Episode 1 | How the Ultra Wealthy Build Generational Legacies

Justin Guilder & Matt McClintock

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Episode Description

In this episode, Matt McClintock, Partner at Evergreen Legacy Planning joins host Justin Guilder, Co-founder of Lumida Wealth, to discuss strategies for estate planning and legacy building for ultra high net worth families.

Episode Transcript

‍[Host] Justin Guilder [00:00:11] Hi. Welcome to the Lumina Legacy podcast. I'm your host, Justin Guilder. On this podcast, we'll explore how to achieve and plan for a long, healthy life, as well as how to prepare for the inevitable and unforeseen. Through estate planning, insurance and end-of-life decisions. We'll talk candidly with experts who advise high and ultra-high net worth clients so you can learn how to apply their strategies and tactics to your own longevity and legacy planning. Really thrilled to be joined today by Matt McClintock. And, Matt, let's just get into it. Why don't you tell us a little bit about yourself? Where your background in trust in the state law come from?


Matthew McClintock [00:00:57] Okay, sure. Thanks. And just in great honor to to be on the podcast. This will be a lot of fun, I think. My name is Matt McClintock. I'm a founding partner of the law firm in Evergreen, Colorado. It's called Evergreen Legacy Planning. And my background is in the structured complex. What we like to say is holistic, legacy planning for highly affluent clients. We're based in evergreen, Colorado, which is just west of Denver, up in the foothills a little bit, but we serve clients all across the United States and in a handful of, countries outside the US. Our typical client base is large federally taxable estates in the US. So, you know, think 30 million plus we really like to focus not just on the tax-oriented quality, the quantitative side planning, but also kind of the meaning behind the world and helping clients understand that the decisions that they make from a legal structuring perspective to derive the tax number has real effect, not just for them during their lifetimes, but ultimately for the people that they care about the most. And so, now we're going to get into this in greater detail. But, I mean, that's the focus of our practice. I've been doing this for 23 years. my law partner has been doing it a little bit longer than that. And we've got a team of attorneys kind of spread around the country, where we serve clients together on, you know, in that realm.


[Host] Justin Guilder [00:02:32] Amazing. Well, really excited to talk to you and dive in deeper before we get into those topics. You mentioned that you help your clients plan for the people most important in their lives. Let's get to know you a little bit. Like, who are the most important people in your lives, in your life? Tell us a little bit about your family.


Matthew McClintock [00:02:50] Yeah, well, I'm happy to say that I've been married to the same woman for. Let me get this wrong, I hope not, 31. Yeah, 31 years. We got married in 1992. Very young college sweethearts. We've got two incredible daughters that are both young adults now. And, you know, those are unquestionably the most important people in my life. I'm fortunate that, we all have good health and, that my daughters, although they're both grown and out of the house, they're still nearby. so my oldest daughter runs operations for my businesses, so I get to work with her every day. My youngest daughter also lives nearby. She's married and is a successful professional herself. So, you know, life is good.


[Host] Justin Guilder [00:03:43] Very lucky that your children are nearby. So you talked a little bit about college sweethearts, but then obviously you're a lawyer. You went to law school. Mhm. Jumping into trust in a state law. What led you into that practice area?


Matthew McClintock [00:03:56] You know, it was kind of by accident, really. when I went to law school at the time, I had no intention of practicing law. I was a policy guy. I was working in politics. I grew up in Oklahoma. I've been told that, I don't have much of an accident, which I relish that. Um. but, I did grow up in Oklahoma and, out of college. My, my background was in political science in college, and, I signed on to an upstart political campaign, and we were just this ragtag bunch of knuckleheads that ended up getting this really great guy, elected governor in the mid 90s in Oklahoma. Really a brilliant, brilliant guy that I still admire to this day. And, my work was in public affairs. And, you know, for a lot of folks, they may even remember all the way back to April 19th of 1995. And, at that, you know, on that date, at that time, the worst act of domestic terrorism took place in the United States. The Murray Building in Oklahoma City was bombed by, Timothy McVeigh. And, you know, Terry Nichols kind of in a conspiracy in those guys are, you know, long gone now. But I was working public affairs. I was a 22 year old bright eyed kid, and all of a sudden I was kind of thrust into the international spotlight, having to represent the governor's office in the middle of, again, this huge act of domestic terror right in the middle of the country. And that really flooded my appetite for politics on a larger scale, for policy, on a larger scale. And I, I didn't fancy myself as the kind of guy who would become a candidate for office, but I wanted to be a policy guy. I thought I could make a difference. again, idealistic young 22 year old. So one of my mentors back then said, hey, if that's if that's the course you want to go, you need to increase your street cred and go to law school. So that's what I did. I went to law school for the purpose of upping my game for public policy, because I want to ultimately be in Washington, D.C., you know, doing things that at the time I thought mattered. and, so I went to law school. But during the law school process, I started working a couple of different part time jobs. One was in the district attorney's office in Oklahoma County, and another one was at an estate planning law firm, where I was working with families who, you know, had very modest estates but were looking at how do you plan for the end of life? How do you plan for a time when you can't make financial decisions for yourself or medical decisions for yourself? And ultimately, when it comes time to pass on, however much or however little you've you've accumulated during your lifetime, how do you do that? With dignity. and so that really spoke to me. And through the law school process, I did a lot of, I took a lot of classes on estate planning, on wealth transfer tax, planning on income tax planning and things like that. And I kind of, lost interest really in politics and policy and wanted to focus really on where I thought I could make a direct difference in the lives of families who I was helping them kind of get their arms around this reality that, you know, someday this life is going to move on without them. And the most important people that are in their lives are going to be left behind. How can you equip those families for success, help them become the best versions of themselves through whatever, whatever I can do from a legal structuring perspective, and I'm sure we're going to get into this, but I mean, legal structures on their own don't solve the problem, but they can create an infrastructure framework for private, family controlled decision making. So you can at least take some of the the stress out of those really otherwise very difficult times for families.


[Host] Justin Guilder [00:07:57] So you started out a little bit with families that maybe don't have the same means as some of your current clients, who are geared a little bit more towards the ultra high net worth we. How does the planning process and ultimate outcomes differ between those two categories of people? Obviously, they're still concerned about the same topics, but they have some different considerations. And how do you think about the differences there?


Matthew McClintock [00:08:29] Yeah, I mean. And on one hand, it's the same. And on the other hand, um. It's very different in that the stakes are much, much higher. Economically, the stakes are higher. not just from a tax perspective. And when we think about tax, we have to think about it really in all of its forms, whether we're talking about the lifetime gift tax, whether we're talking about the estate tax, whether we're talking about the state level estate tax, if there is one versus the federal, the generation skipping tax, the capital gains tax, the ordinary income tax, the entity taxation. So the stakes are really high from a tax perspective. But the stakes are also extremely high. From a human capital perspective because, not to not to diminish the importance of structured planning for more modest estates, you don't have to do the math on those smaller estates so you can focus on the people side of things. but, you know, at the end of the day, if you have a very modest estate and you pass that on to mature adults, the stakes really aren't that high. but when you're dealing with tens of millions or hundreds of millions of dollars or more, you're talking about wealth that ten and by all means should spend many generations. so the wealth itself, the money itself should very well, not just. Sustain those generations, but continue to build to those generations. These families are well past escape velocity when it comes to the level of wealth. But now you're dealing with an inheriting class of people who had no who had no active role in building that wealth. They've grown up in a family that had virtually unlimited means for all practical purposes, and now you're having to address issues like, how do I how do I help my kids not become, you know, terrible people? How do I help? I don't have my kids become the best versions of themselves, and have a sense of a work ethic and a sense of responsibility and stewardship, whatever that means to the family. The sense of purpose. because one of the things that I've seen in a lot of the clients that, that we work with is this concern that when the family has built such a tremendous amount of wealth, you know, usually with my clients, they built it in the first generation. They're the entrepreneurial class. Now they're dealing with, okay, well, well, what happens next? My kids have grown up going to private school, vacationing on the Gulf Stream, you know, and my grandkids will never know what it was like to not have this level of wealth. How do I help them become the best versions of themselves? And the stakes are just higher. And of course, as I'm sure we're going to get into the types of strategies, the technical legal strategies that we bring to bear for clients who have such large estates, plus the more qualitative human concerns those are. There's a lot more that we have to do in order to at least get the infrastructure right. So then the family can say, look, the framework is in place now we can focus on the human element of the plan.


[Host] Justin Guilder [00:11:53] We'll definitely get into that. I think before we go into some of those particulars, you know, when money is on the table and we're talking now significant amounts of money, things can change. It's a emotional situation. Behaviors can change. Attitudes can change. You know you've definitely seen the if. You had to be there to believe it kind of moments. So maybe share 1 or 2 of those where. A fly on the wall would be shocked to hear what happened. And you know, whether you were able to navigate them through that or not. It's important to understand that these things can happen with or without the proper planning.


Matthew McClintock [00:12:35] Well, for sure. Yeah. Um. That is a great question. And. It's going to seem maybe a little bit surprising, but maybe that's why it's meaningful to me. the second Bitcoin client I ever had. she's still a very active client. And, ah, for now, this is a woman. she divorced, and when she divorced her. And so she grew up with very modest means. She still, you know, has lived very modest life. she's she grew up in the country, on a rural family. Just a great solid salt of the earth kind of human. and, you know, living in California in a very modest home. And, she and her husband decided to divorce. And when they divorce, he hands her what looks like a USB stick and says, here's your half. And she says, here's my half. Of what? here's half of pretty much everything that we own. And or what looked like a USB drive was actually a, Bitcoin hardware wallet that had 10,000 Bitcoin on it. and so for those of you, you know, kind of keeping score at home, the 10,000 Bitcoin at today's spot price is about $300 million. and uh I.


[Host] Justin Guilder [00:14:05] Don't know if 300 million are mine.


Matthew McClintock [00:14:07] Yeah, but it's that kind of thing and such like, I mean, her jaw just dropped when she realized, I mean, she knew she understood Bitcoin a little bit. And, you know, they had a lot of Nvidia stock that was very low base as they still have that now. And so she thought, hey, we you were just a modest family, just kind of working folks. And turns out that they are sent to millionaires a few times over. it rock your world completely because they had no planning in place from an estate planning perspective. And this client has a couple of daughters who, um. And one of them has some real challenges. you know, like, kind of growing up problems. if you catch my drift. kid has a hard time making good decisions and has a tendency to surround yourself with people who don't really have her best interests at heart. And so this quiet needed to do some, not just some qualitative estate tech estate planning around how do I keep from just dumping all this money in the lap of a couple of kids? One of them makes terrible decision to their life to while I'm in California, the basis for capital gains tax purposes. And my Bitcoin is almost zero. and I'm not only subject to federal capital gains tax. I'm subject to state level capital gains tax at 13.3%. I've got an enormous estate that I didn't even know I had. can you guys help? And by this time, we were already doing it. You know, substantive estate planning with crypto in mind. But this is, you know, just kind of long story short for this purpose. The client had this surprise level of wealth on a very big scale that she wasn't expecting. And the broader point that I want to make with that, that I think is thematic, is that, when clients find themselves with a significant amount of wealth, either in a surprise, almost law winning type of perspective like this, or whether they've just been a very successful entrepreneur, maybe a serial entrepreneur, but didn't come from significant wealth. That wealth can be a very lonely place for them. They realize that, they're not like their family. They're not like their friends. They don't. Their friends don't really understand. And the friends, often the friends and family often, either objectify the client because of the wealth or become, to a certain degree parasitic or predatory because, hey, they can pay for it. They can do it all. and and even if that's not, like, right out in front for a lot of the clients I see, they're worried about that in the background. And so what I've seen is first generation high levels of wealth can be a very lonely place. And, when professionals like us really only focus on the quantitative side, building more alpha, getting the value out of your estate, mitigating your taxes, all that great technical stuff that we do that's important. That's all we're talking about. And we're not really talking about the human side of the. Honestly, the loneliness, the isolation, the fact that nobody understands. if we forget about that, we're not serving the clients fully. Yeah.


[Host] Justin Guilder [00:17:33] No matter how many zeros are in the bank account, there's still people at the end of the day with the same emotions. Yeah, it's challenging to connect.


Matthew McClintock [00:17:40] And it seems kind of trite to say it, but to a certain degree, more money does mean more problems for a lot of people. You know, it's like, yeah, right. Yeah. You know, it's like like a lot of people feel a burden that goes along with this wealth. And there's, there's a lot that has to be addressed there.


[Host] Justin Guilder [00:17:55] So you touched a little bit on crypto too. Let's dive a little deeper there. How did crypto, an asset class that you know 20 years ago, doesn't exist? What will change estate planning, if at all? are there some complications in there that are unforeseen that you've seen as a result of, you know, the nature of the asset class? Or perhaps it's kind of up and to the right. Growth in the past, decade plus.


Matthew McClintock [00:18:26] Yeah. I mean, there's there's several things that that are really challenging when we're dealing with digital assets. and I'm, I'm kind of use that as shorthand or, you know, kind of synonymously with crypto. But, what I mean, by the way, I'm kind of defining that as an asset that doesn't really exist in the physical realm, in the tangible realm. but something that really only exists on a ledger somewhere. so there are a couple of things that immediately come to mind. One is that intangible nature of this asset. It's complicated. And understanding how private keys work, how wallets work, how, movement of this asset with, you know, along the blockchain or within these various transactions, how those things work, at least at a basic level, is critical to understanding. How do you then substantiate the ownership of a digital asset like Bitcoin or ether or anything else? How do you substantiate the ownership of that within a structure that's designed for estate planning purposes or legacy purposes? so that's that's really hard because if you've got a brokerage account or bank account or piece of real estate, you've got a account ownership form, you've got a deed, you've got a title that you can say, hey, just put this on, you know, just in guilders. Trust. That's easy. How do you do that with a digital asset like this? And so, getting.