare our heirs for the inheritance coming their way. Long live the Kings, both King Charles III and “King” Charlie Munger, now 99 years old, going strong and as sharp as ever.

Each of my three questions at the Berkshire Hathaway Annual Meetings generated significant media coverage. The press is evidently eager to hear the “Oracle of Omaha’s” wisdom on estate planning, a welcome break from all the questions about investing.

  • Information on the media coverage of my questions to Warren Buffet over the years is available here.
  • A transcript of the Q&A for this year’s question, including Buffett’s complete answer, is available here.
  • CNBC was the exclusive host of this year’s meeting. My exchange with Buffett is available as part of CNBC’s recording of the morning session available here, beginning at the 56:24 mark.
  • A transcript of my 2015 question and Buffett’s complete answer is available here.
  • A transcript of my 2013 question, along with Buffett’s complete answer and the subsequent discussion is available here.

In the words of Tevye in Fiddler on the Roof and symbolic of my lucky “chai” 18, “To life, to life, l’chaim!”

Marvin E. Bum

All eyes were on Marvin Blum at the 2023 Berkshire Hathaway Annual Meeting as he poses a question to Warren Buffett and Charlie Munger, the third year Blum was selected as one of the attendees chosen to ask a question.

The Inspiring Story of Rose Blumkin

As our family embarks this week on our annual pilgrimage to Omaha for the Berkshire-Hathaway Annual Meeting, it brings to mind my all-time favorite example of a family business sale. In recent posts, I addressed the challenges owners face in selling their family business “baby.” Those are choppy waters to navigate. Not all ships complete the voyage successfully. The story of Rose Blumkin’s sale to Warren Buffett is especially legendary.

Tales abound how a small company with a quality product grew by mega proportions after acquisition by Berkshire-Hathaway. Mrs. See’s candy is a case-in-point. Today’s focus is on another business matriarch anointed by Buffett: Rose “Mrs. B” Blumkin.

Berkshire bought 90% of Mrs. B’s Nebraska Furniture Mart for about $55 million in 1983. Buffett declared that Mrs. B, an “89-year-old carpet sales woman would ‘run rings around’ the best corporate executives and business school graduates in America.” (Theron Mohamed, “Warren Buffett: Elderly Carpet Seller Better than America’s Best CEOs,” Business Insider, Dec. 26, 2022.) As usual, Buffett’s prophecy proved true.

Like my four grandparents, Mrs. B immigrated from Eastern Europe as a young child, just in time to escape the Holocaust. She arrived in America penniless and not knowing a word of English but loaded with wit, wisdom, and a tireless work ethic. Similar to my Uncle Joe who pushed a fruit cart to send money home to bring over his parents and siblings, young Rose did the same by selling second-hand clothing.

In 1937, Rose sold all her home furnishings and appliances to raise $500 to open Nebraska Furniture Mart. Over the years, her children and grandchildren joined her, growing the business to today’s sales of $1.6 billion and more than $80 million in after-tax profits.

Buffett saw the writing on the wall in 1983 and convinced Mrs. B to cash out. She reluctantly agreed to sell, citing two reasons: (1) to create liquidity to pay high estate taxes; and (2) to avoid having her kids squabble over the company after she was gone. Rose and her family stayed on to run the business.

The story gets better. After she retired at age 95, Mrs. B found she couldn’t stand retirement. (Is anyone surprised?) Only months later, she opened a competing store across the street called Mrs. B’s Clearance and Factory Outlet and quickly grew it to Omaha’s third largest carpet store. Buffett couldn’t resist—he bought her new store within five years and merged Mrs. B’s two companies. As author Mohamed points out, Buffett “joked that he wouldn’t let Mrs. B retire again without signing a non-compete agreement.”

Rose Blumkin worked until 103 and then died a year later in 1998. Retiring was probably a mistake. Her grandchildren and great-grandchildren now run Nebraska Furniture Mart.

As we now head to Omaha, I’m inspired to go pay tribute to Mrs. B’s legacy.

Marvin E. Blum

Rose Blumkin, pictured on her scooter in her Omaha carpet store, ran (or wheeled) rings around other CEOs, enticing Warren Buffett (right) to buy her store. Blumkin grew Nebraska Furniture Mart into the nation’s largest furniture store before retiring at 103.

Don’t Beat Yourself Up Over Investment Mistakes

When Warren Buffett’s annual letter to shareholders goes out, my son Adam is among the first to devour every word and send me highlights. As the Blum family prepares to leave next week for our annual pilgrimage to the Berkshire-Hathaway Annual Meeting, I want to share some of “Warren’s Wisdom” with you. We all make investment mistakes along the way. In Buffett’s annual letter, he owns up to his mistakes. I learned an important lesson: Don’t be hard on yourself.

Berkshire fans glorify the investment acumen of Buffett (92) and his partner Charlie Munger (now 99!). If only we had their investment skills! But Buffett humbly shares the reality in his annual letter: “Over the years, I have made many mistakes… In 58 years of Berkshire management, most of my capital-allocation decisions have been no better than 50-50.” The key is to be resilient. Stay the course, and continue taking measured risks. Don’t retreat to a “disappointing investment” like a “high-grade 30-year bond.”

Buffett modestly confesses that in those 58 years, he’s made only “about a dozen truly good decisions—that would be about one every five years.” So, for those of you (like me) who have made some bad investments over the years, don’t beat yourself up. Buffett concludes: “The lesson for investors: The weeds wither away in significance as the flowers bloom. Over time, it takes just a few minutes to work wonders. And, yes, it helps to start early and live into your 90’s as well.”

Consistent with this lesson, I learned that investment guru Richard Rainwater (the pride of Fort Worth, may he rest in peace) had a similar track record. Rainwater’s management of the Bass family money got off to a rocky start. Sid Bass revealed: “For the first two years, every single deal I did with them, I lost every single penny.” (Skip Hollandsworth, “Richard Rainwater—The Invisible Man Behind One of the Year’s Biggest Deals,” Texas Monthly, September 1996).

Rainwater ultimately grew the Bass’s $50 million oil inheritance into a $5 billion fortune (Hui-yong Yu, “Richard Rainwater, Billionaire Texas Investor with Foresight, Dies at 71,” The Washington Post, Sept. 28, 2015.) Yu discloses that those early losses ate up $20 million of the $50 million inheritance.

At this year’s TIGER 21 annual conference, real estate mogul Sam Zell added further support to this thesis. Not every deal will be a home run, or even a triple, double, or single. “Baseball players get paid $25 million if they get a hit one out of every three at bats.” Just being right on a portion of deals will more than offset the losers.

For those like me who have missed plenty of at-bats over the years, I hope this makes you feel better. We’re in good company. And remember, as I’ve quoted my mentor Jay Hughes in past posts, financial capital is only one of five sources of wealth. Don’t minimize the importance of human, intellectual, social, and spiritual capitals. I’ll punctuate that message with the brilliance of my wife of 44 years, Laurie: “In measuring your success in life, dollars and cents isn’t the right way to keep score.” Now I really feel better!

Marvin E. Blum

Marvin Blum’s son Adam Blum, pictured here with Warren Buffett, as the Blum family prepares for its annual pilgrimage to attend the 2023 Berkshire-Hathaway Annual Meeting.

Spring Cleaning: Time to Clean Up Mistakes in Your Will

Spring has sprung, and with it comes the perfect time for some spring cleaning. For me, that takes me outside to spruce up my yard (or as we call it in the Blum family, “Marvin’s Garden”). But spring is also the ideal time to do an estate plan clean-up.

Cheryl Winokur Munk offers some great tips in “The Biggest Mistakes People Make With Their Wills” (Wall Street Journal, Feb. 16, 2023). Here are some of her ideas, along with a few extra tips of my own:

1. Not having a Will: The statistics are shocking on the number of people who don’t have a Will, even among high-net-worth individuals. Among the many who overlook having a Will are young adults. If you or your kids are 18 or over and don’t have a Will, the state has one for you, and you won’t like it.

2. Procrastinating: Though it’s tempting to keep putting off estate planning, time is not our friend. The pandemic reminded us that we’re all mortal. Moreover, tax laws are likely to change, taking away some of the best tools in the estate planner’s toolbox. Note that the $12,920,000 exemption cuts in half at midnight December 31, 2025, so it’s a “use it or lose it” situation.

3. Leaving an Inheritance Outright Instead of in Trust: In addition to the risks of passing assets into unprepared hands, leaving an estate outright exposes it to creditors, divorce, and estate tax. A carefully crafted trust can protect the inheritance for future generations.

4. Overlooking Digital Assets: Take steps to make sure someone has your passwords and private keys so they can navigate your digital wallet when you’re gone.

5. Not Updating Regularly: Your assets change, as do the people in your life, so make sure to check whom you’ve named as beneficiaries, guardian for your kids, executor, and trustee. The Blum Firm’s rule-of-thumb is to update your Will at each presidential election.

6. Failure to Change Beneficiary Designations: Many forget that certain assets pass outside a Will, such as life insurance, retirement benefits, and pay-on-death bank accounts. Those “non-probate” assets pass to the person you’ve named on a Beneficiary Designation Form, regardless of what your Will says.

7. Not Drafting for Flexibility: Circumstances change, so don’t set things in stone. Make bequests with formulas or percentages instead of dollar amounts. Give beneficiaries a Special Power of Appointment and designate Special Trustees with power to amend.

8. Your Will Is a Public Document: Preserve privacy with a simple “Pourover Will” that leaves your assets to a Living Trust (which is a private document). Retitling assets into the Living Trust while you’re alive avoids probate.

9. Don’t Forget a Charitable Inheritance: Leave your family two inheritances—a trust to provide for their needs, as well as a charitable vehicle they can use to benefit causes meaningful to your family. In addition to carrying on your tradition of giving, such a charitable inheritance creates powerful family “glue.”

10. Leaving Your Heirs in a Cash Crunch: Engage in “squeeze & freeze” planning to reduce estate taxes and explore life insurance solutions to provide needed liquidity.

11. Don’t Ignore Family Dynamics: Face reality about your family and create a thoughtful plan that heads off resentment and conflicts. Engage in facilitated conversations to open up channels of communication and build trust. Otherwise, when G-1 dies, these simmering issues tend to erupt like a volcano.

12. You Need More than a Will: A Will only tells who inherits your assets. Add a Red File to provide other information such as assets, key contacts, and business succession instructions; an Ethical Will (or Legacy Letter) to speak your heart to your heirs; and a FAST Trust to fund family meetings, family enrichment, and travel to foster ongoing family connection.

Let’s enjoy spring and all the promise it offers us. Here’s hoping these tips from “Marvin’s Estate Planning Garden” will inspire you to do some important spring cleaning.

Marvin E. Blum

Caption: For Marvin Blum, spring cleaning means sprucing up “Marvin’s Garden,” but it’s also a great time to spruce up your estate plan and clean up any mistakes in your Will.

“Can We Talk?” It’s Time to Be Candid About Family Dynamics

These were my opening words to the Dallas Council of Charitable Gift Planners: “Can we talk?” (spoken in a New York accent, channeling comedian Joan Rivers and her famous opening line). Having witnessed case after case of what happens when an inheritance falls into unprepared hands, I know all too well the disruption it causes in a family. Joan was joking, but this is no laughing matter. It’s time to “talk” candidly about family disharmony.

I’ve been helping families plan and pass down estates for 45 years. I can say with authority that, in one way or another, every family deals with challenging family dynamics. When you throw an inheritance into that mix, it’s like adding fuel to the fire. As the famous quote goes: “You never really know a person until you’ve shared an inheritance with them.”

Here are a few stories I’ve witnessed that served as wake-up calls to shift me from “head” estate planning to “head & heart” estate planning:

  • A well-meaning grandparent left a trust that doles out a monthly allowance to a grandchild, who now lives a sad and unproductive life in the grandparent’s mansion. The grandchild has no reason to get out of bed in the morning.
  • Siblings at war over control of a family business, a business that has provided generously for three generations, yet is now the source of intense jealousy and hate.
  • Battling siblings challenging a deathbed Will that left family legacy assets all to one child instead of equally to all three.
  • Attending a conference for owners of Family Offices, where the session garnering the biggest turn-out and interest wasn’t a session on investing, tax planning, estate planning, or money management. It was a presentation on substance abuse and addiction. Every family in attendance was dealing with this problem at some level.
  • My own brother’s death at age 65, where the reality hit me hard that a stack of estate planning documents isn’t just about trust structures and saving tax; those documents affect lives. We need to think carefully about the impact of our planning on loved ones we leave behind. It’s not just a bunch of words.

I give a lot of speeches on the topic of Family Legacy Planning, searching for ways to help families improve the odds of multi-generational success. I’ve shared a similar PowerPoint with you before, but for convenience, here’s a link to my recent Dallas speech “In Search of ‘Family Glue.” The statistics are daunting, as 90% fall victim to the adage “shirtsleeves to shirtsleeves in three generations.” In this speech, I covered the “Best Practices” of the 10% who succeed.

We will soon wrap up the eight-day Passover holiday, and it brings to mind a part of our Passover Seder celebration where the youngest in the room asks “The Four Questions.” During the Seder, we offer answers to those questions. Similarly, I opened my speech with a different version of Four Questions, along with suggested answers. Here’s a recap of that Q & A:

  1. Q: What keeps you awake at night? A: It’s usually not your money or your investments; most of the time, it’s your family—wanting them to live happy, productive lives.
  2. Q: To what end have I created this wealth? A: My hope is that the assets I leave behind will be used for good and not tear apart my family.
  3. Q: What’s the right amount to leave your kids? A: It’s the amount they’re prepared to receive.
  4. Q: Are your kids and grandkids ready for the inheritance coming their way? A: If not, it’s important to start taking intentional steps to prepare them for it.

As a final point, I’ll reiterate that the “inheritance” that’s passing down to your loved ones isn’t just money. As Jay Hughes teaches in Family Wealth: Keeping It in the Family, the word “it” doesn’t mean money. “It” refers to five sources of family wealth: Financial Capital, Human Capital, Spiritual Capital, Social Capital, and Intellectual Capital. Hughes quotes a grandmother who got “it” when she said: “Our family has always been rich, and we’ve sometimes had money.”

Wishing all a meaningful holiday experience during this spiritual season,
Marvin E. Blum

Marvin Blum had the recent privilege of speaking about “Family Glue” to the Dallas Council of Charitable Gift Planners.

Congratulations to Kandice R. Damiano and Beth Hampton

Kandice R. Damiano and Beth Hampton have been recognized as 2023 Texas Rising Stars in Estate Planning & Probate by Super Lawyers®.
 
Kandice Damiano is Partner in The Blum Firm’s Fort Worth office. She focuses her practice on a range of estate and business planning matters involving trusts, closely-held entities, taxation, and high net worth individuals and their families. This is Kandice’s sixth time to be honored as a Super Lawyers Texas Rising Star.
 
Beth Hampton is Senior Associate in The Blum Firm’s Fort Worth office. Beth represents clients in a variety of probate and guardianship matters. This is also Beth’s sixth year to be honored as a Super Lawyers Texas Rising Star.
 
Super Lawyers is a rating service of outstanding lawyers who have attained a high degree of peer recognition and professional achievement. The selection process includes independent research, peer nominations, and peer evaluations. 
 
Please join us in congratulating Kandice and Beth!

Culture Eats Strategy for Breakfast

In last week’s post, I expressed gratitude that some hard lessons learned early in my career informed me how to build a caring culture at The Blum Firm. My mission was to create a firm where every team member could thrive, and no one would dread coming to the office. We spend most of our waking hours at work. It needs to be a positive experience.

I shared the journey of my connection with Ed Copley, who grew from being my once feared boss at a big law firm to now being my beloved colleague and Senior Counsel here at The Blum Firm. In discussing that miraculous evolution with my best friend Talmage Boston, I gained some powerful insights. Talmage had run into Ed recently and they talked about how happy Ed is at The Blum Firm and how close Ed and I have become. Talmage credits the environment at The Blum Firm for creating an atmosphere where co-workers can bond and find career satisfaction: “In our personal lives, relationships are everything. In the workplace, culture is everything.”

Talmage followed up that wisdom with a quote from Peter Drucker I’d often heard but never fully understood: “Culture eats strategy for breakfast.” Jacob Engel, in an article for Forbes Coaches Council, enlightened me. “Culture is the secret sauce that keeps employees motivated and clients happy.” Engel uses two stories to illustrate his point.

1. Everyone at Nathan’s security services business had a can-do attitude. Leaders modeled humility, confidence, and integrity. The company’s culture included:

  • Caring about each other and their customers.
  • Empowering everyone to do their best.
  • Striving for feedback, collaboration, and diversity.
  • Reaching for the stars without fear of failing, and if you fail, “at least you will land on the moon.”

It’s no wonder that Nathan’s team gave their all, and his business prospered. “It wasn’t empty talk or something nice on the wall. They knew that the company’s culture was the secret sauce behind their success, and they religiously followed it.”

2. In contrast, Charles put emphasis on processes rather than culture. Instead of caring about each other, there was constant infighting. No one took responsibility for failures. “Culture starts at the top, and as long as the leaders were finding excuses for nonperformance, everyone else did the same.” Is it any wonder Charles’ business was suffering? Processes and strategy, unsupported by a strong culture, will not sustain a business.

Moreover, creating that culture starts at the top. I continually strive to strengthen our culture at The Blum Firm. I’ve been told that even the simple things like my morning walk-arounds to greet each person one by one makes a difference in their day. So do our monthly birthday celebrations and Wednesday lunches. Building a strong culture requires constant care and feeding, and we can always improve. I’ll keep working at it forever.

Culture “eating” strategy signifies that culture is paramount, and it gobbles up processes, rules, and strategic plans for breakfast. Structures are important, but they take a back seat to culture. Putting primary emphasis on strategy and prioritizing it over people (such as adopting a new strategic plan and pushing out good people) destroys culture, which in turn destroys a business. Reacting to my post “It Takes a Team,” attorney Zachary Oliva summed it up: “Culture drives everything!”

As I learned from my mentor Tom Rogerson of GenLegCo., culture drives the success of a business, but it also drives the success of a family. These same principles, modeled by a family’s leaders, can build a strong family culture. Elaborate estate plans with trusts and entities are important, but for a family to succeed and prosper from generation to generation, those strategies must be built on a solid family culture foundation.

Strong core values, caring about each other, celebrating each person’s strengths, honest feedback, encouraging and empowering one another, modeling good behavior—those are the building blocks for a rock-solid culture, essential to sustaining both a business and a family.

Marvin E. Blum

Join Marvin Blum in intentionally creating a strong culture for your business (and your family).

Ed Copley & My Journey from Fear to Friend

I’ve written recently about my journey to create and grow The Blum Firm. As with most endeavors, the path from then to now wasn’t a straight upward sloping line. Especially in the early years, it was more of a roller coaster, replete with mistakes (aka “teachable moments”) and a lot of self-discovery. I’d like to share how one such early “mistake,” seasoned by the passage of time and my corresponding maturity, grew into one of my greatest blessings.

In the summer of 1976, after my first year of law school, I worked in the tax department of Price Waterhouse, and the experience was a perfect match for me. The following summer, I decided to intern at two law firms—one in Fort Worth and one in Dallas—to learn more about a law firm career path. As a Fort Worth boy, my hometown law firm was an easy fit. On the other side of the Trinity River, the Dallas law firm experience was a challenge for me—bigger, faster, and more high-octane. Was it also a fit? Not so much.

The head of the tax department at the Dallas firm was a brilliant, hard-working, and hard-charging man with massive responsibilities on his shoulders. I admired him but was too intimidated to try to forge a connection with him. Once I decided that firm wasn’t the place for me, I made no effort to build a relationship with him. Given how that clerkship went, I assumed he had no interest in me either. I also assumed I’d likely never have contact with him again. His name: Ed Copley.

For decades, that name struck fear in me, conjuring up negative memories of that clerkship experience. As decades unfolded and my Fort Worth law practice grew, it turns out that Ed Copley and I indeed reconnected. He was representing a matriarch in a complicated estate planning transaction that required her children to hire their own lawyer. Lo and behold, the children hired The Blum Firm, arousing fear in me that my relationship with Ed Copley would be tense.

To my surprise and relief, my interaction with Ed was the opposite. He was collegial and welcoming of my input. He treated me, many years his junior, with respect. My fear of Ed Copley melted away.

The story gets better. As The Blum Firm grew, we opened a Dallas office which quickly became vibrant. Our Dallas staff included a senior attorney, Kent McMahan, who had just retired as head of the Trust & Estate department at Fulbright & Jaworski. Still robust, Kent continued his career at The Blum Firm, serving as a powerful mentor to our team. Sadly, Kent passed away, leaving a vacancy I wanted to fill with another senior attorney. Guess who I called to recruit? You got it—Ed Copley!

For the last seven years, Ed has been Senior Counsel at The Blum Firm, bringing extraordinary wisdom, intellect, and kindness to our firm every day. Ed is the consummate role model. We all look up to him and learn from him. Most of all, I regard Ed as a close friend, and our relationship is one of the greatest blessings in my career.

If someone had told me in 1978 that one day Ed Copley would be working at a law firm with my name on the door, I’d have never believed it. What a difference 40 years can make! It still blows my mind, and it teaches me so many lessons. First is to fight off our fears and intimidations and be open to connecting with people in positions of power. They don’t bite, and we can learn so much from them. I now realize the problem wasn’t Ed; it was me. Second is to believe that feelings can change. We evolve and heal, if we will just be patient and have faith. And finally, every “failure” is a learning experience and opportunity to grow. I look back now on that “Big Law” clerkship where I wasn’t a fit and am grateful it helped inform me how to chart a career path and build a law firm (and law firm culture) of my dreams.

To my dear friend Ed, thank you for not giving up on me and for teaching me so much.

Marvin E. Blum

Marvin Blum’s journey with Ed Copley (right), Senior Counsel at The Blum Firm, has come a long way from its rough start in the summer of 1977.

Life Insurance May Be Your Family’s Ideal Solution

Let me clarify at the outset that I don’t sell life insurance. However, The Blum Firm is a big fan of life insurance as a solution to many estate planning challenges. In my speech this month to the Dallas Estate Planning Council, I described seven situations where life insurance came to the rescue (click on this link for my presentation on “Life Insurance Planning Opportunities”).

I started my speech by mentioning that I’m about to attend the 45th reunion of UT Law School’s class of 1978. I reflected on the estate planning world of 1978 compared to estate planning in 2023. If an estate planner from 1978 came back to hear my speech, he would hear a whole new vocabulary and wonder, “What is this foreign language Marvin’s using?” SLATs, Blended Families, Loan-Regime Split Dollar, Mixing Bowl Partnerships, PPLI, Life Settlements, FAST Trusts—none of those were part of estate planning parlance when I started my law practice 45 years ago. Their heads would be spinning.

In this new world of estate planning, planners think “outside the box” to derive creative solutions to address our clients’ needs. Many of those solutions involve life insurance. Here’s an overview of the topics I covered:

  • Each spouse’s SLAT (Spousal Lifetime Access Trust) may buy life insurance on the other spouse to replace assets in the deceased spouse’s SLAT that will benefit the children at the first death.
  • If you love your grandchildren equally, consider a life insurance policy that passes equally to your grandkids, per capita rather than per stirpes.
  • For today’s “Blended Family,” I identified five situations where life insurance can help preserve family harmony.
  • Loan-regime split dollar life insurance can help you “have your cake and eat it too,” removing assets from the estate but preserving a stepped-up basis at death.
  • Using a “Mixing Bowl Partnership” can enable you to shift basis from one asset to another, allowing you use an appreciated asset to buy PPLI (Private Placement Life Insurance) without incurring tax on the gain.
  • Before cancelling a policy, consider selling it in a Life Settlement, often for far more than the policy’s cash value.
  • Create a FAST (Family Advancement Sustainability Trust) funded with life insurance to pay for family retreats, family travel, maintenance of legacy real estate assets, and overall family enrichment after G-1 is gone.

I closed by urging estate planners to address these topics with our clients. Not only will it help our clients and their families achieve their goals, it will also help show our clients that we truly care about them. I concluded by quoting Teddy Roosevelt: “People don’t care how much you know, until they know how much you care.”

Marvin E. Blum

Marvin Blum was honored to speak about “Life Insurance Planning Opportunities” to the Dallas Estate Planning Council on March 2, 2023.

White Belt: Mind; Black Belt: Heart—The Martial Arts of Estate Planning

No where is the struggle of listening to your heart versus your head more potent than when engaging in estate planning. When designing an inheritance, my clients are often torn between doing what their head tells them when their heart is pulling in the other direction. I submit that in estate planning, it’s not an “either/or” (head or heart) but a “both.” And for the sake of multi-generational success, the heart is the more dominant force.

This message became clear to me on a recent trip with my wife Laurie to Lake Austin Spa to celebrate our 44th wedding anniversary. For those who know me, it comes as no surprise that I spend such spa getaways going from one fitness class to another, driven to make every minute productive. (I’m not resting on vacations; as my mother-in-law often said: “I’ll rest when I die.”) As the photo reveals, one such class was Tai Chi, taught by fitness guru David Robbins.

Tai Chi, like other Eastern disciplines, is a mix of body, mind, and spirit. At the end of the session, Robbins challenged us to interpret the phrase “White Belt: Mind; Black Belt: Heart.” I’m no karate kid, but I figured out that in the struggle between the two, the heart takes precedence over the mind. In the world of martial arts, a white belt is a beginner while a black belt represents skill, strength, and experience. A mature person puts his full heart into every effort. While your mind is an important part of the process, to achieve a successful outcome requires a heavy dose of heart.

What does this have to do with estate planning? In my 45-year law journey, I spent my beginning white belt years focused on the “head” side of planning. My primary attention was on the technical and tax aspects of estate planning. As I’ve ventured on toward the goal of becoming a black belt estate planning lawyer, I figured out the critical importance of the “heart” side of planning. It takes both—head and heart.

Numerous wake-up calls lead me to this place: inheritances gone bad, sibling warfare, and unprepared heirs. I repeatedly hear my TIGER21 colleagues say what keeps them awake at night isn’t money or investments, but it’s family matters. Experiencing life cycle events like my brother’s death and the births of my five grandkids awakened me to the role of estate planning in creating a lasting legacy. I took a deep dive into the waters of “FAST” trusts, family meetings, family governance, and preserving a heritage. I understand the need to be intentional about achieving multi-generational connectedness (“interdependence”). It takes more than “hope” for a family to remain strong over the years. Hope is not a strategy.

In my search for a label for this type of estate planning, I’ve considered many options: Family Legacy Planning, Qualitative Estate Planning, Holistic Estate Planning, the Soft Side of Estate Planning, Family Governance Planning, and Family-Centered Planning, but the one I keep coming back to is “Head & Heart” Estate Planning. My Tai Chi class makes me think that label may sum it up the best.

The Blum Firm welcomes the opportunity to assist with both the “head” and the “heart” aspects of your estate planning.

Marvin E. Blum

Marvin Blum’s Tai Chi class at Lake Austin Spa reaffirmed his commitment to “head & heart” estate planning.

Planning for the Other “Baby” You Raised—Your Family Business

I was recently honored to deliver the keynote address for a symposium sponsored by the Purposeful Planning Institute. The topic was the one I frequently describe as “the most neglected area of estate planning:” Business Succession Planning. Click here for a copy of my PowerPoint.

In the realm of “head and heart” estate planning, transitioning a family business draws heavily from both the head and the heart. All business transfers present challenges for a founder, whether the transfer is to family members, insiders/employees, or outside third parties, but the sale to third parties tends to be most challenging. Indeed, unless we pay sufficient attention to the owner’s personal transition, the transaction almost always fails. Here are three examples where The Blum Firm successfully shepherded the process of selling a business through to closing.

  • Founder and his wife observed that they had done their job educating their children and setting them up in good careers. Ready to retire, charitably inclined, and seeking a steady lifetime stream of income, they transferred their business to a Charitable Remainder Trust (“CRT”). (Note that there are special income tax considerations that apply when transferring a business to a CRT.) The CRT sold the company, deferring income tax on the sale. The tax was paid gradually over the years as the CRT made annual payments to the couple (and later, after the husband died, to the surviving wife). In addition to financial peace of mind, the couple enjoyed knowing that their favorite causes would benefit when the remaining trust funds pass at the survivor’s death to a Donor Advised Fund.
  • The owners of a legacy family business received an unsolicited offer for considerably more than they thought the company was worth. Resisting the temptation to give a quick “yes,” they hired a broker to take the business to market. Four more suitors surfaced and engaged in a bidding war. They ultimately sold to a strategic buyer who paid four times the original offer, in cash. Each child owned some shares and received a generous payout. The bulk of the proceeds went to the parents, who then created a Family Foundation which they enjoy operating. Since the children each have their own wealth, the parents are leaving their estate to the Family Foundation.
  • The self-made creator of a major enterprise was eager to monetize the value of his business and lighten the burden of being the sole “captain of the ship.” He declined multiple offers from private equity firms for fear they might burden the business with debt and lay off employees (whom he considered like family). Instead, he sold the business to a major conglomerate, getting the value out of the company but under an arrangement where he could stay on and run it for as long as he wishes. Also charitably minded, the founder and his wife are donating a substantial portion of their wealth to a Family Foundation.

These three transactions addressed the founder’s head needs as well as heart needs, thereby making it to the finish line with a successful closing. Estate planning advisors are uniquely positioned to help business owners address both the quantitative (head) and qualitative (heart) aspects of business succession planning. I applaud the work of the Purposeful Planning Institute for training advisors to deal with both aspects—in their words, “to fuse the technical aspects of Estate Planning and Wealth Management with relational and legacy planning.” I was honored to be on the PPI Symposium faculty and serve as a champion for the cause.

Marvin E. Blum

Marvin Blum delivers keynote on “Business Succession Planning” for the Purposeful Planning Symposium.

Be Spontaneous and Make a Memory!

I’m an estate planning lawyer who urges people to be careful planners. In my own life, I’m a cobbler who wears my own shoes. I try to plan every detail and contingency in my life. On top of that, I’m extremely practical. That’s me—pretty much a boring, practical planner. (At least I’m self-aware.) I don’t do spontaneous.

So picture this scene. Last Thursday night, after a full week of travel, work, and events every evening, I was desperate for a weekend to recharge. A text arrives. It’s my New York daughter Lizzy, who just scored two Saturday tickets to “Funny Girl,” a perfect father-daughter outing. My immediate response: “I can’t do that. It’s too last minute.” Lizzy wasn’t accepting that. Her reply: “YOLO.” I figured it out—You Only Live Once. My wife Laurie added: “One day, you won’t be able to travel. Do it while you can. Also, you’d drop everything for something bad, so why not drop everything for something good?” Minutes later, I’m booking a 24-hour trip to New York.

I’m writing this post on the flight home, tired but grateful that I broke out of my practical planner mold. Last night with Lizzy was a mountaintop moment we’ll both cherish forever. The show was terrific, but more than that, we made a lifetime memory. Lizzy and I share a lot of the same wiring. The highs and lows of Fanny Brice’s journey as an entertainer resonated with both of us. We felt that joy and pain deeply, and it was even richer because we felt it together.

I had almost backed out. Lizzy discovered that the title role was being performed by an understudy. After a brief internal debate, I proceeded with the trip and figured if it’s not performed by Barbara Streisand, what’s the difference if it’s Lea Michele or someone else? Good decision. The understudy was brilliant.

The last time I did something spontaneous was 12 years ago. Leaving an event, friends invited Laurie and me to join them for five days on a yacht—leaving the very next morning! Again, the practical planner in me instantly declined. Then Laurie set me straight. I reversed my decision, and we had the best getaway ever. I’m grateful to have a wife and daughter who challenge me when my brain is yelling “this makes no sense.” Sometimes we should get out of our comfort zone and do things that make no sense to us. The reward is worth it.

At this point in my life, my top two priorities are relationships and memorable moments. Being practical almost deprived me of a chance to check both those boxes. I suppose a little spontaneity looks good on me, maybe once every dozen or so years.

I’ll close with this wisdom, which sums up my night with Lizzy (sing along with me): “People, people who need people, are the luckiest people in the world.” Indeed, I am.

Marvin E. Blum

Marvin Blum made a spontaneous trip to New York to join his daughter Lizzy Savetsky at “Funny Girl,” totally out of character but totally worth it!

Putting a Big Red Bow on Your Estate Plan

I spent Valentine’s Day in Midland, Texas, talking about putting a big red (Valentine-worthy) bow on top of your estate planning package. After signing the package of estate planning documents, our work is not complete until we add the bow on top. The red bow is a “Red File,” a collection of information your family needs to know that is not in your estate planning documentsClick here for a copy of my presentation.

We have described the Red File in a previous post (see “Create a ‘Red File’ to Prepare Your Heirs for What’s Coming”), but the topic is so important it merits covering again today. A Red File provides your family with a roadmap to guide them in four key areas:

  • Your care during incapacity
  • Estate administration upon your death
  • Succession planning for your business
  • Creating a lasting legacy

It includes items such as key contacts, passwords, caregiving wishes, and heartfelt reflections.

A Will tells who inherits your assets, but it doesn’t tell what you own or where those assets are located. Handing an executor a Will without more information is like telling them where to drive your car but not telling them where the keys are.

Like most estate planning tasks, it’s tempting to postpone creating a Red File until “later.” However, playing the waiting game is risky. Once dementia sets in or a traumatic brain injury occurs, it’s too late. Furthermore, death often comes without advance warning. The leading cause of death in the U.S. is heart disease. For two-thirds of women and half of men, their first symptom was death—not chest pain, not discomfort in an arm, not shortness of breath.

Given the uncertainties, I urge all to complete our Red File checklist. This guide is forever a work-in-progress. If you think of items we should add, please forward your ideas to us. We welcome your input to continue improving this valuable roadmap for your loved ones.

Marvin E. Blum

Marvin Blum speaking to the Midland-Odessa Business and Estate Council on “A Red File: Putting a Bow on Top of Your Estate Plan.”

It Takes a Team – and I’m Mighty Proud of Ours

In a recent post I told the story of my journey to create and build The Blum Firm, learning from mistakes along the way (see “When Failure Happens, Send a Thank You Note”). I shared my efforts to create a caring culture, partnering with like-minded colleagues driven to provide first-class estate planning to our clients.

Today I’d like to share an experience from eight years ago that affirmed my efforts were bearing fruit. I received a call out of the blue from the CFO of a family office, engaging in a nationwide search for new estate planning counsel. Months later, the CFO called back to say that after an extensive search, The Blum Firm emerged in first place. Honored and humbled, I wanted to learn more about who we were through their eyes. Why us? The response:

  • The top credentials of our attorneys.
  • The creative “outside the box” planning we provide.
  • The size of our team, as a deeper bench would enable us to staff multiple projects simultaneously.
  • The younger age of most of our attorneys—more likely to be here to assist G-3 and G-4 in years to come.
  • Our reputation for quality work and service.

We’ve now represented this family for eight years, and I’m gratified they often serve as a reference for us. In describing The Blum Firm to others, they add another element to the list—the caring service and responsiveness of our team.

In today’s post, I want to pay tribute to The Blum Firm’s amazing staff. In addition to assembling dedicated attorneys, we take equal effort to hire the best and brightest for the other half of our law firm family. Our paralegals, legal assistants, and all the other members of our support team repeatedly go above and beyond to help us achieve our mission: caring for our clients and each other, collaborating with other advisors and among ourselves, and creating a community of character and talent. Each takes pride in bringing his or her best to work every day. And there’s no ego—we just want the best solutions for our clients.

I’ve seen this commitment in action day after day. Winding the clock back to 2000 when a tornado destroyed our office, our team engaged in the two-year herculean task of sorting through hundreds of boxes of mixed-up papers laden with razor-sharp glass shards to put our clients’ files back together. We’ve been there for client emergencies, literally 24/7, to provide urgent documents and, even more importantly, peace of mind. Hospital visits, home visits, funerals, literally and figuratively handholding for recently widowed spouses—there’s a can-do spirit and a positive attitude. We’re here for you, and we care.

The Blum Firm work community is truly a family. On this Valentine’s Day, I’m sending love to this extraordinary team.

Marvin E. Blum

Marvin Blum pays tribute to The Blum Firm team for always going above and beyond.

The Role of Litigation Attorneys in Estate Planning

Marvin Blum and Keith Morris, two of our attorneys at The Blum Firm, co-authored an article in this month’s issue of Trusts & Estates magazine on “The Role of Litigators in a Modern Estate Planning Practice.” 
 
The article tracks the evolution of The Blum Firm from its early days as a solo-lawyer firm to its current expansion of over 30 attorneys. With a larger team, the firm is able to offer clients more specialized services, including trust and estate litigation.
 
The addition of fiduciary litigators to our practice has proven invaluable. Their knowledge and perspective have helped fine-tune how we draft documents and how we approach delicate situations. 
 
Marvin (as an estate planner) and Keith (as a litigator) pooled their perspectives to write the article. Check out the article here or here.

Senator Dianne Feinstein’s public battle with her third husband’s daughters highlights the perils of inheritance in a blended family.

You Can’t Take Your Leftovers with You—So How Much Do You Leave to Your Kids?

My 10-year-old granddaughter Stella Savetsky posts a weekly Instagram video, Stella’s Torah Corner, teaching that week’s Torah portion. I always learn a lot from her posts, including her most recent one on the portion Beshalach. After escaping slavery in Egypt, Jews wandering in the desert received daily manna from heaven to sustain them. Whatever manna they didn’t finish at the end of the day was destroyed. They couldn’t take the leftovers with them. Stella wisely provided a Torah lesson that resonates with her estate planning Zaidy: when you die, you can’t take your leftovers with you. Accordingly, you need to plan carefully for where those leftovers should go upon your death. Guiding people in that important decision just happens to be my life’s work.

When parents consider where to leave their “leftover” assets, the knee-jerk reaction is to leave them to their kids. However, after careful analysis, the decision is actually more complicated. How much is the right amount to leave your kids? Returning to the article featured in a couple of my recent posts “The Getty Family’s Trust Issues” (The New Yorker, Jan. 23, 2023), Evan Osnos declares: “The question of how much to leave your kids has been with us since the Ice Age…. [W]hen inheritance patterns reach extremes, they wreak social and political havoc.” All are familiar with stories of inheritances gone bad. Osnos cites two famous examples: “Even some of America’s greatest entrepreneurs saw inheritances as a handicap—a ‘misguided affection,’ as Andrew Carnegie put it. William K. Vanderbilt, a descendant of Cornelius, observed, evidently from experience, that inherited wealth was ‘as certain a death to ambition as cocaine is to morality.’”

What’s the answer? Warren Buffett’s famous advice is “enough so they can do anything, but not so much that they can do nothing.” My position is that the right amount of inheritance is the amount your heirs are prepared to receive. Any amount is too much if it lands in unprepared hands. Having witnessed all too often the disastrous consequences of money going to the unprepared, I embarked on a Family Legacy Planning initiative to encourage families to engage in a thoughtful family meeting process to equip future generations with the skills (financial and emotional) to handle whatever amount is coming their way.

Parents often joke with me that they plan to spend their last dollar on the day they die. Obviously, that only works if you have a crystal ball telling you that date. The reality is that, in the end, there will be “leftovers” to distribute. Here’s my suggestion for a three-part inheritance to leave your heirs:

  • A portion as a traditional inheritance passing to a trust that provides for the health, education, maintenance, and support of your heirs, protected from creditors and divorces;
  • A portion to a charitable vehicle, such as a private foundation or donor advised fund, giving your heirs a second inheritance they can use to benefit causes important to the family; and
  • A portion to a FAST Trust (Family Advancement Sustainability Trust) where funds are not to be distributed to beneficiaries but are to be spent only on family enrichment activities such as family retreats, family travel, preserving a heritage, maintaining a legacy property, and providing programs to educate the family on philanthropy, entrepreneurship, and other worthwhile endeavors.

As you ponder where to allocate your leftovers at death, I urge you to work with advisors to guide you through a thoughtful process. The goal is to design an estate plan that improves the odds of multi-generational success, passing assets down to responsible, empowered (and not entitled) heirs.

Marvin E. Blum

Marvin Blum’s granddaughter Stella Savetsky posts Stella’s Torah Corner on Instagram to teach the weekly Torah portion. Last week’s post contained an estate planning lesson.

Pay Attention to the Signs

Last week’s post explored themes covered by The New Yorker magazine’s article “The Getty Family’s Trust Issues” (Jan. 23, 2023). In writing the article, author Evan Osnos interviewed me for my views on current trends in estate planning. There’s a lot happening in the world of trusts, estates, and tax planning.

For over three decades, we have been living in the “Golden Age” of estate planning. As Osnos quoted me in the Getty article: “‘Conditions for leaving large sums have never been better,’ noting that ‘Congress has not closed an estate-planning loophole in over thirty years.’” However, in the world of my wise friend Mary Staudt, it’s time to “pay attention to the signs.”

Until recently, the estate planner’s tools in our golden toolbox were by and large flying under the radar. Then came 2021. As the pendulum started swinging from Trump-right to Biden-left, writers like Osnos began exposing our tools to the general public. Multiple articles in mainstream media began igniting a public outcry to “Tax the Rich,” as displayed in the photo of Rep. Alexandria Ocasio-Cortez’s met gala gown. Senator Bernie Sanders cleverly labeled his legislation “For the 99.8% Act,” asserting that the tax increases would only hurt 0.2% and would help 99.8%. Senator Elizabeth Warren touted her “Billionaire’s Tax,” which actually applied to anyone with a net worth of $100 million, but the “billionaire” label was more bombastic. Provisions such as these came within two votes of becoming law.

Political turbulence and anti-rich public sentiment are sending a warning call that one of these days “a change is gonna come” (to quote Sam Cooke). With that backdrop, here’s my take on current trends in estate planning.

  1. Take advantage of “squeeze & freeze” tools to reduce estate tax while the opportunity exists. Those who complete planning before a law change will likely be grandfathered.
  2. Engage in “Use It or Lose It” planning to lock in the $12,920,000 estate tax exemption before it cuts in half at the stroke of midnight on December 31, 2025 (when Cinderella’s coach turns back into a pumpkin).
  3. Rising interest rates create a push to do a long-term lock-in of today’s low interest rates on intra-family loans but also make certain tools more attractive (such as Charitable Remainder Trusts and Qualified Personal Residence Trusts).
  4. Inflation and the rising cost of living are motivating parents and grandparents to do more to help kids financially now, when they need it, as opposed to waiting until later to inherit. Ways to help include low-interest loans (such as home mortgages), annual $17,000 gifts, medical/education payments, Section 529 Plans, and gifts to Defective Grantor Trusts.
  5. The economic downturn actually creates the ideal timing to do estate freeze planning such as 678 Trusts, SLATs, and DGTs. Resist the psychological urge to wait on planning until values recover, as pre-recovery planning beats post-recovery planning.
  6. As a premier advocate for both “head” and “heart” estate planning, I note that the pandemic has stimulated a trend to engage in Family Legacy Planning. We became more aware of our mortality, prompting introspection: “To what end have I created this wealth?” Sheltering at home made it more difficult to sweep family dynamics/dysfunction under the rug, encouraging facilitated family meetings aimed at improving communication and trust.

While these trends are on the rise, many still fall victim to the greatest obstacle in estate planning—procrastination. I urge all to recognize that time is flying by, and with all the signs that “change is a-coming,” the passage of time is not our friend.

Marvin E. Blum

The met gala gown worn by Rep. Alexandria Ocasio-Cortez is literally “A Sign of the Times” igniting public sentiment to “Tax the Rich.”

Lessons from the Getty Family Estate Plan

In this week’s issue of The New Yorker magazine, Evan Osnos’ article “The Getty Family’s Trust Issues” contains a lot of important messages about Family Legacy Planning. Although the premise of the article is to explore how oil tycoon J. Paul Getty’s heirs have successfully avoided paying millions of dollars of tax, there is a lot to learn from the Getty family story beyond how they managed to save tax. As he was writing the article, Osnos contacted me to discuss not only Getty-type tax saving tools, but broader trends in estate planning. I was honored to provide input for the article about the planning opportunities in the “Golden Age” of estate planning but cautioned that the Golden Age likely won’t last forever.

First, let’s address some of the tools. Osnos points out that J. Paul Getty, America’s richest person, avoided estate tax on his art, property, and land by bequeathing them to a museum trust that established The Getty Center, one of the most visited of all America’s art museums. Paul’s son Gordon Getty, a San Francisco philanthropist, left four sons from wife Ann plus three daughters from an extramarital affair. Gordon included his three daughters in his estate plan by creating a trust for them called the Pleiades Trust, named for a group of Greek mythology sisters who had affairs with Olympian gods and were rewarded by becoming stars in the sky. Much of Osnos’ article is devoted to lengths taken by the Getty family to save tax, specifically by domiciling the trust in Nevada in order to escape California state income tax on the trust income. The trust tax arrangement is exposed by the Gettys’ disgruntled wealth manager Marlena Sonn.

Osnos also references other favorite techniques in the estate planner’s playbook, notably SLATs, CRUTs, BDITs, and GRATs. He shares that the Gettys share the usage of such tools with other mega-wealthy families such as heirs of Walmart founder Sam Walton and casino owner Sheldon Adelson. Other dynastic families also receive shout-outs for their efforts to utilize such tools, including owners of Gallo wine, Campbell’s soup, Wrigley gum, Family Dollar, Public Storage, and Hot Pockets. Osnos also highlights the strategy of holding appreciated assets until death and getting a stepped-up basis, pointing out that Jeff Bezos would avoid tax on a hundred billion dollars of Amazon stock gains if he died tomorrow. To pay living expenses without having to sell the stock during life, many owners of appreciated stock borrow against the stock and live off the loan proceeds, holding the stock till death (described as “buy, borrow, die”).

The important point I want to make is that these techniques are perfectly legal. Osnos draws a distinction between tax avoidance (such as through use of these tools, which is legal) and tax evasion (such as failing to report income or overstating deductions, which is illegal). However, articles like this one and others are shining a light on many of the tools that in prior decades were flying under the radar. Most notably, “For the 99.8%” tax legislation proposed by Senator Bernie Sanders in 2021 aimed to kill a number of these tools but would grandfather anyone who had used them prior to the law’s passage. The law didn’t pass, but the publicity around it stirred up a public sentiment to “Tax the Rich,” as Rep. Alexandria Ocasio-Cortez’s met gala gown proclaimed in huge red letters. As I pointed out in Osnos’ article, “Now that the general public is aware, there is a growing outcry to shut down these benefits. This is a wake-up call that, sooner or later, the tax landscape will likely drastically change.” Those who wish to take advantage of the current opportunities would be wise to act now.

There is more to Osnos’ story about the Getty family than tax avoidance. He also describes competing philosophies among the heirs regarding the purpose of the family wealth. There are different views on where to invest and what causes to support. Dysfunction in the Getty family abounds. Old Paul had five divorces and five sons, whose weddings he didn’t even attend. After his death, the family feud was played out in public view in the courthouse, leading to a forced sale of Getty Oil to Texaco. One of Gordon’s daughters, a beneficiary of the Pleiades Trust, laments that her “abrupt transformation into an heir gave her little preparation for managing a fortune. ‘In exchange for the love I didn’t receive in my life, I got money,’ she said. ‘So, at first, I always felt misery and guilt, and I didn’t know what to do with it.’”

The Getty story is an extreme case of what drives my passion for “head and heart” estate planning. In conjunction with expanding someone’s inheritance through creative tax planning, the estate planning process must also prepare the heirs to be responsible inheritors. Over the last two years, my Family Legacy Planning series has focused on best practices to prepare heirs and bring a family together: family meetings, family governance structure, family mission statement, educating heirs, preserving family history and traditions, business succession planning, writing a legacy letter, family travel—the list goes on and on. Just like the Getty heirs, family members won’t always see eye-to-eye. Communication styles and love languages will differ. But a successful family addresses these matters rather than sweeping them under a rug. The end result is improved communication and trust, as well as family interdependence, so a family is there for each other as a support team when needed.

In my conversation with Evan Osnos, we took a deeper dive into current trends in estate planning. The conversation was stimulated by the Getty story, but my thoughts took off from there. In next week’s post, I’ll highlight more of the modern trends in estate planning that emerged from my involvement with the Getty article in The New Yorker. (The article is available here and here.)

Marvin E. Blum

The New Yorker article “The Getty Family’s Trust Issues” reveals not only Trust estate planning issues, but also issues of trust/mistrust among Getty family members. Marvin Blum was honored to be consulted for the article and quoted in it.

Should I Sell My Business to a Private Equity Firm?

When it comes to selling a business, some opt to sell 100% to a third-party buyer and completely walk away. However, others find it more appealing to “take some money off the table” but keep a stake in the business, keep management intact, and share in future growth. Before rushing to accept an offer, seek professional advice to help you find the business buy-out solution that best fits your family.

In “Private-Equity Firms Eye Family Businesses” (Wall Street Journal, Sept. 19, 2022), Miriam Gottfried explores the world of private equity business acquisitions. A private equity firm is a firm owned by investors who pool their money to buy businesses. Initially known for billion dollar deals to take big public companies private, private equity firms are now shifting focus to smaller family businesses. Very commonly, the bulk of the family’s net worth is tied up in the business. Such private equity deals offer owners another exit option when they wish to diversify their wealth.

Gottfried tells the story of the Lang family, owners of an 80-year-old pet food business, Ainsworth Pet Nutrition. Partnering with celebrity chef Rachael Ray, the firm was poised to take their brand to the mass market. The private equity firm L Catterton, recognizing the country’s growing obsession with pets, spotted an opportunity.

Rather than selling 100%, the Langs sold 42% but parted with control over operations. Under L Catterton’s management, the business expanded its product line and acquired one of the manufacturers of their merchandise. Fast-forward four years and J.M. Smucker Co. bought Ainsworth for $1.9 billion, earning the Lang family eight times what their stake was worth four years earlier.

Another example hits closer to home for me in nearby Greenville, Texas. Polara Enterprises, a 50-year-old family business, makes pedestrian signals to tell the blind when to cross at intersections. Owner John McGaffey held a “beauty contest” attracting 10 bidders (among them six private-equity firms) and sold a majority interest to Vance Street Capital. In acquiring a stake in Polara, Vance agreed to McGaffey’s conditions: no layoffs of its 80 employees, McGaffey holds a seat on the Board, and his son and son-in-law remain executives. “‘I would have loved to have just left it with my boys, but we felt we could get a lot further in terms of our technology if we could get an outside investor, said Mr. McGaffey. ‘I didn’t want to risk all of my own capital.’” McGaffey continues to own a minority stake that will further benefit him if Polara hits it big.

Gottfried offers other examples to illustrate private equity’s entry into the domain of American family businesses. Neal Rosenthal, owner of Manhattan’s Rosenthal Wine Merchant received nine bids, ultimately selling a majority interest to Incline Equity Partners but remaining as CEO. Realizing that his daughter had no interest in taking over, the 76-year-old Rosenthal achieved peace of mind: “I am confident that if I dropped dead today, my business would continue on without me.” Rosenthal Wine Merchant has since acquired one of its distributors and another wine business, but Rosenthal has the peace of mind that it’s not his capital at risk.

Private equity buyouts don’t always have a happy ending. Examples abound where they load up a company with debt, bring in new management, lose ties with the local community, or expand irrationally and break the back of a once profitable business. All can acknowledge the risks. But with a carefully structured deal, private equity offers a business-selling family another solution to consider.

If selling a business is a part of your family’s succession plan, it’s wise to hire a professional firm to help you consider all your options.

Marvin E. Blum

Marvin Blum addresses the trend of private equity firms buying family-owned businesses.

Life After Selling a Family Business: The Challenges May Surprise You

In recent posts, I sounded an alert about the psychological challenges of selling a family business. It’s hard to part with your “business baby” that you gave birth to and raised since infancy. To improve the odds to making it to closing, Denise Logan cautions to plan for not only the transaction but also the transition.

The family needs to recognize how day-to-day life will feel after selling their company. It will likely feel very different, not only for those who work in the business but even for those who don’t. As author Paul Sullivan describes in “What’s Left After a Family Business Is Sold?” (New York Times, Aug. 9, 2019), “A company often holds families together by giving members a shared identity and conferring a status in the community established by previous generations. Without the company, the family’s perception of itself and its purpose can change, and it is often something that members are not prepared for.”

As a prime example, Sullivan tells the story of the Malt-O-Meal family who sold for $1.15 billion to Post Cereal. John Brooks’ grandfather started the cereal business in 1919, and it gradually grew to be the fourth-largest cereal maker in the U.S. Even four years after selling, Brooks “still felt a void in his life. Since the sale, the three branches of the family have gone their own ways, Mr. Brooks said. They are no longer bound by a company or annual meetings or feel the pride of going through the cereal plants around Minneapolis.”

Aside from the void, family members also have to deal with pressure when a high-dollar purchase price becomes public. Old friends may feel intimidated and treat you differently. New “friends” emerge. Who can you trust? Sullivan describes the awkwardness Sabrina Merage Naim felt when her father and uncle sold Chef America, the maker of Hot Pockets, to Nestlé for $2.6 billion. At the time, Naim was in high school. Naim said that at school, once people saw what the business sold for, friends said, “Oh my, you guys have money.”

Here are tips to help families adjust to life after selling a business:

  • Instead of passively investing the proceeds, establish a family office to actively manage the family’s investments, philanthropy, and shared family experiences. Intentionally engage in planned activities to enrich the family. A thoughtfully structured family office can help provide “glue” that the shared business used to provide.
  • Focus more on shared family values than on shared money. Ideally, that process starts long before the sale. Per Sullivan, “agreeing on family values takes time. But done right, those values can become a substitute for the company.” He refers to the Deary family who sold Great Lakes Caring Home Health and Hospice: “But years before the sale, the family had been formulating a plan for its wealth that focused on family values but also held the members accountable. A family scorecard, for example, tracks their progress on 40 items that the family has deemed important, including working hard, investing wisely, and protecting its legacy.”
  • To guard against dissipation of the wealth by high-living heirs (falling victim to the proverb “shirtsleeves to shirtsleeves in three generations”), recognize that passive investment returns rarely match those of a growing business. Brooks urges his Malt-O-Meal heirs to “withdraw no more than one percent a year of his share—still a large amount of money—so that the assets could continue to grow the way his family’s business did.” For future generations to adhere to such a policy requires regular family meetings to educate heirs on investing, family values, family heritage, and the purpose of the wealth. Getting “buy in” from heirs is critical.
  • Join a peer group of similarly situated colleagues. I am actively involved in such a group called TIGER 21. Attending meetings with like-minded peers in a confidential setting allows you to experience lifelong learning, share concerns, and get candid feedback. For me, TIGER 21 serves as my personal Board of Directors. Such a group can help business sellers adjust to life after a liquidity event.

If selling a business is in your family’s future, estate planning advisors can help you plan for all the post-sale challenges. The earlier you start, the better.

Marvin E. Blum

Marvin Blum cites the Malt-O-Meal family as an example of the challenges a family faces after selling a business, offering tips to help such a family adjust.

Matthew Rittmayer & Lani Sandu Promoted

The Blum Firm is proud to announce attorney Matthew Rittmayer has been promoted to Partner and attorney Lani Sandu has been promoted to Senior Associate!

Matthew G. Rittmayer, J.D., is Partner in The Blum Firm’s Dallas office. He is a graduate of Emory University and Texas Tech University School of Law. Matthew joined The Blum Firm in 2020.
 
Matthew has 13 years of experience, initially in litigation before transitioning to estate planning.
He enjoys helping clients establish estate plans that consider both the tax aspects and the non-tax aspects such as family dynamics and efficient transitions from generation to generation. He also works with clients on probate and guardianship matters. 
Outside of work, Matthew enjoys being a new parent, along with his wife Veronica.
 
Lani Payne Sandu, J.D., LL.M., Senior Associate, offices in our Fort Worth office. She has been with The Blum Firm since 2016. Lani is a graduate of Baylor University and SMU School of Law. Following law school, she went on to earn an LL.M. in Taxation from Georgetown University Law Center. Lani is fluent in both Spanish and French.
 
Lani has over 11 years of experience in tax and estate planning. Prior to joining the firm, she was with Deloitte & Touche LLP and KPMG LLP. Lani enjoys working with clients to tailor an estate plan specific to their needs. In addition to the preparation of wills, trusts, and other estate planning documents, her practice also includes probate, asset protection, formation of business entities, and charitable planning.
 
When not working, Lani can be found spending time with her husband and son, traveling, and cooking.
 
We are proud of the depth of talent we have at The Blum Firm and celebrate the enormous contribution Matthew and Lani make. Please join us in congratulating them!

Time Makes Us Older But Wiser

Happy 2023! Thanks for going with me on this weekly journey of wisdom as I now start year three of my Family Legacy Planning blog. Last week, I put a wrap on 2022 by encouraging us to look back to see how far we’ve come from where we started. Observing that journey can inspire us to keep reaching for our full potential as we now embark on a new year.

My focus last week was on the challenge of remining physically fit as time passes. Today. I want to reflect on how the passage of time can improve our mental and emotional fitness. As Melissa Manchester sings in “Come in From the Rain,” “Time has made us older and wiser. I know I am.”

The two below photos show me with my law school buddies (the “Canoe Brothers,” as described in this May 22, 2022 post.) The “then” photo was on a trip to Port Aransas to celebrate graduating UT law school. Our bodies were fit but so were our minds. Our brains worked quickly with what Arthur Brooks describes as “fluid intelligence.” We had instant recall and could spit out calculations and thoughts quickly with precision. That sharp, razor fast intellect comes in handy in starting a legal career.

However, in his recent book Strength to Strength: Finding Success, Happiness, and Deep Purpose in the Second Half of Life, Brooks explains a transition that occurs in our brains as we age. After about age 55, our brains work slower but there’s an improvement in our “crystallized intelligence.” We replace fluid intelligence with the ability to connect dots and see big picture patterns. This skill enables us to make better decisions and give better advice because it is seasoned with experience.

Clients often ask me to provide “gray-haired wisdom” based on my 44 years of real-life lawyering. Sharing guidance informed by my observations over the years may be even more meaningful to them than the lightening-fast reasoning of youth. The Canoe Brothers of the recent canoe trip photo have a different kind of intelligence than the guys in the Port Aransas photo, but it’s a kind of brain power that carries more wisdom.

Another shift that occurs over the passage of time involves our emotional fitness. Whereas “young Marvin” had a wish-list of things he hoped to buy one day, the “mature Marvin” has a different list. I have replaced my desire for things with a desire for relationships. My focus is now on having meaningful connection with thoughtful and thought-provoking people. I achieve that best by becoming part of stimulating communities, such as the Canoe Brothers, colleagues at work, civic groups, and a peer group like TIGER 21. According to Dr. Mark Hyman, “The power of community to create health is far greater than any physician, clinic, or hospital. Science now shows us that a sense of community is correlated to longer, healthier, and happier lives.”

Hyman continues with this advice: “If you want to build a community, volunteering, joining a class, and prioritizing time with loved ones are all ways to strengthen your social bonds and support your health in the process. Get involved in things you care about and your community connections will naturally fall into place.”

As we first look back to our early years and then look ahead to our tomorrows, let’s celebrate the opportunities that the future offers us—opportunities to gain wisdom, create connection with meaningful communities, and achieve not only stronger physical fitness but also stronger mental and emotional fitness.

Marvin E. Blum

Marvin Blum with the “Canoe Brothers” of then and now, a brotherhood bond strengthened mentally and emotionally by the passage of time. Left: Blum in upper right of pyramid, celebrating law school graduation. Right: Blum in center of front row, on a canoe trip with older and wiser law school buddies.

Red File Checklist

Notebook or other centralized source of information that will aid an executor in navigating the waters of estate administration and will make a person’s wishes very clear in the event he or she becomes incapacitated.

Typically a spouse, child, or other loved one takes on the role of executor with only part of the instructions they need. They may know who is to receive mom’s assets, but what exactly did mom own? How many bank accounts did she use? What insurance policies did she have? Was there a safety deposit box? What bills did she owe? Are there magazine subscriptions to cancel? How do I access her email or shut down her social media accounts?

In Section 1, create a centralized file of personal information.
In Section 2, gather the information the family will need for any businesses managed.
In Section 3, create a plan in case of incapacity, including guidance for future care, preferences, and a clear expression of financial intentions. Many individuals assume a family member will take care of them in the event of incapacity, but few appreciate the number of decisions a guardian or caretaker must make on behalf of an incapacitated person. From housing situations to medical treatment to simple living and eating preferences, without guidance, a family member is left to simply guess at what their loved one wanted.
In Section 4, gather information about the legacy you want to leave behind—aside from money or assets.
Section 5 is a list of some of the additional resources available.
Most importantly, once you’ve created your Red File with all of this information, be sure to tell someone where it’s kept. And, be sure to update it periodically.

SECTION 1 – CENTRALIZED FILE OF PERSONAL INFORMATION

You and Your Family
– You– Full legal name, date and place of birth, copy of birth certificate, location of original birth certificate, copy of Social Security card, location of Social Security card, copy of driver’s license, location of driver’s license
– Parents– Mother’s full name, father’s full name, date and place of mother’s birth, date and place of father’s birth
– Children– Children’s full names, dates of birth, copies of children’s birth certificates, copies of adoption paperwork
– Stepchildren– Full names, dates of birth, how related to you
– Grandchildren– Grandchildren’s full names, dates of birth, parents’ names
– Marriages– Spouses’ full names, dates and places of marriages and divorces, copies of marriage certificates, copies of pre-nuptial and post-nuptial agreements, copies of divorce decrees
– Military Service– Branch of military, enlistment and discharge dates, rank at discharge, location of military service record and discharge document (form DD214)
– Contact Information– Phone numbers and addresses for family members and close friends

Legal Documents
– Financial/Durable Power of Attorney– Copy of document, location of original document, who has copies, effective now or upon incapacity, who is named (in order)
– Medical Power of Attorney– Copy of document, location of original document, who has copies, who is named (in order)
– HIPAA Release– Copy of document, location of original document, who has copies, who is named
– Declaration of Guardianship in Event of Later Incapacity– Copy of document, location of original document, who has copies, who is named (in order)
– Directive to Physicians/Living Will– Copy of document, location of original document, who has copies
– Funeral Arrangements Directive– Copy of document, location of original document, who has copies
– Appointment of Agent to Control Disposition of Remains– Copy of document, location of original document, who has copies, who is named (in order)
– Will– Copy of document, location of original document, who has copies
– Living Trust/Revocable Trust– Copy of document, location of original document, who has copies
– Trusts For Your Benefit– Copies of trust agreements, contact information for trust officers, contact information for trustees, what trust owns
– Trusts You Created– Copies of trust agreements, contact information for trust officers, contact information for trustees, what trust owns
– Disposition of Personal Effects– Codicil, Trust Addendum, or Memorandum addressing how to distribute personal effects

Financial
– Financial Accounts– For each checking and savings account, brokerage account, retirement account, annuity: Copy of one statement, contact information for bank/institution, account number, exact name on account, beneficiary designation, signers on the account, online login information, what account is generally used for, what bills are automatically debited from account, what income is direct deposited into account
– Credit and Debit Cards– For each card: Copy of front and back of card, exact name on card, financial account card is linked to (if debit card), copy of one statement (if credit card), what bills are automatically charged to card
– Advisors– Contact information for bankers, investment advisors, financial advisors, attorneys, tax advisors
– Financial Statement– Copy of recent personal financial statement
– Tax Returns– Location of tax returns for past three years, contact information for preparer

Assets
– Real Estate– Copies of deeds and mortgages, location of original deeds, mortgage information (payment amount, contact information for bank, financial account payment is automatically debited from), information on time shares, contact information for property management companies of rental properties
– Business Interests– List of business interests owned, how owner name is styled, contact information for business manager and/or partners, location of documents (corporate documents, buy-sell agreements, stock purchase agreements, appraisals), copies of promissory notes, what
happens to business interests at death
– Consolidated List of All Income Sources– Include source, frequency, amount for all retirement benefits, Social Security, IRAs, annuities, investment dividends, income from rental properties, business income, mineral royalties, trust distributions, disability benefits
– Vehicles (Including Boats, Recreational Vehicles, Trailers)– List of all owned (including make, model, year), location of original title, exact owner name on title, information on loans (including payment amount, contact information for bank, financial account payment is automatically debited from)
– Jewelry, Art and Collectibles– List of valuable items including location of each, copies of appraisals
– Bonds– List of bonds and where kept
– Safe Deposit Boxes, Safes, Storage, Locked Areas– For each: Location, location of your key or combination, who else has key or combination, list of contents
– Hidden Assets– Location of any assets hidden within the home your heirs should be aware of including location of any firearms, money hidden in the mattress, etc.

Home Utilities and Maintenance
– Electricity, Gas, Water, Telephone, Cable Television, Internet, Alarm Monitoring– For each: Copy of one statement, account number, contact information for provider
– House Cleaning, Lawn Care, Landscaping, Pool Maintenance, Pest Control– For each: Contact information for provider, copy of contract
– Home Repair Contacts– For each: Contact information and services used
– Community Association– Contact information, when fees are due and amount

Insurance
– Homeowner’s Insurance– Copy of policy, policy number, contact information for carrier and agent/broker, coverage information, deductible
– Auto Insurance– Copy of policy, policy number, contact information for carrier and agent/broker, coverage information, deductible
– Insurance on Valuables– For policies on jewelry, art, or other collectibles: Copy of policy, policy number, contact information for carrier and agent/broker, coverage information
– Business Insurance– For each worker’s compensation insurance, property insurance, general liability insurance, umbrella policy: Copy of policy, policy number, contact information for carrier and agent/broker, coverage information, deductible
– Health Insurance– For each coverage: Copies of policy and insurance card, contact information for insurance company, member/group number, coverage information, deductible/co-pay information
– Long-Term Care Insurance– Copies of policy and insurance card, contact information for insurance company, member/group number, coverage information
– Disability Insurance– Copies of policy and insurance card, contact information for insurance company, member/group number, coverage information
– Dental Insurance– Copies of policy and insurance card, contact information for insurance company, member/group number, coverage information
– Vision Insurance– Copies of policy and insurance card, contact information for insurance company, member/group number, coverage information
– Prescription Drug Coverage– Copies of policy and insurance card, contact information for insurance company, member/group number, coverage information, deductible/co-pay information
– Medicare/Medicaid– Copy of card, coverage information
– Life Insurance on Your Life– For each policy: Copy of policy and beneficiary designation, policy number, contact information for carrier and agent/broker
– Life Insurance Owned on Someone Else’s Life– Copies of policy and beneficiary designation, policy number, contact information for carrier and agent/broker
– Veteran’s Benefits– Copy of Veteran’s Health Identification Card, information on any benefits currently receiving (pension, disability compensation, medical), information on additional benefits available (life insurance, health care, long-term care, rehabilitation, nursing and residential care, burial and memorial benefits), contact information for closest Veterans Affairs regional office

Medical
– Current Medical Issues– List of current health issues
– Current Health Care Providers– For each: Name, phone number, area of practice
– Medications– List of current medications including dosage and prescribing physician
– Supplements and Vitamins– List of all supplements and vitamins currently taking
– Allergies– List of all allergies including food and drug allergies
– Dietary Restrictions– List of dietary restrictions that need to be adhered to
– Pharmacy– Phone number and address of pharmacy where prescriptions are filled
– Medical Supply Company– Phone number and address for provider of any medical equipment or supplies used
– Medical History– Detailed medical history including vaccines received, surgeries, hospital stays
– Family Medical History– Information on ancestors’ medical health that would be good for future generations to know about in dealing with their own health issues
– Past Medical Records– Contact information for locations of past hospital stays or surgeries, contact information for former physicians

Funeral and Burial
– Legal Documents– Indicate if a Funeral Arrangements Directive or Appointment of Agent to Control Disposition of Remains is included with legal documents
– Grave Plots Owned– Location of plots, copy of deed
– Funeral Expenses Prepaid– Contact information for funeral home
– Funeral Plans– If no Funeral Arrangements Directive, indicate burial or cremation preference, religious considerations, any music preference, any scriptures or prayers to include
– Notifications– Contact information for anyone to notify when you die
– Obituary– Information you’d like included in your obituary
– Photos– Digital copies of lifetime photos you’d like shown at your memorial service

Other
– Subscriptions– List of all club memberships (including country club, gym, Sam’s Club, Costco), airline rewards programs, toll tag accounts, magazine subscriptions and newspaper subscriptions including membership numbers, renewal dates, and contact information for organization
– Post Office Box or Offsite Mailbox– Location, location of your key or combination, who else has key or combination
– Online Accounts– Website, username, and password for all online accounts including email accounts, online banking accounts, social media accounts, online shopping accounts, online entertainment accounts
– Computer Logins– Usernames and passwords to log onto each computer
– Mobile Device Locks– PIN lock for each device

SECTION 2 – BUSINESS CONTINUITY PLAN

For Each Business Managed With a Succession Plan in Place
– Contact Information– Whom family should contact for information on the succession plan
– Company Documents– Location of any buy-sell agreements or stock purchase agreements
– Ownership– How the company’s ownership will be structured
– Management– How the company’s management will be handled

For Each Business Managed Without a Succession Plan
– Contact Information– Contact information for all business partners, employees, advisors
– Emergency Instructions– Any information that will be immediately needed
– Company Documents– Location of all company documents including buy-sell agreements, stock purchase agreements, appraisals, promissory notes
– Management– Who should fill which roles in the company

SECTION 3 – PLAN FOR INCAPACITY

Care Provider
– Do you prefer to live at home with home health care attendants or with a family member? If with a family member, who?
– Is there an adult day care program available that you would be okay going to?
– If you can’t be cared for in a home environment, which long-term care facilities do you prefer?
– If the above-named facilities cannot be used, would you prefer that facilities with a particular affiliation or close to a particular person be given preference?
– If you don’t have children who can guide your care, who will implement your wishes for care during your remaining lifetime?

Personal Preferences
– Spiritual or Religious Advisors– Contact information for any spiritual or religious advisors you would like to continue to minister to you to the extent possible
– Spiritual Preferences– Any faith traditions or religious observances you want to continue
– Favorite Things– List of favorite foods, music, books, movies, television programs, activities, sports, colors
– Friends to Update– List of any people you would like kept informed as to your wellbeing including contact information, list of anyone you expressly want to not have access to you
– Palliative Care & Hospice– Your wishes regarding quality-of-life issues that occur during the course of a serious illness (see Section 5, item B)

Expression of Financial Intentions
– If you prefer to live at home with a family member, do you want a portion of your assets to be used to remodel the home (enlarge doorways to accommodate a wheelchair, handrails in the restroom, ramps instead of stairs, a bedroom that could accommodate a hospital bed) or to purchase a larger home? If so, how much? Will this be considered a gift or an advance against a future inheritance?
– Do you want to provide financial support to a family member or close friend who takes on the role
of caregiver? If so, will this be considered compensation or a gift?

SECTION 4 – LEGACY PLAN

Philanthropy and Gifting
– Do you have any outstanding charitable pledges?
– Are there any causes you support that you would like to continue to be supported?
– Do you have any ongoing gifting plans?

Family History and Culture
– Ancestors– History of family including names and hometowns of ancestors
– Accomplishments– List of family accomplishments
– Traditions– Traditions you want future generations to continue
– Values– Family’s core values and mission statement
– Legacy Letter– (Also known as an ethical will) written to future generations to communicate what you value most in life, your best memories and fondest moments, what you want for your descendants’ lives, wisdom you want to share

SECTION 5 – ADDITIONAL RESOURCES

A) Marvin Blum authored the article “Filling in the Gaps: Create a ‘Red File’ for Clients to Cover Issues Beyond Traditional Estate Planning” in the February 2017 edition of Trusts & Estates magazine. It’s available at www.theblumfirm.com/2017/Filling-in-the-Gaps.pdf
B) A great article about end-of-life planning was published in the October 2017 edition of D Magazine about Dr. Robert Fine, the head of palliative care for Baylor Scott & White. It’s titled “This Man Wants to Help You Die Better” and is available at www.dmagazine.com/publications/dmagazine/2017/october/palliative-care-baylor-robert-fine
C) Debbie Pearson authored a workbook which walks you through the decisions to make, the discussions to have, and the information to gather. The Blueprint to Age Your Way (Family Night Press, 2017).
D) There are consultants who can assist with planning for possible incapacity—aging life care professionals (also called geriatric care managers). These consultants know, for example, the going rate for in-home care, the physical obstacles to look for in a home environment, and which walker would be best. One national association of such consultants is the Aging Life Care Association. The ALCA website provides a resource to search for a list of aging life care experts near you.

The Once and Future Marvin

Here’s to the end of 2022 and welcome to 2023! Each new year brings the promise of new opportunities for personal growth. Before we look ahead, it’s good to wrap up 2022 with a moment of reflection. We can learn a lot about our future potential when we stop to look back at how far we’ve come from where we started.

As I reflect on my early years, my roots are in a loving family of modest means who instilled in me a commitment to family, hard work, and education. With both parents working in Blum’s Café, my preschool afternoons were spent with my Fort Worth grandmother “Bubbie” and her sister. I sat quietly as they watched “As the World Turns,” ate a chicken soup lunch, read the Yiddish newspaper, and napped. That recipe turned me into a scrawny, studious couch potato who watched a lot of TV and invented art projects to entertain myself.

Summers took me to Alabama to visit my mother’s parents. My grandmother Pauline’s cooking, combined with my sedentary lifestyle, soon fattened up that skinny little kid. I blame it on the banana pudding, sour cream coffee cake, and lots of bread with high fat schmears. By fourth grade, I was a chubby kid sitting in Mrs. Gulledge’s class on that fateful day when we learned the news that stands out as my premier childhood memory: President Kennedy spent his last night in Fort Worth’s Hotel Texas and then left for Dallas on the final journey of his life. I became fascinated with world events and was even more glued to the TV.

I start with those memories to compare and contrast the “then Marvin” with the “now Marvin.” I am still a lifelong learner and news junkie, but I gave up my sedentary ways in college. As my friends started to develop a beer gut, I went the opposite direction and discovered physical fitness. I was late to the party, but the benefit is that I developed fitness habits that are part of my daily routine to this day.

I write this post at my daughter Lizzy’s urging. She saw a photo of the young chubby Marvin and pushed me to promote the idea that aging doesn’t have to be a decline. She selected the side-by-side photos to contrast “fat Marvin” with my 2022 gold medal triathlon win.

This message brings to mind an excellent book aptly entitled Younger Next Year. Authors Chris Crowley and Jeremy James describe intentional steps we can take so our tomorrows can be healthier and stronger than our yesterdays. Now is a great time to start, for time flies and, as an inspiring song admonishes, before we know it “A Decade Goes by Without a Warning.” (Thank you to John Batton for recommending that song to me.)

I hope to inspire others to join me in channeling Merlin the Magician from the days of King Arthur, popularized in T.H. White’s The Once and Future KingLike Merlin, let’s attempt to live backwards and “youthen” rather than age. I recognize that prioritizing health and fitness doesn’t guarantee a long life. My brother Irwin was a fit 65-year-old who suddenly died of pancreatic cancer. The message is to do your best to improve the odds but remain realistic about the risks of aging.

As both a fitness guy and an estate planning lawyer, I’ll combine those roles into some recommended New Year’s Resolutions. Yes—eat heathier and get exercise but also make it a 2023 goal to take your estate plan on a “test drive” by asking, if I were suddenly gone, are all my affairs in order?

As we turn now our attention away from the past and toward all the promise that 2023 holds, I wish you a healthy, productive, and meaningful year.

Marvin E. Blum

A chubby young Marvin Blum contrasted against a 2022 triathlon winning Marvin. Looking back on examples of personal growth can inspire us to keep reaching to achieve our full potential.

When Failure Happens, Send a Thank You Note

For last week’s 100th post, I channeled Ben Franklin and shared a mini “Poor Marvin’s Almanac,” a collection of some of my favorite sayings. Here’s another: You learn more from your failures than your successes. When my first job as a lawyer didn’t work out to my liking and I left to open my own firm, my father-in-law Abe Kriger wisely said, “Send them a thank you note.” Abe knew the law firm did me a favor. He assured me I would move on to bigger and better. Because of my dissatisfaction at my prior job, I formed The Blum Firm, which has become the source of immense career satisfaction.

Jim Collins echoes this theme in Good to Great, declaring, “The enemy of great is good.” A job that is just “good” can deter you from creating a career that is “great.” Failure, though painful at the time, opens the door for us to explore opportunities we would otherwise miss.

My prior job experience provided me with a goal when I started The Blum Firm. My mission was to create a work environment where people wouldn’t dread coming to work. I vowed to build a caring culture, one centered around caring for every team member and every client. This law firm camaraderie serves our clients well. Our “open door” environment encourages us to share ideas and stimulates our creative juices. This collaborative atmosphere enables The Blum Firm to generate “outside the box” solutions to address our clients’ needs.

The path from “then” to “now” hasn’t been a perfect upward slope. Failures continue to pop up that provide me with teachable moments. For example, as a young lawyer, I thought I could work with anyone. Early on, I teamed up with some colleagues who turned out were not a good fit. That partnership failed. But, the next time I selected partners, I got it right. I learned from my mistake that I’m extremely exacting and only mesh with others who share my style. Once when I was tempted to bend and hire a lawyer not up to those standards, my law partner Pete Geren awakened me by writing on that resume the words: “Not even close.” I never forgot that lesson.

In a family meeting I facilitated, the patriarch wanted to share his success story. He was surprised when his children preferred to hear about the failures he’d encountered along the way and what he learned from them.

In the Sabbath Torah portion 10 days ago, we read of Jacob wrestling with an angel. Jacob wins the battle. As a result, the angel blesses Jacob and rewards him with a Divine covenant. Like the Biblical Jacob, our greatest achievements and blessings often come to us only by prevailing through a struggle.

As we wrap up the year, may we resolve to see failure as an opportunity. As my son Adam says to me when failure happens, “Don’t be hard on yourself.” And when faced with a risky challenge that offers high-stakes rewards, let’s not allow the fear of failure to deter us. If the worst that can happen is that we fail, let’s remember that failure is a great teacher. The temporary pain is better than not achieving success because we never tried.

Wishing all a Merry Christmas and a Happy Chanukah!

Marvin E. Blum

Marvin Blum celebrates the holidays with his law firm family, grateful his early job failure paved the way to create The Blum Firm.

My 100th Post: Poor Marvin’s Almanac

When The Blum Firm reached our 40th anniversary in late 2020, I was searching for a way to commemorate it. My law practice had always focused on tax and estate planning, but in the prior decade I had adopted a passion for also helping families create and pass down a meaningful legacy. My goal was to not only prepare the money for the family (passing down the largest possible inheritance), but to also prepare the family for the money (preparing heirs to receive that inheritance). I also began to understand that an inheritance is about a lot more than money. Families pass down not only their financial capital, but also their human, social, intellectual, and spiritual capitals. To celebrate the firm’s 40th, I decided to write a weekly series on Family Legacy Planning to offer tips on how to create family glue, improving the odds of multigenerational success.

When I launched this project, I anticipated telling everything I knew about legacy planning over the course of several weeks. Well, here we are 100 posts later, and I’m still writing. The feedback I’ve received has been immensely gratifying. Each week, I receive encouragement to share more, in particular personal stories from my own life journey. I never expected this blog to take off the way it has, but I am grateful to be reaching this 100th milestone.

In selecting a topic for today’s post, I’m channeling one of our Founding Fathers, Benjamin Franklin, whose Poor Richard’s Almanac became a site for him to offer some good old-fashioned advice for better living. Like everyone, I’ve accumulated a collection of my own words of wisdom. At the urging of a number of you, and inspired by Father Ben, I’ll share some random lessons in life that I hold dear. I’m careful not to push my advice on someone unless they sincerely want it, which brings me to my first piece of advice:

  • From an old “Dear Abby” column: Before you offer someone advice, first ask them if they want it. Unless they respond with an enthusiastic yes, the answer is no.
  • From my wife: Take the high road. (Sometimes we ask her where that is, and she always helps us find it.)
  • From my mother: The most important decision you make in life is who you marry. (I’m glad I listened!)
  • From my father: The only helping hand you need is the one at the end of your own arm.
  • From my son: Work smart, not just hard.
  • From my daughter (the family historian): If you don’t document it, it didn’t happen.
  • From my mother-in-law (always on the go doing “good turns” for others): Don’t go to bed at night until you’ve done at least one good turn that day.
  • From my father-in-law: You catch more flies with honey than vinegar.
  • From my former long-time assistant Mary Staudt: Pay attention to the signs. When someone tells you who they are, you should believe them– the first time.
  • From my best friend Talmage Boston: Ask for what you want. The worst that can happen is they say no, but they might say yes.
  • From a relative Donald Adler about family trips: Remember, it’s everyone’s vacation.
  • Two from my friend Bruce Moon’s mother: (1) Time speeds up; (2) It’s always something. (Isn’t that the truth!)
  • From a dear departed friend Anne Marie Hartsell: When you get upset, remember the “100-year theory.” Ask yourself: Will this matter in 100 years?
  • Marvin’s famous three: (1) Take a light courseload your first semester of college so you don’t dig a hole in your GPA; (2) Wedding planning is a recipe for friction, so the shorter the engagement, the better; (3) It’s never the “right time” to get married, have a baby, or start a business. You just have to do it.
  • I’ll wrap up with a favorite from Ben Franklin, which totally speaks to where my life is now: A true friend is the best possession.

I could go on and on, but I’ll close on that high note. This is just a random list that came to my mind today. I welcome hearing your favorite sayings so I can add them to my collection.

I dedicate these first 100 posts to all of you, whose encouragement has inspired me to keep writing. Many of you have even urged me to write a book on legacy planning. Maybe I’ll tackle that one day. In the meantime, I’ll try to keep these lessons coming ‘till my brain hits empty.

With gratitude,
Marvin E. Blum

Marvin Blum uses today’s post to offer words of wisdom, channeling Ben Franklin whose Poor Richard’s Almanac offered plenty of good old-fashioned advice.

Sell a Business, Save a Family

In recent posts focusing on Business Succession Planning, I’ve recognized that often the best solution for the family is to bite the bullet and sell the business. As Denise Logan describes in The Seller’s Journey, that’s a bitter pill for most business founders to swallow. She likens it to the pit in your stomach the day you drop your oldest child off at college. Accordingly, Logan asserts that 70% of business owners fail to follow through to closing. To improve the odds, Logan urges advisors to focus not only on the transaction, but also on the owner’s transition. There are both head and heart issues at play in selling a business.

An example of a business sale success story that did make it to the finish line is Pac Paper, Inc. of Vancouver, Washington, manufacturer of paper sleeves for coffee cups and other paper products. The business had been in the family over 40 years, passed down by father to son David Morgan. Like most business owners, Morgan had no intention of selling the company, assuming it would stay in the family for generations to come. Out-of-the-blue, Morgan began receiving unsolicited call from competitors wanting to buy the company. It got Morgan thinking: who in the family was suited to run the business after him? Hard though it was to admit, Morgan came to the conclusion that the next generation wasn’t in a position to take over leading the business. He also realized that good offers wouldn’t stay on the table forever. Morgan and other co-owners accepted reality and sold the family business to a rival company. They knew that a sale was the best way to preserve family unity going forward.

For those in similar shoes to the Pac Paper Morgan family, there are steps to take prior to going to market that can help the family get the best price. My thanks to Kasper & Associates, a Fort Worth professional merger and acquisition firm, for providing me the following list entitled Business Exit: Tips to Maximize Value:

  • If possible, begin preparing to sell your business 1-2 years before the expected listing date.
  • Get all major shareholders and your spouse to agree with the plan to sell. Don’t assume your spouse or major shareholders will sign whatever is put in front of them to effect the sale. Seek professional help on this matter as needed.
  • Try to keep an open mind about the potential value and be flexible about the terms of a proposed transaction.
  • Explore tax savings strategies with your CPA or other tax advisor.
  • Replace family member employees unless they plan to remain with the business after it is sold.
  • In order to boost your company’s profitability, reduce or eliminate unnecessary perquisites you receive from the business.
  • Replace non-productive employees with productive ones.
  • Develop key employee job descriptions/resumes and an organization chart which includes all employees.
  • Execute employment contracts for key employees.
  • Reduce receivables; clean up your company’s financial reports; update inventory records.
  • Settle liabilities and pending litigation.
  • Spruce up the facility inside and out.
  • Upgrade your company’s technology and fine-tune customer records using up-to-date software.
  • Do post-retirement financial planning with your financial advisor.
  • Develop a relationship with a professional Merger & Acquisition Specialist 1-2 years in advance of anticipated listing date and request an opinion of current market value of your company.

I’ll add another point to this list:

  • Plan ahead to fill the void in your life created by selling the business. I’ll dive deeper into this point in upcoming posts and offer guidance from real-life experiences.

For those of you who are still struggling with the idea of ever selling your family business baby, I’ll close with wisdom from a family matriarch. Dennis Jaffe tells the story of a letter written by the wife of a business founder, read annually to future generations of the family. As precious to the family as the business that “Papa” built is, the matriarch acknowledges in the following Legacy Letter that circumstances could arise where they may have to sell the business in order to save the family:

“Greetings to all of you as you gather for the annual family meeting. I want you to think about a paradox—Money is important./Money is not important. There’s a lot of truth in both statements. You’ve come a long way, babies, but remember where you came from—know your roots. T. S. Eliot said, “Where is the life we have lost in living? Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in information?”

You need knowledge, wisdom, and vision. It’s our job to be good stewards of the gifts Papa left us. There are pitfalls inherent in having a family business. Be vigilant for the warning signs. I would rather you dismantle the family business than squabble over it.

I urge all to conduct an honest assessment of your family and determine if the best course is to keep the business or sell it. No matter how precious it may feel to preserve the business, preserving the family is even more precious.

Marvin E. Blum

Selling a family business is a heavy psychological lift but is often the best solution for the family. Marvin Blum offers tips to help business sellers achieve the best outcome.

You’re Having a “Liquidity Event” and Making a Gift to Charity: The Order of Events Matters!

In my series on Business Succession Planning, I’ve identified three choices for transfer of a business: (1) transfer to family members; (2) sale to employees/insiders; and (3) sale to an outside third party. After a candid assessment, it often becomes clear that the first choice isn’t a workable option. That leaves the owner with a sale of the business, whether to inside parties or outside parties.

When an owner sells a business, it frequently is the first time the family has substantial liquid assets. That’s why the sale of a business is commonly referred to as a “Liquidity Event.”

On a light-hearted note, I’ve kidded with my wife Laurie that so many of the men I represent who’ve had a liquidity event go buy a bright blue blazer and seem to wear it everywhere they go. Laurie and I call it a “Liquidity Blazer,” and I lamented that I’ll never have a liquidity event enabling me to buy one. We were having this conversation when I was in Las Vegas to give a speech, walking around Caesar’s Mall to pass the time (since you won’t find me at a gambling table). There in the window of Brooks Brothers was the Liquidity Blazer of my dreams, and Laurie made me try it on—perfect fit, no need for alterations. Laurie convinced me that (even without a liquidity event) I deserved it, and I wore it the next day when I gave my speech.

On a more serious note, selling a business also provides the owner with the liquidity to satisfy long-held desires to make substantial charitable contributions. All too often, business sellers contact me AFTER the sale has closed for charitable giving guidance. If only I could wind the clock back, there’s a better order of events that could’ve saved them a lot of tax. Consider this example: Owner sells business for $10 million and then donates $1 million to charity, leaving the owner with $9 million before tax. Owner reports income of $10 million (for simplicity, assume a zero basis), and takes a deduction for the $1 million charitable gift, paying tax on $9 million. Rewind the clock: owner donates 10% of the business just prior to entering into the sales contract. At closing, owner receives $9 million, and the charity receives $1 million. Owner reports income of $9 million and takes a deduction for the charitable gift of a 10% slice of the business (appraised at close to $1 million in value), paying tax on approximately $8 million. Bottom line: by making the gift to charity BEFORE the sale, owner saves income tax on $1 million of the sales proceeds.

The following chart illustrates this timeline. To supercharge the family’s tax savings, note the recommendation to do “squeeze & freeze” planning well in advance of the sale. Such planning shifts the business into trusts that are out of the estate, avoiding the 40% estate tax at death. There are trust structures that allow you to achieve this outcome, yet retain access, control, and flexibility. The most popular trust options are SLATs, 678 Trusts, DGTs, and GRATs. Also note that making the charitable gift too close to the closing date runs the risk of an “assignment of income,” killing the above-described tax benefit. Also, be aware that a pre-transaction charitable gift of a family business needs to be made to a public charity or donor advised fund, in order to deduct the fair market value of the gifted business interest. Consult a tax advisor to help you achieve the best tax outcome.

To take these tax savings up to the limit, consider these two recent examples where the owner gave away the ENTIRE business: electronics giant Tripp Lite ($1.6 billion value) and outdoor apparel maker Patagonia ($3 billion value).

  • Barre Seid donated 100% of Tripp Lite to Marble Freedom Trust, a non-profit devoted to conservative causes. After the donation, the company was sold for $1.65 billion, with all the proceeds going to Marble Freedom Trust free of income tax.
  • The Chouinard family donated 2% of their Patagonia stock (all the voting shares) to a new Patagonia Purpose Trust, and 98% of their stock (all non-voting) to Holdfast Collective, a non-profit devoted to protecting the environment.

Neither family will pay any tax when Marble Freedom or Holdfast sells the business it owns, and all the proceeds will be committed to causes important to that family. Ironically, those causes are opposite: Marble Freedom funds efforts to stop action on climate change; Holdfast funds efforts to combat climate change. That’s yet another example of the polarized world we’re living in today. [Note that since these two nonprofits are politically focused, they are 501(c)4 rather than 501(c)3 organizations, so the contributions to them are not deductible, but the income they earn is exempt from tax. Furthermore, supporters can donate assets that the 501(c)4 sells and avoid capital gains taxes on the sale.] By donating a business to support charitable causes, the entire amount of the sales proceeds goes to charity without diminishing any of it to pay income tax on the sale.

Here’s the key takeaway: if you sell a business or other asset and want to commit part or all of the proceeds to charitable causes, make the gift BEFORE you sell.

Marvin E. Blum

Marvin Blum in his “Liquidity Blazer,” reminding all who sell a business to consider making charitable gifts of a business interest BEFORE you sell the business.

Family Legacy Planning: It’s All About Football

Happy Thanksgiving to all! If your home is like mine, part of the day’s traditions will include a football game, with some of us glued to the TV to cheer on the Dallas Cowboys (while others just tolerate it as background noise). Preserving holiday traditions helps keep families connected. Whether yours are more about football or desserts, I applaud the importance of keeping those traditions alive. As Tevye sang in “Fiddler on the Roof,” “without our traditions, our lives would be as shaky as a fiddler on the roof!”

While I’m in a football state of mind, I’ll repeat a favorite metaphor from Jim Grubman. Picture a football field. At one end is a highly skilled quarterback who hurls a perfect pass to the other end of the field. Standing around at the other end are a bunch of clueless receivers. They’ve never been to a practice. They don’t know the rules of the game. They’ve had no experience learning to work together as a team. What are the odds they’ll catch the pass and score a touchdown? Statistics say the odds are only 10%. The quarterback is the family patriarch/matriarch. The football is an inheritance. The receivers are kids and grandkids who have never been prepared for the inheritance coming their way. This football analogy helps us understand the importance of preparing heirs before the inheritance comes their way. That’s what Legacy Planning is all about: improving the odds that your heirs won’t fumble the inheritance football when it comes to them. As Matt Wesley urges, it’s time for the patriarch to move from being the quarterback to being the coach.

In recent weeks, my Family Legacy Planning series has been devoted to the topic of Business Succession Planning. Nowhere is business transition planning more complicated than in the National Football League. Media coverage is replete with family strife over control of an NFL franchise. It’s a hot topic, as the dollars are astronomical, and the transfer of team ownership is imminent. As Ben Fischer reveals in “NFL, Next Person Up,” (Sports Business Journal, Sept. 5, 2022), the average age of the 32 controlling NFL owners is 72. Only eight are below 65. Two of the league’s most powerful are Patriots’ Robert Kraft at 81 and Cowboys’ Jerry Jones at 80. Ready or not, change is coming.

NFL Commissioner Roger Goodell (himself 63 and purportedly contemplating retirement) is committed to developing the next generation of owners. The NFL provides apprenticeships in a junior rotational program, promoting the most talented to serve on committees. Every year, each team must report to the NFL who will take over in case of a sudden vacancy. Per Fischer, the ideal scenario is to create “legacy families,” keeping the business in families where the NFL is their top priority. The goal is to pave the way for a smooth transition when guys like Kraft and Jones are gone. The NFL is trying. “But a litany of factors, among them complicated estate planning and unpredictable family, legal and tax dynamics, figure to make orderly successions within a single family the exception rather than the rule.”

The NFL is waking up to the importance of estate planning. It now allows ownership to be transferred to trusts. It’s also lowered the minimum equity ownership of the family’s head to as little as 1%, recognizing the need for families to do planning to minimize estate tax and avoid a forced sale soon after the owner dies. Even with all the NFL’s efforts, challenges persist. Consider these examples:

  • The requirement that teams file an annual succession plan began after Tennessee Titans owner Bud Adams died in October 2013. Adams divided the ownership equally among three branches of his family, leading to a war over which would have power and control over the team. By requiring the annual designation of a successor, the NFL hopes to avoid a repeat of that strife when an owner dies.
  • Alzheimer’s disease forced Denver Broncos owner Pat Bowlen to turn over control to President Joe Ellis in 2014, followed by litigation among his kids over who would succeed him. The result? The team was put up for sale in February 2022 and sold four months later to a group led by former Walmart chairman Rob Walton for $4.65 billion, the highest price ever paid for a US professional sports team.
  • Houston Texans owner Bob McNair died in 2018, leaving the team to wife Janice with son Cal running the show. In the next three seasons, the team fired a general manager, two coaches, and a president. To add insult to injury, the Texans won just four games in two seasons and fell to 17th in attendance.
  • Washington Commanders’ owner Dan Snyder is reportedly considering a sale of the franchise, a team he bought in 1999 for $750 million that now has an estimated value of $5.6 billion. The prospective sale comes after repeated scandals, including accusations of a toxic work environment. There’s a lot of speculation of who a new buyer might be, but any transaction would have to be approved by 75% of NFL team owners. The situation is messy, to say the least, and not the kind of ideal transition the NFL desires.
  • One of the most painful stories involves Joe Robbie, owner of the Miami Dolphins. At his death in 1990, Robbie left behind a wife Elizabeth and nine children. His Pourover Will sent his assets to a Living Trust, and unknown to Elizabeth and most of the kids, he named three of the children as co-trustees. The co-trustees sold part of the franchise to Wayne Huizenga (former owner of Blockbuster Video), infuriating Elizabeth and the six other children. A family feud erupted that tore the family apart. When Elizabeth died almost two years after Joe, she left nothing to two of the kids and only $200,000 each to two other kids. The family had to sell 85% of the Dolphins franchise and 50% of Joe Robbie Stadium to pay a $45 million estate tax bill and to satisfy a claim Elizabeth filed against Joe’s estate.
  • Tom Benson, owner of the New Orleans Saints (as well as NBA Pelicans basketball franchise) changed his Will at age 87, only a month after a court found him mentally competent. The legal battle, filed by daughter Renee and grandchildren Rita and Ryan, cited powerful evidence of incapacity and alleged Benson was being manipulated by his third wife of 10 years, Gayle, then age 68. The new Will gave sole power over the franchises to Gayle, stating: “I specifically provide that Renee Benson, Rita LeBlanc, Ryan LeBlanc, and all of their descendants shall have no interest whatsoever, and no legacy or other inheritance or benefit of any kind shall be paid to any of them under this will or otherwise.” Benson had previously designated granddaughter Rita to control the teams, but everything changed after an argument erupted between Gayle and Rita at a 2014 Saints game. Needless to say, Gayle (who once ran a home jewelry business and was twice previously divorced) won that fight.

The lessons from these NFL horror stories abound. Suffice to say that the solution lies in tackling the problem long before the team owner dies. As my Family Legacy Series continually reiterates, we should learn from the best practices of the 10% who win the Super Bowl of Family Legacy Planning. Don’t fumble the ball like those 90% who fall victim to “shirtsleeves to shirtsleeves in three generations.” Your estate planning advisors can help you embark on regular family meetings, create a family governance structure, engage in thoughtful business succession planning, and preserve your family values and heritage—starting right now with some special Thanksgiving traditions!

I wish you all a joyful and meaningful Thanksgiving, filled with gratitude for our abundant blessings.

Marvin E. Blum

Marvin Blum is in an NFL state of mind at AT&T Stadium, wishing all a Happy Thanksgiving (and a Dallas Cowboys win!).

In Search of “Family Glue”

Last week’s post recapped a “Lasting Legacy” evening where I was honored to share the stage with the Coors beer family. I described how the Coors family connection remains strong even among fifth generation descendants of Adolph Coors. Today’s post focuses on my part of the presentation: “In Search of Family Glue: Improving the Odds of Multi-Generational Success.”

After Coors sisters Melissa and Carrie shared secrets of their success, I revealed that the Coors story is the exception. A staggering 90% of families fall victim to the adage “Shirtsleeves to shirtsleeves in three generations.” Only 10% of families can tell the Coors story. There is much to learn from them. The bulk of my speech highlights best practices of the ten percenters like Coors. Click here to review my PowerPoint from that presentation.

In a nutshell, I identified 9 best practices of successful families for us to emulate:

  1. Family Meetings
  2. Family Travel
  3. Education Program
  4. Governance Structure
  5. Family Mission Statement
  6. Business Succession Planning
  7. Preserve Family History
  8. Family Traditions
  9. Legacy Letter

I concluded by shining a light on a 10th best practice—Family Philanthropy. By creating a charitable structure in your estate plan, you leave your heirs two inheritances: (1) a traditional inheritance to provide for their security and needs; and (2) a second inheritance giving them the opportunity to use the family assets to give back.

Family Philanthropy is a gift that keeps on giving, not only to the recipients of grants, but also to the donors. Those who give get back more than they give. I described a Family Foundation as a “laboratory” where family members come together to practice group decision making as they jointly select causes to support. As they manage foundation funds, they learn about investing and money management. Through private philanthropy, they can set a vision for their community and shape the future of the place where they live. Moreover, these interactions create connectedness and powerful family glue.

It was a privilege for me to share my thoughts on building family connection. The goal is to create an interdependent family who will be there for each other. In my 44 years of law practice, as well as in my own life, I’ve learned that when adversity strikes, there’s no support system more critical than your family.

I urge everyone to take intentional steps to strengthen your family and create family “glue.”

Marvin E. Blum

Marvin Blum speaking at “Lasting Legacy” seminar sponsored by Tailwind Philanthropic Advisors and The Miles Foundation. Blum shared tips on how to create “Family Glue” and improve the odds of multigenerational success.

Family Unity: An Evening About Glue & Beer

I was honored to speak recently at a “Lasting Legacy” seminar sponsored by The Miles Foundation and Tailwind Philanthropic Advisors as one of two presenters. My topic was “In Search of ‘Family Glue’: Improving the Odds of Multi-Generational Success.” So there’s the “glue.” Where’s the beer come in? The other presenter was the Coors beer family, a real-life example of multi-generational success and keeping the business in the family.

The event kicked off with a Q&A session with sisters Melissa Coors Osborn and Carrie Coors Tynan, two Generation 5 (“G-5”) descendants of Adolph Coors who founded The Coors Brewing Company in 1873 in Colorado. Adolph passed the company down to G-3: grandsons Joseph and William. Joseph’s 5 sons and William’s son (all members of G-4) all work in the Coors business. Now G-5 is taking up the mantle. Melissa heads up the Coors Family Office. Carrie heads up the Adolph Coors Foundation.

Melissa and Carrie gave an enlightening peek behind the curtain to illustrate how the Coors have preserved family glue for five generations. They credit their ancestors for setting a clear vision, not just for the company, but also for the family.
Many business owners cultivate a solid business culture; the Coors have also cultivated a solid family culture.

The Coors cohesiveness is no accident. Melissa and Carrie revealed how their forefathers intentionally created a governance system. Their ancestors also instilled in them a strong work ethic. Their father made it clear that career choices needed to generate sufficient income for their needs. There would be no “trust babies” relying on a trust distribution to cover their lifestyle.

At family meetings, the sisters shared how they mix business and fun. To provide levity when things get too heavy, there’s a variety of stuffed animals down the center of the table. Each symbolizes a different behavior trait. One example that stuck with me was tossing a donkey at a relative who was acting like a you know what. Laughter erupts, and the tension subsides. Every family needs a system to address conflict—this was a new way for me.

Selecting Melissa and Carrie for their governance roles makes an important point when selecting a successor manager: don’t overlook the females in the family. Statistics show that females fare extremely well in taking over a family business. According to a Merrill Lynch study:

  • Women make more values-based decisions rather than just going for the bottom line. They see money as more than a way to finance the life they want to live but also as a way to meet commitments to themselves and to people and issues they care about.
  • Women live, on average, five years longer than men. Women may be around longer to run the business.
  • Women graduate in higher numbers from college and graduate school today than men (57% of recent college graduates).
  • 42% of women ages 18-64 have a bachelor’s degree or higher.
  • A mother typically spends a lot of energy maintaining the emotional cohesiveness of a family and keeping the peace among family members. This mindset can be a positive force in a business.

So that’s the “beer” story. The Coors example is inspiring. Next week’s post will focus on the “glue” as I share tips on how to create some “super glue” to keep your legacy intact for future generations.

Marvin E. Blum

Marvin Blum was honored to share the stage with members of the Coors family at a “Lasting Legacy” seminar. The program discussed how to create “Family Glue” and celebrated the Coors family legacy, a prime example of multi-generational success.

When Your Business Succession Solution Isn’t Your Kids

In last week’s post, I shared the story of my son Adam breaking the news to me that he didn’t want to become a lawyer and join me at The Blum Firm. Like many family business owners, I had to come to grips with the fact that the next generation (G-2) wouldn’t be taking over the business. What are the business transition choices when G-2 isn’t the solution? As I concluded last week, there are a lot of options. Let’s explore some here.

As I’ve expressed numerous times, I’m in the camp with many others who often look to Warren Buffett for guidance. The “Oracle of Omaha” is adopting a blended approach. Although none of his children will step into Buffett’s shoes and take over management of Berkshire Hathaway, G-2 will still play an important role. Son Howard and daughter Susan are on the Berkshire Board of Directors “not for operational decisions, but to retain the ‘culture.’ … All three of my children are devoted to maintaining the culture of the place…. They have an unusual amount of devotion to that.” (Eric Rosenbaum, CNBC Leadership Insights, Nov. 14, 2021). Son Peter will also play a role in the family enterprises as director of the Susan Thompson Buffett Foundation (named for Buffett’s late wife) which oversees the family’s charitable giving. This hybrid approach is instructive when the business ownership remains in the family, yet someone other than G-2 handles the day-to-day operations. G-2 can still play an influential role on the board of directors, helping to preserve the family legacy and protect the all-important business culture.

There are numerous other solutions to consider when exploring the options for transitioning a family business. PNC’s Editorial National Practice Group provides an excellent overview of choices in the article “Lowering the Hurdles to a Successful Family Business Transfer” (PNC Insights, Nov. 5, 2021). Here’s a recap of their ideas, as well as some others:

  • Leveraged Buy-Out: If the goal is for some or all of the next gen to purchase the business (as opposed to receiving it as a gift or bequest), G-2 could borrow from a third party, pledge business assets as collateral, and use profits to repay the loan.
  • Installment Sale: The business owner carries a note, and the buyer uses profits to pay off the note over a term of years. The terms are ideally pre-arranged in a Buy/Sell Agreement entered into long before the event that triggers the buyout.
  • Self-Cancelling Installment Note (SCIN): The seller receives a cash flow until the note is paid in full, but any unpaid balance of the note is forgiven when the seller dies. The buyer pays a premium (either a higher price or higher interest rate) for the cancellation privilege.
  • Sale for a Private Annuity: This is similar to a SCIN, except payments continue for the life of the seller, and then terminate at the seller’s death.
  • Non-Qualified Deferred Compensation: The business continues to pay compensation to the owner after retirement. Such payments are deductible by the company, whereas installment payments aren’t. However, the recipient pays ordinary rather than capital gains tax rate.
  • Charitable Solutions: Transfer the business to a CRUT (Charitable Remainder Unitrust) which makes an annual payout to the owner, with the trust assets passing to charity at the owner’s death.
  • Sale to a Grantor Trust: Do a “freeze” sale for a note to lock in the value in the owner’s estate. Explore a sale to an Intentionally Defective Grantor Trust (IDGT), Spousal Lifetime Access Trust (SLAT), and/or 678 Trust (also known as a Beneficiary Defective Trust or BDT). Because of Grantor Trust tax rules, there is no tax on the sale, and the owner continues to pay income tax on the trust’s income for as long as he’s willing, further reducing his estate tax.
  • Retain Key EmployeesUsing Equity – Grant to employees stock, stock options, restricted stock, non-voting stock, ROFRs (Rights of First Refusal). Using Non-Equity – Grant phantom stock, SAR (Stock Appreciation Rights) Plans, non-qualified deferred compensation, executive bonus arrangements, Stay Bonus Plans/Golden Handcuffs.
  • ESOP (Employee Stock Ownership Plan): An ESOP is a qualified employee benefit plan that buys stock from the owner. Through careful structuring, the owner can defer tax on the sale of his stock by reinvesting in qualified securities. If the owner holds the replacement property until death and gets a basis step-up, the owner’s family completely avoids income tax on the sale.
  • Sale to a Third Party: In many cases, this is the choice that makes the most sense for the family, yet hardest when there’s a strong emotional attachment to the business.

In upcoming posts, we’ll dive into the practical and psychological issues at play in selling a family business. As a foreshadowing, I’ll offer some words of wisdom from Denise Logan, author of The Seller’s Journey. Logan speaks of the feeling you have the day you drop off your oldest child at college. I remember that pit in my stomach when Adam left for UT. Per Logan, that’s the same feeling a founder has when he sells his business. For that reason, more than 70% of owners fail to follow through with selling their businesses. To improve the odds of making it to closing, Logan stresses that advisors must tend to not only the transaction, but also the owner’s transition, helping the owner cope with the prospect of life after selling a business.

As we explore both the “head” and “heart” side of selling your business baby, I’ll offer examples and tips. There’s a way to get there. Even the Rockefellers sold Rock Center.

Marvin E. Blum

Eric Rosenbaum, CNBC Leadership Insights, Nov. 14, 2021 available here.
PNC Insights, Nov. 5, 2021 available here.

Marvin Blum gives a shout-out to his hero Warren Buffett for his wisdom on transitioning a business.

The Day Adam Told Me: “I Don’t Want to Be a Lawyer”

I wrote last week about how to improve the odds of passing down a family business to the next generation. Understandably, when founders love their business, most want it to stay in the family. I can relate. As I was pouring my heart and soul into building my law practice, I always assumed my son Adam would one day join The Blum Firm and help keep the Blum legacy alive.

Then one day during Adam’s undergrad years at UT, we had the conversation that awakened me to the fact that Adam’s head wasn’t in the same place as mine. Laurie and I were walking with Adam along downtown Austin’s Sixth Street when he announced: “I don’t want to go to law school. I want to be a banker.” What? I didn’t even know what a “banker” was, at least not the kind Adam meant. I only knew of Laurie’s “banker” career as a bank officer at Fort Worth National Bank. Adam meant a Wall Street “banker,” and before long he headed to New York for an investment banking career at Goldman Sachs. At least Adam did accommodate me by becoming a CPA (though he never practiced accounting), but he tried to get out of that too. When he hit me with the line, “I don’t plan to take the CPA exam,” I wasn’t as accepting. I replied: “You had the misfortune of being born into the wrong family; becoming a CPA is not optional.”

Lizzy had the same potential to join The Blum Firm, given her superb academics and math skills, as well as her heart for helping others, but I learned from Adam not to even hold out the hope. Indeed, when she turned down UT Business Honors to study music business at NYU, reality hit that neither of my kids would join me at The Blum Firm. Neither wanted to follow my footsteps, get up every morning, put on a suit, and “go talk to people about dying.” (Of course, my life’s work is so much more than that, as my fervent passion is to help families create and pass down a meaningful legacy.)

So, here’s the message to family business owners: Don’t assume the next gen is the solution to your business succession plan. I advise all business owners to conduct an honest assessment of their heirs. Do they have the necessary skills to run the business? Do they have the passion and desire? Would they prefer to chart their own career path? Could passing the business down to the next generation lead to family friction that’s just not worth it?

Estate planning advisors can help you determine if an in-family transition is the right solution for your business. It’s better if these conversations are conducted by an advisor who knows you and your family. Parents often have a blind spot about their children’s true abilities. Kids are often reluctant to share their true feelings with their parents for fear of offending them. An advisor with good communication skills (one who has both “head” and “heart”) can interview the stakeholders and provide an objective assessment. Furthermore, whatever is decided, that decision needs to be monitored and subject to modification based on future developments. Business succession planning is never a “one and done” decision, but a dynamic and continuing process like all other aspects of estate planning.

In one case, an 80-year-old father was keeping the business going to pass down later but believed his 60-year-old son was “not yet ready” to take it over. In interviewing the son, the consultant learned that the son really had no interest in running the business and was ready to retire. Imagine the dad’s surprise.

Family business consultant Jeff Savlov tells of a St. Lucia rainforest tour guide business “Oliver & Son” where Oliver Sr. gave top-quality tours, yet a tour experience with Oliver Jr. was the opposite. Oliver Jr. lacked both his father’s skills as well as his father’s interest. “In family businesses, success or failure often hinges on intentionally and proactively developing the next generation. That requires effort to find out if they have interest, desire and ability – supporting/developing them if they do and finding alternatives if they don’t.”

Shark Tank TV personality Kevin O’Leary (aka “Mr. Wonderful”) speaks to this issue in “Kevin O’Leary on the Wealth-Destroying Mistake He Sees Too Many Family Businesses Make” (Eric Rosenbaum, CNBC Leadership Insights, Nov. 14, 2021). “One of the biggest mistakes of all made by successful first-generation founders is when a family patriarch or matriarch assumes the right decision is to turn the business over to their children…. When businesses are wildly successful, it’s often because the founders, a mother or father, have tremendous operational skills but those execution skills may not be present in the subsequent generation. That’s why we see American wealth evaporate within four generations.”

If your business succession solution isn’t to pass down the business to your kids, there are abundant other solutions. In upcoming posts, I’ll address those choices. Some involve ways to structure a sale to insiders (such as certain family members or key employees) using various leveraged buy-out approaches and Buy/Sell Agreements. Others involve deferred compensation arrangements. Still others involve the use of charitable techniques. We will also explore how to keep key employees engaged, either through equity or non-equity incentives. We will also examine the practical and emotional issues involved in selling a business to a third party, whether to a private equity buyer or otherwise. The key is to work with advisors who can help you identify the solution that’s the best fit for your family.

For those clinging to the hope of keeping the business in the family, click on this link to review last week’s post “No One Owns the Tree” to improve the odds of success. But this a decision that requires a heavy dose of reality. If passing down a business to your children isn’t the right business transition plan, don’t force it.

Marvin E. Blum

Jeff Savlov’s Family Minute Business Blog available here.
“Kevin O’Leary on the Wealth-Destroying Mistake He Sees Too Many Family Businesses Make” available here.

Marvin Blum’s son Adam Blum and daughter Lizzy Savetsky hiking in Colorado. As both are charting their own paths and neither became a lawyer, Marvin’s succession plan for The Blum Firm requires a solution other than his kids.

How to Keep a Business in the Family: “No One Owns the Tree”

Last week’s post described how a family business like Blum’s Café can become like another member of the family. When a family is attached to their business, it’s a strong psychological and emotional pull. The founder’s dream is usually to pass the business down from generation to generation. But to keep a business within the family, you have to cultivate the family to run it. It doesn’t happen automatically.

Consider the example of Hobby Lobby founder David Green. Here’s what I learned in a conversation with Mr. Green in 2019.

  • To pursue his idea of making picture frames in his garage in 1970, Green borrowed $600 from an Oklahoma bank. After one year, he repaid the loan and tried to borrow $1,000, but the bank refused.
  • In 1972, he opened his first Hobby Lobby, a 300 square feet store. Green opened his second store in 1975. He continued to grow, one store at a time.
  • By 2019, there were 900 stores carrying 100,000 items with 40,000 employees and sales of $5.5 billion.
  • Green began involving his children and grandchildren in the business early on, along with their spouses. “We treat in-laws the same as family.” The family gathers in person for team building exercises each month to build trusting relationships and open communication.
  • Green funded 100% of the voting stock into the Green Stewardship Trust, a dynasty trust Green compares to a “ministry.” Heirs are taught that they are stewards of the business, not owners.
  • He describes the Hobby Lobby business as a tree. “No one owns the tree.” Each family member has the opportunity to work in the business and enjoy the fruits of their labors. Per Green, this arrangement “avoids the friction that ownership causes.”

If the goal is to pass the business to further generations, it’s critical to prepare them for it. In “Plan a Smooth Succession for Your Family Business,” (Harvard Business Review, Sept. 13, 2022), Amy Castoro and Fred Krawchuk emphasize that G-1 needs to engage G-2 in the business at a young age. Teach heirs the history of the company, both the ups and the downs. Younger heirs need to shadow family business leaders. The goal is to develop trust, so each believes the other is “sincere, reliable, caring, and competent.” G-1 and G-2 need to agree on written criteria to show when G-2 is ready to take over. As G-1 ages, he must resist the temptation to tighten his controls over the business and instead honor the standards for readiness that were co-established.

I often describe the mentoring process as having G-2 “ride around in the truck” with G-1. One of my clients did precisely that with his son-in-law for several years, so G-2 was ready when G-1 died unexpectedly. Because the son-in-law was trained, the business continued without interruption, avoiding potential disaster. As Mike Benedict of BOK Financial says, “Few things are more frightening than losing the captain of the ship without guidance on what to do in such an event.”

For additional guidance on “Keeping It in the Family,” click on this link for my tips on timing, training a successor, management transition, a cash flow for all owners, and an exit strategy for all owners.

Remember, engaging in planning to pass a business to heirs isn’t only for mega-sized businesses like Hobby Lobby. In “Saving the Family Business in a Beach Town Where Money Talks” (New York Times, Aug. 12, 2022), Alyson Krueger highlights three mom-and-pop shops. In each, the children speak with pride of carrying on a family business. The stories of Daunt’s Albatross Motel, Montauk T-shirts, and Gig Shack on New York’s Long Island are heartwarming.

In each case, the kids grew up embracing the business as if it were another family member. Even though they could close the business and sell the real estate for a fortune, “it was more important to all of us to continue the family tradition” and keep the business alive. That’s how it feels when you love your business like it’s family.

Marvin E. Blum

Marvin Blum learned from Hobby Lobby founder David Green that a family business is a tree that no one owns. Heirs are stewards of the business, living off the fruit but protecting the tree for future generations.

How a Jukebox Paid for My Bar Mitzvah

This post in my Family Legacy Planning series continues to shine a light on Business Succession Planning. Most of the business succession stories covered in the media involve mega-sized family-owned businesses: NFL teams, major chain stores, media empires, huge conglomerates. We’ll get to those later, but first, let’s come back to earth. Most family businesses are small, yet succession planning is as vitally important to that family as it is for the mega business owners.

I can relate to small business owners. I grew up in such a family. In our home, Blum’s Café was like another family member. It was as if my parents had three children: Irwin, me, and the business. Dinner conversation focused on how business was that day. The opening line at the dinner table was always “How was gesheft (Yiddish word for business) today?” Everyone worked in the business.

As is typical, the business started out small. My father opened an industrial restaurant in Fort Worth’s meat-packing district when I was an infant. Growth was slow and organic, often driven by the need for more money.

As my Bar Mitzvah was approaching, my parents wanted to build up a fund to pay for it. How did they do it? They put in a jukebox—5 cents per song! They literally grew my Bar Mitzvah fund one nickel at a time. When my mom called my dad early in the day before she arrived to be cashier, if music wasn’t playing, she’d say: “Julius, go put a nickel in the jukebox and get the music going.” It worked. I had a first-class Bar Mitzvah, and 55 years later I still cherish the memories.

As college was approaching for Irwin and me, my parents were even more ingenious. The meat-packing workers all wore white frock coats, which by day’s end were literally covered in blood. To pay for college, my parents started a frock rental business and installed a laundry. All the area employees started their day in our café to rent a frock (and hopefully buy breakfast while they were at it.) The profits paid for all of our University of Texas expenses, allowing Irwin and me to graduate debt-free.

When a need arose, I learned early on that you go to work to make it happen. Julius Blum trained us: “The only helping hand you need is the one at the end of your own arm.” His other motto was: “If you take care of your business, it’ll take care of you.” I’m a believer.

After college, Irwin joined the business full-time and expanded the café operation into J. Blum Co., a full-blown meat-packing supply business. As I’ve recounted in previous posts, Irwin was running the business single-handedly after my father died and my mother retired. When Irwin died unexpectedly two weeks after his pancreatic cancer diagnosis, our succession solution was mom Elsie. (See post from March 1, 2022 “Business Succession Planning: Not Every Family Has an Elsie.”) My mom emerged from retirement in her mid-80’s to run the business and fully manage the transition.

As an estate planning lawyer, Irwin’s death was a wake-up call for me. I’m now a major advocate for business succession planning. We were fortunate to have Elsie as a business transition solution, but don’t depend on luck. The smarter approach is to have a succession plan in place, ready to activate when the time comes. And as I learned, that time can hit you completely out of the blue.

Marvin E. Blum

Blum’s Café installed a jukebox to pay for Marvin Blum’s Bar Mitzvah, one nickel at a time.

Is Someone in Your Family Hurting?

Is someone in your family hurting? That’s a provocative question. The fact is, for almost every family, the answer is yes. Furthermore, if someone in a family is hurting, generally the whole family feels it. Try as we may to sweep it under the rug, the issue seeps back into our brain and preoccupies us. As I advocate for Family Legacy Planning and Business Succession Planning, the reality is that such processes are impeded until we address what’s hurting us.

Last week’s post coincided with Rosh Hashonah (the Jewish New Year), ushering in a season of reflection, repentance, and spirituality. As sundown tonight marks the beginning of Yom Kippur (the Day of Atonement), I’ll continue to honor the spirit of this holy season with an “estate planning” lesson from renowned Rabbi Shlomo Farhi of New York. My daughter Lizzy attended Rabbi Farhi’s class on one of the central themes of this season: “T’shuvah” (Hebrew for Repentance, though the actual translation is to “Return”). During these Holy Days, we are challenged to turn around and return to more righteous living. Rabbi Farhi shared this parable: A tightrope walker walked down the rope, turned around, and walked back up the rope. When asked which was harder, walking down or walking up, the tightrope walker answered: “Neither journey was the hardest part; the hardest part was turning around.” When we want to change course from a path we’re on, the hardest part is to turn around. After that, we’ve accomplished the toughest part of the journey.

A few years ago, I had a wakeup call at the Annual Conference for FOX (Family Office Exchange) where I learned that most families are indeed hurting. The agenda included all the expected topics for high-net-worth families engaged in legacy planning: estate planning, tax planning, family governance, family education, investing, money management, philanthropy, etc. But there was one topic on the agenda that surprised me: addiction. The presentation from addiction counselors generated the greatest interest of all. It turns out that almost every family was dealing with addiction at some level, and that hurt dominated the family’s psyche. As an estate planner, I learned the importance of meeting a family in the place where it is. In my journey to practice “holistic” estate planning, I realize the need to recognize when a family is hurting and accommodate that in the estate plan design and process.

An effective estate plan needs to fit the family’s reality. We need to engage in honest conversations and design an inheritance appropriately. Trust provisions need to address that reality. Making trust distributions outright to an impaired person can be poison to that person. Trustees need to be empowered to adjust distributions to take into consideration a beneficiary’s dependency.

With my daughter Lizzy’s permission (indeed, encouragement), I will share our own family’s struggle with addiction. In the summer of 2021, Lizzy began her season of reflection with an honest look in the mirror and bravely recognized her dependence on alcohol. On August 1, 2021, she took the hardest step and turned away from a behavior she wanted to change. We are very grateful and proud that Lizzy is now on a sobriety journey, her last drink now more than 14 months ago. As she walks the tightrope back to a life without alcohol, we all recognize the risks. But, she accomplished the hardest part when she turned around. Her journey is not easy, but she wisely chose a support system to help her stay on course.

Lizzy has been very public about her battle against alcoholism, in hopes it’ll give others the courage to turn around and follow her path. That’s why she urged me to share this message, hoping it’ll reach someone who may need help and hope. (To learn more of Lizzy’s story, follow her on Instagram at @LizzySavetsky.)

The third prong of the Blum family mission statement is spirituality. In this season of spirituality, I feel moved to send encouragement to all families who are hurting. At The Blum Firm, we have cultivated resources who may be able to help. Please reach out to us if you’d like information on counselors or programs that come highly recommended. And please know that we’re here for you, with both “head“ and “heart,” to help you design an inheritance plan that’s best suited to your family.

Marvin E. Blum

Left: Putting the Blum family’s mission of spirituality into action when Marvin Blum’s daughter Lizzy Savetsky and her family traveled to Israel this summer to dedicate a Torah to the Israeli army. Right: Dr. Ira Savetsky and Lizzy Savetsky in a ritual presentation of the new Torah, celebrated like a wedding.

What’s Your Unfinished Business?

This post is coming to you on the Jewish New Year, Rosh Hashonah, marking the start of the year 5783 in the Hebrew calendar. A central theme during these Holy Days is a call to action, symbolized during our prayer service by the loud blasts of the shofar (ram’s horn). We reenact this ancient ritual to wake us up, literally and figuratively. The sounding of the shofar ushers in the Ten Days of Repentance, culminating on Yom Kippur, the holiest day of the Jewish year.

This theme of a wake-up call brings to mind a sermon I heard recently in New York. Our daughter Lizzy and her family moved back to New York a few weeks ago after a 3-year chapter in Dallas. Laurie and I went to check out their new surroundings, including their new place of worship, the Alt-Neu (Yiddish for “Old-New”) Synagogue. At Shabbat services, Rabbi Benjamin Goldschmidt alerted us that this is the time of year to “get your affairs in order.” When the doctor tells you that, it’s bad news. This time, the warning is coming not from the doctor, but from the Almighty. The rabbi asked us to think about what that phrase means to each of us. He challenged us to ponder the question: “What’s your unfinished business?”

There are so many aspects to this question, but as an estate planning lawyer, having your “affairs in order” brings to my mind the importance of having a Will. If you don’t have a Will, you should. And, if you have one, is it up-to-date?

I’ll share some shocking statistics. It’s been reported that 73% of those who die in Texas each year die without a Will. Even more startling: 46% of high-net-worth parents have not executed a Will.

Most know the reasons a Will is important, but I’ll recap a few highlights:

  • You designate who will inherit your assets instead of letting state law direct it.
  • You select the person to serve as executor to oversee the passage of your assets.
  • If you have minor children, you name the person to serve as guardian of your kids (the most important provision of all).
  • If you own a business, the Will addresses who will own your business after you’re gone.

That last point ties into the segment I’m now doing on Business Succession Planning. In the last few weeks, I’ve been spotlighting the need to plan for the transition of your business. There are two different elements to address: (1) ownership of your business and (2) management of your business. Ownership is directed by your Will and/or trusts, where you designate who will own your company after you’re gone. Possibilities include leaving the ownership interests to a trust for your family, controlled by a trustee whom you appoint to be in charge. It can also entail creating voting and non-voting stock, so that control rests in hands you deem best suited. Your plan may include a Buy-Sell Agreement, outlining the terms for a buy-out if a family member exits the business. These concepts deal with who will own the company, but that’s different from who will manage it. In a Business Succession Plan, you also address who will run the business, which may or may not be the same persons as the owners. Business owners need both: a Will to direct who will own the company, and a Business Succession Plan to designate who will manage it.

Every person who is 18 or older needs a Will, otherwise the state has one for you that you may not like. Even if you have a Living Trust, you still need a “Pourover Will” to “pour over” any assets you own at death into the Living Trust. Without a Will, estate administration will be far more cumbersome.

As you heed this wake-up call from the shofar and make your own list of unfinished business, give some thought to whether you have an up-to-date Will. And if you own a business, take the extra step to create a Business Succession Plan. This season of reflection is the perfect time to get your affairs in order.

To one and all, I send the Hebrew greeting “L’Shana Tova” (“To a Good Year”).

Marvin E. Blum

Marvin Blum sounding the shofar on the Jewish New Year, a wake-up call to get your affairs in order.

We’re in a “Perfect Storm” for Business Succession Planning

As part of the segment I’m doing on Business Succession Planning, I want to share planning tips I recently presented at Bank of America’s Business Owner Conference. It was easy for me to relate to the audience of business owners, as I grew up in a family business. I understand the attachment they feel to their business, and the reluctance to plan for the day they are no longer here to run it. For people who wake up every day with entrepreneurial energy, it’s hard to imagine the day when someone else is in the captain’s chair. But if business succession planning is done carefully, it will address not only the financial aspects of the transition, but also the psychological aspects. Indeed, it’s the psychological aspects that usually produce the greater challenge.

Why is now the “Perfect Storm” for such planning? Ever since the COVID pandemic, I’ve noticed a heightened awareness of our mortality. Many who behaved as if they’ll live forever began to realize that one day they’ll be gone. As I often say, it’s a WHEN, not an IF, you’re no longer here to run the business. And for those who feel “indispensable,” I often respond with the Charles DeGaulle quote: “Cemeteries are full of indispensable people.”

Therefore, now is the time that more and more business owners are seeking advice on planning tools to pass on their business in the most tax-efficient and family-efficient way. To summarize these tools, I prepared a PowerPoint with seven ideas for business owners to consider. Click on this LINK to review my Bank of America presentation.

Business Succession Planning is not a “one size fits all” endeavor. Each family needs to create the structure that’s the right fit. In my speech, I hit the highlights of “squeeze & freeze” planning techniques, such as Defective Grantor Trusts, 678 Trusts, and SLATs. In addition to locking in the doubled estate tax exemption before it sunsets in half (on December 31, 2025—only three years from now), these trusts also protect all future appreciation from the 40% estate tax. Unless you plan around the estate tax hit, the federal government is your 40% silent partner in your business. Passing business ownership into trusts not only saves tax, but it also protects the business from an owner’s creditors and divorce. Moreover, by using trusts to own the business, you can also carefully select the trustee who will oversee the management of the business when you are gone.

In addition to addressing business ownership, management, and taxes, the plan needs to also address family dynamics. A skilled consultant can help the family navigate the process, doing it in a way that strengthens communication among family members and builds trust. As family consultant Tom Rogerson wisely says: “A strong business won’t sustain a family, but a strong family will sustain a business.” You can’t effectively plan for a family business’ continuity without also planning for family continuity. In addition, the family business is typically inextricably woven into the family’s identity. Letting go of a family business leaves a void in a family’s identity. It also leaves a void in the founder’s self-image and can have a profound effect on self-esteem. Therefore, the plan also needs to help the family “fill the gap” when business ownership and/or management changes hands.

A final note: now is the perfect time to start. Those who are waiting until “the time is right” are often caught by life’s surprises. As Tom Rogerson says, “It’s rarely too early to plan, but frequently too late.” Similarly, life insurance producer Todd Healy confirms: “Five years too early is better than five minutes too late.” Healy analogizes to having an antidote already on hand in case you get a snakebite: “If you don’t have a snakebite kit on hand, by the time you get bitten by a snake, it’s already too late.” A word to the wise: don’t wait until the snake bites to have a kit in place.

I will continue to build on all these themes as we delve deeper into the world of business succession planning. Starting next week, we’ll explore real life stories of business-owning families. I look forward to sharing lessons we can learn from those who did it right, as well as those who didn’t.

Marvin E. Blum

Marvin Blum speaking at Bank of America’s Business Owner Conference on the “Perfect Storm” for Business Succession Planning.

Follow Queen Elizabeth’s Example

As part of the Business Succession segment in our Family Legacy Planning series, I want to pay tribute to a family business matriarch who died last week, Queen Elizabeth. Yes, Queen Elizabeth was part of a family business: the “Royal Firm,” an enterprise with $28 billion in assets. Queen Elizabeth sets an example to put in place a robust transition plan for the family enterprise.

First and foremost, she trained a successor who stands ready to step into her role. Prince Charles has been groomed all his life to now take over the monarchy as King Charles III. One of the primary elements of a business continuity plan is to select and train a successor. Certainly, the lifelong grooming of Charles is an extreme example, but the key is to identify a successor and become his coach. As we often say in Texas, have him “ride around in the truck” (or in this case, the royal carriage) with you to learn first-hand how to do the job.

The Queen also had a plan in place for her farewell and burial known as “Operation London Bridge.” Including that element in your succession plan is a big gift to the family during the first days of grief. The Queen’s plan was activated by sending Prime Minister Liz Truss the code language: “London Bridge is down.” What followed is an orchestrated series of communications to key contacts, media announcements, and fully planned events. Follow the Queen’s lead and leave instructions for your burial, memorial service, obituary, photos, etc. Making those decisions immediately following a loved one’s death is a heavy challenge. Your family will be grateful for the guidance.

Queen Elizabeth also had a plan in place for her assets. The $28 billion in the Royal Firm stays intact, similar to a trust arrangement, to provide ongoing funds to operate the monarchy and maintain the palaces. In 2022, the Royal Firm provided a Sovereign Grant of approximately $100 million to cover such expenses and maintain her household. Providing your family with a source of funding to sustain your business and legacy assets (whether through life insurance or a reserve fund) is likewise important, even if the amount needed has a few less zeros on it.

The Queen also owned approximately $500 million in personal assets. These assets include some $70 million she inherited in 2002 from the Queen Mother’s paintings, stamp collection, china, jewelry, and horses, as well as the Queen’s investments and real estate. It is reported that most of those personal assets will pass to King Charles III. Questioning whether leaving an unequal inheritance to her children will create issues is a topic I covered in my posts on sibling warfare due to unequal inheritances. (See my posts dated July 19July 26, and August 2, 2022.) Perhaps in the royal context, King Charles’ siblings will be more understanding (or perhaps not?).

Another element of a thoughtful transition plan is to engage in planning to minimize estate taxes. That’s one aspect where the Queen got off the hook. In 1993, Parliament passed a bill exempting the estate of Queen Elizabeth from paying the 40% inheritance tax. As no one in the U.S. enjoys that benefit (unless they were lucky enough to die in 2010, the one and only year with no federal estate tax), I urge all to implement techniques to minimize the 40% U.S. estate tax. In next week’s post, I’ll address some of those “squeeze & freeze” tools available while we’re still in the Golden Age of estate planning.

Rest in peace, Queen Elizabeth, and our gratitude to you for living an exemplary life, all the way to the end.

Marvin E. Blum

Queen Elizabeth created a thoughtful succession plan for her royal duties, her assets, and her final farewell. Let’s follow her example.

Don’t Be Like HBO’s “Succession’s” Logan Roy: Switch from Quarterback to Coach

In last week’s post, we shined a spotlight on the complicated relationship between the family business and the business founder. I frequently describe Business Succession Planning as “the most neglected area of estate planning.” Many founders have a deep emotional attachment to their family businesses. They can’t bear the thought of planning for the day they are no longer running the business. In my own upbringing, the family business was to be nurtured and raised, almost like it was another child in the family. I can still hear my dad Julius Blum’s voice: “If you take care of your business, it’ll take care of you.” Yet with all that love and affection, only one-third of family businesses successfully pass from G-1 (Generation One) to G-2. Even worse, only 10% pass from G-2 to G-3.

Why the low survival rate? The HBO hit “Succession” offers one cause. Billionaire Logan Roy, although in his 80’s, refuses to yield control of his global media empire Waystar Royco to anyone, even his four adult children. Although fictional, the show’s writers drew inspiration from real-life media moguls the Redstones (who control ViacomCBS Inc.) and the Murdochs (who control The Wall Street Journal). It’s hard for the founder to pass down control. But for the health of the business, there comes a time when the patriarch needs to switch from being quarterback to being the coach (in the words of renowned family consultant Matthew Wesley).

Though the “Succession” story may be painful, many business-owning families can relate. If nothing else, it’s instructive on how toxic behavior can destroy a business and a familyThe Wall Street Journal covered this topic in “Succession’s Family Business Drama Hits Close to Home for Some Fans” (November 5, 2021). The article describes how the show “pinched nerves every now and then” for Steve Smith, owner of a family architecture firm: “We identified that this is what we don’t want the family to become. The show has put that top-of-mind again and again and again because it’s so addictive to watch.”

“Succession” is even part of the curriculum in a course at Northeastern University called Examining Family Business Through Film. Professor Kimberly Eddleston describes the show as “a case study in how some founders feel entitled to run their companies until they die, and how some potential successors feel unworthy to take over.”

At The Blum Firm, we have witnessed too many real-life dramas on family business succession. Seeing those has caused us to develop “Business Succession Planning” as one of our law firm’s main offerings. There’s no one-size-fits-all solution. Regardless that the solutions are each unique, the process is generally the same. Hence, we created a Ten Step Business Succession Planning Roadmap:

  1. Start the Process
  2. Create an Action List
  3. Form a Planning Team
  4. Manage Expectations
  5. Identify the Issues
  6. Define the Desired Outcomes
  7. Search for a Solution
  8. Get Buy-In from Key Stakeholders
  9. Address the Challenges
  10. Implement the Solution

We’ll walk you through the specifics in the coming weeks. Suffice to say that at the end of the process, you’ll identify a solution that fits your business and your family. You’ll improve the odds of preserving the family business as a meaningful legacy for future generations. Our goal is to put you in the category of Alan Rosen, CEO of family cheesecake empire Junior’s Restaurants and Bakery, who fought his senior generation to expand beyond their original one store in Brooklyn. Learning from Logan Roy’s mistakes in “Succession,” Rosen is committed to a smoother business transition: “I, unlike Logan Roy, will have a plan.” The Blum Firm would be honored to help you have a plan, too.

Marvin E. Blum

Marvin Blum draws lessons from the TV series “Succession” to help in real life business succession planning.

Business Succession Planning: Every Ending Is a New Beginning

One of the toughest challenges in estate planning is to plan for the transition of a business when the founder is gone. There are so many business and financial, as well as psychological and emotional, aspects to consider. That’s the reason most put off doing business succession planning. They just don’t want to open that can. However, as my colleague Tom Rogerson often says: “Failing to plan is planning to fail.” Failing to carefully plan for the continuity of a business often leads to a bad outcome—bad for the owners, bad for the family, bad for the employees, bad for the customers, bad for the suppliers, bad for everyone involved.

Because of the reluctance of business owners to plan for who will run the business WHEN (not IF) they are gone, I am launching a segment of my Family Legacy Planning Series devoted to Business Succession Planning. In the coming weeks, we’ll explore the do’s and don’ts of succession planning. We will study real life examples of families who did it right and families who did it wrong, learning from their successes and their failures.

Interestingly, the idea for this segment on business transition planning came to me when hearing a sermon from Rabbi Zev Weiner. While in Los Angeles to celebrate our granddaughter Juliet’s 8th birthday, we attended Shabbat services at Young Israel Synagogue. I learned that the Gemara (Rabbinic commentary) teaches why Jewish law on divorce comes BEFORE the Jewish law on marriage. Rabbi Weiner explained that all endings (whether it be divorce, death, job termination, or even the end of a month) are viewed in Judaism as new beginnings. Upon any such ending, the focus is to look to the opportunities that lie ahead, opportunities to start over, find happiness, renewal, rebirth. That’s why marriage teachings come AFTER divorce teachings in Jewish law.

It then dawned on me: the death of a business founder brings an opportunity for business continuity, perhaps even improvements, expansion, a better way. It also creates the opportunity for the founder to create a lasting legacy that endures for generations to come. A life ends, but a legacy begins.

By the same token, TV producer Norman Lear recently celebrated his 100th birthday with two words of advice: “over” and “next.” When something is finished, declare it OVER and don’t dwell on it. Immediately move on to what comes NEXT. That philosophy has served Norman Lear well, a man who continually recharges his creative juices and is still working in his 101st year. But when his time is over, someone else will pick up where he left off and bring on what’s next. Similarly, when any business founder’s work is “over,” it’s important to have a plan in place for what comes “next.”

I look forward to diving deep into business succession planning and exploring all the opportunities it offers.

Marvin E. Blum

Marvin Blum’s granddaughter Juliet celebrates her 8th birthday, marking the end of one year and the beginning of another, filled with the promise of new opportunities.

Marvin Blum, Kandice Damiano, John Hunter, Dyann McCully, and Len Woodard Recognized

We are pleased to announce the selection of five attorneys to 360 West Magazine’s “Top Attorneys” list for 2022. The list was released in the magazine’s July edition.
 
The annual list showcases the region’s best attorneys, as chosen by their peers, in 42 specialties.
 
The Blum Firm’s Top Attorneys are:
  • Marvin Blum The – Wills, Trusts, Estates and Probates
  • Kandice Damiano – Wills, Trusts, Estates and Probates
  • John Hunter – Tax Law
  • Dyann McCully – Wills, Trusts, Estates and Probates
  • Len Woodard – Tax Law
We are grateful to 360 West Magazine for highlighting these extremely talented attorneys.

If You Don’t Document It, It Didn’t Happen

My daughter Lizzy has become our family’s historian, taking the lead on photographing the moments of our lives. When anyone objects, she admonishes: “If you don’t document, it didn’t happen.” Lizzy is right about the importance of “documenting” our stories, whether it be in photos, videos, or writings. If we don’t intentionally record our history, one day those treasured memories will vanish.

Documenting your legacy is an important part of the estate planning process. Estate planning is so much more than writing a Will. Estate planning is a reflective process, a time to assess what you want to pass down to your heirs aside from your financial assets. Each of us needs to view ourselves as an ancestor. As an ancestor, the goal is to enrich the lives of our descendants, not by making them “rich” with money, but by making them the recipients of a rich and meaningful legacy.

In his article “Our Legacy,” Blake Amos of Trinity Valley School describes our legacy as “what we leave as a pathway for our kids to follow.” Amos continues: “Our legacy is being created whether we are intentional about it or not…. Our legacy is being created every day, so let’s commit to shaping it with intention, thoughtfulness, and care.” As we do so, Lizzy would add, let’s also document that legacy with intention, thoughtfulness, and care.

In the last two weeks, I’ve described the process of creating a video of my mother Elsie’s life story. The feedback has been heartwarming. A number have requested a sampling of the video that includes her “Southern Belle” accent. Click on this LINK for an updated one-minute teaser video with a couple of quotes in Elsie’s own voice, in particular a snippet where she confesses to being a “flirt” to snag Julius when they first met at a Brandeis camp.

I am now gathering photos to slot into the video, and in doing so, I realize how right Lizzy is to urge us to take pictures. How much I wish there were more photos to aid in visualizing significant places and events. What I am noticing is that an important source of photos often comes from weddings. I’ll put in a plug for investing in excellent wedding photography. Some describe an expensive wedding as “driving a car off a cliff,” as Monday morning comes around fast and it’s all over. Not true. Those wedding memories live on for lifetimes, especially through pictures that future heirs will cherish. We keep a photo album of each of our kids’ weddings on our coffee table, and it’s soothing to peruse them from time to time. There’s even research that proves that looking at family photo albums actually lowers blood pressure.

In addition to documenting your story through audio/visual and photos, it’s also important to prepare a written history. Here are a couple of tips on writing your story:

  • Kasia Flanaghan with EverydayLegacies specializes in personal writing coaching and editing to help you write your story.
  • Pat Hawkins recommends StoryWorth, a Christmas gift from his kids that provided Pat a question each week to answer in writing, which was then compiled into a book after a year. Quoting a Jesuit priest who said “The shortest distance between two people is a story,” and a friend who said “An untold story is a secret,” Pat concludes: “It’s my hope that reading the stories in this book will shorten the distance between you and me, and that these no-longer-untold stories will help create a family legacy.”

Indeed, documenting those stories through videos, photos, and writings will not only prove that they happened, but will weave together a memorable legacy. Preserving a family legacy can help preserve a family. As you engage in estate planning, remember to document a family legacy as part of that process. Your heirs will look back on you, their ancestor, and thank you.

Marvin E. Blum

Left: Wedding of Marvin Blum’s parents, Julius and Elsie Blum, 72 years ago. Wedding photos are often the best source of documenting a family’s history. Right: Elsie Blum today, with her five great grandchildren.

Tips to Create Your Life Story

I revealed last week that I’ve embarked on a video project to document the history of my mother Elsie, and through her, my ancestors. Today, I’ll share more about the process of creating “The Elsie Blum Story.”

First question: Why do it? I’ve emphasized repeatedly the value of a family knowing its heritage in order to remain connected and thriving for years to come. David Issay, creator of StoryCorps, cites research demonstrating that stories connect and heal us. Families yearn for connection. Retelling family memories helps families continually reconnect. We recently had a Blum cousins’ reunion where we sat around retelling old family stories that we all already knew, but everyone left that lunch feeling a deeper bond to each other. Documenting your life story keeps those golden moments alive for future generations. Bruce Feiler reaffirms: “The single most important thing you can do for your family may be the simplest of all: develop a strong family narrative.”

Next question: How to do it? Technological advances make it easier to document your history. The choices range from books, to audio recordings, to videos, to recorded Zooms, to custom-produced films. Resources continue to emerge, including these options:

  • Live On Services – Records a Zoom interview with Ruth Luban prompting you to share treasured memories, traditions, and stories. The extended package incorporates up to 50 photos into the recording.
  • Axcelora – Creates a brief audio recording that goes out at death in a link to loved ones.
  • Life Stories Company – Helps you write your private memoires and create a Life Legacy Book.
  • EverydayLegacies – Records a video/audio history of your family heritage stories.
  • Wells Fargo Family & Business History Center – Generates an oral history in your own words and voice.
  • Epic Bound Books – Publishes a coffee table book.
  • Legacy Commissions Films – Produces a custom family legacy film.

Regardless the route you choose, my advice is to do it now. One reader this week shared: “I wish I knew more about my grandparents’ beginnings and tried to get my mother to tell her stories into a recorder, with no success. I need a kick in the a—to get started.” Well, I’m here to give you that kick, and urge you to engage a service to help make it happen. Many shy away from telling their story. It’s normal to find the process intimidating. When my mom tried to back out, having a third party there to encourage her made all the difference. We worked with Ruth Luban at Live On, who kept the conversation flowing and pulled out some stories from Elsie that I’d never heard. Click on this LINK for a one-minute teaser video of “The Elsie Blum Story.”

Do some advance preparation to make sure you include the most important topics and stories. We used a chronological approach, starting with memories of my mother’s parents and my father’s parents and their escape from oppression to immigrate to America. The focus then shifted to Elsie’s childhood in Montgomery, Alabama during the early Civil Rights movement, followed by marriage to Julius, moving to Fort Worth to raise Irwin and me, to more recent years as a grandmother and great grandmother. The video concludes with inspiring stories of the strength Elsie modeled when she coped with the heartbreaking loss of Julius and Irwin. In her sweet southern accent yet “Steel Magnolia” resolve, Elsie advises future generations to stay strong through adversity and follow her example by clinging to faith, family, and productive work.

I’ll conclude with the words of Ruth Luban in a Live On blog post Preserving Family Heritage: “The fact is, we’re all walking stories, every single one of us. We came into the world with a story on our backs, lifting the life stories of our parents and forbears. Those stories embody traditions, tribes, geopolitical whereabouts, and cultural patterns that inform what our lives will become…. And many people simply don’t realize that their stories actually matter…. Participants have reported how transformative it was to recollect, to attune, to acknowledge their life history…. [That] story is the tapestry within which people thrive.”

I urge you to give your heirs the gift of your life story. It will be a gift that will keep on giving.

Marvin E. Blum

Elsie Blum agreed to do a Zoom video recording of her life story as long as her son, Marvin Blum, sat by her side. The result is a gift the Blum family will forever treasure.

Update on Elsie: Preserving My Mother’s Story

Every family has a story. Those stories make your family unique. As psychologist Marshall Duke explains, “Ordinary families can be special because they each have a history no other family has.” In writing this weekly Family Legacy Planning series, I’ve revealed stories about my own heritage, especially the stories of my four grandparents immigrating from Eastern Europe to America to escape persecution against Jews.

Research shows that heirs who know more about their family heritage, especially examples of ancestors’ resilience, have higher self-esteem and are better equipped to handle adversity. The best way to teach younger generations about their heritage is by telling stories. For that reason, I’ve become an active proponent to encourage people to document their stories. If not, these precious family jewels will get lost over the generations.

As I advocate for preserving stories, I’ve become the proverbial cobbler who is now taking care of my own shoes. I am now engaged in a full-blown effort to create “The Elsie Blum Story.” I can’t claim the credit for this idea. The seed for it was actually planted when Sam Daniel sent me the following email after reading of my brother Irwin’s unexpected death from pancreatic cancer at age 65, and how Elsie jumped in at age 85 to take over the family business:

Your weekly stories are now a must-read in my inbox! Your story about Irwin touched me deeply. Now this story about your mother is incredible to read! Elsie is a hell of a woman, and I mean that nicely! I think a wonderful way to honor her legacy is to sit down with her for a series of discussions about the family history. At Elsie’s age, she is a walking, talking wealth of stories and knowledge about your family history. Record her voice speaking about her life, your father’s life, her parents and your father’s parents. I wanted to do this with my mother before she passed, but alas, she developed dementia and was gone in a matter of months. Needless to say, I regret that lost opportunity.

Sam’s email was a wakeup call to record my mother’s voice before dementia or death come along (often unexpectedly) and then it’s too late. I wanted that history to be told in Elsie’s charming “Lady Bird Johnson” deep South accent. Fortunately, Elsie at age 91 is still going strong, and 100% sharp mentally. I teamed up with “Live On” to help create a video history of Elsie’s story. A few days before filming began, my mom expressed some reluctance (a common occurrence). She agreed to proceed on the condition that I sit next to her throughout the filming. Thankfully, we have now completed several hours of recordings, and the evidence is preserved. We now begin the next step of converting that footage into a final product.

In next week’s post, I’ll share more specifics about the process of creating “The Elsie Blum Story” and explore various options for documenting a lasting family history. I’ll also share a one-minute “teaser” video of Elsie’s story.

Elsie update: As the attached photo shows, Elsie has now added “runway model” to her resume, selected by The Stayton to model in their recent fashion show. Though her mind is still completely sharp, after two falls in the last couple of years, she agreed it was time to retire her high heels and use a walker. Some may have too much pride to admit the need for walking assistance, but Elsie is a role model to stand tall, use a walker, and walk with dignity. To anyone who is unsteady, please follow Elsie’s lead and take the safe route. It’s not worth falling.

Marvin E. Blum

Elsie Blum, adding runway model to her resume, an inspiration for future generations to stand tall and walk with dignity.

Welcome Doug W. Harvey to our Dallas Office!

We are pleased to announce that Doug W. Harvey has joined The Blum Firm as an Associate Attorney in our Dallas office.
 
Doug has a passion for helping families and entrepreneurs protect their greatest assets: their futures. His estate planning practice involves identifying and implementing estate planning techniques to accomplish client objectives, taking into account family dynamics, potential tax implications, and asset protection strategies. Doug frequently counsels business clients on entity selection and formation, day-to-day company operations, and methods to reduce various risks faced by business owners.
 
Doug also has considerable experience in the corporate world having served for 6 years as general counsel for a commercial mortgage lending and servicing company.
 
Doug received his J.D. from Texas Tech University School of Law and his Bachelor of Arts from Texas Tech University, both summa cum laude!
 
His contact information can be found here.
 
Please join us in welcoming Doug to our team!
 
The Blum Firm

Unequal Inheritances: Tips from Experts

In last week’s post, I shared a few samples of the high-octane reaction to the topic of sibling strife over unequal inheritances. I brought home the point that such warfare is not exclusive to the mega-rich. Last week’s real-life stories came from families of all levels of wealth.

In today’s post, I want to offer tips I received from other advisors. Like me, they’re in the trenches learning the “do’s” and “don’ts” from seeing inheritances in action, the ones that worked and the that went awry.

From a life insurance advisor:
I wish families could see how dangerous it is to family harmony to try and split things like businesses and land among three and four kids. Obviously, I am biased to the insurance industry as a solution but the creation of cash at death for the purpose of estate division can be a huge key to maintaining the relationships in the family. If people truly realized its power, they would be actively pursuing getting as much life insurance coverage as they can.

From a family counselor/life coach:
Having a third-party mentoring the children to prepare them for what is in their future is a great remedy and it reduces the risk of relational issues. It doesn’t eliminate the risk, but it does reduce it.

From a trust officer:
I am in favor of equal division to avoid family conflict. Another problem we see is pot trusts (a trust for multiple beneficiaries where distributions are made to the individual beneficiaries as needed, and there’s no score-keeping)—nobody is happy if one sibling has more needs than others. It is better to have an estate split into equal separate trusts, with the irresponsible sibling having a corporate trustee and the other siblings serving as their own trustee. That way the siblings understand that each of the siblings received the same amount from the parents’ estates and that everyone’s shares are in trust.

From another trust officer:
Seriously consider naming a corporate trustee, if for no other purpose than to administer the estate before the split and each child can take over their own trust at that point. Naming a corporate trustee to serve for the first few years only can often diminish the tendency of the heirs to go after each other. This is especially effective if the corporate trustee is brought into the conversation with the adult children and it is understood that getting through the estate tax filing, any probate, and the initial winding up of the decedent’s dealings is not only not fun, but it can be exhausting and beyond the capability of heirs. And, by the time each heir hires their own lawyer to represent them as fiduciary (in that scenario no one generally believes their interests are truly aligned, someone always believes the other heir is somehow going to try to take advantage of the situation), it quickly becomes obvious that the corporate fiduciary appointed to just get through the administrative phase of the estate is well worth the cost.

Once the estate distributes to the resulting trusts, the heir can become the sole trustee at that point and can do what they want. They can move the assets from the corporate trustee, or if the corporate trustee has done its job well, retain the relationship as a value-added partner.

Experience has shown me how ugly it can get when mom and dad swore in our conference room “our children definitely get along well, they won’t have any problems.” What is always underestimated is the influence of the siblings’ spouses as well.

From a financial advisor:
Thanks for another important article. I’m observing over time that more and more of my work and of the value that my practice offers to families has to do with developing thoughtful ways to increase family communication and understanding of the hopes and wishes of the parents, as well as their kids. Of course, this then interconnects with every other aspect of the family enterprise from business management to family governance to estate planning to portfolio management.

I couldn’t have said it better myself.

A final tip from me: When parents are debating leaving an unequal inheritance to their kids, I often advise them to consider making unequal distributions to the kids while the parents are alive, without keeping score. However, when it comes to the Will, leave the estate in equal shares. A Will is a permanent document, and having a reminder of inequality out there forever can continue to sting. If kids aren’t equally capable of managing the assets, leave the assets in equal trusts for each child, and carefully select the appropriate trustee to manage each of the trusts. That way, ownership is equal, even if management is not.

There is no “right” or “wrong” answer; no “one size fits all.” The key is to engage in a thoughtful process, seeking guidance from estate planning advisors who bring experience, wisdom, objectivity, “head,” and “heart” to the table. Every family wrestles with its own dynamics. Address the issues; don’t sweep them under the rug. I urge you to consult with experts who are here to help your family build a lasting and meaningful legacy.

Marvin E. Blum

Tribute to sisterhood: the first post-pandemic reunion of Marvin Blum’s wife Laurie and her three sisters. Even during the separation, the four sisters stayed closely connected on Zoom and by phone, fulfilling their parents’ mission for the family to always remain close. (Left to right: David and Linda Usdan, Peggy and William Adler, Laurie and Marvin Blum, and Diane and Barry Wilen.)

Title: Sibling Warfare: Reader Reactions

My Sibling Warfare post on June 28th, together with last week’s post on unequal inheritances, have really struck a nerve. Not surprisingly, many families are struggling with sibling conflict. The feedback I’ve received has been so informative that I’ll share some highlights with you.

The five stories of family feuds in my June 28 post created quite a stir. WealthManagment.com picked up the article and published an edited version here entitled “Five Famous Families Undermined by Sibling Conflict.”

Those five examples illustrate what can happen when sibling rivalry grows into fighting of epic proportions. Although those five families are all mega wealthy, I’m reminded that family infighting is not limited to the ultra-rich. In the feedback, I learned stories of sibling strife in families of moderate means that are equally toxic.

Several stories involved leaving the family home to only one of the kids, for reasons that appeared fair to the parents, yet the news was not well-received by the other kids. Part of the distress was related to financial disparity of the inheritances but much more was due to hurt feelings. In these stories, the prevailing view was for the parents to do their best to explain their reasons, and even if there’s no buy-in from all the children, at least there were no surprises when the Will was read.

Other stories I received involve family businesses left unequally to the kids. Again, the parents had valid reasons for the unequal division, such as leaving more to those active in the business and attempting to make up the difference by leaving other assets to those not active in the business. In one extreme case, the entire business (considered the family’s premier asset) went to one kid and real estate (of much lower value) to the other kid. The one getting the real estate felt slighted, but watch what happened. Fast forward years later and the business was bankrupt while the real estate soared in value.

One mother shared with me an ongoing internal debate over her plan to leave the estate equally to her four children in an effort to preserve family harmony but was concerned about one child being of much lesser means. The mother held a heart-to-heart family meeting to explain her intentions and seek a moral commitment from the children to be there for each other and use the inheritance to support a sibling, if ever needed.

Yet another story involved two siblings, one very responsible and the other terribly irresponsible. Their parents left both halves of the inheritance to identical restrictive trusts in an effort to protect the irresponsible one. The result was that the responsible sibling felt punished for their sibling’s irresponsibleness.

These are all heart-wrenching, real-life examples reminding us there are no perfect answers. As an advisor stressed to me, an estate plan should not be set in stone, as adjustments may be necessary as life unfolds. Estate planning is an art, not a science. Estate planning advisors have a unique perspective and can offer valuable guidance in helping parents address these thorny issues.

In next week’s post, I’ll share some of the valuable insights I received on this topic from life insurance, financial, life coach, and trust advisors. Stay tuned.

Marvin E. Blum

Two of Marvin Blum’s five grandkids, sweet siblings Lucy Blum (age 3) and Grey Blum (age 1). The Blum family mission is to keep this loving sibling connection going strong throughout their lives and keep pouring down the love to future generations.