Today's podcast episode features John A. Warnick. John A. is the founder of The Purposeful Planning Institute and a highly respected estate planning attorney based in Denver, Colorado.
John A. explained to us what a purposeful trust was, why it's different than other trusts and why you might want to consider using this form of trust in your estate planning process.
After listening to this podcast you'll learn:
- What a purposeful trust is.
- Why it's different than your typical garden variety trust.
- What the process is for putting together a purposeful trust.
- How collaborative planning is part of the purposeful trust process.
Narrator: Welcome to Sustainable Business Radio Show on podcast where you'll learn not only how to create a sustainable business but you’ll also learn the secrets of creating extraordinary value within your business and your life. The Sustainable Business is all about creating great outcomes. Here’s your host, certified financial planner, student, entrepreneur and private business expert, Josh Patrick.
Josh: Today’s podcast features John A. Warnick, the founder of the Purposeful Planning Institute. Before John A. founded PPI, he was and still is a very successful estate planning attorney based in Denver, Colorado. While practicing law, John A. saw a large disconnect between people who drew up trusts and the beneficiaries who received the trust. He developed what he and I both think is a better way. That difference is known as the purposeful trust. I spent a little time with John A. and learned about the purposeful trust and what makes it different and why this just might be a better solution for you and your family.
Hello, John A., how are you today?
John A.: Hey, Josh. It’s so good to hear your voice.
Josh: It’s always good to hear yours, John A. John A. is a really interesting guy. He is the founder of the Purposeful Planning Institute. He is an estate planning attorney by trade. We could probably go on for three or four hours just on things that both John A. and I are interested in but today we're going to talk about trust. And specifically, we're going to talk about something John A. has developed which is called the Purposeful Planning Trust.
So first, John A., why don’t we talk about trust in general and what’s a little bit different about Purposeful Planning Trust versus the garden variety trust that most of our listeners have probably done in their lives?
John A.: Well, you know, it’s really interesting Josh trusts have just skyrocketed in popularity in the 35 years that I've been practicing law. I think there’s a theory advanced by a Harvard law professor that trust started out as a tool to manage assets. If go back a century and you look at the great trust that became synonymous with wealth and the creation of significant wealth, in many cases, those trusts were used to manage assets.
I think that we're entering a period of time where the use of a trust as a management tool, as tool to transfer wealth from one generation to the next. There’s a new paradigm emerging about the use of trust. And instead of focusing so much on the management of the assets or the transmission of legal ownership from one generation to the next of significant wealth, I think it’s very interesting that today a lot of clients are beginning to realize that they should look at trust through the lens of relationship – that trust, at their heart, are about relationships and openly about benefitting those that you care most deeply about.
So, how much good is accomplished if we just manage your assets efficiently, if we preserve that wealth, yet ultimately, the impact of that wealth and the use of that wealth by those who are supposed to benefit from it is negative or if there are unintended consequences or divergences from what the original vision or plan was. I think, more and more, we're realizing that this kind of myopic view - that tax efficiency, tax minimization, tax avoidance should guide the drafting, design and administration of trust above – and it trumps everything else. I think that people are waking up that when we put that much energy and that much focus on taxes without considering the human side of the equation that there will be unintended consequences – often negative consequences that will arise. And so, the purposeful trust or the purposeful gift which is the sister that we could talk a little bit about to purposeful trust, these are intended to be ways in which we kind of create an antidote for that over-emphasis on tax and the efficiency of management.
We're not forsaking tax savings. We're not forsaking the importance of great investment advice and investment management but what we're trying to bring back is an equilibrium where we put greater attention on the human impact of the planning and we think creatively about ways in which that trust relationship that you're creating in your estate plan can be a very positive influence on those who will follow behind you. And that influence can be sustainable. It can last positive way for generations.
Josh: John A. what would the difference be between a purposeful trust and your garden variety trust?
John A.: I think, Josh, the difference show up in a number of ways but let’s talk about the primary ways in which you would immediately notice the difference. To refer to it as a garden variety trust is a little bit unfair because there’s so much diversity in the types of trust. I think, a few years ago, I tried to count up the tax acronyms that tax lawyers use to differentiate one type of trust from another in terms its tax function or emphasis and there were like at least 15 different tax acronyms that we use GRATs, QPRTs, QTIPs – I mean, they just go on, they're all four-letter acronyms. What differentiates a purposeful trust from those four-letter trusts are the purposeful trust - it captures the voice, the vision, the values, the life wisdom of the trust creator.
And so, typically in a purposeful trust, inside the actual trust document will be text boxes where the trust creator speaks to trustees, speaks to the beneficiaries in a non-legal voice. Now, these statements generally have no legal or binding effect. So for the lawyers that are listening to this call, maybe they're going, “Oh, my gosh, how can we put text boxes inside a trust?” Let me just say to those brothers and sisters in my legal fraternity that this text box technique – it’s new to the trust and estate arena but it’s something that we're seeing increasingly inside of complex documents in the business planning arena but it’s extremely powerful when someone picks up a trust document and instead of being overwhelmed by the complexity and sterility of a document that “if you ripped up the first and last pages” as one of my clients said, “what was left could be anyone’s and that my family would never know that that was my trust.” The purposeful trust is the antithesis of that Josh. It is one where you come to those text boxes. You don’t just read them but you hear, in almost a literal way, the voice of the trust creator speaking to you in a positive way, sharing encouragement, sharing affirmations of love and positivity, and sharing wisdom to help guide you in your path as a beneficiary or to help give meaning and purpose to the work of the trustee.
Josh: Do you ever use, for lack of a better term, modern technology to help people convey a purposeful trust or is it only a written document?
John A.: I think you're now entering into the domain of what I call the purposeful gifts. So, there is some technology that does enter into the design and creation of purposeful trust. And I think, Josh, you are so ahead of so many others in this space in terms of thinking about how to use technology proactively to increase the effectiveness of what we're doing in our assisting and serving clients. I think we're going to see an explosion in the next five to ten – fifteen years of more and more technology that will empower purposeful trust. There’s a little bit that’s already occurring. There’s going to be a lot more coming.
But I think beyond that, the purposeful gift which is I think what you're leading is towards is ways in which we warm up. Here’s this legal document that’s already in place. I paid thousands of dollars for the two inches or the inch-thick set of papers or that loose-leaf binder on my shelf in my office that has my estate planning documents in it. I've invested considerable time and money in the creation and I don’t want to just re-do it. What can I do to warm that plan up? And I think there’s ways in which we can do that outside of integrating into the document. We can kind of create a purposeful cover or wrapper that goes with it. Technology does play a significant role in how to create that and how to preserve that. And if you want to talk specifically about what some of that knowledge is, I'd be happy to do that.
Josh: If you like to, please feel free.
John A.: Okay. Well, I think the first thing where technology really has made a big advance in this area is if we think back 30 years and think of how things were done in the attorney’s office 30 or 50 years ago, stenographers shorthand, then we transitioned to dictating machines. And now we have the power of live, in a sense, transcription taking place almost in the moment through an iPhone, an app or digital devices. So, one of the things that I think is an extremely effective technology to help individuals with the creation of purposeful trust, and this also can be an element, an ingredient in creating a purposeful trust – not just a purposeful gift is the digital recorder.
So, we have created what we call purposeful visioning exercises and purposeful visioning conversations. These conversations are questions and informed, guided conversation that Josh Patrick, as a trusted advisor and a skilled facilitator will lead the client through. You're not necessarily going to march through those questions in the exact order as if it were scripted but you have that resource and with the help of a digital recorder - or in some cases, client want to think about this being preserved in a video as well.
So, there’s an opportunity to use either the audio or the video digital recording devices to capture the voice of the trust creator and then to get that voice transcribed and polished and edited and ultimately how that translates into a lasting legacy that will be shared with the beneficiaries over the next generations of your family. It can get burned down to a DVD that has a beautiful cover on it and it can be given out at a special occasion or the holidays to your family members. It can be preserved in electronic digital formats so that if you're building a kind of a family electronic vault, it goes into that vault as part of the legacy section of that vault. And it also can end up in a printed version as well. And there’s lots of very creative ways in which people powerfully package any of these means of the delivery of what is created when we lead a client through a visioning exercise or a visioning conversation.
Josh: John A., your passion for these past several years has been working with the Purposeful Planning Institute – forming it and making it into one of the most valuable groups in the country when it comes to interdisciplinary planning with successful families. Next month, you're starting a new venture, the Fusion Conference. Can you talk a little bit about what Fusion is, and who should be going to that, and why?
John A.: Well, Josh, Fusion – I've had a little bit of push back because Fusion is a word that has multiple meanings and some of the family systems theorists and psychologists are worried about the use of the word Fusion because it may have a not so very positive connotation in their work. But to me, I've always been fascinated by the idea of Fusion - that there is a synergy that emerges when you combine two distinct elements and in integrating those two, the sum is greater than the parts. And so, what comes out of that is a 1+1=3 or 10 or 100. So, Fusion relates to the fact that instead of a client working with one advisor to create a tax-driven, technically excellent plan and then working separately with another consultant or adviser, to create a legacy plan – those two plans are benefitting the same individuals but if there’s no linkage between those two plans, there’s a huge lost opportunity. And the Fusion possibility exists when we integrate effectively the legacy-relational components of planning with the technical aspects of planning. And so, Fusion is about how to integrate – whether it’s in the document, outside of the document. What’s needed beyond the document to actually create a sustainable and positive plan that’s going to pass the test of time and have a positive influence on those that follow after you.
Collaboration is the other word that we've chosen for this new gathering. Collaboration speaks to my belief. I think it’s a belief you share as well as the 350 or so members of our Purposeful Planning Institute that there is no single adviser or consultant who has a monopoly on all the great ideas, on all the best practices that clients need to be aware of, choose from and create effective plans that they invest their time, energy and resources in. So, the collaboration speaks to the tremendous power that emerges when we work as collaborative teams rather than siloed advisers and consultants.
Fusion Collaboration is bringing together lawyers, CPAs, CFPs, wealth managers, CLUs, as well as the behavior list - the consultants who are skilled in facilitating conversations, legacy consultants and others who contribute in a very rich way to the process of creating a purposeful plan.
We're coming together for two days in Orlando, March 19th and 20th of next month. We're going to look at this integration of technical with the relational and legacy side of succession planning. We'll look at that through both the wealth lens as well as a business succession lens. It’s a very exciting experiment. It’s going to feature CLE and CPE for the advisor-consultant that needs that credit for their attending a learning event but it’s also going to have a lot of opportunities to learn how to be better collaborators, learn about the possibilities of collaboration and these fusion integration opportunities. So, I would encourage anyone who’s interested to reach out to us. We’d be to make a special invitation – special offer to you, to come join as at Fusion Collaboration.
Josh: And if they wanted to reach out, how would they go about doing that?
John A.: The best way probably is to reach us at [email protected].
Josh: And if somebody wanted to talk with you about purposeful trusts and purposeful gifts, how would they do that?
John A.: The best way to reach me would be through my e-mail which is [email protected]
Josh: John A., as always, I enjoy speaking with you. I learn something new every single time we talk and today was no different. Thank you so much and—
John A.: Thank you
Josh: I look forward to speaking to you soon.
John A.: Great. Thank you.
Josh: You’ve been listening to Sustainable Radio Podcast where we talk about what you need to do with your business if it was to be or 100 years from now. If you like what you heard and want more information, please contact me at 802‑846‑1264 ext 2 or visit us on our website at www.stage2planning.com or you can send me an e-mail at [email protected].
This is Josh Patrick and thanks for listening. I hope to see you soon for another edition of The Sustainable Business.
Securities and investment advisory services are offered through NFP Advisory Services, LLC – member of FINRA/SIPC.
NFP Advisory Services, LLC is not affiliated with Stage2Planning Partners.