Master Your Finances Kurt Baker with Len Garza – Transcript

Written by on March 2, 2024

0:00:00.1 Kurt Baker: Are you aware of the potential risks and challenges that your business could face if you’re to experience unforeseen circumstances like death and capacity, divorce, or the departure of a business partner. Len Garza are founder of Garza will help you understand the importance of having a plan in place to address these events. Len, this is a near dear of my heart, ’cause I’m a planner, and a lot of times we were like, I wish I had should have done, etcetera. Well, we’re here to tell you that, do it right away and you’ll be… You’ll sleep better and you’ll be much happy or something does happen because it’s not a matter of if it’s gonna happen. It’s more like, when is it gonna happen? And did you prepare it? So that’s been my personal experience.
0:00:41.0 Len Garza: No time like the present. Kurt, thanks for having me. No time, like the present. Exactly.
0:00:45.6 Kurt Baker: Yeah, so give me a little background about how did you decide to be… You’re a lawyer, of course. What kind of drew you to this part of the law?
0:00:55.8 Len Garza: Sure, so I’ve been practicing for almost about 20 years, mostly in larger firms, and what I saw and larger farms also in my own circumstances are it wasn’t so much the Fortune 500, Fortune 100 companies that needed help their plenty of law firms for those… For those companies, it was the family-owned businesses, the private business, the main street businesses that really were lacking for legal help, didn’t really know where to turn, and there are online free, low-cost legal forms or things, and you take your risk with those, like anything you get what you pay for, but if you’re actually looking to have a real life human being, not AI, but real life human being that you can talk to and help guide you through some of the traps for the unwary… A lot of traps, unwary in this area, that’s really where we fit in, so been running my firm for this is… We’re in our fifth year, and I find it so much more gratifying, because dealing directly with people face-to-face is really gratifying to me and how I feel like I’m making a positive dent in the world in these people’s lives and families, much different than practicing kind of in the big corporate type law firm, which is different of course, but it’s a different way of practicing, but this is much more human level, which I love.
0:02:25.7 Kurt Baker: Yeah, and I think we’re the same page here, it’s a lot more fun to deal with the actual business under the actual parties that are involved directly because… And that’s it. You point out something I think is very important, it needs to be emphasized, especially we talk about any kind of advanced planning, I mean, you can get kind of the basics of what needs to occur by going online and doing research, which I would encourage people to do ’cause you’ll get an understanding of what’s out there, but when it comes time to actually implement your own personal plan, there are nuances in there and laws do change and things have to do with like… Are you in New Jersey? Do you plan on moving to Florida or Texas or Arizona, or do you have, where your family resides and where the assets need to flow as all kinds of things that could potentially trip you up that you don’t really think about that aren’t gonna present to you online even with all this AI stuff, which hasn’t figured out anyway, it’s much better to use the human with the advanced technology together, now you have a product that actually addresses your particular needs much more effectively than trying to do on your own without having some kind of guiding person that really has the expertise in the background to do all this stuff.
0:03:35.0 Len Garza: Absolutely. Well, said Kurt… I play around, I experiment with AI as well, and say, Hey, well, what if I ask at this legal question, what is he gonna come out with… And hey, I’m not gonna lie, it’s pretty good a lot of times, but pretty good is not enough when you need to know you need to have it right and the cost or having it wrong is massive. Not even for yourself, it is for yourself, but we’re talking about. Because we primarily focus on businesses and business owners, we’re talking about the business owner, your partners, if you have partners, your team, employee and their families who depend on you, your own family, your own legacy, this isn’t just some. I think the hardest thing about this is human nature, looking far off into the future and you feel like, Hey, that might as well be the Year 3000, whatever, that’s not. The next week, not the next month, the next quarter, or whatever. If it’s not right in front of me, then this is where my attention is, and I get that you have to be that way as a business owner, but it’s this extra act of leadership to your people, to your family, all those that depend on you, that people don’t realize there’s real exposure there, whether you realize it, they are not is.
0:04:50.0 Len Garza: Unfortunately, it’s in material, the exposure is there, and if you do not turn your attention to it, it is the ostrich in the sand mentality, and of course, that’s not a strategy.
0:05:01.7 Kurt Baker: And you point out something that we discover on our side of the fence too, is that, we don’t know what we don’t know. And so when you start going through somebody’s personal life and what their needs are, whether it’s financial, legal or accounting, does all of these areas, they really just need to represent what their issues are, where they stand and what they wanna have happen. And then the professionals come in, typically there’s a teamwork involved where you wanna make sure you’re dressing all the areas all together in concert, and you just really. And I think that’s one thing that I find that a lot of business owners, especially where they have fairly complex situations or maybe they feel they’re simple to them, but whatever the case is, they’re like, I just don’t have to deal with all that. But they don’t really have to deal with it, they just have to explain their situation in their terms, a lot of the people who have the expertise that know how to do it, they will pretty quickly, you get to the bottom line of what needs to happen with the input, obviously from your side, and it’s not as painful as a process as people think it is.
0:06:08.2 Kurt Baker: And I constantly hear the thing that, I wish I had just done this sooner, ’cause now it’s one less thing kinda sitting in the back of your mind that you know you should be doing and get it done. And what I really saw this come to the surface was during COVID, people actually started addressing these things.
0:06:26.5 Len Garza: Yes.
0:06:26.6 Kurt Baker: And they weren’t doing it before. ‘Cause they’re, Oh, I have to go to work every day and etcetera. Well now, Oh I have time. Let me start working on some of this stuff, and so many people came back and said, Wow, I wish I’d done this a while ago, thank goodness I did, ’cause I found out all these things that I should have been doing dealing with. Right.
0:06:40.8 Len Garza: Sure. Yeah, and one of my favorite things to say is, like you just said, the unknown unknowns, right? There’s so many out here, and if I were to recommend one thing, it’s to business owners, whoever you’re talking to, make sure they’re talking to each other. To our advisors, right? You have your financial advisor, a wealth manager, make sure they’re talking to your account, make sure your accountants talking to your lawyer, just make sure everybody’s talking to each other because it’s something I really put a lot of intention on now since going off on my own, when I work for a larger law firms, that wasn’t always a given, and maybe if you’re a business owner listening to this, you think, Well, yeah, of course… Of course, the advisors to talk like that.
0:07:22.1 Len Garza: They do not. They do not. And it is, it may be shocking to you. I think it was still somewhat shocking to me how much this occurred or how little the cooperation amongst advisor occurs and why does it not happen? Well, for a variety of reasons, people are busy, people tend to be tunnel vision, a lot of advisors, lawyers, CPAs or others, the same way, so it’s not necessarily intentional with some of them, it may be intentional, they think, Oh, I know everything and you can get everything under one roof, my experience with dealing people with businesses in the best situations, the clients and the businesses that are happiest is where you really have a situation where it’s like you’re outside board of advisors, you have your wealth manager talking to your attorney.
0:08:13.0 Len Garza: Talking to your CPA, because there are things that I look at from a legal perspective, that I unwind ownership of various entities and it gets very technical, that’s where I focus on, that’s where my passion is going. I can’t be ignorant of tax issues and overall financial issues, but I really don’t go in the weeds there, that’s something where Kurt talk about these things, or tax strategist, CPAs, and I know where to go find the specialist, much like you go to a general practitioner doctor and they say, Look, there’s more specific things. I’m gonna recommend this specialist or refer you this… It’s much like that the world in business is too complex to have everything go under one roof of one advisor that looks great in the movies, but that’s not real life if you wanna do it right.
0:09:02.4 Kurt Baker: And one thing I noticed pretty early in my career was that as you point out that one, that you have to have all these advisors in place to take care of each piece of it, what’s legal or accounting, your insurance or wealth in whatever wealth management. But the part that we’ve seen developing, and I know more and more advisors are doing this and professionals are doing this, where they’re working together because those are the ultra wealthy, the 250 million above, they have family office where they literally hire different people to do different jobs and that’s literally that’s their job. And any of the people just starting off where they really don’t do that, but did you have a huge section of people, which is most of your small business owners, where they don’t need a full family offices, they can’t afford a full family office, but you can work on what we call a virtual family office, where you actually give permission for these different professionals, I have conversations with each other. Because prior to that, they would just say, Oh well, go. Go talk to this person insurance, go talk to that person for accounting, and go talk to that person for legal, or that whatever, but they’re not nearly talking to each other.
0:09:58.0 Len Garza: Right.
0:09:58.4 Kurt Baker: And that’s an issue that the business owner or the principle, the client really doesn’t have. Doesn’t want to, first of all, have the expertise in that area, but when they talk to each other, they actually bring up legitimate issues that along with the client being involved a course, but you get a much better result when you have all the expertise, we actually having the conversation together because there’s a lot more clarity in what’s really going it and they help each other do a better job at each one of their jobs. I think that’s what I’ve seen atleast.
0:10:31.1 Len Garza: I totally agree. And it’s a mindset, right? It’s a mindset of the advisors and of the business owner to wanna go that direction, because if you have one business owner or one advisor or two advisors that isn’t on board with that approach or doesn’t really care about it very easily falls apart. Just the communication doesn’t happen. I wish it happened a lot more and things I’m dealing with, but things stand in the way.
0:10:57.1 Kurt Baker: Communications key. We’re gonna take a quick break. You’re listening to Master Your Finances.
0:11:09.2 Kurt Baker: Welcome back, you’re listening to Master your finances. I’m here with Len Garza, and we’re talking about, the value of the legal side of estate planning, so let’s just get into that a little bit and Len you deal primarily with business owners, which is primarily where my expertise is as well, which is really cool. So to all the small business owners out there, I think, at least, my experience is, they’re so ingrained, they’re so involved in the business, they start forgetting about some of the legal aspects that aren’t part of their profitability and revenue generation and handling their employees and all these other things that are kind of the day-to-day things that go in to being a business owner, but this is an extremely important portion that occasionally people get bit by here, they don’t do the planning and something occurs and now the family is struggling because they have these businesses, these assets and they don’t know how to manage it, it’s kind of a big mess as far as how things are held, so how would you encourage a business owner to say, Hey, I need to kind of move this up the priority list so that I can get it off my plate. And where would they start? It’s not too painful.
0:12:11.9 Len Garza: Yeah. We’ll to add the biggest enemy in this forest all is procrastination, putting it off, putting it off, things that are their time. So if I can start just with a short story of something that happened, there was a colleague of mine was dealing with a client where the wife had come to him and her husband had passed away. He was a business owner with a partner, and he and the partner they’re the manufacturing company, regional manufacturer, and they were local celebrities in the community, really gave back to the community, family business, first generation, really took care of their people, just really had a strong relationship with people and really ran things, what I’d call the right way, but did not have any type of planning in place like this, so one of the business owners, her husband had passed away suddenly, heart attack didn’t have any type of planning and. Well, he did, he had a will. But as we talk about a will, certain people think that the will is to be all end all, it’s enough, and once I have a will, I’m all set, but there’s a lot of the education process that we go through to explain to them where there is exposure.
0:13:37.2 Len Garza: So one of the first things we do Kurt in talking to people is to have that education session, we have… We don’t just crank out documents, we don’t. Some people think they come in and say, Oh well, I don’t have any documents, meaning I don’t have a will, or, Oh, our business doesn’t have a document, you need a partnership agreement, maybe I have a free online template, I got. But we wanna get something in place, and rather than just crank out a document or agreement that may be that they think, Oh, this will all be done in two weeks, it’s just a set it and forget it thing. I inform them and educate the outset. Well, really, the document is the end deliverable, and the focus is not on the document you’re gonna get that. Don’t worry about that. The focus and the most important thing is all the planning, the questioning, the surfacing of issues with you and your business and what you want, what you want to have happen in these hypotheticals, which I lead you through because I see exposures and the way these hypotheticals. The way they’ve played out in the past, and I can guide you through asking the right questions, what do you want to happen in this instance? What do you wanna have happen if you or your partner becomes disabled, incapacitated, has a stroke, all of a sudden they can’t come in.
0:15:00.8 Len Garza: Do you wanna pay them out a certain point, do you wanna allow them to stay on, how long? Do you wanna have disability insurance that can come in and help? Or do you wanna just pay that all out of the company cash flows if you can? That something like that can really put a strain on the business where it’s a real type of Black Swan event if you’ve never gone through that planning and have any type of mechanisms in place, there are so many ways to go with this Kurt, and I can really kind of go off on a tangent and go deep about certain things, but I wanna. Let me just go ahead and stop there and say, this is not for the business owners to think I have to do my own research and go through it all myself. This is where part of that process, we walk through and we go through that, and of course, in the end, that’s memorialized in an agreement, but that’s later. That’s down the road. The most important thing is this really getting that peace of mind that you have a plan for these things versus it being ostrich with the head in the sand.
0:16:01.9 Kurt Baker: And I try to talk in the business person’s terms, ’cause one of the things I hear a lot is like, well, like you said, I have a will, you’re all taken care of, and as you know, that’s kind of that. To me, that’s like the last document, so one like in case I miss it somewhere else in all our documents, this is kind of catching the rest of it, whereas a lot of people like, well, that’s the first thing you do. And that’s the main thing you do. And actually, it’s really not, that’s in case something changed or got missed or some of these other documents you did didn’t figure it out, now, this is my will, this is what I really wanted to have happen. Maybe I didn’t actually do it, but this is my intent. And so you look at it that way. And another thing that I’ve started talking to, especially business that is bad, is like, we talk in trust and this kind of trust and that kind of trust, and these shelters, blah, blah, blah. I say, Look, you’re just making a contract with your partner and your family, and don’t worry about the names of these documents, these are just contracts, these are just what you.
0:16:50.4 Kurt Baker: This is what’s actually gonna happen based on the contract that you set up with whoever you’re trying to work with, ’cause they deal with contracts all the time, many of these business owners, so I try to equate it to something like that, so. Wouldn’t you have a contract for what you wanna have happen to your family? Would you wanna write that down and make sure it’s clear about exactly what steps you want to have occur? Should anything happen in these different circumstances? When you do that with one of your vendors, when you do that with one of the other people you’re dealing with, and if you talk him that way, I found that like, Oh, okay, that makes sense. Yeah, I should set up a contract for this, I should do all these things necessary, ’cause we talk in our own terms, right, so I’m like. And you could confuse the heck out of it, not even get confused what I’m reading some of the literature to come through some of the stuff that comes out, and you’re like, this kind of interest, I’m like, Oh wait, I gotta really read it carefully to make sure you understand exactly, but basically, you’re just creating all this paperwork that’s a really, different contracts. Make different things happen at different points in time, and I found that they seem to understand it that way, that’s kind of what I’ve seen.
0:17:53.2 Len Garza: I think I should try explaining it that way, Kurt. That’s a great idea. Because you’re exactly right. So we’ve been talking about estate planing primarily, but a large part of what I do is help on the business side, help them with all types of contracts, service contracts, things like that, and for me, that’s what makes working with trusts and all these other mechanisms. They’re very much the same, whereas out in the world, out in the legal world, they’re looked at as two different specialties, do different lawyers or divisions, the law firm handle them. Not for me, for me, they’re very cohesive when you work together like this and you’re exactly right, it’s designed to give certainty as to what your intent is, and at the end of the day, that’s really why I do what I do, because it’s all about relationships. Business to me, business, life. Everything is all about relationships.
0:18:46.0 Len Garza: Once you get past the handshake and the like stage, hey, we wanna work together, we wanna have some type of a relationship. Where do you go from there? Well, if you wanna make sure to protect it for both of you, make sure you’re talking apples to apples, memory fades, I say one thing, you may have heard the other. There’s no mal intention behind that, but things, a lot of things are going on. I tell my wife when she’s like, “Well, you know when our daughter’s upcoming recital is?” I was like, “You know what, I know you told me, but it was like in one ear and out the other, right?” That’s kind of the role I play in my house, and she rolls her eyes, but I say, “Look, if it’s related to work or client work or something, I remember it, steel trap.
0:19:30.0 Kurt Baker: Right, that’s funny.
0:19:30.2 Len Garza: But when it’s anything, if it’s anything outside of work, not saying it’s unimportant, definitely not, that’s a good way for me to get into a fight at home.
0:19:37.7 Kurt Baker: Reckless a bit.
0:19:39.6 Len Garza: I may have just gotten in my fight, my way into a fight anyway, unknowingly. You see what I do to myself, Kurt, so.
0:19:46.5 Kurt Baker: Well, your wife’s also a business owner, so she at least has some understanding, right?
0:19:47.7 Len Garza: Exactly, exactly.
0:19:49.4 Kurt Baker: She can empathize with you a little bit there.
0:19:50.6 Len Garza: Yeah, yeah. So it’s really, it’s that protection where. And business owners understand this, there’s a different thing between when you’re talking to somebody, whether it being on the phone, but things become real when you put them in writing. Whether it’s an email and you bullet point out, hey, this is what we discussed, this is the compensation. This is the term, how long we’re gonna work for each other, how long this is. Once it starts getting spelled out, it’s like, whoa, these are. Is that really the number I want? Is that. Or do we say something different? And definitely when you put it into a contract. So when you put it into a contract, if you’re unsure of what type of. Something goes sideways in the future or there may be a dispute, you think the other thing that you’ve talked about with your partner, oh, I don’t know if I remember that being our arrangement. Rather than getting into a blow-up fight, isn’t it better to pull out the contract and say, “You know what, oh, okay, I had that wrong.” Or maybe you have it right, but at least you know going in better than not having a memory that just kind of fades away on those things.
0:21:00.0 Kurt Baker: Right. And it also helps you get focus and clarity on what you actually wanna have happening. And sometimes people are like, oh, I’ll let them worry about that stuff, which like terrifies me when I hear that. Because that’s the worst person to have do it is your heirs or your partner or somebody else, you need to participate in the conversation because you want the result to be as ideal as possible. And you being a principal in the business and a principal in your family, you have input into that decision-making process. Because once you do it, everybody’s gonna feel much clearer, because a lot of times people are literally left in the dark about what’s happening. Especially if you have one person who’s a business owner and a spouse who’s not a business owner, just say, well, I just know that person takes care of everything and the lights stay on and the kids school’s paid for and I’m living a happy life. I don’t really care how it works necessarily, but you have to have some participation in case something happens so you at least know where to go and what leverage to pull to move on to the next step. And I definitely wanna talk about more about that, but we’re gonna have a quick break. You’re listening to Master Your Finances.
0:22:14.2 Kurt Baker: Welcome back, you’re listening to Master Your Finances. And I know Len, you brought up before that procrastination thing and that’s to me that’s a problem and I know to you, that’s a problem too. Because sometimes people come to you kind of, unfortunately, after the fact, when something actually occurs like that person, I think you say it was in manufacturing or.
0:22:34.0 Len Garza: Right.
0:22:34.4 Kurt Baker: And it’s hard to fix things afterwards, things can be done, but it’s a lot harder after the fact than it is if you do the simple things ahead of time and have those conversations. And to me that’s one of the keys, especially as a business owner, you really have a responsibility to your partners and to your family to be very clear about what you feel is the best vision and have a conversation with them in case there’s some modification to that. But you definitely have to have input and if you don’t get involved in this process sooner than later you’re not gonna be. And another thing that people forget is just like a contract, you can always amend it if you change your mind later and that’s a very simple process. Do you wanna talk a little about how we get them to act maybe like before April 15th or March 15th, depending on what their personal deadlines are?
0:23:22.6 Len Garza: Absolutely.
0:23:23.0 Kurt Baker: Just like they need to do with their estate plan, their taxes, they need to do that with their estate plan and set a deadline and go do something.
0:23:28.5 Len Garza: Right.
0:23:28.7 Kurt Baker: If they haven’t already.
0:23:29.4 Len Garza: Well, I think we were mentioning between the call, Kurt, is that one of the most difficult things is, you don’t know when the deadline is. When it’s not in April 15th, it’s not. When are any of us gonna pass away or a Black Swan event’s gonna happen or even something that maybe we know about or the partner knows about. Things like our own divorce or, oh, I wanna leave the business, I decided I wanna do something else with my life. Go ahead and pay me out, my share. Well, if that hasn’t been planned out and I think my share is of a business, just throwing out numbers, two million. And my partner says, “I don’t know how you got that, the most it would go out in my head is 500,000, if even that.” Where are these numbers coming from? How do we even determine that? Well, if things have gone sideways in the relationship, is it more difficult to come to an agreement when you’re already frustrated or angry with somebody else versus when you’re on good terms? It becomes exponentially harder when you’re on bad terms and more expensive. Because if all of you’ve hired lawyers at that point and it becomes a fight, can get very expensive. So I say, as soon as possible, make it now, make it. And it’s not even getting the planning done.
0:24:57.6 Len Garza: Get to talking to your advisor, get to talking to somebody and schedule that call, right? And then they’ll take you through, they’ll take you through what to do. You don’t have to know what steps you need to take to protect the continuity of your business. You don’t have to know how a will does not adequately protect your business and could provide you a false sense of confidence in thinking your business is protected. And how as a business owner, you actually need more. And you don’t have to know, but that’s what you have other advisors for, that’s what I do. That’s what if you are already working with an attorney, talk to them about, right? And that’s what they’re there for, that’s to help guide you through those things, right? And so you can focus on keep focusing on what you do best, your own business, your family. And that’s why it’s so important to have advisors to go through that can help take that load off. As business owners, I’m a business owner myself, you too, Kurt, it’s wearing so many hats, so many hats, right? And sometimes you have to wear multiple hats, I get it, I’ve been there or I am there with some things. But when you realize I’m not really the best person for this hat and somebody else should be wearing it to make that decision.
0:26:27.4 Len Garza: Is a true decision in my mind of leadership of saying, look, you can do everything, a lot of different things, but you can’t do all things, all yourself. And this is one of those things, get. Ask for help, which I think is hard for, definitely hard for me growing out of, but I think a lot of business owners realizing, hey, I need to ask with help for this and that’s okay that’s how I protect the people I care about most.
0:26:53.0 Kurt Baker: I heard two very important points there. One, we went over fairly quickly, which is whenever you’re starting a business, especially with partners, it is always start the business with the exit in mind, even if it’s just yourself. And you can back into that, it’ll make things much clearer about what the intent of starting the business, what you plan on doing with it, how you plan on exiting it. Now, again, you can change these things as time goes on, but you need to have a plan for what your vision is of how this business will operate when it’s up and running with your partners and how, if we decide to sell or buy each other out, how that formula is gonna be done. And you can help. Advisors can help with that process if you’re not sure how to do it. And the other is really just about planning it out, so you are using your highest and best use, what is your area of genius? What do you do that nobody else can do? Because you can for a few dollars, relative to your personal experience and your personal brand and who you are as an individual inside of your own business. Like what is your piece? You can hire 20, 30, 40 years worth of experience. For literally hundreds of dollars an hour, you can’t live long enough to gain all that experience.
0:28:06.0 Kurt Baker: It’s much more cost effective to hire it out and focus on where your highest and best use is because you can generate more business and more income. And easily, if you really think about it honestly, if you spend that extra couple of hours that you’re doing and spending on this research, which you need to have some understanding of what’s happening, obviously. But once you get to the point of understanding a concept so you can communicate with the other professionals, at that point you just bring them in and they can guide you and assist you. But if you spend more than that, you’re gonna. You’re losing money, you’re literally losing money and it’s not necessary. And you really should be spending that time either doing what you do well or educating yourself on being better at what you do well as opposed to learning somebody else’s job. It doesn’t serve you long term.
0:28:48.8 Len Garza: Right, right. Boy, we can have a whole day talking just about this, I love this.
0:28:54.0 Kurt Baker: We’ve had quite a day, but we have a couple few minutes.
0:28:56.0 Len Garza: Oh, I thought this was gonna be a multi-segment here, Kurt.
0:29:00.0 Kurt Baker: I have dinner plans.
0:29:00.9 Len Garza: I’m hurt, I’m hurt. But anyway, exactly what you said. And what I hear is, but they can’t do this as well as me, “They can’t. If I bring somebody in, they’re not gonna be able to have. To do that.” Well, do you like that? Do you like doing it? Or is it your passion to do that? If it’s your passion, then okay, do that. If it’s your passion to run spreadsheets and whatever you’re doing in your business, if it’s your passion to focus on doing the books for your business, by the way, I don’t think I’ve run across one person that that’s their passion, but I’m just giving you an example.
0:29:38.0 Kurt Baker: Yeah, bookkeeping is the first thing I get rid of.
0:29:40.0 Len Garza: Right, right, exactly.
0:29:40.7 Kurt Baker: Personally.
0:29:41.6 Len Garza: Exactly, but I think it was in a book by Dan Martell that I read.
0:29:46.4 Kurt Baker: I love him.
0:29:46.5 Len Garza: Where he’s like, “You don’t have to do it. 80%, if they can do 80% of what you do, 80% is awesome.” So get.
0:29:52.6 Kurt Baker: Buy Back Your Time, right?
0:29:53.0 Len Garza: That’s exactly it, which is, I highly recommend.
0:29:56.0 Kurt Baker: I love it, that’s a great book.
0:29:56.5 Len Garza: Great book because it gets you into a mentality if you’re not there of already, of how you have to think, to not only grow your business, but just to have peace and sanity and actually be happy and fulfilled running your business. There are many businesses owners out there who are slaves to their business, and they don’t feel like they can look up and get out of it. And a lot of the strategies, a lot of things that we’re talking about, Kurt, obviously, is this is part of that, and this is all holistic. There are a lot of different areas here, but the philosophy runs through. Get help with this stuff, that’s not your core competency, hey, if you wanna go research on the internet and things, yeah, that’s fine, there’s a lot of stuff out there. But once you’re looking at getting customized, that’s where the research tends to fall apart and get a lot harder. Because it’s like, well, what about, how does this work for my situation? I understand, I seem to understand, I’m sophisticated, I live in a revocable living trust, or an irrevocable trust or a real estate trust. Okay, that sounds like what I would need, but what if I have properties, I have an investment property in two different states? Is that. Do I need two trusts? Does that help?
0:31:15.4 Len Garza: I can’t find that anywhere. And by the way, I’ve spent all morning on a Saturday researching this, like what. Wait a minute, is this what I wanna be doing? There’s so many areas where that can come into play, and as a business owner, you don’t have time, you don’t have time for that. What’s the true value of your time? And as you know if you’ve been running business any amount of time, time, not money, time is your most valuable resource, that’s finite. Money’s important, you need money to lifeblood a business, but time, we all have finite time, right? So if you can use others, hire others to handle these other things, and just max it out on your zone of genius, right?
0:31:58.7 Kurt Baker: Right. And what if you spent those couple of hours actually doing something related to what you do well, I’m sure you would have generated far more income for yourself, your business, your family, than the cost of whomever that expert might have been to bring in and just solve the problem for you, relatively quickly and relatively painlessly and much faster and cheaper than you taking all that time in there. And I think, honestly, I think, and you mentioned to yourself, I think we all. I have the same issue, so I wanna be. We have to be open about this. I have the same issue where you wanna do it all, you’re like, I can do this, I know, I can do math, I can do this, I can do that. All these jobs, in theory, you could do probably. But the question is, is that really the best use of your time? I know how to mow my lawn just fine, but I don’t do that anymore, because it takes me a couple of hours and I’d be better off if not working on my job, recovering, relaxing, rejuvenating, doing things I love to do. So that then a Monday morning I’m gonna be excited about going to work and helping my clients and serving my clients. You wanna. You have to remember that you have to add that part to your life because otherwise, you’re gonna wear yourself down. If you don’t have that enjoyment side of it and that rest and relaxation side of it.
0:33:06.0 Len Garza: Boy, that’s so important, what you just said, Kurt, and it took me a while to get to that point. That not mowing your lawn, not doing this other thing, yeah, it can mean doing your zone of genius, but it doesn’t have to mean that. It can mean resting and often does. In my situation, and I’m the same way with you, Kurt, it’s like, I’m not saying, directing, hey, this is what you should do, I’m talking to myself here. This is not just something like, hey, I can understand it on an intellectual level, area of genius, I got it. No, it is a, I get out of balance with that, frequently. And I have to say, am I doing my area of genius, my highest and best use here? A lot of times, the answer’s no, transparently.
0:33:51.0 Kurt Baker: Many times it’s no.
0:33:51.6 Len Garza: But just putting recognition on that for myself allows me to try to do the right thing for my long-term goal, for my family, business, everything, right? But if I don’t even know that’s a thing to shoot for, I’m in the weeds all day, every day and feel trapped after years. How did I get in this situation? I created my own prison, this business. This was my dream, what happened?
0:34:19.8 Kurt Baker: Alright. We’re gonna get you out of prison, but first we’re gonna take a quick break, alright? You’re listening to Master Your Finances. Alright, welcome back, you’re listening to Master Your Finances. We left Len was in his personal jail there, we gotta get him out. So, yeah.
0:34:37.7 Len Garza: Help me out here, Kurt. Please, please.
0:34:39.0 Kurt Baker: Yeah, you’re good, you’re good. No, it’s important to really structure your life in a way that really allows you to do what your highest and best use is, your area of genius. You get a lot more joy out of it, gives you energy. You need to do things that give you energy and hand off the things that don’t give you energy, even if you’re good at it. And I learned that a while ago, and I’m. And it’s still a struggle, frankly, but you keep bouncing it back. Now, I get actually a little upset with myself if I start doing things I know I shouldn’t be doing.
0:35:02.0 Len Garza: Right.
0:35:03.3 Kurt Baker: And I think when you start really getting that focus down, it’ll eventually take traction, but it does take some effort and does take some time to start handing these off and get rid of them. And only doing those things that give you energy, give you joy, and actually, ’cause you’ll add value, you wanna come in and do it. So now for the business owners that we’ve been talking about, why don’t we get down into that a little bit, because I know that all of us as business owners at some level have always struggled with doing this advanced planning and making sure that everything is done the way we wanted to go. And I’m sure they think about it occasionally, off and on, but to actually take action and move in the right direction. So what are some basic things our business owner friends out there should be doing just to get started and then eventually, if you get the ball rolling, hopefully they finish the whole thing out.
0:35:47.7 Len Garza: Right.
0:35:48.4 Kurt Baker: And then things will be much better for them and their families.
0:35:50.0 Len Garza: Right, right. So I think one of the key ways to look at this is what are the threats? What do we wanna protect against? And you’ll… We talk about it a lot in estate planning, advisor circles, right? The four Ds, sometimes there are five Ds and we’re talking about something like this happened to you or a partner that are existential threats that could sink your business, right? So death, if you die, right? The ship has no captain. What happens, right? Disability, right? Again, basically the ship has no captain. Well, what happens? Divorce, this is one that surprises some people. Well, what is my… Divorce, that’s kind of a personal issue what does that have to do with my business? Well, a lot actually, because you may not know the way things get split, this is where the intersection of business and personal, while we or some people you may think of it as separate things. Oh, I like to keep business and personal separate, that’s not the way the law looks at it.
0:36:57.6 Kurt Baker: Not New Jersey.
0:36:58.0 Kurt Baker: No, no, you’re right. And they put it all into one pot, your business is just the same as your bank or savings account, the same as your stocks or IRAs, 401Ks, it all goes into a pot and it gets split, right? So if you don’t have a plan, there’s good news and bad news if you don’t have a written plan. The good news is you actually do have a plan, the bad news is it’s…
0:37:26.6 Kurt Baker: State of New Jersey.
0:37:27.0 Len Garza: The state’s plan, the state’s plan, right. And it’s not the plan you want.
0:37:31.8 Kurt Baker: They don’t know you very well, frankly.
0:37:33.2 Len Garza: They don’t know you very well. Congress people from decades, years ago, that have no idea about you, your family, idiosyncrasies of your own family quirks that there’s a brother or sister-in-law you can’t stand that only sticks their head up when money’s involved and haven’t talked to you forever.
0:37:55.7 Kurt Baker: Oh, that long-lost relative.
0:37:58.0 Len Garza: Right, long-lost relative that I’ve never heard of them but all of a sudden, they’re. They may have a claim to the money. These things happen, money and human nature, they bring things out of people. So if you don’t have a plan it is go to your local law library and open up the creaky books and some statute is gonna say, yeah, your whole family, your situation fits into this round hole.” And typically the way this round hole happens is, well, we don’t know, you can’t figure it out over yourself, so you go to a court to figure it out. And that’s always a messy and expensive process. If you’ve ever been through court or even if you’ve never been through court, I tell people, if you’ve never been through court before just think of what it’s like going to your local DMV or motor vehicle department or any government agency like that. And you get in line, you get in line, the people there that work there are just overwhelmed with paperwork.
0:39:07.0 Kurt Baker: Yeah, way under capacity, they don’t have enough capacity to handle all the stuff coming through for sure.
0:39:10.4 Len Garza: They don’t have enough capacity and COVID, even though it’s, I don’t wanna say it’s behind us or not or get political or anything with what I say there. But that only exacerbated things with people having. With these agencies having cutbacks and things. So what does this all mean? That means that as important as business continuity is to you, your family, knowing who’s the captain and having all this fared it out, as important it is to you, you are just a number to the court. You’re just a business and a number and things can die on the vine for nine to 12 or more months while they finally get around to your number, right? And so I don’t know about your business, but there’s no business that I know that can survive without a captain or direction or who’s the owner or what do we do for nine to 12 months.
0:40:08.0 Kurt Baker: Very difficult situation.
0:40:09.7 Len Garza: Morale dies, as morale dies, customers, clients sense the same thing, they leave.
0:40:16.7 Kurt Baker: And the employees.
0:40:17.5 Len Garza: Key employees leave.
0:40:18.7 Kurt Baker: Yeah, you can loose…
0:40:18.7 Len Garza: It starts to become a vicious circle, right? So number one, getting back to your question about what we do, we realize that there’s these four Ds, death, disability, divorce, departure. This is something, what if you wanna leave the business? What if you have a business partner, if they wanna leave the business? If you don’t have a plan set up, this can very easily lead to a dispute and even a fight and in the worst case is litigation. Because you’re trying to figure out, okay, they’re leaving, they wanna get paid out X amount, what’s the company worth? Which is gonna lead to how much their share is worth, this is where a lot of things break down. And then also if you or somebody dies becomes disabled, what does the compensation work like there, right? Because if you die, for example, unless you have a plan set out, everything you own goes to. Let’s say you’re married, goes to your spouse or your estate automatically, including your business assets. So this is something that shocks a lot of business owners that I talk about. Say you have a partner and your partner passes away, you don’t have anything in place, you have a new business partner.
0:41:39.6 Kurt Baker: Yeah, the spouse.
0:41:40.9 Len Garza: I do?
0:41:40.9 Kurt Baker: Yeah, right.
0:41:41.9 Len Garza: Well, it’s, of course, it would all go to me, this is all how we worked it out. We’re two partners. One of us is out of the picture so it automatically is with the surviving partner, right? It’s like that may sound like the common sense thing that would happen, but it doesn’t work out that way, it doesn’t work out that way. All of a sudden you are in business with your partner’s spouse who probably has no interest, whatsoever in being your partner. The spouse just wants the…
0:42:12.4 Kurt Baker: Money.
0:42:13.0 Len Garza: The payout to be compensated from their deceased spouse, meanwhile, as empathetic as you may be there, you’re trying to keep the business afloat ’cause you’ve lost your right hand person.
0:42:24.0 Kurt Baker: Right.
0:42:24.9 Len Garza: And again, if there’s no plan in place, if you haven’t thought about these things, what you want to happen in these scenarios, you’re talking about the perfect scenario for your business partner and your family, your spouse to be pitted against each other in a fight. Can you think of a more nightmare scenario? If I were to look at that, I would never want that to happen, but yet that is the default that is set up if you’re not proactive and get these things planned out and in place. This is all the planning that we go through and scenarios and questions that we go through the process. At the end of the day, we get to actual enforceable legal agreements. So what do those look like? Well, for the business, depending, and I don’t wanna get too technical here, Kurt, a lot depends on whether you’re a corporation, LLC, partnership, things like that. But at the end of the day, you want some type of written agreement that in the name of the agreement, don’t get hung up on the name.
0:43:28.4 Kurt Baker: Right.
0:43:28.7 Len Garza: Right? It’s what is important, what is actually in the document, right? But for your help, what is this document typically called? Many times it’s called a buy-sell agreement, it can be called a partnership agreement, it can be called an operating agreement. There’s a lot of different names. So the important thing is to don’t pay attention as much to the title, but read exactly what the provisions say. Because I’ve seen agreements that say they’re a partnership or a buy-sell agreement on top of them. And I can tell very quickly within reading them that they don’t have the necessary language in there or their glaring holds missing, even though there it’s called. It says buy-sell agreement in capital letters at the top. So it’s really important to look and see what’s in there or more importantly, get your business lawyer who’s experienced in this area.
0:44:30.6 Kurt Baker: Right, to read it.
0:44:30.8 Len Garza: To know and see what’s in there.
0:44:32.0 Kurt Baker: Sure.
0:44:33.5 Len Garza: An example, I’ve seen language in there saying, oh, if a business owner dies or becomes disabled, the business may purchase insurance to help pay out that obligation so the business doesn’t have to come out of pocket, out of cash flows. Okay, yeah, that language is great, but it was business.
0:44:55.0 Kurt Baker: Did you do it?
0:44:55.4 Len Garza: Was insurance ever purchased.
0:44:56.7 Kurt Baker: Did you do it?
0:44:57.4 Len Garza: Did you do it?
0:44:57.8 Kurt Baker: Exactly.
0:45:00.5 Len Garza: And so this is where having cohesive communications between and amongst your advisors really helps.
0:45:06.7 Kurt Baker: Right, correct.
0:45:07.7 Len Garza: Right? Because a lot of attorneys, most attorneys out there, they can draft the agreement, they may be able to draft the agreement, but they don’t provide the insurance. So are they connecting you with a financial advisor or broker or somebody that provides that insurance and making sure it gets done. Because that is a massive risk for you that is waiting if that piece doesn’t get done. It’s not just, oh, hey, I’m gonna hand the agreement off to you, talk to your own advisor to get it done, that’s a way to do it, but you know how it is.
0:45:42.0 Kurt Baker: That’s not the most effective way.
0:45:43.0 Len Garza: No.
0:45:43.5 Kurt Baker: That’s why what we talked about early on is that you really need the advisors talking to each other to make sure that it’s all completed and every piece of it is done.
0:45:50.9 Len Garza: Right.
0:45:51.4 Kurt Baker: Then you can rest TV, then it’s just reviewing and moving on. So I know we’re running low on time, so Len, it’s been awesome. I know we could definitely do this all day. It’s dear and dear to both of our hearts, but any last words before we say goodbye today?
0:46:04.7 Len Garza: No, it’s been great being on, Kurt, and I would say, the. Again, pulling it back, the biggest enemy for businesses and really the people you care about is procrastination on this. You don’t have to run the ball all the way to make a football analogy, get the ball down the field all the way. Allow on your team members and your advisory board to do their own part, schedule a meeting with your financial advisor, with your business attorney. Start there and then take it step by step after.
0:46:33.4 Kurt Baker: Awesome. Thanks again, Len. You are listening to Master Your Finances. Have a great day.

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