Business Innovators Radio - Interview with Paul Stawinski, Founder of CLU Wealth Advisors Discussing Inheritance Positioning

Episode Date: February 29, 2024

CLU Wealth Advisors is a full-service wealth management firm that specializes in personal and corporate financial planning including comprehensive wealth accumulation and estate planning. Our focus includes clients in the entertainment, fashion, and music industries, high net-worth individuals, and businesses. Our objective is to provide stellar service by communicating with our clients regarding all aspects of their financial lives.Founded by Paul Stawinski CFF, CLU Wealth Advisors, has maintained relationships with clients in ways only a boutique business can, acknowledging and focusing on the individual needs and solutions specific only to them. Our practice centers its Financial Planning strategies around each individual’s investment and Insurance objectives, wealth management needs, and risk tolerance, providing a complete financial platform for our client’s lives. Paul is a Certified Financial Fiduciary.Learn More: http://theclu.com/Securities are offered through Garden State Securities, Inc., (GSS). Member FINRA, SIPC. 328 Newman Springs Road, Red Bank, NJ 07701. 732-280-6886. Advisory services are offered through Garden State Investment Advisory Services, LLC, an SEC-registered Investment advisor. CLU Wealth Advisors is an independent branch office affiliate of GSS and GSIAS.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-paul-stawinski-founder-of-clu-wealth-advisors-discussing-inheritance-positioning

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have with us, Paul Stavinsky, who's the founder of CLU wealth advisors, and we'll be talking about inheritance positioning. welcome to the program.

Mike, thank you very much. It's my pleasure to be with you. Yeah, thanks for coming on. And I think this is an interesting topic because inheritance positioning. So that kind of gives the connotation of what should we do? We should put it somewhere. We should do it with something. There should be a strategy.

So before we dive into that, give us a little bit of your story and background. And how did you get into the financial services business? It's an interesting and a long story. So I'm going to. I'm going to short-circuit it a little bit. I've been in the business over 30 years. I came into the business from a family background that had nothing to do with the financial services. As a matter of fact, my father was an inventor and an engineer. But I experienced something that not everybody does. My father went blind and he lost his entire business. So inheritance may not

necessarily mean that somebody's going to receive money, but it's planning to what could happen. And I don't mean to say that people will be sick and can't continue what they're doing. But it drove to me a real sensitive point in my life. And I went to college, of course, and got my degrees. And I came back and tried some of the things. And I said, you know what I really like is to help people. So I said the best way to do that because I loved money. I loved investing.

I've been listening to WQXR and the old radio stations in Manhattan, you know, wherever I was at home with the stock market update. So I love, make a long story short, I got into the business and it became very evident that what I thought was probably not as significant as it should be is the concentration of effort that people should be putting in prior to events rather than after events. So that's basically what the groundwork was. And I've had my own firm now for many, many years. I've served as vice president of three major financial services companies. one was overseas. It doesn't matter the names, but the bottom line is that I've held senior positions at major financial service companies. And now I do it for me and I do it for my clients. You know, and I love the point that you made about there's certain kind of like trigger events that

come up in someone's life that you should be prepared for. Not that you're running scared or worried, but, you know, it's kind of like, if this, then that. If this happens, then that is what I'm going to do. And so what are a couple of those things? leading up to then that inheritance positioning because many times I would suspect, you know, an inheritance triggers when there's a death. So it's not like that is typically planned. So how do you work with your clients regarding planning ahead of time? Well, I tell most clients, first of all, let me give a statistic that is pretty interesting. In the next 10 years, $70 trillion will change hands, meaning it would be passed from generation to

generation. It's the largest wealth transfer in the history of the world. So it means something very, very specific to every one of us, whether it's $50,000, $500 million, or, you know, higher. The point is that it's going to happen. And what I concern myself with now is how do you begin the conversation with parents, friends, with business associates as to what could happen or will happen or what you want to happen upon death with your assets. That's really the major thing I try to impress. And once that happens is how do you start that conversation? Let's say it's your parents.

You know, it's very difficult to say, hey, mom and dad, can I please have the half a million dollars you're going to leave me? Maybe 10 years or 15 years. They're not going to have it now. You don't do that. You talk about what they want to have that money do for you. And it's a conversation that gets you into the discussion of how do you mitigate taxes? How do you mitigate loss of assets?

Because there's plenty of pitfalls and I can go through some of those as we go along. But that's really what I do is I try to set it up so that now we're talking about what they want that money to do for their beneficiaries. Yeah, and that's a huge point because I think that when you think about like the, you know, the striving years of, you know, here's mom and dad that are striving to plan for retirement, build up, grow, and then we're thriving because we've got this nest egg. And then now they get to the point of at whatever age, you can always plan, you could plan for your death in your 30s. But, you know, when you get to the point of we have a retirement portfolio that is growing every year, what do we want it to do when we pass? And there could be some things like charitable, you know, considerations. There could be the family. And then I just think that

that word legacy ties in. So what are some of those key principles and strategies that you focus on working with your clients when you start that conversation as the parent or parents planning for that wealth distribution to theirs? Where do you start? Well, first of all, it has this complexion of assets. In other words, each asset that a person owns has different complexions, both tax complexion, investment complexion, use of money complexion. So what you have to do is determine which buckets of these assets you want to turn over. I'm going to tell you a quick story. This is very recent. My wife happens to be the trust officer for a family friend of ours who died not necessarily surprisingly quickly, but within a time frame that we weren't prepared for.

Yeah. What she did was she left out two people from her inheritance that she really, really wanted to and included two people in her old trust that she didn't want involved. Since my wife is now trustee, it's a nightmare, only because the people who wanted to be in the trust are not in the trust, obviously. And the people who have the trust and have the assets don't want to give them up, which, again, talks to the planning aspect of this. You don't necessarily have to title each asset, although my biggest concern, if you have not written a will, you do that immediately. You do not want anything to go through probate. And I can talk to you about until the sky, the sky start falling, that probate is the worst thing you want to happen, which means everything goes through the government. They then decide who gets it and win.

And that can be years in some cases. I mean, there was a, I think just recently Prince's estate was settled. Now, that's what's going on seven or eight years now. And, you know, the infightings, you don't want that to happen. So I tell everyone, first thing you do is you make a will. If you have qualified assets, those can be directly given to a beneficiary by beneficiary designations. And I'll talk to you a little bit in a second about complexion of the complexion of the

tax implications of qualified versus non-qualified money. And then again, what if the inheritance is in cash? What if it's in real estate? What if it's in a qualified plan, as I just mentioned, or in some stocks or bonds? So that's pretty much the beginning of it. You know, that's a really great point about the complexity, a complexion of. It's kind of like, what's the purpose of this fund or this money and what could it do for this person? And it's kind of like, you know, the old saying begin with the ended mind. You know, you want to say, okay, well, with this, I would like it to accomplish that. And that's a really great kind of overview that you brought up there. You kind of touched on this a few minutes ago, but I think that all the time you hear like an overview like that,

and you're like, oh, that sounds easy. Let's just go out and do that. But I think that there many times are misconceptions or mistakes that people make. So what are some of those top, low-hanging fruit common misconceptions that people make when starting to plan? for moving their money to their heirs? Well, the first thing is, you know, consider the possibility that you may never receive any money. Now, what I mean by that is, let's just say you have parents, you have friends or wherever else. There are lawsuits. There are back taxes.

There's debt. There's probate. And shocking of all, you may accidentally leave somebody out, like I just told you. There's a case where a gentleman 58 years ago had a divorce. he never signed the divorce decree papers. She took all the money, the X-Y. Now, it's so simple. It sounds ridiculous. Why wouldn't he have signed him? I don't know the reason, but he didn't. So those things come up. It's basically you have to make sure that all your T's are crossed and your eyes are dotted. And that means, again, having a professional team and or a professional fiduciary advisor,

who can at least talk to you about some of the pitfalls, how you can avoid some of these pitfalls, and maybe review documents. I don't put myself out to be an attorney, but I work with many, many attorneys. I work with many, many CPAs that we trade back and forth our expertise in a client's situation. So, you know, that's basically, you know,

the pitfalls are there. You have to kind of walk the landmine a little bit, but with help. You know, you mentioned about that example, with your wife and and this person was supposed to be in the, you know, the mix but weren't. And then these people weren't, but they are. That kind of gives us the feeling of, you know, you better set it up the right way and then check it every so often.

Maybe it's not set it and forget it. Maybe once a year you sit down and you look at your, you know, set up with your wills and your paperwork and your trust or whatever that you've done, right? Getting with that professional. But that leads me to my question, because as you, you were describing that, it made me think of this using that, that example. What if there's a, you know, let's just use mom and dad as the example. And they're sitting down going, you know what?

We got this number of kids and we want to take care of them. But this one right here, they need some help. And we can't just give them, you know, our state divided by three, if there's three kids. We want to make sure that there are checks and balances in place. What do you do, not to cut someone out, but what do you do in your advice? if you want that person to have access to funds, but in a controlled way. Well, there's a couple ways to do it. And again, I'm going to reiterate and repeat myself a couple times today.

You need to have a will and a directive, not only a medical directive, but, you know, who's going to be in charge of taking care of these assets, but most important, a will. And inside that will, you can make things like a spendthrift clause or you can, let's assume someone had a, you know, a person or family member who needed special needs. You don't want to give them a lump sum of money without having someone oversee it. You know, anything can happen to it. You know, the spendthrift provisions are immensely important, especially like some of the trust fund babies. You know, people take money that they never earned. Don't really have the value added to that money because they didn't really earn it and just whittle it away when that wasn't the intention of their

parents. Their parents wanted them to have some help in life, but not just to throw it all the way. So those are the two perfect examples of how you can minimize some issues. The other is making sure that you include per stirpes in anything. Persterpes means children may be born after a will is done or beneficiary designation in a life insurance policy where you put down, well, here, this is my wife and I want 50% to go to Jane, my daughter. well what happens if you have Mike and Bill three years later and you forget to change it? So per-sturpes inside of a beneficiary designation is extremely important. So those are the kinds of things.

And then you dictate. I happen to have, not that this is, I have a very large collection of guitars. And a lot of them vintage, a lot of them signed by some of my clients. So I have certain guitars that I want to go to certain people. And only because either they gave them to me or I know. that it would mean an awful lot to them. So those kinds of things you should do. Just to take it all, throw it into a bucket and say, here, it's all yours, go do what you

want with it. That's nearly what, it's not what I want. And certainly, my daughter is a wonderful doctor. Believe me, I love her to death. But I know she wouldn't know what to do with these things. And it becomes arduous, a task to break up all of these little things and send them to the right people. And again, he is my wife's, you know, example.

she's dealing with that now. There's some art involved in this estate she's wheeling with. And then nobody dictated who it should go to. So there's all kinds of things that can come up. So yes, to answer your question very long-windedly, you must make plans. You don't just, you know, say, okay, I have a will. It all goes to my wife. Not a good idea.

And we know that there are times where these events, death, you know, it just happens. All of a sudden, you know, car wreck kind of a thing. and oops, we didn't have time to plan. But for the times that we thought ahead, you know, and they're doing that legacy planning and estate planning, yes, it is arduous and yes, it is detailed. But when you were describing that, I was putting myself in that position thinking, isn't it really an act of love and care for someone to sit down and say, here's our estate, let's just kind of think through this thing and go, you know what, this person really wouldn't

get the full appreciation of this piece. So we're going to go and then and I really just feel like it becomes this whole, it's more than just passing numbers on a balance sheet to another person. It becomes like I'm caring so much that I'm taking the time to do that. Yes, absolutely. You know, one of the things that again, I counsel clients on, you know, while you're obviously, you know, have assets and you obviously have some, you know, things. in mind where you want them to go, you should consult with a professional. And I'm a certified financial fiduciary. What that really means is I have my client's best interest at heart. You can have a professional. It doesn't have to be my firm, but somebody who really will oversee with you

all of the different aspects that you may not even think to deal with. Like, what do you do with cash assets? What do you do with a house or what do you do with a mutual fund or what do you do with especially retirement assets. And again, it can have terrible tax effects if you don't have it structured properly. And just like you've mentioned some legal considerations, I'm confident that you would say, I'm not an attorney, so we'll bring an attorney or you bring yours in in this conversation. Same with tax considerations. You can speak to that. And I want to ask your advice on that last piece here as we wrap up. But I know that you would say, hey, Mr. and Mrs. Client, if you've got your CPA, bring them to this meeting. Let's make sure that everyone's

on the same page or I'll bring in a CPA. But let's talk a little bit about some of that tax consideration because when you are doing that caring, loving, let's make sure that everything is passing the right way from, you know, to my errors. There are going to be some potential triggers that, you know, you might just go, oh, here's my money divided by three. And if we're gone, we're gone, what do we know, what do we care? But in reality, if you can, positioned it the right way so that it doesn't have as big of a tax burden to your heirs, then that's yet another level that you can do some of that pre-planning, right? Correct.

And a CPA and an attorney in conjunction with what, you know, a certified financial planner will do, is you take the assets, like, for example, interests. Let's say you have a large credit card balance. Do you want to pay that off? Obviously, yes, probably because the highest interest rates that you're going to be paying. What about a mortgage? If you've got a 3% mortgage and you can earn 7 or 8% conservatively with a good balance portfolio, do you really want to pay off that mortgage?

So there's all kinds of considerations that a CPA obviously would be involved in. And the other, again, is pre-tax versus tax deductible assets. If you inherit, let's say, a 401K from your parents, you have 10 years to take that distribution, but it's fully taxable because it was tax deductible. when the contributions went in. Let's assume they have a half a million dollars in a mutual fund and stock portfolio. Well, that gets transferred directly to you through the will. But you don't have to take that immediately.

You can take your time. So you structure what income you need, first of all, and it may not me just sailing everything out, you know, put it all in cash and say, okay, let's just cut it down the middle or cut it three ways, as you just say. There are a lot of considerations that have to be done. And a lot of this is not done, and that's the biggest point I think I can make today. It's not done in time sometimes. You need to do this prior to the event so that it doesn't cause problems afterwards.

And you know what you were mentioning about the 10 year and a 401K and things like that. You know, like if mom and dad worked, they may have 401Ks. And then they didn't have time to get it, you know, they just didn't take it out because they were still working, right? So it makes me think of, you know, having the attorney and the CPA in these meetings. There might even be times where you have like a little family meeting outside of those other professionals to go, hey, look, here's what we just came away with. We had the attorney say this. The CPA say that. You know, our state includes some things such as 401K.

You know, there might be some times where you might want to sit down with your financial advisor and only take certain portions of it out for five to seven to ten years because black. blah, blah, blah, blah. So I think looping in, then your airs gives the kind of that cherry on top to go, okay, we thought about it, we planned it, we loop them in, we've got the professionals, and now people kind of have a path forward. And I would venture to say that gives a nice solid kind of wrap it up and put a bow on top, right? Yeah, absolutely. Everybody should be involved in this.

And prior to, again, the event, I have a client right now who's not in great health. I have reached out to her daughter to make sure that she's aware of, first of, first of, of what her mother has in terms of assets and discussions prior to what happens with her apartment here in New York that's worth four or five million dollars alone. And, you know, she was totally unaware of some of this stuff. I did that obviously with the position of the permission of her mother. Yeah. But we're going to set up a meeting exactly that way. We're going to have everybody involved and we're going to talk it through prior to any event. Yeah. I think that just makes so much, so much sense and they come away with that going you know what mom and dad have been wonderful our whole

life we loved it but what a unbelievable final gesture of making double a triple and quadruple sure that everything is you know tied up the right way i just think that that is such a nice gift um that that you're you're helping your clients give to their air so i tell you paul this has just been really eye-opening and helpful to see some of these these concepts if a listener is interested in learning some more and also reaching out and connecting with you, what's the best way that they can do that? Well, obviously, you can go to my website, which is cLUwealthadvisors.com. You'll find there some helpful, you know, calculators and articles and things that I've

put together to give you some food for thought. I think the best way to do it is to reach out to me personally. That can be directly 917-969-8287. I do not charge for initial, you know, I guess meeting consultations. I try to make sure that the value that I can provide is worth any fee or any, you know, any cost that you go incur. So let's talk first and we can go from there. Perfect.

Well, Paul, thank you so much for coming on today. It's been a real pleasure talking with you. Thank you, Mike, for having me. You've been listening to influential entrepreneurs with Mike Saunders to learn more about the resources mentioned on today's show or listen to past episodes. Visit www. www. influential entrepreneursradio.com.