Wealth Actually

The massive costs of caregiving can be a big surprise to most people. It is an expensive undertaking in the best of circumstances and can be a full time job. BETH PINSKER, a columnist at Marketwatch and the author of the new book, “My Mother’s Money- A Finanical Guide to Caregiving” takes us through her experience. There are many great tips to help get support for this difficult experience. https://youtu.be/WNYLOR_Pvw8?si=8dS2LPG3vfe1FWIX https://www.amazon.com/My-Mothers-Money-Financial-Caregiving-ebook/dp/B0DW3RLJSF/ https://open.spotify.com/episode/120pb9198YPecMzPir7RyC?si=mqlnY7XmRA-gtRzfJemq_w Outline 00:00 Introduction to Caregiving and Aging 02:15 The Importance of Planning Ahead 08:28 Navigating Legal and Financial Caregiving 10:33 Understanding the Emotional and Physical Toll 14:29 Making Informed Decisions for Loved Ones 19:40 Financial Planning for End-of-Life Care 25:28 Essential Documents and Digital Access Transcript Introduction to Caregiving and Aging Frazer Rice (00:04)This is a real treat for me in the sense that I have had personal experience around this. Your book, which we’ll get into in just a second, is going to be coming out in November. I think it’s going to be an important resource for pretty much anyone who has ⁓ any exposure to aging or anything like that or any sort of caregiving. Give us a little bit of a sense of the timing of the book first and we’ll get that out of the way, far away. Beth Pinsker (00:35)Great, you know what, we’re all in this together and nobody’s gonna escape any of this. You will either need to care for somebody or you’re gonna need to be cared for yourself at some point in time. Like it’s inescapable. you ⁓ know, we’re all, we all need this information. The reason I put it together was because I couldn’t find it out there when I went looking for it. When my mom got sick, there wasn’t a resource that told me how to deal with the things that I had to deal with. Being a CFP and being a retirement columnist and a journalist, I got the caregiving information. Then I wanted to put it out there for other people to benefit from it so they could plan a little bit better or get through whatever they were stuck in the middle of. I pulled together a bunch of columns I had written and brought in them out. I interviewed a lot of people, like almost 100 people, especially for this book. Over the years as a journalist, I’ve interviewed probably, you a thousand people about, you know, planning and estate planning and all of that stuff that goes into it. This book is coming out November 4th from a Penguin Random House imprint. You can pre-order it on bethpinsker.com or through the publishers portal. Hopefully you’ll see it everywhere and every bookstore you go to. Frazer Rice (01:51)One of the concepts of the book that I think is vital is that it’s important to have these steps. This caregiving analysis, this process established while everyone is at least a little bit on the top of their game. That you’re not making decisions under maximum stress, either emotional, financial or otherwise. Maybe take us through a little bit about how you came to that realization and how you articulated that. The Importance of Planning Ahead for Caregiving Beth Pinsker (02:06) Yeah, so I got a call from my mom ⁓ one day. You know, she’s perfectly fine, 76 year old, and she’s like, I’m gonna have surgery. It’s gonna be a big one. I’m gonna get my back operated on so that I can continue to walk. She really wanted to be able to walk and she was losing her abilities. The thing we need, we needed two things. We needed a power of attorney for ⁓ financial needs and a healthcare proxy because she was going to be incapacitated for a certain amount of time. We didn’t know how much and we needed those documents. If we would not have had those documents, my life would have been an utter disaster. It was already really hard with those documents, but without them, I would have had to go to court. I would have like not been able to do anything. I would have had to pay her mortgage out of my funds, I would have had to pay the caregivers out of my own funds. I would have been locked out of her life and locked out of making decisions for her and I would have had to, you know, get a lawyer and, you know, that cost about $18,000, right? So instead we had forms that said I could act on her behalf and she got them as part of her estate plan. The equation I put in the book is you can get those documents for free or you can pay $18,000 to go to court. Like that’s the position that people are in before something bad happens. Like, do you want to just spend 10 minutes and get a power of attorney and healthcare proxy? Or do you want to go to court and spend months and agony and lots of money? So, you know, if you put it that way and you explain to people why and show them how hard it is to not have those documents, I’m hoping it will spark a discussion that somebody in the family will say, hey, Does mom have those documents and does dad have those documents? Does Aunt Sue have those documents? We really need to get those and do it. Everybody over the age of 18, so don’t send a kid off to college without them. My son turned 18 and he needed some minor surgery before he went off to college. Printing out documents and marched him down to the notary and got those signed for him. He’s like there was no way I was gonna have him do even a minor surgery where he wasn’t even gonna be really fully under and Was gonna come home the same day I wasn’t gonna let him do that without having some sort of paperwork in place because he’s 18. He’s a legal adult You know Frazer Rice (04:46)I mean, everything related to the Terry Schaivo case to situations where decisions for accidents that happen abroad and so on to not have those documents in place is a disaster waiting to happen as you described. One thing that I’ve gotten from my experience is that it’s important to not only keep them reviewed to make sure that people are in place, et cetera, but also to have them just generally updated. I’ve found that hospitals and medical practices sometimes say, you know what, this is more than five years old. We’re not going to respect it. Beth Pinsker (05:22)Yeah. Frazer Rice (05:23)Was that any part of your experience or have you heard about that from anyone? Beth Pinsker (05:26)Absolutely, because ⁓ people move, right? And so my mom and dad had their estate plan done in Pennsylvania. ⁓ Then they retired and moved to New Jersey, primarily. So Pennsylvania and New Jersey have different rules. If they would have gotten sick in New Jersey and had a Pennsylvania power of attorney, Frazer Rice (05:30)Right. Mm-hmm. No question. Beth Pinsker (05:47)We would have had trouble. Then they packed up and moved to Florida. So if they would have gotten sick in a time period where I needed to take over for them and they still had their old documents, we would have been stuck. ⁓ As it was, my father died in 2018. The first thing I did was have my mother redo her entire estate plan in Florida as a single adult, right? No longer, I give everything to my husband and my husband gives everything to me, ⁓ which they call sweetheart wills, which everybody in your audience already knows, but ⁓ if you’re watching and you don’t know, that’s what they call those. ⁓ Frazer Rice (06:18)That’s right. Beth Pinsker (06:25)But so they had sweetheart wills and if something happened to one of them they said I give the power to the other in a power of attorney and my brother and I were named as you know successors. ⁓ But after my father died, those things are no longer any good, right? So my mom needed to update her plan and I was already a CFP and a retirement columnist by then. So she listened to me and she went and got all these documents done in Florida. And so when she got sick, it was within five years. ⁓ Nonetheless, I went to the bank with them and tried to get access to her bank account and they just look at me and they shook their heads. They said, Nope, you need a court order. And I said, Nope, I don’t. I don’t need a court order. have valid paperwork. They said, Nope, you need a court order. We went back and forth like that in like, you know, for like 10 minutes. I knew what I was doing and I stood my ground, but I wonder how many people don’t ⁓ and go off and you panic. But I made, I stood my ground. made them, you know, let me talk to a customer service rep. made an appointment. I came back and they put the paperwork through, but I really had to like, ⁓ you know, hold a sit-in and refuse to leave. Frazer Rice (07:42)Gosh, the one of the things that that brings up, go in all sorts of directions on this. But the first one is that is the changing of planning once an event happens. And so when your father died and your mom was on her own and the characterization of the estate planning is different at that point, you know, it’s sort of take it’s taking one set of circumstances into account. Well, those circumstances happened and now you have to prepare for the next tranche of life. both from a caregiving perspective and then from an estate planning perspective. It’s also, I think, a unique opportunity to sort of look in as you sort of diagnose too and understand who is actually making the decisions for people at this point because the dynamic is now completely different. Navigating Legal and Financial Caregiving Beth Pinsker (08:28) Yeah, no, my mom, you know, didn’t know a lot of this ⁓ stuff. And I think a lot of people don’t like in the process of writing this book. I got an edit note that was like, I didn’t know this, you know, and it was that when you have a couple and they’re both getting Social Security when one dies, you know, you go down to one Social Security income and you can can shift to the higher of those Social Security incomes. But people don’t realize that. And if they’re counting on paying bills with the two Frazer Rice (08:49)That’s right. Beth Pinsker (08:58)social security incomes, that’s a big shock to their financial system. And people like you, you’re surprised by what people don’t know. So if you’re a professional and you know that and don’t even think about it, but don’t understand that your clients don’t know that they’re preparing for a different financial situation than you’re helping them prepare for, right? They’re thinking they’re getting two checks ⁓ perpetually and they’re only going to get one and they need to plan differently. And so somebody along the way has to explain that to them so that they get an understanding of what their income will be if one of the couple goes. ⁓ Frazer Rice (09:36)One of the things that I really liked about the book ⁓ is the concept of getting the caregiver, usually someone younger, one of the kids of the parent or someone like that, or sometimes it’s the spouse to the other spouse, then there may be an age, ⁓ sort of assymmetry on that front. But getting them used to the idea that caregiving is a full-time job with multi-faceted approaches to it. We’ve already alluded to the sort of intersection with the banking system and the legal system and then the healthcare system, all of which is maddening in terms of detail and again, a full-time situation and then that doesn’t even get into the emotional and physical aspects of it. How did your experience shape that? There are obviously plenty of surprises, probably many of them unpleasant around that. What happened on that front? And I’m sure that was a big part of the thrust of the book. Understanding the Emotional and Physical Toll Beth Pinsker (10:19)Yeah. Okay. It was, and there’s a difference. I draw a line between medical caregiving, like physical caregiving, and the financial caregiving. And I’m purely focused on the financial caregiving. There’s a lot out there on the medical and the physical side, and even the emotional side of caregiving. ⁓ But those are things that you can actually pay other people to do. And it’s really hard to pay anybody else to do the financial caregiving part. Even a financial planner, even a manager. Like you can hire people to do some of it, but ⁓ you know, like my mom was not gonna give her ATM card to just anybody, right? She certainly wasn’t gonna give it to a banking stranger or somebody she hired to be in that relationship. She wouldn’t trust them, especially if she was incapacitated. Certainly, she wasn’t gonna give it to one of the ladies who was helping her in the bathroom. so. That’s another thing. Frazer Rice (11:16)Sure. Or worse maybe she would have and that’s another problem that you have to insulate yourself against. Beth Pinsker (11:33) So, you know, for somebody, need somebody you trust who’s really on the ball to like, you know, have access to the bank account and the credit card and all of those things. And it goes way beyond that because when somebody’s in the hospital or sick or navigating, you know, the care infrastructure in the United States, you have to keep an eye on it because it’s just, it’s so complicated. You have to be on site or visiting often or making spot visits or calling them in some capacity. They’re trying to move your parent. They’re trying to release your parent. Things need to be taken care of every single day. If you don’t check in on them, that person could be waiting in dirty bed clothing to be changed. And you don’t want that for your parent or any sick loved one. Just the amount of mental energy and physical energy caregiving takes. I think I counted them up for the book. In eight months, I made eight trips back and forth from New York to Florida. Each of the trips was at least a week. Some of them were for multiple weeks, like three weeks. I made a trip, I was there for three weeks, because stuff kept happening and I kept having to stay. My mom’s time was short because her illness got serious pretty quick, but it was a lot. I have a full-time job. I’ve got kids. I’m divorced. when I’m with my kids, it’s just me and I have a dog. People have stuff that they have to do in their regular lives. It’s hard to add an entire other complicated human being on top of that. Mom’s coming home from the hospital. You got to go find a place, either a nursing home for her to go to, or you got to be at the house to accept the medical delivery. Somebody’s going to be there who’s responsible to sign for it. That can’t just be anybody, you know, like you need to be on top of those things. Frazer Rice (13:39)Well, and you’re fighting the caregiving business model in many ways. The healthcare business model is not an empathetic thing. Not only are you fighting that and all the different bureaucracy that accompanies it. There is so much mental energy to do what you described. To make sure that the aging process and the recovery or hospice process is done with the dignity that you want. That is squarely at odds with what the healthcare system is wanting to do at that point. I tell anybody on that front to get ready to deal with this stuff. You’ve got to really swallow hard and get ready. It is going to be an emotional and energy tax that you may not have prepared for yet. Making Informed Caregiving Decisions for Loved Ones Beth Pinsker (14:29)Yeah. And you really need to know what caregiving that person wants. So that’s where a living will, ⁓ the healthcare proxy, the HIPAA permission, there are all sorts of ways to express that living will. There are these things called five wishes, which help you ⁓ say what you want in a more ⁓ common way instead of legalese. But the living will is a legal document, right? Like you need that in order to be able to prove what your loved one wants or wanted if they can’t speak for themselves. ⁓ And you don’t want to be making that stuff up. You really need to like have a discussion about it. I think that of all the things I went through taking care of my mom, knowing very clearly what she wanted was the only thing that brought me peace in the whole process is because I was there as a steward to take care of what she wanted. And if I didn’t know what that was, I would have driven myself crazy. Like it’s too hard emotionally to try to make life or death decisions for somebody else, somebody you love, without knowing what they want. And, or especially if you’re going to go counter to their wishes, because that’ll blow up your whole brain. ⁓ But I knew what my mom wanted. I knew what her parameters were. I knew what she considered hopeless and how mostly how she didn’t want to live. Without knowing those things.I would never have been able to make decisions, hard, hard end of life decisions, And you need them, not just verbally, but you need them on paper. You need both. And, you know, estate lawyers, God bless you, like all of you out there, like you help people get those things together and people need them. And I just wish more people had them because like, you know, I’ve, looked at all the stats for this book, right? Perennially over decades, 60 to 70 percent of people do not have any documents in place for their incapacity or death. Like 30 percent of people in almost all surveys, 30 percent of people have a will of some sort. That’s not enough. You need the capacity of documents. You need a living will. Like if you’re going to help, if you love people, like you have to put this stuff together for them. They have to know what you want. Um, and I, what my book tries to do is show people why, right? Here’s my caregiving story of what I went through. Here’s when I needed this and that document. And finally, here’s what having that document meant I was able to do and able to feel and able to survive. Um, and here’s what having that document, not having that document would have done if I didn’t have it and here’s what it did to you know other families that I talked to. You really have to understand that why and I think a lot of people don’t and I think that’s why they don’t get the documents done. That’s why when a lawyer hands them in a state planning binder and asks them to put information in it, it just sits on a shelf. Frazer Rice (17:40)It’s a huge mistake and all it takes is one time touching the stove like that and people understand right quick what it means to not have that in place. And when you don’t have documents in place, you’re stuck with the default rules that the government sets up for you and with the process that the government sets up for you, all of which is painful. And to not do that is to not get things in order. It’s a small thing, ⁓ but it’s not a small thing. If you don’t do it, you’re setting up the people who are in charge of taking care of you or that you’re dealing with that just get raked over the coals with crazy. Beth Pinsker (18:27)Yeah, and it’s even more important, people think about that in terms of ⁓ state mandated succession, if you die without a will. ⁓ But after somebody dies, you have a lot of time, nothing’s gonna change in that situation. When you’re incapacitated, there’s deadlines. If you don’t have access to certain things in a certain amount of time, like money for a mortgage payment or the ability to make medical decisions, even who can see you in the hospital if you’re divorced or if you’re in… There are people in this country who have family members who don’t agree with their lifestyle, say. If you’re in a same-sex relationship, and you don’t have paperwork in place and your family swoops in and won’t let your partner in to see you, that’s still happening out there. And without legal paperwork, you can’t fight it. That’s just really sad. And I don’t want that to happen to anybody. So if you can reach some people with storytelling, that’s what I was hoping to do. Frazer Rice (19:22)One of the things that’s a little bit scary too is the numbers around all of this, where to me, one of the things that scares me going forward, country-wise or otherwise, is the amount that the costs of the last two years of life are and what they’re going to be. And the safety nets that are out there may or may not exist later on. They’re so poorly understood as to how to deal with them anyway. ⁓ Maybe take us through a little bit about what you found related to getting the dollars in order so that ⁓ those last two years, which are the most expensive years of life, usually even the last two months, ⁓ how that can creep up and really ⁓ create a situation. Financial Planning for Caregiving and End-of-Life Care Beth Pinsker (20:12)Ha. Yeah. Probably nothing made me crazier than, than hospice. Like I didn’t understand that hospice like wasn’t a place. I thought hospice was someplace that you went like, oh, when, when you’re at the end of life, they send you to hospice, right? Hospice is like, for the most part, just your house, you know, and they, they pay for some of the medical supplies and they, uh, you know, a nurse will come by. Um, but for the most part, you’re just like living your normal life until, you know, until it’s really, really close to the end. I think a lot of people don’t understand that, you know, because like they go home and think they’re on hospice and then, you know, 18 months later, you know, they’re still footing the bill for all this care or somebody has to quit their job to stay home with them. And I didn’t understand any of that. You know, my mom’s illness went really fast. So, we were in this hurry up offense, the whole hurry up defense for caregivng, I guess it is- I’m not good with sports, but we, you know, we were just running gun the whole time. It wasn’t until we got my mom home for hospice that, you know, we started to look at how long can we handle this. We didn’t, you know, my mom didn’t have a terminal diagnosis. So it’s not like she had cancer and we knew how long it was going to be or something like that. We thought she was potentially gonna get better and she just wanted to go home so she went on hospice so she could go home with some support. We thought that we were gonna be in for a long haul- in Jimmy Carter land, where you’re just on hospice and when you go, you go. He was on hospice for more than a year. Frazer Rice (21:49)Right. Beth Pinsker (22:07)That happens to people, but not very often. We started to plan then. What we did, you know, I these formulas in my book. Which are standard financial planning formulas that you learn, you and that any CFP knows. Mostly you have to plug them into software. The parameters and the Monte Carlo simulations get too complicated. It’s basically, you know, how much are you spending now? How much do you have? How long, ⁓ and then you plug it into a formula about how long is that going to last, right? If you have enough to last a significant amount of time, you need to factor in growth, right? So the money’s growing at the same time you’re spending it. So you can’t, it’s not just subtraction is the point I was trying to get along to people. If you’re spending $15,000 a month, You have $100,000, it’s going to last a little bit longer than just, you know, taking $15,000 chunks out of it. If you’re lucky enough to have, you know, more than that, or the ability to sell a house or whatever, you have to factor all of those in. So you have to make a plan. Okay, for the next six months, we’re going to spend down the savings, and that’ll get us to point B. Then after point B, we’re going to sell the house and you’re going to go to a nursing home. That’s going to be more expensive. but we’ll have the cash. Then after that, you know, we’re gonna have to think about Medicaid or somebody in the family’s gonna have to put up some money to fund the cost. And then you’re sort of playing this like game of catch up the whole time. You know, is the person gonna stay alive for that length of time? You know, are they gonna need significantly more care as you’re going through those equations? Because you have to change them all the time. My mom started out with one set of aides who covered a 24 hour period. Every day, seven days a week. But when she came home for hospice, one caregiver wasn’t gonna be enough, right? So we had based our whole budget on, you know, one caregiver at a time. They would do a 12 hour shift. Then the next one would come in and do a 12 hour shift. When she was home for hospice, we needed those shifts to overlap, because she couldn’t be left alone. If the caregiver needed to go to the store or run to the pharmacy to get medicine or leave the room to go make dinner or whatever a normal life requires you to do, we were gonna need them to overlap a little bit. That was more money, you know, and it lasted longer than we thought. So they were going to need vacations because they were getting burned out. Then you’re paying for a caregiver to go on vacation and then paying for a caregiver to cover for them. And the cost just, they’re just exponential. They’re just, it’s just so much money. Frazer Rice (25:07)It does not stop. As we wind down here, what are the top parts of the checklist that everyone should check off and make sure that they have in place? And I say that as a subtle jab to people to buy your book because that’s going to be, you know, the details underneath that checklist are going to be important. Caregiving: Essential Documents and Digital Access Beth Pinsker (25:28)Yes, so you need to have the power of attorney and the healthcare proxy. You need to have access to the person’s phone. That means knowing their latest phone code. And also, I bring up a thing, I don’t know if, you know, this is some things people miss. Like, I don’t know everybody out there if they’ve done this. If you named a legacy contact for your phone. that is like naming a beneficiary for your phone. And it’s really important because phones are hard to break into. And people ⁓ think that you know their phone code. Then they change it and they forget to write it down, especially old people. If you can’t get into the person’s phone, you’re kind of… It’s as if you don’t even have power of attorney. You can’t two factor anything. ⁓ You don’t know anything about their life if you don’t have access to their phone. So you need those proper documents to do it legally. You need ⁓ access to their phone before and after death. ⁓ And you need some sort of will or trust or something to say end of life, ⁓ you know, cause power of attorney, a lot of people don’t know this either out there in the world. Power of attorney stops when somebody dies, right? So you need something for after that point. So you need power of attorney and healthcare proxies up until the point somebody dies. And then you need whatever you’re gonna do for after. Whether that’s a will or a trust. It depends on your circumstances, but you need those documents and you need access to the person’s key, Frazer Rice (26:45)Sure does. Beth Pinsker (27:06)⁓ digital existence, which is their phone. With their phone you can mostly get their passwords. So it’s not important that they write everything down. Like my mom didn’t. My mom thought she did. My mom had an old check register. She wrote all the passwords to anything that she had a password to. I couldn’t make any sense of it whatsoever. She thought she was so clever and so prepared. I literally couldn’t read her handwriting, had no idea what she was talking about. like it was written in scribbles and I couldn’t make sense of it. So I just went in and two-factor everything and overrode all our passwords and reset them. But that’s time consuming. Think if somebody had to go into your entire digital existence and reset all of your passwords. Conclusion Frazer Rice (27:56)If I’m doing it, it wouldn’t happen. I confused myself on that front. So as we, what is the best way for people to get to the book? I know it’s coming out in November, but pre-sales are important. So everyone get out there and, and, and get it. Beth Pinsker (28:09)These titles are everything. Bethpinsker.com and I write regularly for Market Watch. I’m a retirement columnist, so you can always find me out there on the internet, on social media. It’s just my name. All you have to do is search it and you can find it. I’m readily available on all channels. Frazer Rice (28:28)and title of the book. Beth Pinsker (28:30)My Mother’s Money, a Guide to Financial Caregiving, out November 4th from Crown Currency. Frazer Rice (28:35)Excellent. Beth, thanks so much for being on. Beth Pinsker (28:37)Thank you. ⁓ JENNY ROSELLE on Aging and Roles in Estate Planning https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

There are plenty of LESSONS FROM GENE HACKMAN’S ESTATE PLANNING. https://youtu.be/HZI4oiP0ZtM It’s a cautionary tale about managing changing circumstances. Proper implementation and monitoring has to be in place. Periodic reviews of the documents, asset titling, and staffing of the fiduciary roles are a must. Finally, understanding the family dynamics and desire for confidentiality are vital in putting the estate plan in place. The disposition of $80 million was at stake here. LAWRENCE D MANDELKER, Partner at the NEW YORK OFFICE OF VENABLE, and I discussed the fact pattern, what could have been avoided, and points to take away in one’s own affairs. https://open.spotify.com/episode/1ndlYCQRiAokJ4FyATL9Te Transcription Frazer Rice (00:02)Welcome aboard, Larry. VENABLE ARTICLE ON GENE HACKMAN’S ESTATE Lawrence D. Mandelker (00:04)Thanks for having me, Frazer. Frazer Rice (00:05)This is, I wouldn’t say it’s fun talking about someone’s estate, but this one’s particularly interesting. We all remember Gene Hackman from Hoosiers and Superman and Mississippi Burning and all sorts of great movies. Unfortunately, his end was sad and as it turns out, Gene Hackman’s Estate was complicated and public. From a planning perspective, we can learn a lot. ⁓ Take us through a little bit about where where Gene’s estate kind of went from and ended up as far as a fact pattern. Fact Pattern in Gene Hackman’s Estate Planning Lawrence D. Mandelker (00:37)Sure. So, you know, the news sort of surprised all of us when we heard that he had died. And then over the next couple of days and weeks and even months, more more detail came out. And as you said, it was pretty disturbing. But it seems as though Gene Hackman was a very successful ⁓ actor and he engaged in estate planning. Gene worked with attorneys, which is always a good thing to do it to work with people who are experts in the field And he had a you know a normal estate plan. He lived with his wife It seems like he had a little bit of a fractured family. It was not his first marriage. We learned after he signed his estate planning documents sort of things over the next 20 years sort of changed for him he He had some health issues. He was suffering from advanced dementia at the time he died and as we know his wife died from a virus apparently a week before. Then as the details came out we learned that he had the advanced dementia. There was a fractured family the the wife and his kids did not get along so well. It’s unclear what the situation was with how much contact he did have with his children. But he had a will, he had signed it 20 years before he died. The facts changed. It looks like he hadn’t reviewed it in a while. His attorney died so we have a sad situation here. Frazer Rice (02:12)Many lessons to get from that. Let’s start with the first one. He definitely had ⁓ sort of dementia situations, cognitive dysfunction that eroded over the course of time. Maybe take us through a little bit about the scope of that issue. mean, it affects lots of people and a growing number every year and some things that should be in place because of that. Lawrence D. Mandelker (02:38)Yeah, you know, we all think we’ve got a lot of time and for someone who gets a diagnosis of dementia It’s sort of a warning sign as soon as that happens that, you know, we never know when our time is going to come, but the dementia is sort of the warning. You know, maybe you’re entering the second half of the game or the fourth quarter of the game. So maybe you should start getting your affairs in order while you still can. So it’s a good ⁓ impetus to do that. You know, when we’re looking at estate planning, there’s, you you can do different types of estate planning, but really think about it as, you know, you can do it for yourself. You can do it- your loved ones and then you know for depending on the nature of your assets you can do it for tax purposes but you know getting the the warning that you have dementia doesn’t mean that you can’t sign a will doesn’t mean you can’t do any estate planning it just means that you know you’re probably heading towards a situation where you are going to face you know a number of years during your life where you can’t make the same decisions on a daily basis for your own benefit that you can today. And going back to that idea of the first level of estate planning is for yourself. So you want to make sure that you’ve put in place a plan of who’s going to make decisions for you when you can’t make those decisions, rather than having those people fighting amongst themselves to decide who’s going to do it. You’re empowered to do it yourself. Standard Documents Frazer Rice (04:08)Well, and it goes to goes so far as to reiterate the notion that you should review these things periodically. The idea of making decisions around health care, making decisions around financial ⁓ situations. We’re dealing with a sizable estate and to have that in a confused state, you know, someone’s health starts to decline. That’s a dangerous place to be. Lawrence D. Mandelker (04:31)Yeah, absolutely. mean, you’re at the very basic documents. You want a healthcare proxy and a power of attorney. The healthcare proxy is going to name a healthcare agent to act for you to make your decisions when you can’t make them. And the power of attorney is going to name someone who can do anything that you can do by signing your name. So they can sell your house, they can buy a house, they can take out a mortgage, they can buy stock, they can sign your tax return, they can pay your electricity bill. The people that you trust to do those important jobs may change over time. So when your kids are young and if you’ve got a teenage child, maybe you don’t trust them. But as they are in their 20s and 30s, and at that point when your kids are young, maybe you’re naming your siblings as these agents, or good friends, or trusted advisors, whether it’s your accountant or your attorney, people that you’ve known for a while whose judgment you trust. But then when your children get older, that changes a little bit. Maybe now you start trusting your kids to do that. Your advisor is no longer working or you’ve moved on a different advisor. Maybe your siblings have their own health problems so they’re not able to do it. So it always changes and it’s always something that you don’t need to look at the documents every day. And I sort of tell my clients, know, keep the documents someplace where they will be found but not where you see them every day. ⁓ Frazer Rice (05:57)Well, the backup to that is don’t leave it in a safety deposit box at a bank where necessarily the bank may have trouble getting to it if you don’t have those documents in place or they are in the vault. Lawrence D. Mandelker (06:12)Yeah, you know, that’s the thing that’s one of the first things you learn out of law school as a trust and estates attorney that you you need a court order to open in New York, at least you need a court order to open up a safe deposit box after someone died. So if the will is in there, you you’ve increased your complexity, you’ve increased your costs, you’ve increased your time just to get the will. Implementation Frazer Rice (06:32)So let’s get back to the important notion of implementation and then the close cousin to that monitoring the estate plan as it goes forward. A lot of what’s going on in the Gene Hackman estate is going to be related to titling of assets and making sure that they are in the different entities that were set up, making sure the designations are in place, and then understanding that that is where that it follows the intent of Gene going forward. What do we learn on that from what we had here. Lawrence D. Mandelker (07:04)Sure, know, a lot of our clients come in, they sign the documents, and they think, wait a minute, I’m done, right? And, you know, sort of there’s a next step. You want to make sure that you’ve implemented your plan. So that means you know if you have a revocable trust because you want to avoid probate Well, the assets have to be in the revocable trust You actually have to retitle your assets if you want to update your beneficiary Designations on your retirement accounts or on life insurance policies. It’s not enough to just say you want to do it. You have to actually fill out the forms. You have to send them in. Practice pointer: you should follow up with the insurance company and get written confirmation that you’ve done it correctly. If you name three children and they only put down two, then they’re only going to pay it to two kids. You want to always check and recheck to confirm that everything that you’ve done. Frazer Rice (07:58)This was a case where sort of the way of going about it, where they “set it and forget it.” It really hurt things going forward. Lawrence D. Mandelker (08:06)Yeah, he signed his will and he didn’t review it, it seems like, for quite some time. So he named as a fiduciary, he names his attorney. And meanwhile, his attorney ⁓ predeceased him. We don’t know if that was because maybe he lacked capacity to change those documents at the time the attorney predeceased or he just didn’t look at it. But in any event, if the attorney’s getting older or something’s happening, you you should know, you should constantly monitor. If these are the people that you’re counting on to take care of you, then you want to make sure that they’re in a good position to do that. Frazer Rice (08:42)I tell people that it’s a good idea to have the people who staff the different roles in your estate plan be, as a rule of thumb, 10 years younger than you are. Maybe more, just so that you don’t have these types of issues. Lawrence D. Mandelker (08:57)Yeah, no, that’s a good rule of thumb. You usually don’t want someone older in the event that you really have nobody else. Or you have a small family or you don’t trust someone. Maybe the family dynamics is really shifting drastically. Then sometimes you’ll just name, maybe add an extra person in the hopes that, well, this person probably won’t act, but if something, you know, happens to me, you know, something surprising happens to me, then at least someone’s there to be able to name someone else to act. So yeah, naming younger people, naming more people is backups that’s always important. Frazer Rice (09:33)Well, and that was an unintended good thing that happened in this estate plan. It sounds like he had a second successor in place because the circumstances around the joint death were a little peculiar. So having someone else in place has helped a little bit in this situation. Lawrence D. Mandelker (09:49)Yeah, absolutely. It’s that second successor. So it’s not only your primary agent and a successor, but sometimes having that other successor. It’s contingencies. I we’re always worried about, you know, the fact when we draft documents, we always in part of our plan, try to figure out, OK, well, what happens in the family disaster situation? Right. You all you’re all on the plane going down to Disney World for a big family reunion and the plane goes down. Who, you know, who outside of the immediate family do you want to get the documents? But we’ve got it. We’ve got a plan for all contingencies. Confidentiality Frazer Rice (10:20)One of the things that’s sad about Gene Hackman’s Estate is that it’s being played out in the public. hear about estate planning in People Magazine is not exactly something we expect. But the fact of the matter is that this is sort of played out publicly when in many cases I’m sure that Gene didn’t intend for that to happen. Maybe talk a little bit about the privacy and the confidentiality issues that are at play here. Lawrence D. Mandelker (10:43)Sure, so your will is your will and it’s just a document until it actually gets probated, which means the court goes in and stamps it as being an official document. But for that process to happen, you have to go to court, you have to file the will in court, and that means it becomes part of the public record. And whenever there’s a celebrity death, sort of a week or two weeks afterwards, the will comes out. It’s always in a newspaper or magazine. I represent highly visible people, They don’t want that. That’s their personal issues. Gene Hackman lived a quiet life. I don’t think he wanted people to know what his relationship was with his family, et cetera- or how he wanted his estate distributed. Now, one thing that he did do was he used a revocable trust. A revocable trust is also sometimes referred to as a will substitute. That does not get probated. So that does not become part of the public record. Where it says that his assets go into a revocable trust It doesn’t mean that it didn’t that he didn’t leave it for his kids or he didn’t leave it to charity.We just don’t know and, frankly, it’s none of our business. No, you know, we don’t we don’t need to know how much money he had. or what he did with his money You don’t know what he spent it on on a daily basis. As someone who represents highly visible people athletes entertainers, they don’t want you know. They’ve got enough publicity. They want a little bit of privacy and we should all sort of give them that. Frazer Rice (12:18)No question. I imagine that’s why Gene kept a low profile, especially in the later stages of his life. He wanted to be remembered, I think, for his acting career and the legacy he left behind. Not the final years and the way he lived that. Lawrence D. Mandelker (12:37)Right, absolutely. ⁓ I wouldn’t want my neighbors to know what I’m doing with my money. I don’t deserve to know what they are. these people just have a, maybe it’s a cooler job and it’s a more visible job, ⁓ but give them that common amount of decency. Hidden Traps in Gene Hackman’s Estate Planning Frazer Rice (12:50)Right. Regarding, Gene Hackman’s Estate, one of the things that ⁓ I think is a real cautionary tale here is that sometimes the boilerplate in these documents is particularly important and the circumstances of Gene and his wife’s demise have created a little bit of ⁓ sort of a walk into the gray area of how things should be applied here. Maybe take us through that. ⁓ This involves sort of the timing of death and how that applies to the implementation of these different vehicles. Lawrence D. Mandelker (13:29)Sure, so when we say boilerplate, we’re kind of talking about the general language and the will. So when you have a will, talk… you know, when your client tells you what they want to do and we’re drafting their will to reflect their wishes, there’s certain provisions that we’ll always have in that will, you know, provisions on how the will is going to be administered, what laws are going to apply, things like that, tax provisions. So, you know, that’s really what we talk about as far as boilerplate. The problem is that that boilerplate sometimes is more important than the actual dispositive provisions of the will. Those provisions that say 50 % goes to my son and 50 % goes to my daughter. Depending on how it’s administered, the 50 % could turn into something very different. This is a perfect example of that. Gene survived his wife. His wife died and then a week later he died. Her will said if Gene survives me, if he’s alive when I’m dead then he gets the money. It goes to him. Later on, it said if he doesn’t survive me, if he’s not alive when I die, then the money goes to charity. The document said, well, if Gene doesn’t survive by 90 days then it’s treated as if he pre-deceased her. That little provision rewrites the whole will. It’s done for the reason to make sure that if jean wasn’t around, if we died in a common accident and maybe I died. We died in a car accident and I died on Monday and he you know survived for three days in the hospital You know, he really didn’t have time to change it. He didn’t benefit from it So I don’t necessarily want it to go to him. I want it go to who would have gone anyway. If he didn’t survive, so that’s the purpose of that type of provision. But really it turns things on its heads. And I really think that the lesson from this is, especially for the do it yourselfers out there who go online and they try to copy a will and type in their name and say, this is the provisions. You don’t know what’s hidden in the, for computing purposes, you don’t know what’s hidden in the code, right? You don’t know what else is in there and what changes those could have on the of the document and the plan. Frazer Rice (15:57)Well, and to put numbers around this, depending on how this gets sort of, sort of disseminated and understood, this could be $80 million going to the heirs or $80 million going to charity. And with some, you can understand that some people are going to have some questions about that going forward. If you aren’t clear about what the intent is in your documents and making sure that that’s understood in that language. Lawrence D. Mandelker (16:28)Yeah, like I said earlier, these little provisions that you tend to gloss over can really change the entire estate plan. This is a swing of $80 million. That’s going to be a huge difference. The Dangers of DIY-Planning Frazer Rice (16:43)For the do it yourselfers, I’m going to reiterate it because I think it’s important. Getting an estate plan document by auto generation is going to cause some issues around this. People put things in place where they don’t understand how the levers get pulled. The directions that an estate plan can go will frustrate intent. So this is my little sort of bromide: if you are using those documents, it’s a good idea to have them go through a lawyer as well so you understand how each of the clauses can impact these types of situations. Lawrence D. Mandelker (17:27)Yeah, I mean, you know, I sometimes say that if you’re being responsible enough to do estate planning. You’re thinking ahead, you want to plan, you want to empower yourself, you want to take matters into your own hands so you get to decide who gets things and how it’s going to be done, then you really should go the next step to do it. Otherwise, you’re really taking a big risk. I could get behind the wheel of my car and blindfold myself and start driving to the store and I may make it. It may work out perfectly, but it’s not necessarily a good idea to do it, even if it works out. Frazer Rice (18:01)Well, and to go back to the other parts of the Gene Hackman Estate fact pattern here, number one, intent can shift. And if you get into places where capacity or dementia start coming into place, it’s important to review these things. And secondarily, you can even have the will or the revocable trust say what you want it to say. But if you don’t have that titling and designation of beneficiaries and various things line up with the document, your intent can get distorted quickly. Lawrence D. Mandelker (18:29)Right, you know what you know, but you don’t know what you don’t know. And that’s dangerous part. Frazer Rice (18:34)We can look into the crystal ball for people and take care of a bunch of risks, but certainly not all of them. Lawrence D. Mandelker (18:41)Right. I think you brought up a very good point just now and thank you for raising it. There are certain things that are done when you sign a will. They can help support the will in case of a later challenge, especially if you have incapacity. So when you’re dealing with an attorney in some states like New York, for instance, where I’m located. When an attorney supervises the execution of the will, there’s a legal presumption that it was executed correctly. When you bring the will to court to probate the will, you have to prove that it was executed correctly. If you had an attorney supervise it, you don’t have to do that. Someone looking to object to a will, to contest it, and say that’s not a valid will. You’ve made their job infinitely harder by having an attorney supervise the execution. Frazer Rice (19:37)People are discovering, for instance, Aretha Franklin’s estate has this issue. Someone found another will in a couch somewhere.Tthey’re going to litigate as to whether that’s valid or not. You can reduce the stress on the executor. The ultimate heirs and family members will thank you if you tie this up in a nice bow ahead of time. Lawrence D. Mandelker (20:00)Absolutely. There’s a lot of things that go into the will execution ceremony, the meeting where you sign your will. There are a lot of things that go into the whole process of your estate planning. You have to deal with correspondence, deal with discussions that you have with your attorney. This is true especially for people that are concerned about having a will contest. There could be concerns about dementia and people saying maybe they didn’t understand the will. Working with someone well versed in what they need to prove the will execution is extremely, extremely important. Can’t be said enough. Final Points- Lessons Learned in Gene Hackman’s Estate Planning Frazer Rice (20:42)Great stuff. Larry, any final points on Gene Hackman’s Estate? Lawrence D. Mandelker (20:46)Your estate doesn’t have to be the size of Gene Hackman’s estate. You should be take these steps, regardless of how large your estate is. You should be working with someone who’s well-versed. Who is going to give you the information that you need to effectuate your wishes. Frazer Rice (21:02)How do the listeners find you? Lawrence D. Mandelker (21:05)I am a partner in the New York office at Venable. They can email me at lmandelker at venable.com . More than happy to talk to anyone. Frazer Rice (21:20)I’ll have that in the show notes. Thanks so much for being on. Lawrence D. Mandelker (21:23)Thank you. I appreciate this. Further Links Some links related to lessons and Gene Hackman’s Estate Preserving Legacies (And the Applicability to Gene Hackman’s Estate) Three Estate Planning Mistakes (and Gene Hackman’s Estate) https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

US/UK TAX PLANNING with ALEX JONES, Partner at London Tax Firm, RAWLINSON-HUNTER https://youtu.be/UjgQRpfqJ-E Thousands of Americans live and work in the UK and record numbers of them are applying for British citizenship. Planning for taxes for these folks has always been challenging, but in 2024, with the change in the non-DOM rules, it’s gotten even more difficult. To help us understand what’s happening here and to try to identify some of these issues is ALEX JONES. He’s a partner at Rawlinson Hunter, the British tax firm. Enjoy. Outline 00:00 Understanding UK Tax Law Changes for US Citizens07:00 Navigating Residency and Tax Implications11:49 Planning for Inheritance Tax and Trusts19:51 Pre-Immigration Tax Planning Strategies30:03 Managing Double Taxation and Tax Credits https://open.spotify.com/episode/4Hmqaalhjk3NklfMCWNd4X?si=8e45eac2d2f247cc Transcript of US/UK Tax Planning Frazer Rice (00:04) Well, we have certainly had a lot of news with British tax law changing. And for those of us here in America who may or may not be part of getting to Europe in a major way and in the UK in a more permanent way, maybe give us a little overview of ⁓ A, what happened, but more specifically, how the UK thinks of US citizens, which can take different forms. Alex Jones (00:31) Let’s start with the back end of that question, how we regard Americans. So from a tax point of view, clearly what we’re really saying is how do we regard Americans who are exposed to UK taxes? And typically that means Americans who are here. Like most countries in the world, the UK will tax people on UK sources of income. If somebody has a trade or business operating in the United Kingdom, we’re going to try and tax it whether they are here or not. But if the US individuals physically in the United Kingdom, then the UK is going to try and tax them in a number of different ways, which I’ll talk about in a second. The pause is really just to emphasize the fact that they’re American. So a US citizen or US green card holder is going to be US worldwide taxable, whether they live in America or not. So America is going to look at everything everywhere in an American way in dollars in a calendar year. And at exactly the same moment in time, albeit in the UK we have a different tax year end. Our year end is a rather crazy 5th of April year end. Exactly the same amount of time the UK is going to look at exactly that same person and say, hey, what are we going to tax? And so you’re starting with the premise that both countries are fighting over who gets the tax first. And the first thing you have to do is look at the two sets of domestic legislation to see how to start, where the problems are, and then you start looking beyond that. In principle, the UK is going to tax people who are resident in the UK on worldwide income. So anything everywhere under UK rules, UK fiscal year, in sterling, et cetera, et cetera. And somebody who’s not resident in the UK on UK-CITUS connected income only. However, the UK has long had a regime which has been known as the domicile regime or the remittance basis regime, which has been pretty well known internationally where we said, Look, if you don’t originate from here, if you’re a foreigner coming in for a period of time, could be indefinite, could be reasonably long, but not permanently, then we won’t necessarily tax all things which are non-UK. We would tax things that you brought into the UK, remitted, but we wouldn’t necessarily tax non-UK things that you didn’t otherwise bring or use or benefit from in the United Kingdom. So the thing that changed in the budget that was announced at the end of October 2024 that largely came into force on the 6th of April 2025 is that we said, hey, this domicile regime, this remittance basis regime is kind of too beneficial to wealthy individuals. You have neighbors who are paying differential amounts of tax just because one person’s kind of foreign and the other person’s a blue blooded Brit who’s lived here forever. That’s not right or fair morally. So what we’ll do is we’ll say, okay, we’re to do away with this term domicile. We’re not going to use it for income tax or the estate tax purposes particularly. And we’re going to create some new terms. And one of them we’ll create it, which is a four year regime. call the fig regime for an income gain regime where we basically say, again, we’re going to tax UK stuff, but we won’t tax foreign things for that four year window. But once you’ve been in the UK for more than four years, we’re then going to tax your worldwide income. And then we have an extra piece we’ve added on, which says, if however you’ve been here for a long time, which is basically resident for 10 out of the last 20 years, we’re also going to say, now you get worldwide inheritance tax. If you die while here, well, if you die with UK stuff, we’re going to tax you on your worldwide assets. as opposed to potentially just your UK only assets, which is how we typically would have treated you if you were a non-domiciled individual under the old regime. So lots of change as to how the UK taxes people and therefore how we view the American is all about the interaction of the two. It’s all about, yeah, but I’ve got both. I’m an American, I’m paying US income tax, I’m paying US estate and gift taxes. How do I deal with the fact? How do I prevent? Two sets of taxation globally, such that my income tax rate isn’t a top rate of 37. What I don’t want it to be is 37 plus the top rate in the UK of 45, plus maybe some tax I’m still paying in California or New York because I’ve got a residential property that I’m renting out in one of those two locations. how we treat Americans is we treat them under domestic rules. We treat them in a way that says what are we or are we not going to tax in our way how we think about things. And by that I mean if we think it’s taxable, it’s taxable. If you guys think it’s municipal bond interest which is exempt, that doesn’t mean anything to UK eyes. We look at it go, well, it’s just interest income. From our perspective, Britain has our own domestic rules which try and stop double taxation. That means give credit for other people’s taxes. Frazer Rice (05:37) Sure. Alex Jones (05:50) And also, most importantly, between the UK and US, we have two tax treaties. We have one tax treaty that deals with UK and US income tax, and we have a completely separate tax treaty which deals with UK inheritance tax and US estate and gift taxes. So we call estate and gift tax inheritance tax in the UK, and it applies in life or death. So we’ve got two treaties which are both trying to minimize unacceptable double taxation. That’s kind of a… kooky term of art, Minimise unacceptable double taxation. A little bit of double taxation may be acceptable in the eyes of government. Well, these two treaties, they’re designed to try and minimise. So when we deal with both UK and US taxes, and I’m a both UK and US tax guy, I’ve been doing US tax since the late 1980s, what we’re trying to do is try and get the two systems as closely aligned as we can. To the amount of credit we can get between the two countries so that overall the person’s paying the lowest amount of tax that they should pay as opposed to maybe double tax. Frazer Rice (07:00) US/UK Tax Planning So if you’re so let’s steer this back to the Americans quickly. The typical situation that you’re running into is, guess, an American who has moved over to the UK either for work or for something else. Maybe take us through a little bit of how you analyze that in terms of sort of understanding how long they’ve been there and then how that sort of surfaces through the regime you just described. Alex Jones (07:25) Yeah, so. there’s always a duality here so we have to talk about sort of both sides to understand the whole but from a UK perspective when we’re thinking about how long have people been here is what we’re really saying is hey are they UK tax resident have they done enough to make themselves UK tax resident because if they are they’ve got an expansion on the things we can tax maybe we can start taxing worldwide income and in the UK we have a test we call substantial residence test, statutory residence test, excuse me. And that’s a slightly complicated set of rules, which is designed to say, hey, if you spent too much time in the UK, are you tax resident? If somebody spends, as an example, more than 183 days or 183 days or more a year in the UK, we’re going to treat you as a tax resident under pretty much all circumstances. But if you spend less than 16 days a year in the United Kingdom, we are always going to treat you as non-resident. And that’s quite a big gap. In between those two, there’s a combination of day of time and factors which can trigger residency. So we’re looking at how much time. We’re also looking now under this four year FIG regime as to have you been here for more than four years? Have you been here for more than last four years? Because if you have been, we are going to tax worldwide everything. If you haven’t been, if you’re still in year two or three or four, then we aren’t going to tax the non-UK income or gain sources or at least most of them. And indeed, we won’t even tax you if you bring and use those funds in the UK. We’d quite like you to bring that money into the UK because that’s good for the UK economy after all. From a US point of view, ⁓ ignoring US citizens or green card holders, you have a test which is called the Substantial Presence Test. That’s basically what the test you would apply to a non-American who is spending time in America to determine whether they were US tax resident and therefore worldwide taxable in America. So both countries are looking at a time component as to where you’re spending time. We also have to look at time in the context of employment income. Employment income is deemed to source, belong to the country where you do the work. Not the country who pays you or the company that pays you. Where do you physically do the work? That’s the source of the income. That can give taxing rights to either country respectively based on where the work is performed. If I spent too much time working in America, I could become US taxable. If you spent too much time working in the UK, you could become UK taxable even though you don’t acquire UK residency. So there’s lots of reasons that you have to look at where people are, how much time they spend in the UK and ultimately for, as you say, our sort of typical average client. Who’s an American coming to the UK, we’re also interested in this long stop now of, you been here for more than 10 years, or 10 after the last 20 years? Because if so, now you’ve got UK inheritance tax. And again, without giving too many games away, the UK and US have the same rate of estate tax and income tax, 40 % currently, but you guys have got a $13.99 million lifetime estate tax exemption today, and our lifetime. Not lifetime, but our estate tax exemption, our inheritance tax exemption is £325,000. So top rate still 40%, kicks in a lot earlier. So it’s not just about income tax for the people who were here for quite a long time. And in the olden days, before 6th of April, 2025, that long time was more than 15 out of the last 20 years. Now it’s more than 10 out of the last 20. So we’ve cut down the length of time that people can spend in the UK without really paying the price of full exposure to double tax. Not on income tax that kicks in earlier, but particularly in relation to estate tax. Now we’ve effectively knocked off a third of the time that somebody can spend in the UK before they have to worry about, what happens if I die? Hey, what happens if I give a bunch of money to the kids? Frazer Rice (11:49) US/UK Tax Planning So if you’re an American who may or may not be spending a lot of time in the future going to, ⁓ getting to the UK and becoming a resident for UK purposes and sort of tripping those time trip wires, ⁓ can you do planning ahead of time to let’s say cordon off assets so that they aren’t viewed by the UK as part of the overall inheritance tax regime, especially after this new April 6, 2025 deadline that we’ve leapt over. Alex Jones (12:21) I’m kind of now going to say no, but let me explain that. So under the old rule, the domicile remittance basis regime, we had the ability to set up vehicles like trusts. We can still do that, but the rule set, the application is different. So we could have set up a trust. And if we did so before we became domiciled in the UK, and if that trust contained Frazer Rice (12:28) Mm-hmm. Alex Jones (12:54) – US/UK Tax Planning Exclusively non-U.S. not sorry non-UK property so let’s say the stock portfolio in America then that would be excluded from the UK inheritance tax regime on a subsequent death it would be locked away forever. Now some U.S. trusts might be revocable for U.S. tax purposes particularly living trusts for example The UK has never had a great relationship with trusts that are revocable. So sometimes you have to be a bit careful about what we mean by when we say the word trust or settlement is a more typically common word to use in the UK. But we used to be able to do that. We create these excluded property trusts, lock the assets outside of UK tax forever. Under the new regime, that’s not necessarily true. We are now operating a rule set which is much more like the US grant or trust rule set. We would refer to it as a settler interested trust where the settler of the trust is going to be taxable on the trust’s income, whether it’s a UK trust or a foreign trust or whatever, to the extent that they have an interest in it and that might mean either they’re a beneficiary or their kids are a beneficiary and so on. From an estate tax point of view, we have two ways we can trap folks. in relation to trusts. One is in relation to a trust which has what we call a gift with the reservation of benefit. I’m going to give the money to the trust, but hey, actually, I’m still a beneficiary, so I can get it all back. Maybe I’ve got a revocation power. Maybe I’m the principal beneficiary and I’m going to get things back, in which case the UK is now going to say, well, in that case, you never gave it away properly, and it’s going to be still part of your estate. So contrast that to the intentionally defective US grant or trust, which is a grantor trust for income tax purposes, but you gave the asset away permanently because you irrevocably transferred to the trust. For UK purposes, if you’ve got one of these trusts that can give you back assets, then that will be part of your estate and we will include it within your taxable estate on death, whether it’s got UK assets or foreign assets or whatever. But we also have a separate regime, which has been around for a long time. This is what we call a decentennial charge, a 10 year charge in relation to trust assets. That charge didn’t apply to these excluded property trusts in the past, but now does, or rather it didn’t apply to the offshore trusts before, other than in relation to UK situs assets. So you could have had a foreign trust with UK assets and this charge would have applied. Basically it imposes a 6 % charge every 10 years of the trust’s life. So you look at when it was created, you count 10 years and on that day you have a 6 % charge on the value of the assets in the trust at that point in time. And the reason for that existence, you’d also to be fair, if you made distributions in between those 10 year anniversaries, you would also have a proportionate charge and you would also have a proportionate charge if you had a trust which fell into the rules which you essentially exported from the UK, then you’d have a charge at that point. And you can do that simply by leaving the UK. You could have a proportionate 6 % charge. So think of it as the 10 year charges. When we as individuals in the UK transfer money to a trust that’s taxable, so if I set up a trust tomorrow and transferred too much money in, I would have a lifetime 20 % charge. So I would have an inheritance tax charge half of the main rate, half of our 40 % rate during my lifetime. And in addition to that, the trust would suffer this 6 % charge every 10 years. And what the UK is trying to do is over the course of a generation, replicate the 40 % tax charge. So the 6 % charge is basically just the back halves of the 40 % charge I would have got had I just left the asset in my estate. Frazer Rice (16:42) Mm-hmm. Alex Jones (17:07) Tell switch time as I died or gave otherwise gave them to another individual. Frazer Rice (17:11) US/UK Tax Planning So you’re staging and front loading the realization event so that you don’t have to wait generations for the revenue to show up. Alex Jones (17:21) But we’re meaning the UK government, correct? Yes. Not that I am obviously the UK government. I wish. Yeah. So yeah, so we trust, it’s just different. It’s different than America. Whenever you’re dealing with things that interact between the US, I’ve kind of said it already that, you everybody’s everything under their rules, their tax year, their currency. They don’t really care what the other country thinks something is. That’s true of… ⁓ Frazer Rice (17:23) That’s right. Me neither! Alex Jones (17:50) Basically everything! I sometimes use the word, would be easier if you guys spoke Dutch. Because when you explain to tax rule, we’d go and get a translation into English. But we both speak English and it’s the old adage separated by the common language. In taxation, we’re talking ever so slightly different languages. And yet it’s so, tempting for us to assume that everything will be the same. Frazer Rice (17:56) Ha- That’s right. Alex Jones (18:18) But you guys intrinsically know that we drive on the wrong side of the road. You accept that. You know that we mispronounce words like tomato, or in my case, words like bath and grass, because I’m originally from the north of England. Somehow, mysteriously, when it comes to taxation, people say, oh, I just kind of assumed it was the same, and that the same type of exemptions might apply, and the same sort of stuff will be tax exempt, and so on and so forth. But we’re speaking alien languages. One of my truisms or other truisms is I’m not American. For tax purposes, I’m an alien from a US perspective. I’m an alien. That’s how foreign I am. I’m proper alien. I could be from Mars as far as the US tax system is concerned. I’m really strange. And that’s how you have to think of each other’s taxation. A Brit goes to America, you’ve to think that’s an alien language. The American comes to the UK in taxation, we’re talking in alien language with alien sets of rules. But what we’re trying to do is get them mapped together so that we can treat the same thing happening at the same time in broadly the same way. Then all we’ve got to argue about is which country has the higher of the two taxes, because probably that’s the one we’re going to end up paying. Or at least that’s going to be our overall global worldwide cost that we’re aiming for. is don’t pay any more than the higher of the two taxes. If you can do that, you’re doing a good job. Frazer Rice (19:51) Right. So if you’re ⁓ doing what’s called pre-immigration planning for a US resident, and I know that ⁓ US citizens, a lot of people are investigating going to the UK and getting citizenship there or otherwise living there. From a pre-immigration planning perspective, maybe take us through your process as to sort of how to analyze things so that you can align your affairs and not get the double taxation or… you can benefit from the lower tax rate if at all possible. Alex Jones (20:24) – US/UK Tax Planning So slightly different game sets based on the direction you’re heading, UK to US is different than US to UK. But it can be quite simple things, like you would look at your stock portfolio or your investment portfolio absent this four year period where we in the UK don’t care about your foreign investments. let’s put that to a side. We’d look at your investment portfolio and go, OK, well, you’ve got you know, some direct stocks, that’s fine. Direct stocks are easy to measure. We actually measure them in slightly different ways. The UK pools stocks together. We don’t look at individual stock sales and treat on a FIFO basis. Britain pools them together and take average cost basis. And we obviously do it in sterling, not in dollars. So there are differences even with things as simple as a direct stock. But then you might say, well, I’ve got a whole bunch of ETFs and mutual funds because I want diversification and that’s kind of important. We would look at them and go, well, they’re not UK funds, they’re foreign ones. And why would a Brit, why would a UK tax resident invest in foreign funds? That’s a bit strange. Should be said that exactly the same is true in America. You would look at a Brit coming to America with what we call unit trusts, unitized funds or open-ended investment companies. And you go, why the heck would an American invest in that foreign stuff? That’s not going to benefit the US fund management industry. So we would look at US mutual funds and say, That’s not benefiting the UK firm management industry. We don’t like that. We don’t want to encourage that. So what we’ll do is we’ll tax them in a slightly penal way. So one of the things if somebody’s moving to the UK and was going to be here a long time, it’s at some point you want to get out of investments, which the UK is going to view negatively. You don’t really want to be in a tax exempt bond if you can get a better rate of yield from a taxable bond because the US Mutual Fund is going to be taxable in the UK, even if it’s not in America. So you’re always dealing with the after-tax yield. So if you can get a higher coupon, albeit taxable, that’s better for you if you’re going to be taxable in both countries, albeit America isn’t taxing that. Same with US mutual funds. You don’t want to be in a US mutual fund that when you sell it, we’re going to tax it as income tax rates of 45 % up to, as opposed to treating it as a capital gain as you would in America. You want to be in a fund that both countries view in broadly the same way and ideally both as a capital gain on exit because you have a 20 % long-term capital gains tax rate of course, albeit plus the 3.8 % net investment income tax. And we now have, as a result of the changes that happened last October, we now have a 24 % rate of capital gains tax. And you might curiously say, and that will lead you through a whole different cul-de-sac of tax, Frazer Rice (23:01) Mm-hmm. Alex Jones (23:18) You might go, that’s coincidental, isn’t it? That 20 plus 3.8 is pretty flipping close to 24. Okay, so am I paying 24 plus 3.8 if I live in the UK as an American, or am I paying 24 in the UK and I’m going to cover off the 20 % and maybe can I cover off that 3.8 net investment income tax as well? That’s a very current question in the world of UK and US taxation. So yeah, so you want to look at things like that. You also do want to look at, you know, slightly more exotic investments than simply direct stocks and funds. You might look at insurance backed contracts and think that’s fine. it’s an insurance policy. It’s going to lock things away, I’ll only pay tax when they exit. While that is true, the insurance contracts can park investment growth while it’s in the contract. Don’t for a second think that the UK looks at US insurance contracts and says, we’re gonna tax it like a UK insurance contract. We’re not. If you exit, we’re gonna tax it. And exit includes death. That’s for what we in the UK would term whole of life type policies, policies that have an investment component. On death, that’s a chargeable event. That’s not true of term insurance policies. It’s literally if you die in the next year, you’ll get a payout, but the contract otherwise is worth nothing. Those term insurance policies, both countries will… we’ll look at and go, yeah, death benefits tax free. However, insurance contracts can lock away the investment growth until you exit. But if you exit, when you’re in the UK, we’re taxing the whole lot. If it’s not a UK qualified contract. So. Frazer Rice (24:58) US/UK Tax Planning As you mentioned about the municipal bond income, if you’re a US person, you’re on autopilot that has preferential tax treatment. Again, same thing like some of these other concepts. Look it over because the UK doesn’t care that the US states are getting a benefit. They’re going to tax it as regular income. Alex Jones (25:22) – US/UK Tax Planning When we sell an offshore fund, as we would call it, a US mutual fund typically, we will treat the gain that you generate on the disposal of the contract as though it is income. Technically, it is a gain, but we tax income tax rates. And so often with US individuals that haven’t planned or thought about this, we’ll see quite kooky results. So for example, you have a typical US broker account portfolio with a mix of direct stocks and funds. You might quite naturally think, okay, what we’ll do is we’ll have sold some stuff early in the year. We’ve generated gains and we’ve come to the end of the calendar year. What we’ll do is we’ll cash out on some lost stocks. We’ll get rid of some stuff that generate losses. We want to try and balance the capital gain and the capital loss for US tax purposes. That makes utter sense from a US perspective. You’ve had some gains, you want to kill the tax on those gains by realizing some losses that you’ve got in the portfolio.Tthen you can go buy something else with the net proceeds. But if you do that the wrong way, the stuff that you sell at gain could be those mutual funds. And then UK will look at the gain and go, okay, well, that’s actually taxable as income tax. And then the stuff you sell at the end of the year, the loss stuff, maybe that’s direct stocks. Well, that’s a capital loss. In the UK capital losses are offset against capital gains. They’re not genuinely offsetable against income tax and they’re not offsetable against offshore income gains. You would have a perfect zero position in America. You’ve got no gain or loss because you’ve offset the two perfectly. For UK purposes you’ve got a whole bunch of income taxable fund gains. You’ve got a capital loss you can’t do anything with other than carry forward till next year. So these differences can cause real timing issues and differences between the two countries. When you get differences, you get unexpected tax results. That’s normally going to be bad and something that you don’t want. The reverse is also true. And I should say before even thinking about the reverse, am an American investing in UK unitized funds. That’s where you create a four letter word in America called the PFIC. Passive foreign investment company is just bad. Don’t do it, please avoid. There are some non-UK funds and this includes many US mutual funds that have a special status. We call it reporting status. Reporting status fund is a typically a US mutual fund that gives HMRC, our tax authority, information on what’s going on underneath. Frazer Rice (27:47) Right. Yes. Alex Jones (28:16) It tells the UK how much income and gain that the fund is generating. The individual, if they’re UK residents, is taxable on their proportion of that underlying income or gain. As it happens, which is basically the same as a US mutual fund. Therefore, you’ve got an alignment between the two countries. Both countries try to tax the same growth in the same way at the same time. Then you don’t get these differential rules where one country is treating it as a capital gain. You’re just treating it as a completely different type of income event. You get both countries looking at it and going you’ve got underlying income of 100, we’re going to tax that. The UK says, yeah, yeah, we agree. We’ve got underlying income of 100, we’re going to tax it too. Now you’re just arguing which country wins. Who gets to tax it first? And you’re, look, you’ve also got some underlying capital gains and we’ll tax those at the same time too. Again, who gets to tax them first is your question. And that’s when things… get complicated. He says after having made things sound complicated! Where things are complicated is how you offset the two taxes. And it’s worth just pausing on that because it’s, again, that is itself an alien concept to most people. It’s not about who you pay the tax to first. The two countries sat down and agreed which country would win if there was double taxation. And we call that the income tax treaty. Frazer Rice (29:16) Ha! Alex Jones (29:42) So the treaty between the two countries dictates who has the primary taxing right. That’s who should get the money first, even if they don’t. That country is never going to give a credit on that item of income for tax pay to the other country. You could have a situation where you pay US tax on a gain in November. The UK tax year ends in April and therefore we’re going to tax it in the year to 5th April 2026, let’s say. And then you owe the UK tax, the UK 24 % tax. So you file your 2025 US return, reporting this gain in November 2025.Yyou pay your US tax on the 15th of April, and then you’re going to file the UK tax return to 5th April 2026. And we’re going to say 24 % tax please. Now any sensible person is going to go, hold on a second, I’ve just paid 20 % to the IRS. Surely you’ll give me a credit. And the UK would say, did you sell the US real property? No. Oh, that’s a shame. Because if you did, we would have given you a credit. Did you sell the US trade or business property? No. Oh, that’s a shame too, because if you had, we would have given you a credit. What you saw, did you sell US stocks? Yes. Okay. Well in that case we win. So we’re not going to pay any attention to the 20 % in America. What you need to do is get the UK tax back from America. you need to claim a credit on the US return. Of course you can’t do that in 2025. You’re not paying the UK tax until you file the UK tax return, which could be in 2026 or could actually be in early 2027. And so there’s a timing mismatch. The US foreign tax credit system as we call it works, is the US will say we’ll let you put the tax on the tax return in the year you pay it. Frazer Rice (31:16) US/UK Tax Planning Gosh. Alex Jones (31:31) Physically pay it. There’s another term we use called accrue, which is a little bit more complicated, but basically the foreign tax year ending within the US tax year. We’ll allow you to put it on the tax return. Now that doesn’t mean you get to offset against US tax in that year. It just means we’ve identified it exists. Then they ask a second question.” Do you have any US tax on the same type of stuff in that year?” Against which you can offset it. Let’s say you don’t. Let’s say you didn’t have any more capital gains in that 2026 year or 2027 year. Then they would say, okay, well. That doesn’t seem entirely right or fair. What we’ll do is if you’ve paid UK tax in calendar 2026 and you can’t use it against the same type of income, US tax on the same type of income or gain, we’ll allow you to carry it back to the previous year, one year only, to use against US tax on the same stuff in the previous tax year. If you can’t use it in that one year carry back, then you can carry it forward for another 10 years to see if you can use it anytime in the next 10 years. But remember I said, we file our UK tax returns for the year to 5th April, 2026. We don’t have to file the UK return until 31st January, 2027. So we might not be paying the UK tax until 2027 for gain that happened in November, 2025. Yeah, yeah, that’s two years different. I said you could carry back one year only. Frazer Rice (33:02) So have a nice deep cash position. ⁓ Alex Jones (33:10) – US/ UK Tax Planning So I can get UK taxes back into 2026 calendar year. I can never get them back to 2025. You can generate double taxation just, so it’s not just about a deep cashflow position as you said, that’s absolutely true. Actually you can create double taxation just through that passage of time. Hence you can see when I say this is when things get complicated is how you play that foreign tax credit game. Frazer Rice (33:30) Crazy. Alex Jones (33:38) It’s absolutely critical if you are fully embedded in both systems. But to some degree, that’s simpler than the situation we have today or had before 6th of April, 2025, when we had this non-domiciled remittance basis regime where the UK said, we won’t tax the offshore stuff unless or until you bring or use the money in the UK. So you could have an American who’s deliberately in the past structured their affairs to keep non-UK stuff outside the VUK tax regime. And five, 10, whatever years later decides to buy the big house in the UK and bring the US funds into the UK to help fund that purchase. And all of a sudden, under the old rules, we were going to go, hey, that’s the stuff that we could have taxed had you brought it into the UK back in the day. Well, we’re going to try and tax it today because you brought it and used it in the UK. And then you’ve got this multi-multi-year gap in taxes between when the US taxed it in the past and when the UK is taxing it in the future. So the good news about the new rules, if we’re looking for silver linings on tax changes, is that other than stuff that happened before 6th of April 2025, that’s less likely to happen because either we’re taxing an American who’s here today on worldwide income or they’re in this first four years of being in the UK regime, in which case we don’t care whether there’s any foreign income at all. We’re not taxing it, whether they bring it in the UK or not. So although we’ve sort of done with the remittance basis regime and the non-domicile domicile rules as we have them, in reality, if anybody’s already here, if anybody’s been here for the last few years, they’re still stuck in this regime where they may have had income will gain outside of the United Kingdom. It’s never suffered UK tax, but it will if they ever bring it to the United Kingdom. So we’re kind of stuck with the thinking of this remittance issue, maybe for the next generation. But in parallel, we’ve got this new go forward rule set, which is simpler, that basically says first four years, US income, we don’t care. We’re not going to pay any attention to it and we’re not going to tax it in the main. But once you hear from Auden, Frazer Rice (35:47) Oh my- Alex Jones (36:02) – US/UK Tax Planning Four years we’re going to tax worldwide income. Then it’s basically full double tax in both countries at the same time go figure it out. Nice and simple, nice and comparatively black and white compared to the present situation. Great for people who arrive in the UK now, perhaps nice, simple, planable. Not so much help for the individual who may have been here for 20 years or certainly less than 15 years. They may have all sorts of offshore income and gains and funds and private equity interests and, you know, real estate funds back in America. And they’ve never been analyzed for UK purposes because nobody’s ever thought the money’s going to come to the UK. But maybe now the person’s been here for 15 years. So it’s kind of thinking, I like the UK, maybe I won’t go home. Maybe I’ll stay. And if I’m going to stay, then at some point I’m probably going to start thinking about bringing that offshore stuff into the UK. So, Anybody in the space I operate in has got to think about those things and has got to think about the, if somebody is here for a long time, what about the old stuff? The nice thing about the way the UK operated the changes is that for a few years, for three years, we invented or created a temporary repatriation facility, as we call it. The temporary repatriation facility is basically, if you’ve got any of that bad stuff, this remittable things outside the UK that you were benefiting from under the old rules. If you want to bring it to the UK, what we’ll do is we’ll apply a flat rate of tax and for first two years, that’s a 12 % rate of tax. We’ll just, you bring it in, you point at it and go, that’s what I’m bringing in that Apple, Abbot Labs, Google, Tesla stock sale from a couple of years ago, I’m bringing that into the UK and the UK will go, okay, that’s great. It’s your temporary repatriation tax is 12, but flat 12 % on whatever that income or gain was. And we’re not going to pay any attention to foreign tax credits. We’ll just hit you with 12%. So you can do that. So for the next couple of years, we’ve got a really interesting regime, is when is it beneficial for me to pay that 12 % rate? After year three, it goes up to like 14%. When is it beneficial to pay that 12 % rate? Or when is it beneficial to just pay, just to remit the thing directly to the UK and pay UK tax? And just to give you an example of that quickly. I mentioned earlier that if a question which was, you sell US real property? Did you get, did you have a gain on US real property? US always wins on US real property. You always get, you America gets its tax first. So if you had a US real property gain and you brought that into the UK and you go identify it and point to it and prove what it was, we would say, okay, well, we’re going to tax the gain too. Sure, we’ll convert it into sterling and we’ll do some, there’ll be some foreign currency differences with, you know, to determine the gain or loss in sterling. Basically it’s the same gain and we’ll give you a credit for the US tax you’ve already paid. So in the UK, we’re going to tax real property gains now at 24%. We used to tax them for a short period at 28, but that fell back last year to 24. We’re going to tax at 24%, but you paid 20 % maybe to the US on that real property gain. So we’ll give you a credit for the 20%. You also potentially or likely paid a 3.8 % net investment income tax because you probably had too much net investment income or gains. Therefore you paid 23.8. Well, our rate’s 24%. So if we give you credit for both of those, the incremental UK tax might only be 0.2. And that’s before I asked the question, did you pay any state taxes on the gain? Because we’d give a credit for those too. So potentially you could have wiped out all of the UK tax on that US real property gain. Or, you could pay 12%. Which would you rather have zero or 12 %? Well, obviously that’s a rhetorical question. The answer is I’d like to pay zero please. But you may have to do some work in order to be able to get to that level of identification where you can basically go, am remitting and I can prove it that gain. And therefore that’s what I want to use. And on that I may pay zero. So this temporary repatriation facility is great on certain type of income. Frazer Rice (40:05) Right. Alex Jones (40:28) If you had US municipal bond interest, which I’ve said exempt in America taxable in the UK, the UK rate could be up to 45%. That’s our top rate in the UK. But if somebody said to you, well, if you bring that qualified foreign stuff that you haven’t paid tax on so far in the UK, you’re going to bring that to the UK and we’ll let you pay 12, if the answer is would you like to pay 45 or 12, that’s also a rhetorical question. No, the answer. So we’ve got this really interesting regime for the next two, three years of if an American has been in the UK for an extended period of time and likely wants to stay for a good deal longer and wants funds in the UK to invest in businesses, buy property, do normal life stuff, then actually there’s an opportunity to get a lower tax rate than you might otherwise get either in the future or that you would have got had you paid tax on it in the UK at the same time. But it’s going to be quite specific and it’s going to involve lots of looking and it’s going to involve lots of being able to evidence what things are to get the best tax result. But it can make these differences where you can have a swing from zero to 45 just based on what it is, whether you can identify it, and whether you’re using this new temporary repatriation rule to try and clean up the past. or whether you’re just basically saying, no, no, no, the direction of credits that the two countries have agreed on happens to work in my favor in this case, so I’m going to take advantage of it. Frazer Rice (42:07) US/UK Tax Planning Really cool stuff. Alex, we could go on for another two hours plus just ⁓ ducking and weaving all of these different tiger traps here. ⁓ How do we find you? How do people who might have this situation get in touch? Alex Jones (42:11) US/UK Tax Planning Easy, easy. So I can be found at the Rawlinson and Hunter website. Name is Alex Jones. We have a team here of 18 people that practice both UK and US taxation. All of us are qualified in both UK and US taxation. And therefore, we live and breathe these interactions. So I’m forgetting the email address. www.rawlinsonandhunter.com. is the email address. Rolnton-hunter.com is the email address and you can find me there. FRAZER IN LONDON https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

JOHANNA DAVID, Adjunct Faculty Member at Hofstra Law School is with us to talk about three estate planning mistakes and how to avoid them. Johanna is a Trusts and Estates lawyer, and a partner at Forchelli, Deegan, and Terrana. She’s also the adjunct professor of law at Hofstra University. We’re going to talk a little bit about mistakes that we see in estate planning and the simple things you can do to keep them away from your situation. Enjoy. https://youtu.be/gD_d9J609Vg Three Estate Planning Mistakes Chapters 00:00 The Importance of Estate Planning09:47 Common Mistakes in Estate Planning19:54 Understanding Trusts and Their Benefits24:00 Navigating Elder Care and Estate Planning Outline of “Three Estate Planning Mistakes” Frazer Rice (00:01)Welcome aboard, Joanna. Johanna C. David (00:03) -Three Difficult Planning Stories and What Can We Learn? Hi, thank you. Thank you so much for having me. I appreciate it. Frazer Rice (00:06)Well, happy to have you on because we are now, most people sort of put their estate planning off toward the end of the year, but I have a feeling given where the legislation is going, et cetera, that the crush is going to happen earlier than we think. In the meantime, you and I were talking beforehand about some mistakes that people make from an estate planning perspective and that they’re very avoidable. I thought we’d take this opportunity to go into that a little bit. In your practice, maybe let’s start with a couple of, or sort of the big ones that you see, ⁓ give us some ideas of some mistakes that people make that really should be avoidable. https://open.spotify.com/episode/57MMskGgp1P3fOVklGt090?si=ISap3Z_YSdqK_zg4-Dlevw Johanna C. David (00:48) – Structure and Other Planning Tactics Sure, absolutely. So the number one mistake that I think that people make is not having the proper estate planning documents. I see this happen time and time again. I don’t know if it’s because of the stigma. People are afraid to approach estate planning, right? Sometimes it makes your mortality very real. But the biggest estate planning mistake is not having the right documents. Everyone, everyone, I cannot stress, everyone needs to have at least a will, a power of attorney, and a healthcare proxy. And there are people that say, well, you know, I don’t really have much, I don’t need to do that, or ⁓ everything’s gonna go directly to my husband and my children anyway. You know, that’s how it works. But that’s not exactly the case, right? You and I both know. So, especially if you have young children, young couples definitely want to have those things in place. You want to think about who is going to be the guardian for your child or your children if both of you pass away. And a lot of people don’t think about that. And those only cause problems in the long run. I’ll give you a quick example if we have time. But ⁓ Frazer Rice (02:02)⁓ please do. Johanna C. David (02:03) – Long Term Planning Issues and Avoiding Problems I remember, this was several years ago. I must have just started practicing and I had been a young attorney. So it was about 15 years ago and a woman came into the office and she and the decedent had been living together for about 30 years. They held themselves out to be married. Now, Frazer, you and I both know that New York does not recognize common law marriage. Frazer Rice (02:30)This is true. Johanna C. David (02:32) – Correcting a Big Will Mistake She was not aware of that. And so they were married for 30 years. Everything was in his name or excuse me, they were not married. They were together for 30 years, held themselves out to be married, not legally married. He owned the co-op apartment. Everything was in his name. Now he had a daughter from a previous marriage, legal marriage that was a strange. And you guessed it, our client did not get along with the daughter. So the father dies and guess who inherits the co-op that this woman has been living in for over 20 something years, right? And who inherits all of this man’s assets. It ends up being the daughter and the woman is out. Frazer Rice (03:09)It’s not the intent. Johanna C. David (03:13) – The Price of Neglect and Other Costs of a Mistake Right, exactly, not the intent. And you know, this man didn’t have a will. He did not have a will. Again, there are so many myths out there about estate planning. You know, this woman was under the impression that, hey, you know, we’re common law married. If he passes away, if I pass away, everything will go to each other. That’s not the case. So I always remember that case. I always give people that example because it’s so important to have a will. Frazer Rice (03:38)The other part too on that is that the poor person who has to administer that estate has to go through the court and all that. You’re not doing your executor any favors by not having a will. And, you know, there isn’t technically an executor in that case, but someone’s left to clean up that mess. Johanna C. David (03:45) Yeah, the administrator has to clean up the mess and it’s not an easy thing, believe it or not. It’s funny because this week I had a client come in and this one is a little interesting, but I’m going to, you know, just stay with me because it gets a little hairy. OK. Frazer Rice (04:09)Gosh. Johanna C. David (04:11) – Difficult Phone Calls It gets a little hairy. When I teach at school, cases like this, I like to draw out on the board. So I hope that our listeners can kind of follow a little bit. A woman comes in and she tells me that her cousin died. OK? This man died in, I believe, 2012. Up until his death, she was his power of attorney. OK? Another myth. People don’t realize power of attorney dies with you. Okay, she’s no longer the power of attorney. He died in 2012. She was the power of attorney. He was a widow, a widow were rather. His wife had predeceased him. He had no children. She’s a cousin, but they’re very close. She’s the power of attorney. All of a sudden, and I don’t know how this happened, she figures out that there is a fidelity account that has about 300,000 numbers in it. What now? She’s like, well, you know, what do I do? I asked if he had a will. Of course, he didn’t have a will. So I explained to her that, you know, we have to go through what is called an administration proceeding. And I tried to figure out his family tree. He had no children, his wife pre-deceased. He was survived by a brother. For example, for this example, let’s call the decedent Will. William will call him. Will and his brother- let’s call him Dave. So Will was survived by Dave. Right after Will dies, Dave dies. Dave also didn’t have children but was married and had a stepdaughter. So Dave dies, right? As it’s go to Dave’s wife. Dave’s wife dies right after him. I know, it’s crazy. So now Dave’s wife dies. Dave’s wife has one daughter, okay? She dies. I’m not making this up, I promise. Frazer Rice (05:43)My gosh. Tell us where they live so we can avoid it. Johanna C. David (06:01) – Complication So daughter dies, okay? So now, so the brother, Dave, his wife, his stepdaughter, they all die. Daughter had no children, okay? Whose daughter’s next of kin? Frazer Rice (06:18)You’ve lost me, if you go back up, I think there’s a stepdaughter in there somewhere. Johanna C. David (06:22) – Tracing the Lineage Right, so that’s daughter. Her next of kin would have been her biological father. So guess who’s entitled to the assets? So let me bring it all back for our listeners. Basically, Will’s assets, so Will died. His assets will end up going to his sister-in-law’s ex-husband. Frazer Rice (06:28)Right. gosh and they may not have ever met. Johanna C. David (06:49) – The Family Tree Correct. All because if, again, none of these people had wills, and when you don’t have a will, you know, New York State basically writes one for you. And those are called the laws of intestacy. The laws of intestacy determines what happens when someone dies, who inherits, who are their heirs. So we have to follow the family tree. It’s very unfortunate. I had to explain to this woman that the truth of the matter is, yes, we needed to administer all these people’s estates. But then at the end of the day, assuming that this man is alive, which we think he is, right, he will be entitled to the assets. Imagine getting that phone call, Frasier. Frazer Rice (07:28)And not only getting that phone call, but then having to make that phone call when you find this all out. And then part of that too is, some people, and it’s easy to get confused, is that you have beneficiary designations. So the fidelity account, guess in theory, could have also been designated, but that doesn’t sound like that happened either. Johanna C. David (07:49) – Beneficiary Designations All right. There was no beneficiary designation. So you’re right, he could have had a will or he could have at the very least if he was very close to his cousin, you know, she was taking care of him. She was power of attorney and healthcare proxy. He could have at least had her as a beneficiary, which he didn’t. Frazer Rice (08:07)Well, as I tell people, ⁓ yes, the beneficiary designation is useful and powerful, but don’t let that act as a substitute for a will because there are going to be other things going on in your estate, most likely. Johanna C. David (08:19) – Dealing with Institutions Yeah, absolutely. And sometimes people put beneficiary designations. They forget all about it. And then they pass away. So I have seen beneficiary designations that might have been a parent, right? Maybe you had this account since you were young and you were not yet married or had children. And so you put your parent on the account, you know? Now you pass away. Maybe your parent has passed, but now the assets may end up going to, you know, who knows? ⁓ And ex-wife, right? And ex-wife and ex-husband, exactly. Frazer Rice (08:43)An ex-wife ⁓ or… ⁓ Johanna C. David (08:48)- Having Everything Line Up And so, ⁓ yes, so wills and beneficiary designations, extremely important. ⁓ Powers of attorney, very important. People often wait, you know, until it’s too late. If you don’t have a power of attorney, then when you are incapacitated, there’s no one that can act for you. People are under the impression that, well, if I’m married or I have kids, these people will be my power of attorney, right? Automatically. It doesn’t work that way. You know, unfortunately, my hardest… conversations are with families, you know, that I have to explain like, I’m sorry, at this point, we can’t do a power of attorney for somebody that’s incapacitated, right? They can’t sign a power of attorney. And then you’re in the world of guardianship, which is not a nice proceeding. You know, you and I both know it’s expensive, it’s long, you know, drawn out. Everybody gets paid. Frazer Rice (09:39)And there’s a structure around it that doesn’t make decision making easy. So if you have to make fast decisions, that’s not a great place to be either. Johanna C. David (09:47) – Proxies and Why They’re Important Exactly, you have to go to court, you know, so powers of attorney are also very important and health care proxies. Again, people think, I don’t need to sign a health care proxy or I signed it when I went to the hospital. Those are normally for that instance or that procedure, right? It will terminate. So you need to have a health care proxy that says, hey, if I am ever incapacitated, this person can make medical decisions for me. I don’t know if you remember, Frazer, and I may be. dating myself a little bit, but do you remember the Terry Scheinbo case? Frazer Rice (10:17)I sure do, so I’m dating myself right along with you. Johanna C. David (10:19) – Long Term Health Care All right, so we’re in the same boat. But for our listeners, those of you who may or may not remember Terry Shifo, it was very sad. This was a young woman, I believe she might’ve been in her 30s, who suffered an injury. And as a result of the injury, it caused some serious issues with her brain, okay? For lack of a better word, she was completely incapacitated. She was on machines. She was basically a vegetable. I mean, I don’t like to use that word, so I apologize. But she was married. And so there was a fight between her husband. She did not have a healthcare proxy. So her husband, after some time, wanted to disconnect her because he felt that she would not want to live in that state. Her parents wanted to keep her alive. And so they ended up going to court and fighting. This poor woman was on a ventilator, on machines, on breathing machines between 1990 and 2005 when the court finally intervened and allowed her husband to… disconnect her. So she was in a vegetative state from 1990 to 2005. Frazer Rice (11:26)Well, which aside from the moral sort of quandary around whether to sort of pull the plug or not, mean, for, one of the considerations is that it’s just unbelievably expensive to maintain that kind of healthcare. And I’m sure that was a big consideration. Johanna C. David (11:31) – Powers of Attorney Yeah, absolutely. I’m not saying one or the other is right. But the point is her husband had one idea, her parents had another idea. And so they, you know, they took it up to the highest court, you know, revolving around the right to die. You know, if this young woman had had a health care proxy and a living will, she could have explained, hey, this is what I would want in this situation. This is the person that’s going to be in charge, you know, and it would not have been a fight. Frazer Rice (12:09)One thing that I’ve been telling clients and actually have some personal experience with this is to make sure that ⁓ these documents, the power of attorney and the healthcare proxy are updated ⁓ periodically. And I don’t necessarily mean changed, but ⁓ to make sure that the date at which they’re executed is recent. The intersection between people and the healthcare industrial complex is often times awful. ⁓ Johanna C. David (12:36) – Dealing with Hospitals Absolutely. Frazer Rice (12:38)If you’re the hospital and you’re not sure whether the documents are in force or not, or whether it was signed under duress or incapacity, that creates all sorts of issues. Here is my comment alongside that really good example. Make sure that those estate planning documents are updated. Then to probably have HIPAA release forms and even establish a relationship with the hospital or the healthcare provider as best as possible because you could be saving yourself a lot of damage in operating. Johanna C. David (13:05) – More on Proxies – Common Mistakes Absolutely, absolutely. I agree with you 100%. These documents can be your saving grace, can literally be your lifeline. I agree with you with having HIPAA release is very, very important in your healthcare proxy. Yes, I always tell people to look at their documents at least every three years or so, like you said, not necessarily that you have to change it, but just take a look, make sure that this is still what you want. This still reflects your wishes, right? These people that you’ve named, they’re still the right people. We know life changes, things happen. So they’re still the right people that you want. And of course, again, making sure that these documents are updated when they need to be. So I do agree with you, Frazier. Frazer Rice (13:36) That’s right. Yeah, that’s just sort of, I think, a good ⁓ rule of thumb just generally in terms of reviewing the documents and so on. That three years, I think at most five, circumstances change, friends come in and out, your kids have kids, you get married, all that stuff. All of those different life events merit a review of these types of documents. Johanna C. David (14:00) Yeah, that’s good. Absolutely, absolutely. I agree with you 100%. Frazer Rice (14:16)So maybe take us through a situation where ⁓ people have heard a lot about trusts and whether they’re appropriate or whether it’s for me, I’ve got a will, do I need something else that’s more durable or ⁓ maybe a revocable trust that might help avoid probate or that type of thing. Maybe take us through an example where that might be a good situation. Johanna C. David (14:36) – Further Reasons for Estate Planning Sure, sure. So, you know, one of the other mistakes to avoid is, you know, and I’m going to tie in trust here, is transferring assets to our kids. I mean, listen, I remember when I was growing up, my parents would say, you know, not knowing better, not knowing any better would say, hey, you know, when you and your siblings grow up, we’re going to transfer the house to you. We’re going to put the house in your name. We’re going to put assets in your name. And because they thought that that was a way to protect their assets from long-term care or whatever it might be, that was a way to avoid probate. And so I’ll give you a very good example, and then we’ll go through what could have been done to make this better. Another Client So another client that I will never forget again when I was a young attorney, this woman came into the office and she had a brownstone in Brooklyn. Okay. Now we’re talking maybe 15 years ago at the time the brownstone was already worth well over a million dollars. It may have even been 2 million. It was in a historic neighborhood and considered a historic building. And so she had this brownstone. She was a widow. Her husband had passed away and they had one son. He was 45 years old. He was married, living in Atlanta, had no children. So when her husband died, she said to the son, listen, I’m gonna just put the house in your name, right? If anything happens to me, if I get sick, I don’t want them to take the house. If I pass away, the house is already yours. And so she transfers the house to him, okay? And at 45 years of age, he has a massive heart attack and dies. All right, so mom is alive, son dies. Her only child, he had no children. He was married. So I’ll ask you, which is like, would ask our, you know, our audience, who owns mom’s house now? Frazer Rice (16:24) Hmm, I see storm clouds on the horizon here. Johanna C. David (16:27)- Estate Planning Mistakes and How They Apply The daughter in law. Yes. Exactly, the daughter in law. And so it was a situation, it was a very sad situation because the daughter in law now owned the home and she would not let her mother in law even live there. She said to her, listen, you have to leave because my husband’s at an unexpected leave. We have a mortgage, we have bills, we have this, we have that. So I need the money. She put the house on the market. And I was in a position where this woman wanted to hire us to negotiate with the daughter. She even said, like, listen, she was in tears. She said, but this is my house. My husband and I worked hard for this. But I explained to her why it was no longer her house. And not only that, but she even agreed to pay her daughter-in-law rent. Frazer Rice (17:13)Gosh. Johanna C. David (17:13) – Worst Case Planning Scenario Right? This woman is at least, I don’t know, maybe 80 at the time. Okay? So she’s saying, look, please just let me live in my house. I’ve lived in this house for 30, whatever it is, some odd years at this point. This is where I got married. I raised my child. Please let me live in the house. I’ll even pay you rent. Right? So you have money to take care of what you need. Daughter-in-law said, nope. I need the household. She put it on the market. Mom is out on the street. And she had to go rent an apartment somewhere. Frazer Rice (17:40)Oh gosh, stories like that, it… Johanna C. David (17:43) – Dangers It’s heartbreaking. It’s heartbreaking and I will never forget her. She came into my office three times, Frazer, once by herself, but she just couldn’t believe what I was saying. She came in again with a friend, she came with a cousin, you know, and I explained the same thing over and over again. It was just, it was a heartbreaking estate planning mistake. And it still is, it still is today when I tell that story. All because she thought she was doing the right thing. Frazer Rice (18:06)Yeah, well, and sometimes people try to get around that by giving half of the property to somebody else. That’s not necessarily foolproof either. Johanna C. David (18:16) – Asset Protection and Estate Planning Yeah, absolutely because so so let’s even if your child does not pass away, right? Many of us don’t want to think about that. That’s, know, most of us that are parents, that’s our biggest nightmare. And there are people that don’t want to think about it. That’s fine. But what if your child is going through a divorce, a bankruptcy or something like that? Your house is now in their name and therefore is an asset. I’ve also seen people where they transfer their home or a part of their home, like you said, half of their home over to their son or daughter. Now that son or daughter is going through a nasty divorce or going through bankruptcy. And now guess what? They’re sharing the house. That’s up for grabs. Frazer Rice (18:50)That’s right. Johanna C. David (18:51) – Avoiding Estate Planning Mistakes with Trusts Right? So the way to avoid that is by creating a trust. And so if this woman, for example, had put her home in a trust, for example, a revocable trust, let’s say, she would still own the house. She would still have the right to live there. But she would ensure that if she passed away, the house would automatically go to her son with what we call a step up in cost basis. This means that the son would inherit it for the value on the date of her death, right? So she could do a revocable trust. It goes directly to her son upon her death. But that trust would say, if my son dies before me, the house goes to whomever, right? When I die. So she may have wanted it to go to maybe her family members, right? Her cousins, her nieces, her nephews, or whomever. It would not have ended up with her daughter-in-law which was a massive estate planning mistake- both current and future. Frazer Rice (19:14)That’s right. Johanna C. David (19:40) – Avoiding Probate and Other Planning Goals Creating trust. Now there’s also people that say to me, okay, well, it avoids probate, but what about if I, you know, want to protect my house from a nursing home? I have to put it in my kid’s name. That’s not true either. You can create what we call a Medicaid asset protection trust, where you put the home in the trust, you’re allowed to live there. It is an irrevocable trust, but in the state of New York, you still retain the right to change a trust. These are the beneficiaries. And the home can be protected from long-term care issues and other estate planning mistakes. I think that that’s also one of the biggest mistakes that people make is not getting the right advice, not seeing an attorney and not planning for the future. And I know I’m taking up a lot of my time here, but if I could just, can I squeeze in one more quick example? Yeah, you know, so I was growing up, I grew up in Brooklyn. I’m a Brooklyn girl and I grew up in Brooklyn and I distinctly remember a good friend of my parents at the time. They were a little bit older and the husband had to go into a nursing home. Frazer Rice (20:31)No, please do. Examples are great. Johanna C. David (20:49) – Poor Titling and a Another Planning Error And so he did and they owned a home right on our block. And so when the husband went to the nursing home, they kept on calling the wife saying, you have to pay us, you have to pay us, you have to pay us, know, thousands of dollars a month that she didn’t have. So she thought that the right thing to do was and they said to her, you know, we’re going to come after your house or whatever have you. First of all, that is not true. They cannot put a spouse out on the street, right? You can’t come after your house if somebody’s living there. They can’t kick your spouse out. Anyway, the woman was led to believe that she ends up selling her house, moving in with her daughter to pay for her husband’s nursing home care. It eats up most of the proceeds from the home. And not only does he die shortly thereafter that she ends up dying too. And their kids inherit nothing. Frazer Rice (21:40)And with a couple of conversations ahead of that, they could have had a much different, much better outcome. Johanna C. David (21:45) – Avoiding a Planning Mistake Absolutely, absolutely. Just getting the right advice. And listen, I always say that we can always do something in terms of if you are facing a situation where maybe a nursing home or home care services or long-term care is imminent, get the right advice. See an elder law attorney. Because we can at least steer you in the right direction. ⁓ A lot of people don’t do that and they think that they know how the system works, right? A lot of people say, well, I’m gonna lose my house anyway. What do I need to worry about estate planning or any mistakes? I might as well just give it to them or sell it, you know, and then, and so, ⁓ you know, unfortunately, you know, I’ve seen people lose assets, you know, their hard earned money, their nest eggs, so to speak, ⁓ and then their loved ones, their children and grandchildren inherit nothing. Frazer Rice (22:32)I think too, one thing when people are selecting people to trust and talk to from an attorney perspective, I find that estate planning and elder care are extremely related, but very different practices. And so I think it’s a good, maybe a good practice for people if they’re going down this road ⁓ to ask the attorney if they have experience in both the estate planning and the elder care, because it’s one thing to deal with administer wills and trusts and so on. It’s another to sort of Johanna C. David (22:46) Yes. Frazer Rice (23:02)in a sort of deal with the government program and everything that’s involved with that. Johanna C. David (23:07) – Elder Law and Estate Planning Mistakes Absolutely, absolutely. I happen to have a background in both elder law and estate planning, but you’re right. ⁓ It is a different area of practice. And yes, they overlap. An elder law attorney can actually do a well-powered attorney in health care proxy. But not all estate planning attorneys ⁓ can walk you through that process of long-term care. Frazer Rice (23:30)I had personal experience with that. was family members who we had to navigate the elder care system. The estate planning was almost beside the point, but the elder care system, we really needed a sherpa to help us get through it because there were veterans benefits and Medicare, Medicaid, what can you access? How do you do this in a way that doesn’t lead away the assets unnecessarily? It’s money well spent to avoid these planning mistakes. Johanna C. David (23:48) – 3 Estate Planning Errors Yeah! Frazer Rice (23:58)To have someone smart on that front- top avoid the planning mistakes. Johanna C. David (24:00) Exactly, absolutely. listen, for those of us where that is not a concern, that’s fine- it won’t be a planning mistake. It’s still worth your while to see an estate planning attorney to discuss your will, your power of attorney, your health care proxy, whether a trust is appropriate for you or not. Right. Depending on, you know, we were at the beginning of the conversation, you and I were just talking about the sunset and different things happening with tax laws. Right. You know, do we need to do some estate tax planning for you and avoid any mistakes? It’s always worth your while to get the advice of an attorney, right, and to also speak to your financial advisor and things like that about getting these things in place because you don’t want your assets to end up in the wrong hands. Like I said, you know, your assets may end up with your sister-in-law’s ex-husband and things like that to happen. Frazer Rice (24:47) One thing just to dovetail on what you mentioned about the sunset. know a lot of people are hearing the federal government, the estate tax and all that, the exemptions are so high it doesn’t apply to me. I would tell people that are in states like New York or Illinois, Maryland, other places that the ⁓ state tax or inheritance tax if you’re in one of those states, That’s something you can creep into very quickly. In New York, I guess it’s about $7 million. That’s a lot of money. But for some people who’ve been living in neighborhoods that have gentrified and it started out as one thing, all of a sudden they’ve got this asset. They may start creeping up toward that exemption. I think it’s worth having that conversation no matter where you are, just in case. Johanna C. David (25:23) – Three Estate Planning Mistakes Thanks. I agree, I agree. And I think that especially, you know, people like you said that are in those kinds of neighborhoods where all of a sudden they have this asset that’s worth so much, you know, tend to undervalue it. You know, tend to think, it’s not gonna be worth that much, but all of a sudden it’s marked as a historical site. You know, all of a sudden you have a brownstone in Brooklyn that’s worth a few million dollars. ⁓ So I guess I agree with you. Frazer Rice (26:00)Terrific. So as we wind down here, ⁓ maybe take us, wind us down with a couple of things to think about as people are going through this process. Johanna C. David (26:10) – Three Estate Planning Mistakes Sure, so a couple of things to think about as you’re going through this process is, know, what is your family dynamic? You know, where would you like your assets to end up upon your passing? But before you even get there, just think about some of the basics, right? Estate planning is always gonna start with the basics, and then we build on that if we need to especially to avoid mistakes. So in the event that you were sick or incapacitated, who can handle your affairs for you financially? Who can speak for you in a medical emergency? ⁓ If you have young children, you know, who would be the guardians for your children in the event that you and your spouse or you your significant other passed away? I would at least start the ball with that, right? And then maybe also having a good understanding of what your assets are. Do you have beneficiary designations on those assets? So I think that that’s a good place to start. Frazer Rice (27:00) Summary of Estate Planning Mistakes to AvoidPerfect. So wills, powers of attorney, healthcare proxies, and make sure your beneficiary designations line up with what you want. Joanna, how do we find you if someone wants to reach you and find out more? Johanna C. David (27:04) – Three Estate Planning Mistakes Right. Absolutely. Sure, so I am a partner at Fort Shelley Deacon in Toronto. I’m in Uniondale, New York. I can be reached at my email address jdavid at fortchellelaw.com or at our phone number 516-248-1700. That’s 516-248-1700. And again, I’m at Fort Shelley Deacon in Toronto in Uniondale, New York. Frazer Rice (27:42)That’ll all be in the show notes. thanks so much for being on. Johanna C. David (27:45) Thank you so much. appreciate your time. Thanks for having me. Other Estate Planning Mistakes WHAT IF YOU ARE NAMED IN A WILL OR A TRUST? https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

We’re going to be talking about the current incoherent world of US ENERGY POLICY. ANNA KRAMER joins the podcast to help us get our arms around the future of energy in the United States. Anna is a reporter for NOTUS, a non-partisan longform journalism outlet. She has written a series of stories on the the disconnect and frustration around US Energy Policy and paths forward. We talk about: The chaotic policy at the federal level (and beyond) The huge cost overruns and administrative complexity The role of nuclear The increased energy demand in this country Finally, we muse about what can be done about it going forward. https://youtu.be/3k-N-AGTNfU Outline Section 1: The US Energy Policy Transition: The Goals and the Problem. Discussing Brandon Shores Coal Plant and electricity prices in the Mid-Atlantic Region. https://www.notus.org/policy/biden-clean-energy-coal-maryland-brandon-shores https://www.notus.org/policy/electricity-prices-spiking-biden-clean-energy-transition https://www.notus.org/policy/nuclear-power-energy-crisis-cost Evidence that the transition is happening. Electrifying = efficiency. Cheap wind and solar, look at the free markets in Texas — ballooning wind and solar there The reliability, capacity, and resource problem: Needing certain amounts of energy and voltages at all times of day. Leads to keeping coal plants online past scheduled retirement dates, plus spiking prices How much do emissions and climate change goals matter to the industry? What role does nuclear energy play? Section 2: Interconnection Queues and Permitting Reform. Bipartisan and Industry wish for Permitting Reform: Why is it so hard for US Energy Policy?  https://www.notus.org/policy/permitting-reform-bill-manchin-environmentalists https://www.notus.org/policy/solar-farm-culture-war-biden-climate-change Section 3: Trump’s US Energy Policy “dominance agenda” disappointing every part of the energy industry. Idea is not aligning with reality. DOGE cutting into the basic functions of energy governance. https://www.notus.org/policy/doge-cuts-trump-drill-baby-drill https://www.notus.org/policy/donald-trump-tariffs-trump-energy-agenda Transcript Frazer Rice (00:01)Welcome aboard, Anna. Anna Kramer (00:03)Thanks for having me, really psyched. Frazer Rice (00:04)I went through a bunch of your articles covering the power industry and energy generation and a lot of things that are happening federally, state level, and it’s going to be a lot to get our arms around, but you were the person to do it. So just generally speaking, we’re at a point in time with energy and transition ⁓ that policy is moving. Maybe take us through a little bit about the goals and the problem we face. Anna Kramer (00:31)So there are sort of two, I would say, competing problems right now. ⁓ The first one is load growth, which means basically more demand on the electricity grid. And that is something that we haven’t seen in this country in decades. for really around 2000 up until maybe a couple of years ago, energy demand on the grid has been fairly constant or even declining slightly. And the reason for that is that everything has become more efficient. Like every appliance you use, every light bulb, your car, everything that could possibly have a demand on the grid is more efficient than it used to be, which is awesome. There’s a lot of wonderful benefits that we get from that, including the fact that for a long time utilities and transmission planners and states and the federal government have not really ever had to think about the grid or about like where you get your power aside from these sort of technical conversations that the average person doesn’t really pay any attention to. That has really started to change as of the last few years. There’s a large number of reasons for that. Basically for the first time in decades we have significant demand expected on the grid. We expect it to grow over the next several decades. The reasons for that are widespread and hotly debated. A lot of people talk about data centers and artificial intelligence which require huge amounts of energy to power At the same time, there’s a lot of research that shows that some of the larger sources of demand are actually going to be manufacturing facilities built in the United States for things like semiconductors. Electric vehicles are a huge demand source on the grid. Basically, the more that we electrify, the more demand there is on the grid. So for the first time in decades, we have the need for a lot more power. And then at the same time, we also have climate change. And for those who really care about With the emissions we create in the United States or globally, there’s a compelling argument that we should be addressing the emissions from the power sector. These are quite significant between coal and gas plants, and then the emissions that come from regular vehicles. Those are somewhat competing because if you have increasing demand on the grid, while you’re trying to reduce emissions, you’re both trying to transition the economy from fossil fuels while increasing the amount of power that’s available. There are a lot of competing tensions there. Frazer Rice (03:06)So as we’re trying to get more efficient ⁓ and we’re sort of transitioning to electricity, how do you think about sort of the downstream effects of that? To me, energy generation is a symphony of measures you’ve got in everything from coal, the natural gas, to oil, to nuclear, to hydro, to solar, ⁓ hydro or sort of hydrogen based things, that type of scenario. Getting power generated and where it’s needed, everything you just described, that’s the part that’s tougher for everybody to understand. Anna Kramer (03:44)Yeah, definitely. And this is really where all the debates come in because… It’s not as simple as just creating the power in one place. The act of moving it to the place where it’s needed is complicated and equires transmission infrastructure. That’s the grid that everybody sort of sees, right? Your power lines, your substations. And there’s only a maximum amount of power that can move, know, or sorry, maximum amount of electricity. My power and energy sources would be very mad at me if I said power. There’s only a maximum amount of electricity that can move on any given part of the grid at any given time. So you need your transmission infrastructure to be really well built to sort of facilitate maximum movement of electricity to the people that need it. And it’s really hard to do that. And our…Transmission infrastructure system in the United States is not well built. It’s quite old. It’s aging. It hasn’t been well maintained. There are some incredible technologies that can be applied to transmission infrastructure to make it better. They can make one line have the ability to carry a lot more electricity than it does currently. There’s a lot of politics around who has to pay for that. When it comes to gas fire generation, one thing you can do is build a gas plant near a place that needs the electricity to minimize the transmission infrastructure that is needed. But there’s a lot of politics there too because the question is sort of like who bears the cost for building, for example, a gas plant next to a data center? If a gas plant isn’t going to contribute to the transmission network, should they have to avoid the costs that somebody would normally have to pay in to maintain it. There’s so many complicated political questions involved in all of this ⁓ down and there’s so many fights about who pays for what. And at end of the day, the average electricity consumer doesn’t know any of this is happening and doesn’t want higher electricity bills. But we’re now in a situation politically and practically speaking where Everyone has to understand how electricity moves around and everyone’s going to have to reckon with higher bills if we’re trying to meet all this new demand. Frazer Rice (05:59)So let’s take as a given, which it isn’t a given, but let’s take it that the costs could be figured out and we print lots of money and do all that stuff. Where does the world of NIMBYism kick in here? When do people say, “I don’t want the power line to go through my backyard or I’m worried about the externalities of a power generation plant within five miles of my house. I don’t want to breathe difficult air or radioactivity is a problem” – that type of thing. Anna Kramer (06:04)It’s probably the single greatest problem getting in the way of all of this. It’s not just NIMBYism necessarily. In general this very anti… It’s not just like I don’t want things built in my backyard, but people in general don’t really like to change the status quo, broadly speaking. So you have a number of things that happen there. The first thing is that… Anytime you try to build a transmission line, takes years to longer to build it than it should because people are fighting it in in local systems. The same thing goes for a gas plant and wind turbines. The same thing goes for a coal plant that, you know, might need upgrades and instead the local community wants that coal plant to close because of air pollution issues. But it’s even broader than that. One of the stories that I wrote was about a solar farm that was going to be built in somebody’s backyard. Basically they have a large farm, they were gonna cover a lot of the land with solar panels because the farm isn’t financially sustainable and the solar panels were going to help. And the local community essentially revolted against the farmer and prevented them from building the solar infrastructure. Not necessarily because any of them would ever interact with or see it, but the idea that this solar farm would sort of change the constitution of the community was so revolting to so many people that they essentially made this family like local pariahs. So it’s important to understand like just how passionate people are about energy infrastructure and specifically how much they don’t like changing it. And that has so many weird political ripple effects. You see, you know, members of Congress coming out against a plan that would make a lot of sense to lower electricity bills in their district because of the fact that that plan will upset a local community in the process. It’s such a huge problem. I’m sure we’re going to talk about this more. There are also a lot of federal, state and local rules and regulations that enable communities to prevent anything new from being built. It’s really important to understand how big of a problem those rules and regulations can be. Frazer Rice (08:38)Well, you combine federalism with sort of consensus-based decision-making and you can turn something that doesn’t, that shouldn’t take much thought into a multi-decade process. So we’ll talk about that in a second. But one of the problems I think that’s interesting is sort of in terms of understanding what is important about energy policy is sort of the physics of it in many ways and having a reliable source of energy that has the capacity and ⁓ the resources to support it. Maybe talk a little bit about that. mean, it goes to the idea of if we like the idea of climate change addressing that and incorporating other types of energy, but then it’s not there for you when you need it, that’s a problem. Anna Kramer (09:05) Huge problem. Yeah, so basically we all take for granted that our electricity system in the United States just kind of works. We’re not experiencing regular blackouts. That is because there is enough power of different types, all the time, to maintain this extremely complicated system. I’m not going to get too far into the physics of it but basically the voltages really matter and the amount of baseload electricity that sort of keeps the grid moving really matters and you need to be able to control precisely how much electricity is moving through the system in different places. And there are parts of the system that are extremely sensitive. Without perfect control of how much is pulled off and put on the grid at the same time, you get this risk of a blackout or a grid collapse. It’s way more complicated than that at the end of the day. But the reality is that our grid system works very well in part because we have sources of energy that you can call upon ⁓ in times of crisis, especially, and those sources of energy tend to be fossil fuels- coal and natural gas for the most part. They’re critically important for those moments where suddenly you have a huge amount of demand on the grid. You need to meet it. Otherwise, what’s being sucked off of the grid is going to cause the whole thing to collapse. They’re also important for maintaining this sort of base load power. One of the other things that works here is nuclear power, which is utterly critical for this base load element where you basically have some guaranteed amount always flowing into the grid at a certain time. Nuclear provides that sort of certainty in a way that literally no other resource can. Nuclear is not so great for the other side of the coin when you have something where you really need an extra amount of electricity pulled onto the grid, sort of at the last minute in order to prevent collapse because of increasing demand. That’s the kind of situation where natural gas-fired power plants tend to be extremely helpful because you can just burn more gas. So… The fossil fuels and the nuclear tend to be really, really valuable baseload power, and they’re really, really critical for making the grid function. Frazer Rice (11:39)You wrote extensively about this related to the Brandon Shores problem and ⁓ sort of what looks like a spike in consumer, how much they’re going to be paying for it in the mid-Atlantic region. Maybe talk a little bit about that because that gets back to the concept of people wanting to shut down coal for good reasons, but then you go and do it and it has all these spillover effects that no one really likes, i.e. you get your, in New York, your Con Ed bill at the end of the month and you go, what the hell happened? Anna Kramer (11:49)Mm-hmm. Yeah, exactly. So what’s happening in Maryland is that Maryland is an electricity ⁓ importing state. Basically, they consume way more electricity than they produce there. So the few things they do have that make electricity are extremely valuable, including a large coal plant called Brandon Shores. The coal plant was scheduled to shut down. I think this year actually was the formal shutdown date, retire. And that it was gonna retire for a number of reasons. It’s not terribly economical. The Sierra Club and state regulators applied pressure shut it down because of the polluting effects of the plant. The the shutdown would have essentially created this problem that I was talking about with your grid physics, where you can’t maintain the appropriate. sort of voltages and flow of electricity that you need for the grid to function normally. The grid operator, the large organization that manages the regional grid, is called PJM, It made the decision that they have to force the coal plant to stay online for several more years. before they can build the transmission. AKA all the wires that I was talking about, that could compensate for the loss of the coal plant. But…when you don’t want the grid operator forcing a coal plant to stay online because it’s extremely expensive. That’s not an economic, there’s no economic logic that’s inducing that coal plant to stay online. PJM is saying, “we’re going to force the rate payer, you, with your electricity bill to bear the cost of keeping a plant online that was supposed to otherwise retire.” This isn’t just happening in Maryland, this is happening all over the country. You have a plant that’s supposed to shut down. Then everyone goes, “my God.” There is nothing else that we have available to address this problem. We have to pay to keep it online even though it wasn’t supposed to be. So there’s huge problems here in Maryland. It is complicated. One thing happened over the course of the last year since I’ve written about this. PJM and then FERC, which is the… federal independent agency that regulates utilities and power in the United States have come to a conclusion. The way that was handled with this particular coal plant could have been done better and lower costs a little bit more. Yeah, unfortunately what’s happening now is… Frazer Rice (14:27)You’re like, “great, thanks!” Anna Kramer (14:34)Rate payers in Maryland are gonna see enormous increases on their utility bills this year. ⁓ The reality is there are probably over the long term are solutions that will sort of allow these coal plants to retire in more economical ways. But because of this problem I was talking about earlier, it’s really hard to build new things now and really hard to change things. Those solutions are sort of stuck. This leaves us in a really weird kind of terrible place right now. We’re keeping coal plants online. It is the only option in large parts of the United States. The other options are too hard, expensive and too politically complicated to get done in the timeline that we need. Frazer Rice (15:16)One of the things, so I think we can all agree the grid needs to be upgraded. I don’t think anybody would contradict that statement. We could use lots of different types of power generation, whether it’s nuclear or solar or wind or whatever, which have their own expenses and issues. Why is this so hard? I get, you know, this gets back to, you know, federalism and consensus and, you know, states interacting with people who have their own interests and red tape that goes with dealing with FERC and other regulatory agencies. But why can’t we get our arms around this and push this forward a little bit more efficiently? Anna Kramer (15:48)Yeah. There are so many problems with US energy policy here that we could go into. The first and the biggest one is permitting. So permitting reform is like the catchphrase of every single person in energy world these days. Every conference I go to, every meeting I have, the number one thing on the wish list of any kind of company or industry group is permitting reform, which means changing the rules of how you get permits from the federal, state, and local governments. US energy policy has complicated rules. They extend from environmental legislation, These environmental laws, passed in the 70s, try to reduce serious pollution effects, try to protect endangered species, that kind of thing. Some of the laws here that we’re talking about are NEPA. which is the environmental protection law. We’ve got the Endangered Species Act. There’s historic buildings conservation. Tons of different kinds of laws that require all these different permitting processes that are really long and complicated. If a company, any company in industry could have one thing fixed, it would be permitting issues. That is insanely politically difficult. We are just not at a place where Congress can reach the kind of compromise that they need to fix these laws. It’s basically like a toxic, horrible mess in Congress anytime anyone talks about it. Everyone says they want to do it However, the reality is no expert expects to see anything significant with permitting reform, at least in the next year, maybe longer. Congress is not really capable of that kind of compromise anymore. Unfortunately, if it were to happen, a couple of folks have said to me maybe next year when they have to do reauthorization of the bill that will sort of manage the federal highway system, that’s like a must pass bill. So maybe there’s a way to end this. There are folks involved in that legislation that are the kinds of folks more inclined to compromise. So if there’s a chance, that’s when it would happen. I’m not optimistic after all of the reporting and conversations I’ve had over the course of the last year that we’ll see that transformation. It doesn’t seem that likely to me, despite the fact that it is like the number one desire of almost everyone who works in or around energy. Yeah, there are others as well. Frazer Rice (18:04)So, maybe we’ll do one more besides permitting. I’m sure there’s a long list, but what else is there that’s causing the roadblock in US Energy Policy? Anna Kramer (18:07)So we have interconnection queue problems and the interconnection queue is the line that power companies get into to get permission from the grid to move, to build a new generation facility and connect it to the grid. There is a reason they call it the interconnection queue. Tying something to the grid is a complicated physics problem. These grid operators need to very carefully do the assessment of what it’s going to cost to bring something onto the grid. They have to know whether it’s going to overwhelm that really complicated system that we’ve been talking about. What has happened, and this is largely the fault of renewable energy, whether this is a good or bad thing is kind of a personal assessment, but… there are so much demand for new sources of renewable energy and it’s so easy to build some of it, especially solar and wind. The projects are on average much smaller than your average gas, or nuclear plant that suddenly you have thousands of projects applying to interconnect to the grid across the country all at the same time. Up until now that has never happened before. Up until the last few years, it’s like a couple of gas plants would try to get online in one place in one year. It’s not that hard for a grid operator to sort of do the mathand figure out what it costs and whether they can connect. Now you have thousands and thousands of generation facilities applying to get onto the grid at the same time across the country. You have no idea if any given project is going to break ground quickly. Or get online if they get application approval. So all the grid operators across the country are overwhelmed. They are struggling to process the applications to interconnect from these different generation facilities. Suddenly you have this like huge quagmire that nobody can resolve. It’s like a massive tangled knot that has essentially stopped approvals for a large number of new energy generation projects. The grid operators are trying to come up with solutions as is FERC. There are things that can expedite this. There’s a lot of pressure to expedite it now and to come up with some solutions. But the reality is that interconnection is now such a huge barrier to entry. It hasn’t improved yet. Frazer Rice (20:30)Crazy. So we have a new president in who in theory is taking a chainsaw to bureaucracy and supposedly wants to have an energy dominant policy where the US is, I guess, not only an exporter where possible, but so self-reliant that everything kind of works as well as possible. But that’s not necessarily the way the energy industry is seeing it. And the Doge efforts are a little bit at cross purposes. Maybe explain that. Anna Kramer (20:40)Yeah, absolutely. the president says he has an energy dominance agenda and the way he defines that is he’s basically going to do everything in his power to increase our energy production and export in this country. If you were to actually do that in a sort logical way, there are a number of things that you would do, which involves some efforts on permitting reform, it involves speeding up the processing of permits. ⁓ You would support really every single kind of innovative energy technology. You would support the production of basically every new source of energy, something a lot of Republicans like to say is an all of the above energy agenda is what they have, meaning they support everything without discrimination. ⁓ None of those things are actually happening, despite the fact that the administration says that’s what they’re doing. The oil and gas industry was a huge donor to the Trump campaign because they assumed that this energy dominance agenda was going to benefit them enormously. Even folks in that industry are disappointed with where things stand right now. Not everyone, this is not an across the board assessment, but everybody that I talked to in my reporting has a lot of disappointment. I had somebody who’s a huge Republican reform advocate for the energy industry say to me the Delta between what they expected and what’s happening is so much larger than he ever could have predicted. He said this to me yesterday because folks are really, disappointed about what’s been happening. So I’ll give you a list of some of the problems here. ⁓ The biggest one now is the tariff and trade situation. Basically, the size and scale of the tariffs that Trump implemented or has threatened to implement are disastrous for anyone that produces anything. That includes energy, the costs for oil and gas drilling, the cost to build batteries and solar plants, the cost to build manufacturing facilities. Anything that you need to make energy in this country is way more expensive than it was before. That’s counterproductive to any kind of energy dominance. It’s a huge problem. Also, if tariffs do shrink the economy in any way or lower consumption or demand, that’s a huge problem. for the oil and gas industry. They can’t drill more, justify drilling more oil or gas if there’s no increased demand. Right? One of the things that always happens when the economy shrinks is that oil prices plummet because there’s less demand. And that’s something that we’re already seeing. ⁓ That’s now the biggest problem. Before this happened, DOGE was the biggest problem. DOGE made the cuts without very careful policy prioritization. This includes staffers, to rules and regulations, to offices and facilities, .So there are very talented federal government workers, or not so talented government workers, who do tasks that are essential for things to function. Especially they produce permits, which we’ve been talking about are very slow and complicated and a problem for folks. If you fire the people who work on permits, it lengthens the permit time. If you fire the people who are really good at working on the permits, it exposes those permits to more litigation later, which also slows projects down. Same thing goes for the folks who inspect an oil and gas rig, or somebody who makes sure a pipeline isn’t leaking, or somebody who inspects a transmission line. You need those federal workers ⁓ in order for all these companies to be in compliance with the law. If they’re not in compliance, then the have litigation exposure. They have lawsuit exposeure, which slow things down. All the cuts happening across government. Because they have not carefully tailored the cuts to policy priorities, they hurt the administration’s agenda, unfortunately. Frazer Rice (24:43)What is the way forward on this? It looks like Trump’s been able to accept doing about faces every other day on lots of different things. Are we too far gone or is this something we can remedy? Anna Kramer (24:51)I mean, it really depends. I think theoretically, yeah, the administration could do a number of things to try to remedy this. There are certain things that are really, unfortunately, of difficult to fix at this point, especially when it comes to government workers. If you wage a campaign of war against government officials, if you make them feel as if their jobs are not important, why would the most talented people ever take a job in government? This is the question that people ask me every day. It’s distressing. The administration hasn’t “ensured” that there are adequate staff to do the necessary work. Because even if you were to try to rehire or hire for very specific issues and hire the best people who work on those most specific things, why would the best people take those jobs, right? ⁓ That’s a question that people ask me every day. A lot of folks who are really good at their jobs are leaving the Department of Energy. There are political appointees in the Department of Energy trying to come up with ways to persuade employees to stay. Because of how important their jobs are! They won’t stay. Why would you not take a job in the private sector? So that’s the area that I think is unfortunately not that remediable at this point. Some of this other stuff that we’re talking about here. When it comes to policy choices, definitely, there are things that Trump could do. If only he could maintain a consistent trade policy and find a way to convince people that that’s the case. That would be huge for the industry. Same thing goes if he decided to leverage his power to force Congress to get it together on permitting reform. That would be such an amazing win that people in the industry. They might not care about all of the other things that have happened. ⁓ As folks have said to me, there’s damage that has been done there that will be hard to undo. Frazer Rice (26:52)As we wind down here, Somehow we’ve managed to cover so much ground in 25 minutes. It’s unbelievable. I’m a big fan of having nuclear being a keystone of future energy policy. It’s expensive to put these things together. Lots of permitting issues, et cetera, What is the state of the union on nuclear energy in this country? Anna Kramer (26:56)I know. People have come around to nuclear sort of across the board ⁓ politically, which is huge. A lot of folks call it the second nuclear renaissance. We’re living in an era where it’s so politically popular. Enough people have finally understood that a lot of the safety concerns around nuclear are not sizable anymore. Where we are with the technology is so good. The track record of nuclear is so good that a lot of folks are finally coming around to it politically. Most of these power plants last a lot longer than projected. Suddenly you have basically free energy after 50 years of a power plant. Which is incredible! I mean that is such an insanely good asset to our grid. There’s a lot of people that agree with that now. We’re finally at a place where it’s you know, where it’s really popular The problem is that even with a strong deregulatory agenda that the Trump administration professes to have but has not yet implemented, nuclear remains bananas expensive to build. One of the few pieces of progress we’ve had in nuclear is the construction of the Votal Plant in Georgia. This is the first new nuclear power plant to come online in a really long time in the United States. The utility commissioners there have said that they sort of regret approving this. It will be expensive for the people who are taking that power, you know, any of the ratepayers.h Which is a real problem, right? How do you build new nuclear when utility commissioners across the country are suspicious of the cost. What will that bring for the people paying the electricity bills? There are a lot of answers to that question. The federal government could step in and subsidize in the early stages. You know, you could…find a way to get a tech company to pay for a lot of the costs. They really want the power for a data center. There’s a lot of interesting theories going around. Theories about things that we could do to make it more affordable. Ironically, one of the most compelling arguments is a really strong policy around climate and around low emissions. That would really help justify the cost, the initial cost, because nuclear power is emissions free. If you have financial incentive for emissions free power, it makes more sense to build nuclear power. If you don’t care about emissions, or greenhouse gasses, it’s harder financially to justify building these plants right now. It is a complicated problem, I have to say. Frazer Rice (29:59)Really, really cool stuff. ⁓ Anna, how do we follow you and your reporting going forward? Anna Kramer (30:04)Absolutely, so there’s a number of ways you can follow me. I’m on Twitter and blue sky on Twitter It’s Anna underscore C underscore Kramer. I write for NOTUS. We have a daily newsletter which encompasses everyone’s work, but Anytime I write something large, it’ll be in there. If you’d rather sort of get a broader political newsletter. But otherwise, you can find me on Twitter or Blue Sky or LinkedIn, and I post almost everything that I write there. TWITTER BLUESKY Frazer Rice (30:35)Great, I will have all of that in the show notes. Thanks so much for being on. Anna Kramer (30:39)Thank you, it was really fun. More Longform Journalism at Propublica https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

Family Office AI has become a dominant theme at the fancy dinners where families and their advisors chart a course to incorporate new technologies. As wealthy families grapple with the risks and opportunities of AI, institutional rigor and structure hasn’t kept up with the often informal world of family offices. This is a mistake High end governance must play a part in the family office AI space. https://youtu.be/n_KHB_gOc9M We’re going to be talking to TIM PLUNKETT, who’s the founder and managing partner of Plunkett PLLC. He advise families on structure, governance and the development of procedure around these exciting, but potentially dangerous concepts. We’re going to be talking about best practices for family offices as they deal with the artificial intelligence theme. Family Office AI “When looking at AI adoption in family offices it is important to remain true to the culture, operations, reputation and underlying trust among those who built the Office in the first instance. Remain true to your principles and don’t get distracted by the new toys.” – Tim Plunkett Family Office AI Transcript Frazer Rice (00:01)Welcome aboard, Tim. Tim Plunkett (00:03)Hey Frasier, how are you doing? Thanks for having me. Frazer Rice (00:05)doing terrific. we’re in the midst of Trump tariff season, so it’s a little crazy, I’m sure for everybody. yeah. so why don’t we, we’re going to talk a little bit about family offices and artificial intelligence, which I think is a theme. both themes are, you know, big unto themselves, but how family offices integrate with the space. I think it’s something where it’s a, it’s an area where family offices can be very informal and. Tim Plunkett (00:11)We’re blessed. Frazer Rice (00:33)Getting some institutional rigor around them is important. And so to that end, you have a lot of broad experiences advising businesses from a governance perspective. Maybe describe your firm for a few minutes and what you do. Tim Plunkett (00:47)Sure, thanks again. I have three pillars in my firm. I can only do certain things well, so I try and limit what I do. My training is as a litigator, and so I consistently think of things always as having to explain them in front of a judge, which helps with a lot of risk, which goes along hand-in-hand with AI and governance. The second part is I’ve done a lot of government relations work, which is working across disciplines and organizations, trying to advocate for certain outcomes and create business environments that are efficient, compliant, ethical. Again, all that ties back to the same foundations in the world of AI. And the third component of it is, is obviously the AI work I do, which came out of working in data privacy and security over the last 10 years. The natural flow was to move towards this sector. And today my practice is Mostly helping companies learn how to implement strategies that are fair, equitable, just, but also compliant with the laws and keeping in pace with the technological change, is really at breakneck speed and an incredible place to be right now in the world of opportunities in front of all of us. It’s very exciting. Frazer Rice (01:57)So when you’re canvassing companies and families that are invested in them, what are the use cases that you’re seeing? Tim Plunkett (02:04)So use cases are, I mean, they’re kind of all over the place. you look at in terms of how do you define the practices, have, there’s operational use cases. so you have use cases that are like document intelligence and automation. Sometimes in places there’s expense tracking and anomaly detection. There’s dashboard creation for organizational purposes. You have investment use cases for deal sourcing. portfolio risk management, alternative data, source and analysis. You have governance use cases for succession planning, philanthropic impact analysis. So there’s a lot of different cases that are out there. Each one of those has lots of different levels beneath them. But back office integration in the family office space, like you said. Some places are single jurisdictions, some are multiple jurisdictions, some are international, some are local, some are really formalized, and some are not. And so you have basically two buckets that everything fits into. One is AI for adoption and operational efficiency, and one is for investment. And those are viewed and treated very differently. Others overlap, obviously. But when you’re talking about getting down to the fundamentals of building the rigor around these things, and what the institutional rigor looks like. That’s where everything emanates from. Risks Frazer Rice (03:31)Got it. So, you know, it’s difficult to put sort of a roadmap around this. It’s all evolving so quickly. And, you know, just when you think you’ve got everything in mind, there’s some new use case that pops up as a litigator, as someone who is trying to advise companies and families around governance so that they stay safe from the various risks that are out there. How do you group those? Tim Plunkett (03:54)Well, the risks are there’s risks that are from compliance. Okay, you have regulatory risk. You have family, know, reputational risks, operational risks. Then you have the obvious investment risks, due diligence, things like that. But and then the fundamental thing about family offices is they’re about family, and they’re about protecting that asset more than anything else, in my mind, at least. And so and so What are the risks that go with that? Those are family reputation risks that you want to mitigate as much as possible. There’s obvious data risks and security risks. Once you start pulling data in places, then it makes it more of an attractive target. You have risks that go around that make them more attractive targets because people seem to think that some data family offices don’t have a strong data governance strategies or security strategies that they may have decentralized security. There’s all kinds of risks once you’re inside the office as well between family members, between generations. One generation looks at technology one way and another generation may look at it differently. That creates a risk from an investment perspective, an operational perspective. the world is fraught with risks, but for every risk, there’s a solution pretty much. And a lot of that comes down to really building the governance strategy properly from day one, focusing on what your foundational documents should look like, your AI governance policy, and that is what your, for lack of a better term, your constitution. That’s what guides you. Frazer Rice (05:32)So a client walks into your office and they’ve got some level of complexity, they’ve got an interest in the space, they’ve got wealth and assets in there. It maybe takes us through your process as how you get them to get their arms around the issue and then put structure. Tim Plunkett (05:50)I think the first thing to do in talking to anybody is finding some common ground. And there are certain principles that guide people, decent people, professionals that have licenses and things like that or certain mandates to do certain things. Tim Plunkett (06:08)I think that when you’re looking at building the bridge, the first thing you have to establish is trust. And trust is something that is in the background of every decision that’s made in the world of AI. So once you’ve established a level of trust, you can start talking about philosophically what the family is looking for, whether it’s from an investment perspective or a philanthropic perspective. But you have to understand what the family is all about, what the family office is all about and their mission. Before you can start putting on legal tools or technological tools or anything else you have to have that that trust at the beginning. Once you do that you start to build your your your frameworks Your legal frameworks and that’s what I said to your AI governance policy becomes your Constitution The good news is that there’s so much information available now on how to set up governance programs. It’s not that hard depending even if you’re you know small office or a big office foreign domestic whatever, there’s frameworks for everything. But at the foundational level, the first thing is to get the trust together, to get the AI governance policy document together. And that will be comprised, if you go down the line from there, we can get into talking about what the specific core rails are and what you’re trying to accomplish there. Frazer Rice (07:26)Sure, and let’s do that. One of the things I think about when we go from paper to operation as many times that, you know, in my world, the trusts or the wills or whatever are well drafted and they stand up to lots of different things. However, the people who are administering them are the weakness on that front. When you’re thinking about the guardrails and the legal structures, how are you advising these families as far as staffing them? Tim Plunkett (07:45)Right. Okay, so staffing, again, This is about knowing your people. It’s about knowing what you have, doing an inventory of what’s inside your organization, who’s good at what. And there’s legal frameworks that you put around those based on what people are good at and what they aren’t. So when you’re looking at staffing in particularly, you basically want to build a structure where there’s accountability. You have to have, there’s expectations in the office for returns on investments and things like that. And then there’s also expectations on how these places behave and how they’re viewed publicly. So you have to define the roles and responsibilities very clearly. You’re gonna want an executive leadership team to begin with. That’s a strategic oversight role. That you’re gonna have ethics officers or maybe an ethics committee, depending on the size and structure of your organization. You’ll have technical teams. which would be your data scientists or your engineers or your developers. You might have a risk management team that identifies very specific AI risks that they want to control or other market risks that they want to account for. And then you have the people in the organization who are actually using things, which I would call the end users, which you want to always be soliciting feedback from. But what you’re really looking for also in addition to skills are the people qualities, right? Because AI is a team sport. And that’s the one thing that is really essential. Teams win and lose together. And sometimes teams have role players. And sometimes teams have superstars. But they’re not always gonna like that. But they have to have the same common mission in defining that. And so what you really wanna find is people who can work across your organization that are multidisciplinary. So in some family offices you have people who wear multiple hats. And so as you start building out your framework, you want to look at the team that you have and say, does Bobby do this really well, then Bobby should do the risk analysis guy should maybe be in touch with the compliance people. know, Sally does marketing really well. Maybe Sally should be talking to the vendors who are going to be doing the marketing. So it just depends on personality a little bit. trust, trusting your people to make decisions and putting those teams together. It’s critical. I mean, I could talk to you about the roles and responsibilities of each of those roles if you’d like but in a large, you know, in an overview that’s what you want to put in place. Best Practices Frazer Rice (10:27)So from the, a general set of best practices, how do you think about the things, if a family office is walking into your office and saying, okay, I understand the need for sort of constitutional frameworks and legal structures, making sure the right people who understand the difference between an LLM and an MBA, that’s probably a bad example because that could be legal versus business designation. Tim Plunkett (10:52)Yeah. Frazer Rice (10:56)Making sure that the people are right. But what are the bullet points in your mind that are things that families should really be thinking about? Tim Plunkett (11:06)The high level, the highest level thing to me is always the family risk. Now, like I said, you have under that bucket, you have reputational risk. You don’t want to be aligned with certain products. If you’re investing in AI, okay, let’s take it from that context first. If you’re investing into AI, you’re investing generally, you’re not, a lot of places you’re not building, right? So you’re buying into things. There’s always, you know, buying into funds or whatever else like that. If you’re making direct investments into companies, that’s again fundamentally about people. You have to align yourself from a reputational perspective with people that you can trust and believe what they’re gonna do. If you’re gonna be sharing data and anyone getting access to your systems, you don’t want your wills, your itinerary, your discussions with a concierge somewhere, any of those things exposed. So what you have to be doing when you’re doing, when you put yourself in position to be co-investing or side by side with somebody, you have to know what their security profiles look like. You have to understand how they’re audited. You have to understand their history. Have they been serial litigants? Who are you dealing with here? And on the data side, you have to understand where the data’s coming from, how it’s been tested, has it been…through several iterations or is it a one time? Is this the first time you’re meeting this data? Is it been anonymized? I mean, there’s a tons of different ways to look at the risk from an investment perspective. But when I think of family office, the first thing I think of is the family itself and the risk around them and protecting them first and then building the business out from there. Frazer Rice (12:56)Let’s talk about the concept of the audit for a second. Whether you have a vendor or you’re tracking an investment or in many ways even tracking your family’s whereabouts. How do you think about that audit piece and who should be, in many ways the family’s not doing it, they’d be hiring people to do it. where does the check and balance come from? Tim Plunkett (13:21)Yeah, so again, if you’re looking at it from an operational perspective inside the family office, executive team, you want to have somebody’s accountable always, that you can point to, that the family can say, you know, that person is responsible for my AI strategy. That person’s answers, know, deputy has my role if something goes wrong, but that person is fundamentally in charge. So you always want to have strong executive leadership in the organization. that you can point to from a family’s perspective. So part of that function will be the audit function of looking at the technology. mean, when you’re talking about vendor contracts and things like that that are under the control of executive leadership, you’re going to have to have clauses in there for data protection for the family. You’re going to want to know about breach notifications and those kinds of audits that you can do. You also are going to have, if you’re very proactive, and you probably should be, running audits and simulations within your organization. Tabletop exercises, penetration testing, trying to find where your weaknesses are. All that will be accountable through one person, ideally. And the other part of it is you want to have risk mitigation tools in there. One could be cyber insurance, one could be other forms of insurance, but also education and testing is underrated. It could become disassociated from their money and trust people to do things with their money. When they have an idea of what they’re actually gambling and what’s happening, whatever, even if they’re very prudent risks that are taking, if they’re not informed about the topics really well, and AI is a hard one because it’s changing so fast, and the world is unfolding so quickly, that training and education programs inside the family can be very, very helpful. Frazer Rice (15:19)When the tools are already pervasive, I see it in my practice, we use AI driven document tools, we use it for other types of things. The tools being used by the staff of the family office and then the family members themselves, both in audit process and maybe even sort of an evaluation process as far as the security protocols, but then ultimately, Getting people to understand the limits of the technology. And to me, that’s an important part of the education. Like you just described, who does that fall under? Is that the chief technology person? How do they wrangle everybody together to make sure that everyone has a good baseline to work from? Relationships Tim Plunkett (16:07)So yeah, again, I think that comes from the people who have the best relationships with interacting with the family are the people who should designate who runs the team. The people that they’re more familiar with. mean, I’d rather get bad news from certain people than others. And so again, that goes back to who do you trust? But once that person is in place, their job is to build out the team. And you do that with an executive level team that starts out the discussion.and then it flows down to AI specific use cases that you’re after. You build teams around the use cases and then below them you would have sort of a shadow layer of professionals who have different skill sets. So you would have your legal, your HR, your communications, your compliance people and the different end user people who are gonna take feedback. Then you have your people who iterate the models and improve them over time there, the ongoing monitoring that happens. And you have this pyramid that goes down like this from top to bottom. When you’re looking at, again, accountability at the top, you want that one person there to be accountable. There’s all sorts of tools that those people can use. You always want to do sort of a pre-adoption exercise so that you can…explain things. Explainability is a big thing everyone talks about in AI obviously. And you can do explainability assessments, know, that’s part of it. Frazer Rice (17:42)Maybe take us through a challenge that a family had where you’re brought in to try to help make sense of a situation where they were getting involved in technology and maybe AI specifically where they went in without the requisite understanding and needed to be sort of brought to a better place. Tim Plunkett (18:01)Sure, I would say I had an example of somebody that came to me, this was in the educational AI context, some family offices like to do things differently than others and have different mandates. And I had two that had mandates to spend money and try and develop AI tools specifically for education. I had an existing relationship with one of them and then someone else came to me and introduced me to another. Putting them together sometimes is a good idea, it’s not always a great idea. And parts of those marriages last and parts of them don’t. And so I had a fairly sophisticated existing client and they are very sophisticated companies and making investments globally. I don’t think that they thought that they were on equal playing field. So there was a personality issue at the beginning. But then we started talking when we started getting into systems and philosophy. You know, there’s personality, there’s philosophy, and then there’s the operations. And we started getting into the practical implications of doing things certain ways. We found that there wasn’t a lot of alignment between the teams so you basically have a situation there where you can’t force an integration. But I haven’t had a lot of situations where I’ve had security risks and family offices. I’ve had him in a lot of other context and and in those situations the best thing that you can do is you know there’s obviously breach requirement notices and things like that statutorily mandated requirements are out there, but putting those in place, turning them on, getting them operational, bringing in forensics teams and things like that, That’s hard. I’ve had other situations where, and this is not technical, this is not AI, but when you bring an AI team or team together under the auspices of investing in AI, you sometimes bring who their vendors are, right? And so we had an accountant who was essentially crooked and we were able to establish that there was some fraud happening. That’s a reputational risk to the one family who had that person in their backyard, right? They’re bringing that person into another transaction. That doesn’t look good. And it makes you one side question the other. So I’ve had those situations. the best thing you can do is rely on the law and rely on your reputation of who you are as an organization because that will buy you credibility even if you have a hard time with another party. If you can look around and say that you’ve never had these problems before and you can look someone in the eye and tell them that this is not familiar to you and you’re being honest, then you can buy a little leeway there. Frazer Rice (20:58)On the investing side, to take it in what’s called a more of a positive direction where we’re not dealing with chaos and loss and things being crippled, how do you sort of think about advising clients in terms of understanding where AI fits in their investment portfolio and less on the investment side of it, but more on the understanding how to evaluate the appropriateness of the investment, maybe.receiving input from a board that might have outside expertise on it and integrating that into a family’s allocation of capital. Tim Plunkett (21:35)I think the concept of an outside board and outside advisors is tremendous. The range of what AI is, again like I said, I’ve dealt with a bunch of family offices that are educationally focused and some others, but that level of expertise, you say education, and then under that there’s so many subparts. If you’re a family that’s interested in drug development, That’s a massive, massive area. And so bringing in that outside expertise is critical in the world of AI. You have legal expertise, substantive expertise on the actual investment itself, and you have security expertise. There’s so many different levels and you can’t have that all in your own house. It’s not possible to do. And with the amount of change that’s happening in AI, as fast as it’s changing, you can’t keep pace internally, I don’t think. Even the most sophisticated entities in the world, the largest banks with huge resources can’t keep up. with what’s happening. I’m a huge fan of having a board or advisory board, sounding board really, for you to talk to, for the family to talk to, to develop whatever it is they’re looking to invest in. Frazer Rice (23:00)Well, and at the board level too, how it integrates with things like HR or risk or insurance and things like that. Oftentimes I’ve seen in a board situation that people sit in those roles that come from that different avenue. so that they reiterate in your point, you not only attack it from a strictly AI technologies perspective, but from a domain expertise perspective that you don’t necessarily have to have on full-time salary in-house. Tim Plunkett (23:28)Yeah, they have to be, they have to,. Everything has to at some point go to somebody who has to make a decision for the family. And, and that’s a board level, you know, there’s an outside board that we’re talking about, but there’s also can be an inside board. Like I was saying, the executive leadership board, and then there has to be board level review of even the most, of some of the most basic things like vendor contracts and things like that. There has to be, you know, the board has to look at the dashboard review. They have to look at a lot of different things. They help you think strategically. And again, like I said earlier, AI is a team sport. if you can bring in the better players, then you bring them in. If your family can afford to do that, that’s what you do. You want to make it as transparent between the family and the project lead as possible. And so the board will have the best information that they can have. And that gives the family the best opportunity to make good choices. Frazer Rice (24:28)As we wind down here, one of the things that’s exciting to me from the AI theme and sort of the technology bent and the advanced use of data, et cetera, is that it’s a way to get the next generations excited about either the investment process or the overall wealth creation of the family entity. And it’s a way to have older generations be able to speak to younger generations, both on their terms from maybe a financial or business side of things to the technology side of things andthe younger set. How do you think about this from a next generation discussion and an overall buy-in slash operating feature of a governance structure for a family long term? Tim Plunkett (25:11)Yeah, I think you have to facilitate intergenerational engagement in that sense. And it has to be something that’s put in. Again, everything goes back to the foundation document, your constitutional document, your AI governance policy. You have to have that in there. I think also when we touched on before sort of the training and education part of this, having that component gives everybody the same information. There can then be discussion between the generations about how do they think about this versus how do you think about this? If you ask somebody right now about TikTok, every kid will tell you it’s awesome, everyone uses it. Everybody who’s over the age of 50 will tell you it’s potentially a national security risk and something else. And so there’s a real breakdown in terms of perception of technology and how it can be leveraged. And data is treated more casually. in younger generations and there’s a lot of information about that that’s available out there. So you have to have some mechanism and that should be built into your documents that requires at least semi-annual, if not quarterly discussions about the technology, how they’re evolving. And I think also at the end of the day, some of this isn’t legal or technical, it’s just basic, which is listen. I think listening to how kids these days. operate and talk about technology. If I listen to my son tell me about how he drafts prompts for ChatGPT, it’s entirely different than I ever have done it or thought of doing it. And it’s intuitive to him and it’s not to me. And I think just listening to that influence in your family is really important. But there is a way beyond just the warm and cuddly notion of listening. There is a legal and mechanical way to make it happen and that’s through your AI governance documents. Frazer Rice (27:02)Really good stuff. Tim, how do people find you and your firm? Tim Plunkett (27:05)I’m Tim at Plunkett PLLC. I’m PlunkettPLLC.com. On Twitter, I’m Tim the AI Lawyer. I’m on LinkedIn. I’ve got a ton of content that comes out there, which is really entry-level posts for people to understand AI, taking it from a very basic level. anybody can call me anytime when we’re around. We’re here to help, and we’re honored to be here. And so thank you. Frazer Rice (27:33)Tim, great having you on. Thanks for coming. Tim Plunkett (27:35)Thank you. Outline Describe practice- “Bringing institutional rigor to an “informal” space” Will discuss the first steps in bringing a plan to fruition.  Discuss the AI Governance Policy as the foundation for “institutional rigor.” Establishes the context for all discussions as this is the bedrock.  Guardrails in operations Guardrails in Governance – making FO’s more institutional Will expand on Policy and then how to ID framework/guardrails; where you can select from, kinds of models that fit from globally available version & looking at the context of the FO platform. Focus on foundation building with core principles.  FAMILY OFFICE AI in practice – how do you define it? Operational Use Cases 1. Document Intelligence & Automation 2. Expense Tracking & Anomaly Detection 3. Family Reporting Dashboards 4. Deal Sourcing & Screening 5. Portfolio Risk Management 6. Alternative Data for Public Markets Governance & Strategic Planning Use Cases 7. Succession Planning Analysis 8. Philanthropic Impact Analysis Back-Office Integration AI-Enhanced RPA (Robotic Process Automation Is the genie already out of the bottle? Data Privacy and information security Security of assets and family Unique Data Privacy Challenges for Family Office AI 1. Blurred Lines Between Personal and Institutional Data 2. High-Net-Worth Target Risk 3. Decentralized Technology Footprint 4. Third-Party & Vendor Risk 5. Global Footprint & Jurisdictional Complexity 6. Next-Gen Privacy Expectations 7. Lack of Formal Data Governance Solutions Data Mapping & Classification, Access Controls & Encryption, Zero Trust Architecture, Cyber Insurance, Vendor Contracts, Regular Audits & Simulations, Education & Training Larger discussion of data security, legal issues, corporate issues Lack of Transparency in Tools (are they working correctly/behaving ethically?) 1. Conduct Pre-Adoption AI Risk & Explainability Assessments 2. Discuss a “Human in the Loop” 3. Implement AI Governance Policies  4. Favor Explainable or Transparent AI Models  5. Regular Review and Audit of AI Tools  6. Align AI Use with Family Values How do you manage FAMILY OFFICE AI vendors? Natural skepticism meets needs discussion; differentiators; examples of risk presented:  Data Security Risk Operational Dependency & Continuity Risk—VENDOR LOCK Compliance & Regulatory Risk Confidentiality & Reputational Risk Misalignment of Interests AI/Automation Risk Onboarding/Offboarding & Transition Risk If I were running a family office, here’s a clear breakdown of best practices and policies I’d adopt when managing vendors: Establish a Formal Vendor Management Policy Conduct Thorough Due Diligence Customize Contracts and Include Key Clauses Assess & Monitor Cybersecurity and Privacy Controls Require Annual Vendor Reviews Integrate AI Risk into Vendor Management Build Relationships, Not Just Transactions Optional: Tools & Templates to Use Vendor Due Diligence Checklist Data Protection Addendum (DPA) Vendor Scorecard (to track cost, quality, trust, and responsiveness) Preferred Vendor List with Tiering AI use in financial decision-making AI Use in Financial Decision-Making How it can help: Guardrails I’d Set: AI use in strategic and family “qualitative” decision-making AI Use in Strategic and Family “Qualitative” Decision-Making Potential Use Cases: Ethical/Privacy Concerns: Governance Actions: FAMILY OFFICE AI as an investment thesis- how do you incorporate due diligence in the investment decision-making process What I’d Look For: Due Diligence Process: Exit Scenarios: Portfolio Strategy: Non financial advice  How do you staff the function? Should there be a Chief Information and Technology Officer Should there be an outside board member to think strategically? Executive Sponsors Biz Leadership Core AI & Data leadership (AI, Data, Core AI leaders) Execution Team (Finance, Risk, Legal, Security, HR, Comms, enterprise Portfolio Management) Working group members on implementation.  1. How Do You Staff the Family Office AI Function? Responsibilities: Should There Be an Outside Board Member to Think Strategically? My View: Yes, especially for larger or institutional-style family offices. Why It’s Valuable: Ideal Outside Board Member: Hybrid Option: Advisory Board or Innovation Council How do you think about this with family and next generation discussions? 1. Center the Conversation on Legacy, Not Just Capital “AI, governance, and innovation are tools—but the goal is family continuity, not just asset growth.” How to Frame It:  Include the Next Generation as Strategic Stakeholders Tactics I’d Use: Build Governance That Evolves with Generational Input Use AI & Digital Tools to Democratize Access and Engagement Treat AI as a Cross-Generational Learning Opportunity Sample Messaging to Bridge the Generations: Where to Find Tim PLUNKETT PLLC Human Resources AI https://frazerrice.com/ai-and-human-resources/ https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

BARRY RITHOLTZ’s new book “How Not to Invest” has received a warm reception. We talk about investing mistakes, the Trump Tariffs, and curating a good media diet. https://youtu.be/pS4f45v2iRk https://www.amazon.com/dp/1804091197/ “How Not To Invest” Transcript Frazer Rice (00:03)Welcome aboard, Barry. Barry (00:04)Well, thanks so much for having me, Frasier. Frazer Rice (00:06)Well, we are recording in the midst of chaos and disorder. We’re basically in day three, trading day three of the tariffs and trying to understand all of that. But back at the matter of hand, your new book, I read it really good. I thought it did a really good job of sort of colloquially putting some process and structure around not making bad investing decisions. Tell me a little bit about the impetus for the book. Barry (00:35)Sure, so the last book, Bailout Nation, was 15 years ago when I’ve had a lot of friends and family say, when’s the next book coming? And, you know, I had a little, like, hey, that was kind of a slog, stuff blowing up and forcing me to rewrite entire sections of the book every time some new company went belly up. And I came home from Christmas break from vacation. You have that dead zone a few days before you’re back in the office January 2nd. And I just started thumbing through some old quarterly calls for clients and research notes and market commentaries. You know, I had moved the blog from GeoCities in the nineties to Typepad in the two thousands to WordPress in the 2010s. And so I was looking at some of these old things and like, God, I never revisited this. This is such a great piece of research. I love this academic take on where alpha or even beta comes from. And I’m just kind of mulling it over. I start writing down chapter ideas on three by five cards like these. And I end up using this giant bulletin board on my wall. It just basically I start putting stuff up and I start rearranging them. And pretty soon it becomes obvious. Hey, these ideas, a lot of them are don’ts. Don’t do this. Don’t do that. Avoid this. Try not to make this bad mistake. And ultimately, I kind of came to the conclusion that, know, we’ve part of the reason I held off writing a book is there have been tens of thousands of investing books telling people what to do. And we’re all pretty mediocre investors still. Maybe it might be useful if we learned what not to do and thus “how not to invest” was born. Frazer Rice (02:35)We found kind of an interesting crucible to test all of this with sort of Trump’s tariff initiatives and a bunch of chaos on that front. As you think about what we’re living in right now with uncertainty, whether manufactured or not, what are some of the top things that you think about that you tell people, your clients and otherwise? to keep in mind as we sort of weather this storm and try to learn a little bit about what the future is going to look like. Barry (03:06)Right. I had no idea what what the sequel would be named. Maybe it could be how not to run an economy or what we’ll play with that. But so so what’s happening these days are kind of fascinating because the first third of the book I spent a lot of time talking about how little we really know about about what’s happening right now. And we learn even less about the future. And so our Frazer Rice (03:12)Ha Barry (03:34)A hot take on these things is maybe we shouldn’t build portfolios based on having to predict where the economy is going to be, what the hot sector is going to be, where the hot geography is going to be, what the best companies are. Maybe we need to be a little more robust and capable of withstanding this. And the tariffs are a perfect example of how little we know. Look, the obvious examples of “How Not to Invest” Nobody had heading into 2020 in their year had forecast global pandemic that shuts the world’s economy. And by the way, stocks go straight up. They just after a 34 percent crash, they go straight up from there. Nobody had that. Nobody had Russia invading it. Ukraine, Israel Hamas war, 500 basis points of Fed hiking, double digit losses in stocks and bonds in the same year. So when you look at all the annual predictions, You would think we would be a little more humble, have a little more humility about this. And the ironic thing about what’s going on, I keep pointing to the television. The ironic thing about what’s going on is like this should have been completely foreseeable. It’s a failure of our own imaginations to imagine anyone would do this. Trump, for his whole adult career, has been enamored and enthusiastic about tariffs. He calls himself Tariff Man. He ran on tariffs and he tried like half a dozen different rationales. We’ll protect domestic industry, we’ll protect our borders, we’ll reduce bad things coming into the country, we’ll get other countries to lower their tariffs and cover more of their own defense costs. Like he said all of this and collectively, and I include myself in this, nobody had the slightest idea that, and he will Completely upend the world’s economic order. He will tear the band-aids off of long-standing allies and relationships and supply chains and all these things in pursuit of a goal that I don’t think a whole lot of people think makes a lot of sense and the market obviously Was wholly unprepared what we see going on now is simply the market saying hey The price today is our expectation of profits and revenues a year forward times some multiple, which typically reflects collective psychology. And we thought the revenues and profits are going to be much higher. This new regime is going to make everything more expensive. It’s going to reduce consumer spending. They’ll have less discretionary cash, less capex spending, less hiring. let’s ratchet our GDP expectations down, you know, 100, 200 basis points. And so it just goes to show you nobody knows what’s coming. Even after a presidential candidate says this is what I’m going to do. We still can’t wrap our heads around. Frazer Rice (06:41)One of the things I think too is, you know, I don’t really ascribe genius to Trump on anything, certainly not economically. I don’t even put it to him politically, but he is in the same sentence as P.T. Barnum as far as understanding ratings and media. And I… Barry (06:55)No, he’s a genius. I will tell you, he in his own way has an incredible feel for what excites the public. As did P.T. Barnum. He knows exactly how to get people enthusiastic. He knows how to craft a message. Just look at his performance in all the debates. He has this incredibly intuitive sense of here’s how to catch people’s attention, keep their attention, and get them behind a story. Now, whether that story is rational or makes sense or, you know, forget even heterodoxy, whether it can be done, that’s another conversation. But credit where credit is due, he’s a communication genius. And you mentioned P.T. Barnum, another showman of the highest order. Trump is a brilliant Showman, we can have another discussion about how effective he is as a steward of the economy and every time he’s won an election, he’s won against a weak unpopular candidate, both times a woman, he’s never been able to beat a man, he’s able to tap into a certain angst and a certain anger that exists at a certain level of the country and it’s kind of fascinating. mean hold the disaster that is this past week aside. There is something fascinating about watching a master at work even if it’s towards ends that seem to really be damaging the US and global economy. Frazer Rice (08:46)Yeah, I mean the other part too is I mean he’s very good at declaring victory or jettisoning things that aren’t working very quickly and moving on and sometimes leaving a path of destruction in his wake that everyone else has to fix. Barry (09:01)No doubt about that and you know when you look at when you look at what’s been going on here They keep coming out like my best-case scenario here is no no this is a negotiating tactic There’ll be a whole bunch of side deals You know we’ll cut a deal with Israel because there’s a special relationship there and then something will happen with the UK and then Korea and Japan and before you know it like When we look at what’s going on now No one really believes that we expect the trade deficit with Vietnam to be closed. I mean, if everybody in Vietnam spent every last penny of their salaries buying U.S. goods, it still wouldn’t close the trade deficit. Unless you’re going to get a Ford F-150 pickup truck, unless you’re get three of them purchased by every Vietnamese, that trade deficit’s never going to be closed. So… It doesn’t make any sense. What was said on its face. We’re tariffing penguins in Antarctica. Like part of me, I am I am both bemused and comforted by that. Because it allows me to hold on to my wishful thinking that dear Lord, please let this be a negotiating tactic. We’re really not tariffing penguins. Are we? Frazer Rice (10:26)No, mean, part of it to me is it feels like that economically speaking, we’re firing Bill Walsh and hiring Woody Hayes to install the wishbone and then drafting a kicker in the first round and a punter in the second round. And I look at it and go, this wasn’t how I was brought up. And I’m not quite sure I ascribe that notion. How do you think about this in terms of the things you talk about in your book in terms of I love the William Golding quote, nobody knows nothing and I subscribe to that too. I I feel like a lot of people are sort of opining on things that they are six or seven levels of abstraction away from and therefore, you know, it’s useless opinion. And then sort of taking data that we don’t understand and then getting all worried about things that they don’t really have a lot of control over. If you were just…sort of take someone right off the deck and say, you know, here’s some things to think about as you’re analyzing our current situation and “How Not to Invest.” What are you thinking about? Barry (11:28)So first and foremost, I’m thinking about what’s your time horizon? How long are you going to be investing? And hey, you my heart goes out to you if you’re retiring in 25 or 26, you you have a sequence of returns issue, you have a whole bunch of other problems. But if you just had a newborn and you’re saving money in a 529 for their college in 14, 16, 18 years, if you’re saving for retirement 10, 20, 30 years, You have to be able to think long term and look to the other side of this. Right? So that’s one thing. The other thing is kind of watching, you know, humans were soft and chewy and delicious. We don’t have fangs or claws or armor. And so we had to evolve as a cooperative species. We’re clever primates and working in a group we prevent getting picked off by leopards constantly. And so that cooperation has led to not only group dynamics, that’s very tribal, hey, our tribe has to be protect ourselves against that tribe. But you see that passed down, you know, a million years later, in partisan politics, or sports teams who you root for. And it’s kind of interesting watching the tribalism sort of unwind a little bit. I keep I keep hearing some friends on the right. people think they know my politics. They really don’t. I’m pretty fiscally conservative, socially progressive, and a lot of people completely misread who I am and what I say because I just call it out as I see it. And that often angers people. But I’m shocked at the number of people who have been saying to me, hey, this this isn’t what I voted for. I take a little perverse pleasure in telling that tribe, no, no, this is exactly what you voted for. Let’s stop kidding ourselves. We make decisions. They have ramifications. You built a lot of wishful thinking into your vote. By the way, this goes to the left and the right. It’s people frequently are not honest with themselves and to bring it back to investing. I love having conversations with people. Hey, How do you think your portfolio is doing? What are your alternatives doing relative to the benchmark? How are you doing relative to your goals? How much risk have you assumed in this portfolio? And very often people really don’t know what they own. They don’t understand their risk profile. They don’t understand how well they’ve done. It’s kind of shocking, but wishful thinking and a little bit of self delusion goes a long way. And again, it doesn’t matter if you’re Republican or Democrat, if you’re a value investor or growth investor. We all kind of, you know, fool ourselves into believing, hey, we’re all better looking, have more hair, way less, are more youthful in our mind’s eye than we are in reality. And the same bit of self-delusion applies to our portfolios and our major life decisions. And so, you know, part of the goal with the book was just getting people to Hey, be honest with yourself, make sure you understand you know what you’re doing and why. And by the way, here are all the little mistakes that I’ve made along the way and it looks like you’re making them as well. Maybe if we can avoid those mistakes, we’d all be better off. Frazer Rice (15:06)As far as self-delusion goes, it reminds me of Garrison Killier and Lake Wobegon where all the kids are above average and everyone kind of thinks that about themselves and about the people they listen to or vote with. And then it gets into people having voice to have their opinion maybe outstretched the reach it should have. And you have people who think that they’re experts on viruses and then tariff policy and then the Monroe Doctrine and force majeure clauses and things like that. Barry (15:11)Ha Frazer Rice (15:36)stitching back to getting under control of your delusions, how do you curate your media diet so that you are taking in high quality information and using your valuable resources, in this case, some time and attention in a way that pulls you forward and helps you to think about things in a good way? Barry (15:59)Sure. A lot of stuff to unpack. Let’s start with the media diet. And if we want to get into epistemic trespass, we can address that a little later also. There’s an old joke, you know, when you’re young, you should read everything. And when you’re older, you should filter out everything. And there’s some basis for that. I started on a trading desk and I quickly figured out that sometimes what I read in the morning would affect how I traded. And so I would Instead of reading this, I would just create a list and that was my reading on the way home at night. So I wanted to go in fresh and thoughtful without anybody else’s voice in my head because they don’t know my risk profile. They don’t know my goals. Why should I have some random journalist author fund manager? They shouldn’t be living rent free in my training brain. And so I started curating this list every day of what I wanted to read. And I kind of found a couple of things. First, there were some people who were consistently thoughtful, that they had a process. It wasn’t just a spasmodic reaction to whatever the news of the moment was. That there was a framework for analyzing the world and that they were more right than wrong. Nobody is going to bet a thousand, but when they were wrong, they owned it and explained what they learned from the process. And so that kind of became my own filter. And I just started putting together sort of an all-star team of my favorite writers and people on TV and radio. They all have lived through a few cycles. They all have a defendable process. It’s not just dumb chance or luck. They all have a fairly rigorous analytical approach to thinking about markets and economics and risk capital and I tell everybody you should create your own all-star team. By the way, this doesn’t mean get three million dollars and hire 20 of the smartest people. Their stuff is available for either free or relatively inexpensively. I list a dozen people in the book that are my favorites. That list could have been 20, 40, 80 people, but you kind of know them when you see them. To paraphrase Powell’s quote on pornography. know it when I see it. know, Jonathan Miller and Bill McBride when it comes to real estate, one residential, one thinking about it nationally. Sam Rowe has a great concept of broad market structure. Jason Zweig and Morgan Housel on psychology. The list just goes on and on and on. And by finding people I know and trust, they have a track record. I know I could take what they write and read it and not feel like this is going to make me crazy. This is going to get me emotionally enthusiastic. This is going to manufacture outrage. A big part of the problem with social media these days, or at least algorithmic social media. I don’t find the same problem on blue sky that I see on tik tok, Twitter, Facebook, Instagram is, know, they they’ve run these giant a b tests, they’ve iterated the process of how do we get people? How do keep people engaged and clicking on links and looking at ads? Well, it turns out, piss them off, make them crazy manufacturer outrage, get them like, get that fight or flight response engaged. And that’s how you end up sending your profits higher. So it’s also what makes social media so toxic. And it’s why a handful of countries have banned social media for children under 18. You know, we’re seeing a giant uptick in teenage suicides linked directly to social media. So it’s bad for your family. It’s bad for your portfolio. It’s bad for your mental health. Other than that, you gotta love it. It’s just the greatest thing ever. Frazer Rice (20:22)Let’s take for a moment, you had a great chapter in “How Not to Invest” talking about a billionaire or close to billionaire family making the same mistakes that maybe the retail investor makes in terms of letting their analysis sort of outstrip their expertise and making a variety of different bad investments. What do you see in that world? What is it that the wealthy do that is also a mistake that other investors do? Barry (20:50)So let’s start out by saying on a day like today or this week where like year to date markets are now down almost 20 percent. In reality it doesn’t affect their standard of living and it doesn’t affect the quality of life. Maybe this is a little uncomfortable but I used to ask a joke of some of our wealthy clients what’s the difference between one billion dollars and two billion dollars? And the answer is really isn’t any difference. It’s not gonna you could do whatever the hell you want Go wherever you want fly private, but maybe you can only buy 20 monies instead of 10 monies If you have a billion dollar, but other than that like really there’s no difference So first we have to really be careful when we compare ourselves to billionaires their choices their risk tolerance their goals their profile very different than ours and I I really despise all those here’s Here’s what this billionaire does before lunch. Right. Well, good for them. know, for a middle class family with a half a million to a million dollars in savings, down 20 % is disastrous for whatever they’re saving for now. The market will eventually come back. But hey, if you’re retiring now or if your kid starts college in September, Jesus, this sucks. You’re 529 that you’ve been saving 15 years. Suddenly it’s a fifth lower. Frazer Rice (21:47)All right. Barry (22:13)You better hope they’re not going to a five-year school. It’s only a four-year school because you just lost the fifth year of funding. So that’s really problematic. But where the parallels are, so that’s the differences, where the parallels are is people are people. know, every now and then I have a discussion with folks about foundations and institutions and endowments. Hey, bad news, they’re run by human beings. And they’re subject to the exact same foibles and cognitive errors that we all make. There’s just no way around it. So I use the not well endowed joke about Harvard. The billionaire trifecta from hell was a presentation I used to give that was so much fun. The audience reaction was so much fun, I had to turn it into a chapter. And so many years ago I gave a presentation to I think it was tiger 21 and I challenged the room with everybody supposedly in that worth of over I don’t remember if it was 20 million or whatever it was way back then and Hey, you don’t know what you’re holding. You don’t know what your performance is You don’t know how that performance is relative to a benchmark ton of pushback And so I challenged everybody right down right now. What are your five biggest holdings? What? How have you done year to date? Wht about last year? How did each of those funds perform relative to their benchmark? Write it down right now. And, you know, a month later, I’m getting emails from people. my God, I can’t believe you were right. was wrong. Fast forward to this presentation. Story about this very successful family. The dad came here just before World War Two started and ends up being wildly successful. uh, the belphers they they belfer petroleum eventually they get bought and then Rebought and you know the company he continues to run each time every time the company gets bought He becomes the president of new company until houston oil and gas buys him He eventually retires his son joins the board of houston oil and gas better known as enron And when enron starts to wobble 15 years later, um, he just rides it down two billion dollars down to nothing Hey, you know, managing our money ourselves is kind of a problem. Let me find somebody who can help us. So they find a guy, long story short, Bernie Madoff. By the way, there’s a semi happy ending to this. After Bernie Madoff blows up, you know, maybe this whole stock thing is not for us. And so they rotate into this newfangled crypto when they give the money to FTX and Sam Brankman Fried. So I call that the trifecta from hell. Enron, Bernie Madoff, FTX. The good news is 96 % of the Madoff monies were recovered. That’s the initial investment you put in, not the fake returns Madoff claimed. And with FTX, it was, I think it’s like 115 or 120 % returns. They just keep finding money. There was combing of funds, totally unacceptable, and money all over the place they just weren’t keeping track of. And a couple of AI investments that worked out well. So they recovered more than the starting point with that. But the takeaway is if you’re to do it yourself, you have to know what the hell you’re doing. You have to be thoughtful about it. You can’t be super concentrated in one stock. We see that time and again throughout the books. Second, if you’re to trust somebody else, you really have to do your due diligence and find a person that, you know, there has to be ordered returns. The process has to make sense. A number of people looked at the madoff split strike option underwriting and it turns out there aren’t enough stock options in the world to cover what he was doing and it didn’t take a whole lot of I know a number of people who in real time the more famous ones were Jim Simons looked at it and said something smells wrong here and who wrote the how to beat the dealer and how to beat the market Frazer Rice (26:31)Charles Ellis? Barry (26:32)L not Charles Ellis. his name will pop into my head. He turned out to have, figured out, it was a problem. How, beat the dealer, the dealer. I’ll tell you exactly who that was. of course it was Ed Thorpe. How do I not remember Ed Thorpe’s name? so anyway, you gotta do your homework. And third, if you’re going to roll into some new products, be aware that most new products don’t work out. Even the products that do work out the vast majority of them are not great you know the I quote Ted Sturgeon in the book who a science fiction writer from the 40s 50s 60s. He was always defending the genre against people said why is so much science fiction junk and his answer was 90 % of everything is crap and that’s true for hedge funds and private equity and mutual funds and ETFs and specs and podcasts. And, you know, if you could get into the top decile, great, knock yourself out. But if you’re this newfangled thing comes out, you’re taking a risk on it, especially. And this is what’s so ironic. If you’re a billionaire, you’ve already won. You get to stop playing the game. This shit shouldn’t matter to you down, you know, 5%, 3 days in a row should be irrelevant because the whole purpose of investing towards a goal is that here’s my objective and here’s the path I’m going to take to get to that objective and what we have learned about human nature is if you can reach your goal with less stress, less volatility, less drawdown, hey, you’ll enjoy the ride more. Some of us, you know, and I credit this to my trading desk days, days like this, you know, I’m looking for down 20 % to deploy more capital. I’m excited about that. Most people want to throw up in the nearest waste paper basket because it’s nauseating. So for, if you aren’t, you know, wired in a weird way and the opportunity that these dislocations create don’t get you excited. Well then create a portfolio that isn’t going to be this volatile. That’s not going to be up and down. It’s not going to be single stock based as we saw with that example with Enron. Just figure out what your goals are. I’m always surprised how many really wealthy people and I don’t mean middle class wealthy upper middle class you know a house and a vacation property and a couple million dollars in the bank. I mean 50, 100, $500 million. Hey, you’ve already won. Ring the bell, throttle back and enjoy your life. Even if you want to keep working. Warren Buffett, know, Charlie Munger worked up until his dying day. If you want to keep working, great. But why have so much stress in your life if this sort of stuff causes you stress? Frazer Rice (29:47)Great stuff. Barry, how do we find the book? Barry (29:49)So how not to invest book dot com if you want to learn more about it, but it’s out everywhere. Barnes and Noble, Amazon Books a million wherever you find your favorite books. It’s there in both hardcover, audible and e-book reader. It’s it’s there for the taking. Have have have fun at it. At the end of the book, I include an email address where I tell people, hey, if I left a lot of stuff unclear or ambiguous, Let me know about it and I’ll see if I can resolve that either in an email or perhaps in the next edition. Frazer Rice (30:26)stuff. Thanks Barry. Barry (30:28)Thank you, Fraser. Barry’s Comments on the Book The challenge in writing “How NOT to Invest” was organizing a large number of ideas, many of which were only loosely connected, into something coherent, understandable, and, most importantly, readable. It took a while of playing around with the concepts, but eventually, I hit on a structure that I found enormously useful: I organized our biggest impediments to investing success into three broad categories: “Bad Ideas,” “Bad Numbers,” and “Bad Behavior.” That insight greatly simplified my task of making the book both fun to read and helpful for anyone interested in investing. Here is a broad overview of each of the 10 main sections, which can help you quickly grasp the key ideas in the book. Bad Ideas: 1. Poor Advice: Why is there so much bad advice? The short answer is that we give too much credit to gurus who self-confidently predict the future despite overwhelming evidence that they can’t. We believe successful people in one sphere can easily transfer their skills to another – most of the time, they can’t. This is as true for professionals as it is for amateurs; it’s also true in music, film, sports, television, and economic and market forecasting. 2. Media Madness: Do we really need 24/7 financial advice for our investments we won’t draw on for decades? Why are we constantly prodded to take action now! when the best course for our long-term financial health is to do nothing? What does the endless stream of news, social media, TikToks, Tweets, magazines, and television do to our ability to make good decisions? How can we re-engineer our media consumption to make it more useful to our needs? 3. Sophistry: The Study of Bad Ideas: Investing is really the study of human decision-making. It is about the art of using imperfect information to make probabilistic assessments about an inherently unknowable future. This practice requires humility and the admission of how little we know about today and essentially nothing about tomorrow. Investing is simple but hard, and therein lies our challenge. Bad Numbers: 4. Economic Innumeracy: Some individuals experience math anxiety, but it only takes a bit of insight to navigate the many ways numbers can mislead us. It boils down to context. We are too often swayed by recent events. We overlook what is invisible yet significant. Instinctively, we struggle to grasp compounding. We evolved in an arithmetic world, so we are unprepared for the exponential math of finance. 5. Market Mayhem: As investors, we often rely on rules of thumb that fail us. We don’t fully understand the importance of long-term societal trends. We view valuation as a snapshot in time instead of recognizing how it evolves over a cycle, driven primarily by changes in investor psychology. Markets possess a duality of rationality and emotion, which can be perplexing; however, once we understand this, volatility and drawdowns become easier to accept. 6. Stock Shocks: Academic research and data overwhelmingly reveal that stock selection and market timing do not work. The vast majority of market gains come from ~1% of all stocks. It’s extremely difficult to identify these stocks in advance and even harder to avoid the other 99% of stocks. Our best strategy is to invest in all of them through a broad index. Some terrible trades are illustrative of this truth. Bad Behavior: 7. Avoidable Mistakes: Everyone makes investing mistakes, and the wealthy and ultra-wealthy make even bigger ones. We don’t understand the relationship between risk and reward; we fail to see the benefits of diversification. Our unforced errors haunt our returns. 8. Emotional Decision-Making: We make spontaneous decisions for reasons unrelated to our portfolios. We mix politics with investing. Emotionally, we focus on outliers while ignoring the mundane. We exist in a happy little bubble of self-delusion, which is only popped in times of panic. 9. Cognitive Deficits: You’re human – unfortunately, that hurts your portfolio. Our brains evolved to keep us alive on the savannah, not to make risk/reward decisions in the capital markets. We are not particularly good at metacognition—the self-evaluation of our own skills. Second, we can be misled by individuals whose skills in one area do not transfer to another. Third, we prefer narratives over data. When facts contradict our beliefs, we tend to ignore those facts and reinforce our ideology. Our brains simply weren’t designed for this. Good Advice: 10. This is the best advice I can offer: A. Avoid mistakes (fewer unforced errors, be less stupid). B. Recognize your advantages (and take advantage of them). C. Create a financial plan (then stick to it). If you need help, find someone who is a fiduciary to work with. D. Index (mostly). Own a broad set of low-cost equity indices for the best long-term results. E. Own bonds for income and to offset stock volatility. Primarily Treasuries, investment-grade corporates, munis, and TIPs. F. Be tax-aware. Consider direct indexing to reduce capital gains and reduce concentrated positions. G. Use a regret minimization strategy when sitting on outsized single position gains. H. Be skeptical of all but the best alts (VC/PE/HF/PC). If you have access to the top decile, take advantage of it. Otherwise, exercise caution. I. Spend your money intelligently: Buy time, experiences, and joy. Ignore the scolds. J. Fail better. Understand what is and is NOT in your control. K. Get rich: Here are the classic strategies to get rich in the markets, including how difficult each is and their likelihood of success. *** I was just discussing the idea with Morgan Housel and Craig Pierce — “Is this anything?” — and now it is the day it arrives! (Hardcover and ebook are published today; Audible audio version is out tomorrow). How did that happen so quickly…? You can order it in your favorite formats in the US, UK, or around the world. If you want to learn more before putting down your hard-earned cash, check this wide array of discussions, podcasts, reviews, and mentions. This book was a joy to put together, and I have been delighted at the response it has received! Please let me know what you think of it at HNTI at Ritholtz Wealth dotcom. Barry’s Masters in Business Podcast on Bloomberg Barry’s Colleague, Nick Maggiuli https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

As the United States acclimates to the “flood the zone” governing style, reasoned discourse around civics has crumbled. https://youtu.be/ngx0GxJjmDM There are many causes. Polarizing media, bombastic claims, and systematized gas-lighting on both sides have created one of the most toxic political environments since the Vietnam War. However, the absence of civics and good citizenship concepts have laid the groundwork for the hysterics of today. LINDSEY CORMACK has a way forward. She is the author of the book “How to Raise a Citizen “ https://www.amazon.com/How-Raise-Citizen-Why-Its-ebook/dp/B0DBWYTXJ4/ Outline: Why are Civics Important? Recent stats on the absence of civics Understanding structures Understanding the “why” of structures and civics Knowing what the Constitution says Knowing that the Constitution evolves too Understanding federalism Government funding mechanisms Communication- how to broach inflamed subjects How to raise the next generation What makes a good citizen?  Going beyond jury duty and voting Civics and Active participation Intersection with wealthy multi-generational families Joint decision-maling Believing in something greater than self Guardrails of ideals melded with open-mindedness and curiosity Right holder vs Duty bearer (Rights come with obligations) Justice vs compliance  Control vs grace Right and wrong in civics Contacting Lindsey Links: www.howtoraiseacitizen.com IG: @howtoraiseacitizen Lindsay discussing civics on Errol Louis’ YOU DECIDE Podcast The Intersection of Civics, Money and Presidents Rights and Obligations with David Haass (Civics) Background LINDSEY is an Associate Professor of Political Science at Stevens Institute of Technology. She is the former Director of the Diplomacy Lab. She is the secretary of community board 8 in Manhattan and the co-chair of the Street Life Committee. Lindsey is the creator of DCInbox, a comprehensive digital archive of Congress-to-constituent e-newsletters.  Finally, she is also the author of Congress and U.S. Veterans: From the GI Bill to the VA Crisis. Frazer’s interest in citizenship and civics: You may be wondering why a show about wealth management (and beyond) would be interested in citizenship and civics.   In a nutshell, I get asked three times a day what can be done to raise responsible kids.  Because families (and the answers to those questions) are different. The answers should come from within, I ask what they (the parents or grandparents what think it takes to be a “good citizen.”  The answer to that question can then lead into the discussions I need to have about stewardship and a variety of other concepts. Additionally, good civics is good business. Businesses ignore the politics around them at their own peril. Board dynamics are also the intersection of civics, joint decision-making and constituent accountability for businesses. Executives have to be good at this. The values that make people successful are also the ones that people want to pass down to their kids Personally, politics and civics are ingrained in me.  I majored inhHistory and political science major in college. I worked in many NYS campaigns, the NYS Department of Economic Development, and ran the Republican Party in Bedford, NY for a year. More recently, I was on the board of my co-op for 7 years and president of the NYC Estate Planning Council. Civics and participation are a big part of my worldview. Transcript Frazer Rice (00:32.447) As we get acclimated to the new flood the zone component of politics, reason discourse has crumbled. And I think absence of civics in public life is the cause. Lindsay Cormack has a way forward and she’s the author of How to Raise a Citizen. Welcome aboard, Lindsay. Lindsey Cormack (00:46.978) Thank you so much for having me. I’m excited to talk with you today. Frazer Rice (00:50.025) This will be a lot of fun. It harkens back to my background before wealth management and lawyering and all that stuff. Tell us a little bit about what you do and the impetus for the book. Lindsey Cormack (01:02.574): Background Sure, so for the last 10 years, I’ve been a professor at Stevens Institute of Technology. This is primarily in an engineering school in Hoboken, New Jersey. It is one of the reasons that I ended up writing this book. I have some of the brightest students that I’ve ever been around. They have really high test scores. They know how to do school. When I teach them intro to American government, I realize most of them have been failed by our school systems. They do not understand the landscape of the government. They don’t understand their own routes of power. They’re not practiced and having hard conversations. I’ve got wonderful students who are going to go on to successful careers in everything. We should make sure that they have this positive look at government and this better understanding than they’re getting. And it’s true that it’s not just happening in New Jersey. It’s kind of everywhere. Frazer Rice (01:47.737) What does the absence of civics look like in the education system? I seem to recall a stat that you put forward that it’s almost like less than 1%. It’s actually focused on in a curriculum in public schools. Lindsey Cormack (02:00.652) on Civics Yeah, so it’s really hard to say here’s how civics instruction happens. Every state has its own approach. Within every state, the independent schools have different approaches than the public schools. The charter schools or the mini schools have different approaches. The modal form of delivery across the United States is usually in your seventh or eighth grade of school. At that grade, you have some social studies class. That’s where students are going to learn a little bit about the founding. They’ll learn about some like westward expansion. They’re taught a history lesson about like how we got to where we are. The actual lessons that they hear vary. But that’s like the basics. We usually wait until the second semester of 12th grade to give students a class called government. The amount of instruction time that we’ve had on civics and government has only gone down from the 1940s. It is the subject that has the least amount of focus and time allocated to it. And it also has the lowest amount of federal dollars spent on it. For every $50 that gets spent on STEM, the science, technology, engineering, math disciplines, only five cents go to civics. We don’t give it enough attention in schools and we haven’t been doing that for a very long time. Frazer Rice (03:07.564) I mean, I’m never going to be one to say take money away from STEM. At the same time, to not have that background is crazy. With the polarization of information that’s out there, the ability to deal with information is vital. The news that you get, the values you have and the understanding of our structures are vital. How do you think about that in terms of structuring your curriculum? Lindsey Cormack (03:34.734) So for me, in my intro to American government class, it moves very, very slowly. Like we’re coming up on midterms. We’ve been in school for about eight weeks and we still are not done with the Constitution. We’re still in the amendments. That’s because I know that if our students know the rules of the game, they can figure out everything else with a clearer brain. And so we go really line by line figuring out what did this mean? What were they trying to say? What are they not saying? I think that’s animportant starting piece that we don’t have in most K through 12 educational systems. It doesn’t surprise me that we don’t have this. The end result is for most kids in high school, it’s a score on an SAT or an ACT. Neither one of those exams has any components of social studies. And if it’s not tested, it’s not taught. So I understand why it’s not in the curriculum, because we don’t think we need to evaluate students on this. Frazer Rice (04:25.531) You dive into the Constitution, which is a great underpinning of how the United States works. I’m sure you go into the history of it and where many of the concepts and values came from. What else surrounds what you’re teaching on that front? Lindsey Cormack (04:41.336): Learning to Communicate Usually I start with:, “what have they heard so far?” I like to start any conversation that might be controversial with this. It’s helpful with students who have difference of opinions. I just like to set the table and say like, well, what have you heard? Here’s something that I heard a few years ago that really stuck. The constitution doesn’t say anything about slavery. And I was like, that is such an interesting take. Let’s go read it with a keen eye for that. Like if you just do a control F and try to find slavery, you’re right. It doesn’t say slavery. There’s three to four oblique references to the practice that are in there that takes a little bit more observation. You just have to have a keener eye to it. And that’s something where I like to go with like, what are they starting with? Then how can we get to something that lets them appreciate something in a bigger? Or fuller or more robust manner? Frazer Rice (05:24.169) The history of the Constitution is important too, For example, you can get things like three-fifths voting for slavery, There may be previous incarnations of slavery, but it’s been changed to reflect different values and cultural norms. Lindsey Cormack (05:40.962): The Evolving Constitution Yeah, that’s right. That’s something that I think our schools do an OK job at. We teach them this is a historical form of theater. You know, we say to our kids 250 years ago, some really smart guys got together and wrote this document. Isn’t it great? But I like my students to think of themselves as the caretakers of this document and the entire enterprise what we’re doing. And in order for that to be true, they can’t see it as a history lesson. They have to see it as an active lesson where they’re a participant in moving this forward. Truthfully, they are. One of the best things about being in the United States is that we have the agency to shape our outcomes. This document sets out a lot of guarantees. However, we have to make sure that we understand how it works to move it forward. Frazer Rice (06:19.002) One of the things that I really enjoyed about your book was the concept of reminding people that civics and our government is not just the three branches in the federal government, Federalism and the interaction between the states and local government are just as important in many ways. And in some ways, the real sort of rubber meets the road impact component of where policy affects people. How do you think about that in terms of sort of conveying that, that lesson? To your students and beyond? Lindsey Cormack (06:49.848): Getting Kids Interested In Civics So usually, my pedagogical approach is to let them go figure something out. So I’ll let them say any policy space that they care about. I don’t care if it’s like I care about fashion or I care about sports. And then I’ll ask them to go see if different states have different orientations to this. And then they really get a clearer picture of like, my gosh, you’re right. The states get to decide so much. And when we think about what students care about generally, things like access to guns or access to reproductive care.or access to drugs. All of those things right now are state level decisions. Most of them don’t really understand how their state systems work because the little instruction that they get in K through 12 is nearly all focused at the federal level. It’s just sort of this task of saying like, hey, why don’t you go figure this out? Then they learn in that figuring like, ooh, this is important or, my gosh, she’s right. There might be something that’s different here than it is in the state where my parents happen to be right now. And I really like that approach. Something else that’s important to me is we all get excited about federal elections, but in this upcoming year where we don’t have federal elections slated, we have over 100,000 state and local election coming. So like we have all these different places to learn and they just need to be nudged and reminded to go look for that sort of information. Frazer Rice (08:00.638) : Good Citizenship The idea of being a good citizen, of being part of the civics discourse is something that I think your book does a really good job of really approaching and understanding and that it really gets back down to communication. And the lesson that I took from it in my day job in many ways is the concept of really understanding communication and building in some structure and values in communicating to families that have multi-generational wealth. When I get the question “hey you know how do I raise productive kids?” or “how do I raise people who respect norms that are around there and are active and participate in civics and society?” My answer to that oftentimes is what makes a good citizen when you’re sort of thinking about this and getting the the students excited not only about the structures and the underpinnings of government and so on. How do you take the communication lessons forward for that? Lindsey Cormack (09:04.142) So in all of my classes, if it’s happening during a non-federal election year, we have a project at the end that’s going to be a debate. And so it’s like it’s a research and a debate. And I don’t let them pick what side they’re going to be on. But I do let all of us decide what are the topics that we most care about. And then some of them are going to have to argue for sides that they believe in. Some of them are going to have to argue for sides that they don’t. And in an engineering discipline or in an engineering school, they don’t get a lot of opportunities to do this. That’s not their normal mode of classroom time. It really is this practice and like, how is it to inhabit someone else’s perspective and then say those things? And at first they’re a little bit like frustrated by it. They’re like, but if I don’t believe it, I don’t want to say it. Then I slowly sort of like keep telling them the more that you understand about the way that the other side or another side sees this issue, the better you will be able to understand your own personal position. Let’s say that you encounter some information that sort of changes the way you see something. That’s not bad. That’s not like a marker of failure in civics. That shows that you’re a human with a working brain who can like add in new information. That’s all we’re doing here. And so by giving them like the experiential piece of like, no, you’re going to have to chat this out against another team in front of all your classmates. I think that’s one of the best things because it is the practice that they’re lacking because so much of our instruction is I tell you, you listen, you regurgitate it to me. But if I give them that sort of like opportunity to do this with each other, it starts to open up their minds like, ooh, maybe I could do this. It’s not so daunting. I don’t just have to listen. I can do a back and forth. Frazer Rice (10:34.012) Well, it also underscores the idea that the sign of true intelligence is being able to house two differing thoughts in your head at the same time and to be able to work through them, which is sort of an unfortunate byproduct of law school for me and, you know, an expensive liberal arts education. But I imagine in the engineering world where things may be a little bit more black and white, it can be a new experience for them. Lindsey Cormack (10:56.962) Yeah, that’s mostly what my feedback is, is that, you know, in every other place there’s right and wrong answers, and here there’s just a bunch of different right answers depending on who you’re asking and what the perspective is. Frazer Rice (11:06.326) So David Haass has a great book out on the rights and obligations of citizens. And something I saw in a website, sort of a curriculum based website was the idea that people were right holders and that duties were borne by somebody else. And it really agitated me. How do you think about that in terms of good citizenship and participation and things that people should feel not only entitled to, but obligated to participate in? with regard to being a part of American society and beyond. Lindsey Cormack (11:39.874) Rights and Obligations Yeah, I appreciate this question very much. I also like that book. If it’s not in my bookcase behind me, I know it is in my house because a mom at my daughter’s school was like, ooh, you should read this book. And she said that to me while I was writing my book. But in terms of rights and duties, I’ll tell you sort of like how I come to this. When I was on sabbatical two years ago, I spent some time going around to different parts of New York City and setting up two chairs, a table, and a sign that said, you chat with me about politics for three minutes? I bought a three-minute sand timer, and I’d just sit with different people and let them tell me about politics. And a lot of times the takeaways that they would have is like, well, I don’t really like where it’s going. They’d sort of conceptualize themselves as passengers on the ship of democracy or passengers on some ship of politics. Then towards the end, I’d be like, okay, that’s really interesting. And then if they were willing to have me talk to them about it, I’d say like, but don’t we kind of think that we’re the crew? Like we’re not passengers on a ship. We are the crew that is powering where the ship goes. And so if we don’t like where things go, we do have an obligation. We do have a duty to figure out things a little bit more and find out how we can turn our own sort of agency on to change those things. An example in my life is right where I am in New York City, we have had undergone an enormous policy transformation on marijuana policy. Like we can now sell legalized marijuana in our stores. But there was a lot of gray zones. And we had so many unlicensed, illicit stores who just like popped up and were like, well, there’s no enforcement. Someone’s going to make money. Might as well be me. At that same time, I took a position at our community board chairing our street life committee, which was talking about liquor licenses and cannabis licenses. And that meant that I was going to have to go to a bunch of illicit stores and try to figure out what’s happening here. Who are these people? Why are they running this business? Why is it happening? And that was like annoying. That’s not my day job. I don’t get paid for it, but it’s an obligation. If I want my society to be better, to be a part of that solution, to figure out what this is, what’s happening. I was really happy and proud to do it, but I know that we need to do a little bit more because so many of us just want to be not inconvenienced, but the price we pay for living in a society instead of just as 340 million individuals that happen to be together is that we’re going to be inconvenienced sometimes. Things are going to be annoying, but if we want to get better, we have to get into it instead of putting our heads down and thinking that someone else is going to do it for us. Frazer Rice (13:51.546) How do you think we broach that subject to get people to think about participating beyond jury duty and voting, which we have to force people to do that anyway, to get more engaged with their surroundings? Lindsey Cormack (14:04.898): Why Are People Afraid of Civics? I mean, I think part of it is that there’s a narrative that politics is either bad for egomaniacs, for people who are like really into themselves or they’re out to like steal from other people, or there’s this narrative that like politics is for nerds. And so it’s like, I’ll let these other people take care of it. But it’s actually a true blessing or something that I see as like one of the greatest things about America is that politics is for everyone. It’s going to happen to us, whether we like it or not. We need to change the narrative that it is a force for good and that there are things that can come to better ends if we have more people who care about them. So the idea that voting is a hassle, or I hate when people are like, I’m trying to get out of jury duty. I’m like, what are you talking about? This is one of your only entry points to influence the judicial system. You really know other ways to do this. And so I think we need to tell our children the positive stories of this. If you have clean water to drink, government has a hand in that or if you have nice roads to be on, government has a hand in it. If you have schools that you can go to, places that you can recreate, usually government had a hand in that. All too often we focus on the negative stuff when we talk about the bad actors in this system. But a lot of the people, especially at state and local government, are essentially volunteers who just think they have something to offer who can make the world a little bit better. And those are the stories that I wish we would champion. Those are the people that I wish we’d introduce our kids to instead of letting them have a narrative that’s characterized by media that focuses sort of on bad outrageous activities or even child’s entertainment, which really has archetypes of people in government as either bumbling, like bumbling idiots, or like slick characters out to defraud the people they’re meant to protect. And so we have to do the work, collectively, of showing them when government does good things. Frazer Rice (15:42.873) Where does the role of bureaucracy fit into that you’re thinking on that? I know that for me, it’s very frustrating. You go to the post office or the DMV, or you’re trying to get something through, you know, whether it’s a tax situation or something like that. The red tape component, which is to me sort of the byproduct of what’s happening up top and how it’s implemented or seen at the ground level. How do get people patient with that? Lindsey Cormack (16:08.12): Bureaucracy That’s a much harder question. I will say I’ve only experienced the DMV in three states and I happen to really like the New York state approach to it, which is like you’re making, you make appointments online, you show up, you do it, it’s done. That wasn’t my experience in Kansas or in Arizona. But for like the day to day frustrations about government, I think something that we sort of misunderstand is we think the government is maybe like some big wigs who are like just trying to make our life hard. Frazer Rice (16:20.002) Right. Lindsey Cormack (16:32.536) When in reality, it’s a lot of like legacy systems with people who are trying to do the best work that aren’t terribly well compensated to do that work. And if we can kind of extend empathy for that, that’s like part one. Part two is let’s get to fixing it or let’s get to a way that we make this better. I do get sad when I see like the beautiful outsides of post offices and I’m like, wow, these buildings are incredible. Then you go inside and you’re like, we don’t have air conditioning in here. my, we still have like COVID things up on the wall. but. That’s like, has to be a point of pride. can’t be just a point of annoyance and we have to get over that one way or another. I don’t know that I have all the right answers, but I do know that I share that sort of viewpoint that you’re saying. Frazer Rice (17:10.521) Something that sort of strikes me and I deal a lot with financial literacy and numeracy generally and that when people don’t have that, they almost don’t have the language to be able to navigate in their own self-interest. How do you think about the language of numbers as it relates to understanding one’s role within civics and society generally? Lindsey Cormack (17:33.934) Civics as Something Bigger So I think you’re absolutely right that if you don’t have that in civics, there’s so many decision pieces that are just harder or impossible for you to sort of get your head around. But something that I like to think about is when you’re like pivotal. In federal elections, I oftentimes hear people be like, well, I’m only one voter. And you know, for the presidential election, it’s a winner take all system. And maybe you’re a Democrat in a red state or Republican in a blue state. You think your vote doesn’t matter, whatever. But when you say, OK, let’s like put that aside or believe that you’re true there. Think about what the denominator is for state elections. Think about what the denominator is for local elections or for even smaller ballot initiatives. We are all so important at the local level, yet these are the elections that are the least attended. Oftentimes there isn’t really good media around it and we think it’s just for party insiders. Soon you realize, no, if I got together with like 20 of my friends, we could have someone on the school board. Those sorts of things are really powerful. However, you have to break down the numbers for people where they see like once the denominator changes. Once the number of people who get to make this decision changes, every individual is more powerful than they were in a bigger system. This is why we really should have more focus on local and state government because we’re all far more pivotal in those arenas than we are at the national level. Frazer Rice (18:45.156) I think too, when you start hearing about numbers being thrown around and the current DOGE numbers, how much is being saved or not saved and whether it’s entitlements and so on and where the actual spending takes place or the interest to pay off federal debt, etc . . . The scale around these numbers is not well conveyed, I think, in the media and people end up focusing on more narrow situations and end up spending a lot of time, energy and emotion around things that are minor in comparison to the tougher questions that we need to be asking. Lindsey Cormack (19:20.376): Innumeracy I think that’s correct and I actually don’t put all the blame on the media. I actually think these are really hard concepts to teach and in a similar way to civics not being giving enough time in K through 12, we certainly don’t have more financial literacy. We need more financial literacy. We have like plenty of math, but the translation of this to dollars and cents doesn’t happen in many K through 12 settings. Something that I do in my classroom is I try to think about what it is where they could sort of have a relative understanding of something. So an exercise that we were doing this last week is I had them look at Doge data. I said, ‘I want you to guys go to the Doge website. “I don’t care what sort of thing interests you, but I want you to go figure something out and tell me what you learned. Some of them were like, I looked at how many people were fired. I looked at how many contracts got taken. Or I saw like, if this state had this much Medicaid funding, do we think they’re talking about DOGE in their legislature? And so I was like really interested to see what they were doing. However, it all spoke to this numeracy component, which is like, everyone had a different insight, but the ability to sort of assess it relative to anyone else is very limited because we really don’t have that comparative ability for most people, at least most people I interact with, which are the best of the best STEM minds that I’ve ever been around. Frazer Rice (20:25.921) Well, one of the, this is my plea to throw in the power of compounding, even if it’s just a sentence in your curriculum, It just- it triggers so many things. I think the light bulb goes off for most people that if you allow things to compound interest wise, either for the positive or negative, it can create some major outcomes with not very much time. As we go through that though, I think one thing that I’m interested in isthe concept of where the spending goes, I bristle when people forget that the federal government can print money, but the state governments and lower can’t. That the taxation that occurs at those different levels has different ramifications. Is this something that you talk to in the federalism component in civics? Lindsey Cormack (21:20.654): Federalims They don’t really understand this, but they hear a lot about it. So we talk about that a little bit. When we talk about federalism, we talk about how states get to make their own sorts of tax rules, whether they’re going to have property taxes or if they’re going to have exemptions for things like clothing and food. So we have a week towards the end of class where we talk about money and politics. And we talk about top marginal tax rates, because most of my students are 18 to 22. They haven’t really been paying income taxes. We talk about why states might make these different decisions or if some states are going to have income tax and some states aren’t what sorts of things happen with that. So we get into that at a very high level thing, but in a 16 week curriculum, there’s only so much that you can do on every, on every subject. That certainly gets like a part, but it’s not an enormous part. We do another exercise that I really like where I have them go use opensecrets.org to look at federal elections commissions data on like what companies or what PACs or what individuals are donating to different sorts of things. And they always come up with the cleverest stuff. They were able to see.how people in my own university, the administration versus the faculty, were donating politically. As a result, they were able to make some sort of deductions about like where you could sort of put our politics. I said, “I’m so proud of you all for trying to figure out things about the world that you think matter to you and that are like right in front of you.” Part of that is giving them the tools and confidence to go play with data themselves. This is something that I see as an integral opponent to teaching civics. If you want to know the civics, this is not just a history lesson. This is a numbers and a data lesson. And so you really got to be able to get into those things if you want to have the bigger conversations. Frazer Rice (22:51.533) You’ve been in different parts of the country, New York, Arizona, Kansas. Any regional differences in the level or interest in civics that you’ve noticed? Lindsey Cormack (23:01.986): Civics Across Regions I think there’s enormous regional differences. I grew up in Kansas and I was there until I was 22. And in Kansas, as well as in parts of the South where much of my family remains, the sort of approach to talking about politics is much quieter. There’s this sort of fear that like it’s going to offend someone. It’s sort of a taboo topic. Like it sits in the same place as like you’re going to talk about sex or drugs or how much money someone made. It would be like, Ooh, that’s an off limits one. We’re not going to do it. Whereas in my 17 years on the coasts, I find that people do talk about politics more, but they tend to do it in like an overtly negative way where it’s like always dismissive. One of the sort of things that happened when I was writing this book was looking about what etiquette manuals said for the longest times about like how we’re supposed to approach this. And there are regional differences. Neither one of those approaches though is truly that functional. Not talking about something doesn’t make it better. Only talking about the negative parts of something doesn’t incentivize children to want to learn more. I think we have like cultural differences, but not one of them is like, we’re getting it more right here. We have room to work in all sorts of parts of the country. Frazer Rice (24:09.462) Interesting. You talk in your book a little bit about the responsibility that parents have in teaching about the political end of things. Maybe go into that a little bit. Lindsey Cormack (24:21.762): Parents Raising Citizens Yeah, so the book’s full title is “How to Raise a Citizen (and Why It’s Up to You to Do It.)” That parenthetical, “why it’s up to you to do it”, is because in researching this book, which we thought was going to be something that said, you know, this state curriculum is the one that’s graduating the students who really understand it. What we found is, like, no state curriculum is graduating a lot of students who really understand things. So if we got to change something, it’s probably going to have to start in the home. Changing the state policies around what you can teach in a classroom or how many hours of instruction time you have or even how many teachers are hired with the requisite expertise is incredibly hard to do. Like something that we heard in these interviews was everyone knows who teaches government, his name is coach. At most of our high schools, there’s not enough social studies hours that are going to be taught to have a full-time employment contract. Many of the people who teach that also teach wrestling or swimming or track or football, what have you. It became a book that said parents have to take this on because there’s so many barriers to getting this done in schools. It’s not that schools couldn’t do better. It’s not that schools don’t do good work in the limited sorts of ways that they can. But we’re not going to fix things if we’re putting this on schools. We really have to take it into the home. It’s also the case that emerging research on parent socialization to kids indicates that one of the best things that allows your kids to understand different viewpoints, be able to engage in respectful dialogue. They should participate in voting and volunteering is having their parents do that with them. They should be practicing it and showing it to them. If we want better outcomes, if we want our politics to feel and function in a better way, where the adults in the room now, we’re the ones raising the next generation, we’ve got to show them what that is and hope that they take that up and continue that work with their kids. Frazer Rice (26:00.853) When I read that part, the light bulb really went off to me because I’m spending a lot of time on intergenerational money discussions and money like you just described earlier, has its own taboo associated with it. Ultimately, if you’re trying to convey values AND value to the next generation, you have to have these discussions. Civics is an important component of it. To be politcally involved is vital in order to not only get the country aspect and the town aspect preserved, but the family aspect too. To not have that conversation, I think would be a mistake. As we wind down here, the media, social media, traditional media, books, newspapers, TV, internet, TikTok, et cetera. Do you have any thoughts or ideas as to how to curate your media diet so that you get more signal than noise? Lindsey Cormack (26:55.074) Yeah, but my thoughts are not terribly popular. My thoughts are you need to be talking to people face to face. You need to be interfacing with people who are in your communities and in your day to day reality. You need less of your online algorithmically derived information, meant to keep you either attentive or disassociative. I think a lot of our online content is going to be different than what I’m going to see is going to be different than what my daughter sees. And we’re actually, none of us. Frazer Rice (26:57.704) Yes. Lindsey Cormack (27:21.686): Political Discourse and the Social Media Diet If we exist in just online spaces or ever seeing the same slice of the world or the same slice of reality. I think if you really want to like get down to it, it’s understanding what the people around you are thinking and hearing. That requires that you do conversation. That requires that you don’t have AirPods in, in every social setting that you might be in. This is something that I think is, is really damaging. We’ve been okay with it for the last eight years or so since AirPods came out. This idea that we can be in social settings, but everyone’s listening to their own podcast or book on tape or music. I think we really have to be able to talk to each other more. If you want to have a rich information diet, you have to not let it just be the one that’s algorithmically designed to come to you. So you’re going to have to have that friction with other people. Frazer Rice (28:04.477) Lindsay, great stuff. How do we find your book? Lindsey Cormack (28:07.042) You can find it anywhere that you find books online. It’s sold on Amazon and on Barnes and Noble and bookshop. It’s also possible to buy it directly from me.I’ll sign it and scribe it and send it to you. I can send it to someone else as a gift. And you can do that on howtoraiseacitizen.com. Frazer Rice (28:23.781) That will all be in the show notes. What is your other information? Lindsey Cormack (28:29.187) You can find me on Instagram @howtoraiseacitizen, on Bluesky and Twitter, I still maintain DC inbox. This harkens back to the first civics project that I ever did as a political scientist. Frazer Rice (28:40.733) Really cool. Lindsay, thank you for being on. Lindsey Cormack (28:42.786) Thank you so much. I love these questions. https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

For those of us who live in New York, mass transit is the norm and traffic is a minor form of apocalypse. In response to this persistent issue, New York City implemented a new congestion pricing plan. https://youtu.be/TeObZEnjmv4?si=fQTxzRCe6b-sGH5F Besides the increased funds for badly-needed infrastructure improvements, the plan made other promises. These also include reduced commute times, better air-quality, and improved safety for all road users. https://www.amazon.com/Movement-Yorks-Long-Take-Streets-ebook/dp/B0CV9FNFWV/ Because the sample size is small, it is an open question of whether congestion pricing has delivered? Can it deliver? And how did we get from the horse and buggy, to the street car, to the train and automobile-based system we have now? Will it apply to other cities in the U.S.? Nicole Gelinas and I took some time to trace New York’s transportation history in her new book and analyze the prospects for congestion pricing’s effectiveness going forward. (*UPDATE: 20 minutes after we stopped recording on 2/19/25, President Trump announced that the U.S. Department of Transportation was pulling its approval of New York City’s congestion pricing plan. Governor Holchul has met, apparently unsuccessfully, with President Trump on the topic. Litigation has already started. STAY TUNED.) NICOLE GELINAS, a Chartered Financial Analyst (CFA) charterholder, is a Manhattan Institute senior fellow and contributing editor to City Journal. She lives in New York City. She is the author of the recent book, Movement: New York’s Long War to Take Back Its Streets From the Car. Outline How did you get interested in congestion pricing and the development of transportation in NYC? New York City’s Transit History What are some of the “tragedies” (Cross Bronx Expressway / death of streetcar) and “near misses” (The Saving of Washington Square Park and Grand Central Terminal) that we don’t know about? How much credit or blame should we give Robert Moses? Congestion pricing- what is it trying to do (and is it trying to do too much)? As a revenue raiser To reduce congestion Help environment Quality of Life What are the early returns on its effectiveness?  (Anecdotally, to me it seems like it is having a positive congestion effect in Manhattan)  Uber/Taxis?  Notwithstanding these initiatives, what about these often empty cars? E-Bikes? Now that the city has addressed cars, what about the safety concerns of motorized bikes? How is the program affecting Westchester, Long Island, New Jersey and Connecticut?   As a result of these changes, has the air quality shown any improvement? Meanwhile, is London a Success?  Because of its heady reputation of being one of the most forward cities on congestion control, urban planners trot out London as an example for others. Is this warranted? (However, having been there in November, I thought the traffic was insane! ) Did they do other things to screw up a good initiative? Congestion Pricing’s Future (*Before Trump’s Involvement) I never met an automatic tax that a politician didn’t see to expand and the tax is automatically going up by law, Regarding government’s growing addiction to revenue, Will the program expand? Will the borders go north? Brooklyn? Queens?  Or can it go backward under Trump? Regardless, does the MTA have the will to cut costs? Notwithstanding the controversy, is there any political will to enhance safety? Wish list: What would be your favorite next NYC transportation initiative? If we want to learn more, what’s the best way to get the book and keep track of your work? Further Details on NeW York’s Congestion Pricing Plan THE WEALTH TAX https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

https://youtu.be/xNeFuqsU7A4 Podcast Trailer Welcome to the “Wealth Actually” podcast trailer. I’m FRAZER RICE. After 170 episodes, I thought I’d check in to make sure that everyone understood what to expect from the show going forward, especially if you’re new to it. For those newcomers, it was time for a quick podcast trailer. Ultimately, I’ll be talking to a lot of different experts in their various fields. By day, I’m a chief operating officer / wealth strategist for large complicated families. This involves wealth management, tax, trustee issues, family dynamics, and the odd business succession story. I’m also a lawyer which means I’m interested in legal issues that surround these concepts. Finally, I enjoy politics and public policy. I grew up in it, and so I like to think about it and its interaction with my day job. Ultimately, this show is paired with a book called Wealth Actually, and the best way to reach me is via www.wealthactually.com. I hope this podcast trailer was helpful. I’m always looking to get it better. If you have guest ideas, topics to explore or or other ways to increase its reach, I’m happy to listen. Finally, if you have other shows that I think are worth experiencing, send them along. (For those repeat listeners, you will notice I changed the theme music too. It’s a little more thunder, a lot less synthesizer. Let me know what you think of it.) Enjoy the show and be sure to like, subscribe, and share with your friends. More Episodes Find more episodes in the podcast section HERE Book To buy a copy of the book “Wealth, Actually”, see the link below. (There is a great audiobook version that I just produced and is accessible on Amazon too) https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/ Social Media Linkedin Twitter IG BlueSky (NEW!) Podcast Trailer