The Lawyer's Money Show
The Lawyers Money Show" is your go-to podcast for mastering the dual arts of law firm management and personal financial acumen. In each episode, our hosts Ian Weiner and Todd Whatley delve into the practical aspects of running a successful legal practice, from optimizing operational efficiency to innovative client engagement strategies. We also zoom in on the personal financial management of law firm owners and partners, offering insights on wealth building, tax planning, and retirement strategies tailored for legal professionals. Whether you're looking to enhance your firm's profitability or secure your financial future, join us for expert advice, actionable tips, and real-world success stories designed to elevate your practice and personal finances.
The Lawyer's Money Show
Mastering the Terminal Dollar: Strategic Wealth Transition and Financial Planning for Legal Professionals
Imagine reaching a point where you've earned the last dollar you'll ever need. What would you do next? On the latest episode of the Lawyer's Money Show, we promise to transform your financial mindset by exploring the concept of the "terminal dollar." We dive deep into understanding when enough is truly enough, and how this realization can revolutionize your financial decisions. We'll guide you through the three key uses of money—spending, investing, and giving it away—and challenge you to think about the best way to allocate your wealth beyond this crucial milestone. Through compelling anecdotes and expert insights, we aim to reshape the way legal professionals approach their financial strategies for long-term success.
Transitioning wealth across generations is no small feat, and only 10% of fortunes manage to reach the third generation. In this episode, we'll uncover the secrets to successful family wealth stewardship, emphasizing the importance of passing on not just assets, but also values and vision. We'll delve into the shift from merely accumulating wealth to making meaningful investments in family and community. Learn why time is your most valuable resource, the benefits of delegating tasks, and the necessity of clear, purpose-driven financial planning. Tune in to discover how thoughtful preparation can ensure your wealth benefits future generations and serves its intended purpose. This is a conversation no legal professional can afford to miss.
Welcome to the Lawyer's Money Show with your hosts, todd Whatley and Ian Weiner, where finance meets the legal profession. Here we dive deep into the economics of law practice, from managing your firm's finances to optimizing personal wealth strategies for legal professionals. Every episode we bring you insights, strategies and stories from leading experts to help you navigate the financial landscape of the legal world. Stories from leading experts to help you navigate the financial landscape of the legal world. Stay tuned as we uncover the tools and tactics needed to help lawyers make the right money moves so they can grow their career, manage their practice and optimize their wealth so they can focus on enjoying the life they've worked so hard to build. For more resources, visit us at wwwlawyerstotalplancom.
Speaker 2:Hey there, thank you so much for joining us today and today's another exciting podcast, and I'm Todd Wally and I am here with my co-host, Mr Ian Weiner. Hey man, how are you?
Speaker 3:Todd, I'm doing well. I think this will be a halfway decent one. Usually, I say it's gonna be a good one, but I want to say I like to set expectations low, early, and often I think this is gonna be really good and I say it's going to be a good one, but I like to set expectations low, early and often.
Speaker 2:I think this is going to be really good and I think our goal today is to get you to think a little bit differently. Yeah, think about why you practice, why you go to work every day, why you save money, why you do stuff. You go to work every day, why you save money, why you do stuff. And the title today is going to be the did you say the terminal dollar? The terminal dollar? The terminal dollar.
Speaker 3:Explain what that is, what to do when you've won the game. Maybe we write a book about this. That's a goal. I can't remember who I ripped off this term from the terminal dollar, sorry.
Speaker 2:It's one of my colleagues. If we wrote a book and put it in the title, we'd probably find out real quick.
Speaker 3:Yeah, we'd give them some money or something. But the idea is let me just pause for a second. I like making people think Okay, because if I have to be burdened by all of the thoughts that I think, I think you should have to have some of them too, sure. Anyway, I'm just joking, but the concept of the terminal dollar is this and maybe we'll rename it something else and get away with it, but I love this concept. At some point in your life maybe this has already happened you have earned the last dollar that you will ever spend. Let me say it again At some point in your life it could be when you're younger, it could be when you're older, it could be the last day that you live you will have earned the last dollar that you will be able to spend.
Speaker 2:Okay.
Speaker 2:So, we grow up, we get jobs, we go to college, we can make more money, ideally so we can buy stuff Houses and cars, and food and insurance and things like that, maybe even have a little fun now and then. Yeah, and you stick some back, so for a rainy day, later day, retirement, so that you can have money to spend throughout your life. But at some point that amount's going to grow to the point that you won't spend past that dollar. That's another way to think about it. So many of us you obviously don't know when that is, you might could kind of estimate but most of us keep on working, keep on saving, keep on investing so that we make sure we have that. So today's show is to think about what about those dollars past the terminal dollar?
Speaker 3:And we can figure out pretty well when that amount is, and so we can help you get clarity on that. I don't think I'm there yet. I don't know. Who knows, I keep working.
Speaker 1:Yeah.
Speaker 3:And some of it is. It's not bad to work doing what you love. I mean, the goal is not to just have money and then not do anything. That's when people wither and don't do well, so we don't want to encourage that. But the idea is there are three different things that you can do with a dollar you can spend, spend it, you can invest it or you can give it away. Really, I mean, that's pretty much it right, and so if you're not going to spend it anymore, typically people would either invest it or give it away, and so what we want to begin to think about is okay, let's say you do win the game Not everyone wins the game, by the way, but let's say you do. When you say win the game, what does that mean? You've achieved your terminal dollar. You have more money than you will ever spend.
Speaker 3:This tends to be a lot of clients that we see, and sometimes the behaviors that contribute to this are being frugal, saving well, investing well, and so if you do that for 40, 50 years giving well, investing well, and so if you do that for 40, 50 years it's hard to unwind those behaviors. I understand that. I mean this is a real thing. I had a call with someone just a couple of days ago. Four and a half million bucks. They spend $50,000 a year and they're like we need to get a new part on the house. It's going to be $8,000, like a little wall thing built it's going to be 8,000, like little wall thing built, it's gonna be $8,000. And I just can't and I'm like, if you don't spend that $8,000, I'm going to lose my mind because it's like it's
Speaker 3:literally a rounding error for them. But they just like they have, they're honest, good, hardworking people, you know. And so we started to have this conversation about the terminal dollar and like, all right, if we continue to grow the money, where's it going to go? What do you want to happen with it? And I want folks to begin to think about that a little bit and hang with me.
Speaker 3:We're just a little bit philosophical here today, but hang with me because if you can get clarity around the purpose of the dollars after your terminal dollar, it brings a lot of stuff into perspective in a much different way. Some of the dollars after your terminal dollar it brings a lot of stuff into perspective in a much different way. You know some of the clients that I work with you know they will have achieved their terminal dollar quite a bit younger than some of my other clients. You know I have someone who about 20 million net worth single individual that was after he had a pretty nasty divorce and lost half of it in the divorce and blue collar guy, blue collar worker, just business hardworking he won't spend 75 grand a year.
Speaker 3:I mean, a big event for him is going to the NASCAR race, and that's what he wants to do, but it's important to him that the money goes to the next generation and the generation after that, and so what he's beginning to think about is okay, the investing and the giving. Why is that important for our family and how do we do that? How do we build a process to do that? Because the easy part is transitioning it from one generation to the next. So here's the thought pattern If you're not going to spend the dollar, you can either invest it and give it to the family or you can give it away.
Speaker 3:So we've got to think about that transition. In a technical sense, the easy part is figuring out how we transfer it, whether that's in trust, whether it's an outright gift, what have you? The hard part, especially when you're keeping it in the family, is how do you transition the value system? I mean, that's you know, and if you're like, oh, that's not a big deal, I'm not worried about that, get the checkbook out and stroke a check to your kid, and we've done a podcast on this.
Speaker 2:Yeah, that third generation is the problem.
Speaker 1:Yeah.
Speaker 2:Because the second generation sees you work, sees you maybe go from not much to have quite a bit. They see you get up and go to work. They see how you spend the money or not spend the money. They see how you invest. They see how you do this and they'll incorporate some of that. But that third generation then sees the second generation not work as hard and mainly not have to do things like the first generation did, and they don't have the value system. They're more removed from that Absolutely and so very few fortunes make it past that third generation that quick?
Speaker 3:Yeah, it's a. It's about a 10% success rate. Yeah, that's those.
Speaker 3:Those aren't great odds, just people understand that if you weren't sure, look, there's a 10% chance you're going to win, that your third generation is going to win, you know, and that may or may not bother you, and that's okay if it doesn't. But and if it doesn't, great, we can make the last check bounce. You know, I mean we say that in meetings with clients. It's like, okay, what do you want to happen? Well, I don't really care. Okay, let's, let's make the last check bounce and they're on their own. And if that's what you want, great. I mean, that's what you, it's your money, that's what you built.
Speaker 3:But if that's not what you want, what is the process for transitioning? Not only the assets and most people need to do work on that, but we can do that, that's not that complicated for us but also, then, what's the process for transitioning the values and the vision and helping them to steward it. And so it changes your mindset from okay, how do we, you know, keep investing money Great, that's part of it To how do we invest in the family, or how do we invest in the community. And what's important and it's a shift the purpose of wealth, the purpose of the dollars after your terminal dollar or even up to that terminal dollar are to help you buy your time back. Really, we talked about this on the radio show today. I said radio show. It's not the radio show it's not on the radio anymore.
Speaker 3:No, I said radio show. It's not the radio show, it's not on the radio anymore. No Moment of silence. We talked about this today on the Facebook show that you know there's. I totally lost my train of thought. What was I going to say? The radio totally threw me off. That was sad, but there's. You get to a point where you realize and hopefully this happens before your terminal dollar you get to a point where you realize that time is your most valuable resource. And it's tough for me, frankly.
Speaker 2:I do a lot of stuff myself.
Speaker 3:I'm like I do my own hair, I do my own dental. There's a lot that I do I. You know, I'm like I do my own hair, I do my own dental. You know there's a lot that I do and you can. I'm just kidding.
Speaker 1:You don't do your own hair. I'm mostly kidding.
Speaker 3:I used to. I used to cut my own hair. It's more efficient, you know. But at a certain point it's like it's okay that you don't do everything. Sure, like, what's the purpose of that? Where is it supposed to go? That's really what we're asking is what is the purpose of that? If you're not going to spend it, who is?
Speaker 2:Let's plan around that. Yeah, and that's a mindset thing. My father-in-law did not go to college very blue collar and I'm sure he thinks differently than I do, particularly when I hire someone to do something that I could do it. I just don't want to, and thankfully I make enough money now that I would rather spend those two hours not cleaning out something or fixing something. I would just rather have someone else do it and I have those two hours to do something else.
Speaker 2:I still mow my yard, but I enjoy doing it. That's the key and I enjoy doing it. I don't mind doing it, it just kind of gets me out and does something. I do something and I enjoy seeing it going from rough grass to oh, that's smooth grass. I like it. Yes, I could hire someone to do it and I could reclaim that time, but I enjoy doing that. But there are things that I don't like to do and that's where you, as the listener, you make money and the real purpose is to first stop doing things you don't want to do and then, number two, try to make a difference in the next generation. And that takes forethought and takes planning and you can't just leave it to them. You can't just, you know, do a will and say at my death there are things divided three ways. Here it goes and hope that that works out. Hope is not a strategy. Hope is absolutely and particularly for that, that second generation may do okay and if you leave them enough to eventually get to the third 10% chance that it's gone.
Speaker 3:Yeah Well, 90% chance that it's gone.
Speaker 2:Oh yeah, 10% chance that it does well yes 90% chance it's gone Do something right.
Speaker 3:And look, I know this is like kind of philosophical, kind of emotional, but I mean you feel better when you have clarity about why you do the things that you do. A really interesting exercise. If you want to do this, I'm going to encourage you to do it. And it's a little bit harder if you're retired, but we can get pretty well what your effective hourly rate is, and maybe you know what your hourly rate is If you own your business. It's a little different, right, but you would divide your income. You can do pre-tax just to be nice here Do. Your income divided by 2,000 is roughly a 50-week working year. See what your hourly rate is. And that's fine. It doesn't matter what it is, it's good, bad or indifferent, it's just the number. And then next time you're doing something that you don't want to do, get out the checkbook and for that hour just write the check for that amount, and then it really makes you think through it a little bit differently. One hour, yeah.
Speaker 2:Yeah, there's a consultant. That I think one of the first things he did when he came on stage. He's like, okay, who out there would pay $300 an hour for someone to come clean your house? Everybody's like, no, that's expensive. $300 an hour to clean my house God, he said. When you're cleaning your house, you're paying $300. If you make $300 an hour, you're paying someone $300 an hour to clean your house. If you could do it for $100 an hour, isn't that a pretty good deal? And you're like, wow, I hadn't thought about it. So I'm paying a pretty high rate to have my yard mowed.
Speaker 2:But that's okay right, that's okay I don't mind.
Speaker 3:The money is a tool. It's meant to be spent or invested or given away right, and that's the purpose of it. But again, think about these things and are you spending the dollar? Are you spending, investing or giving the dollars that you intend to right now? And are you on exactly what I want when I want and it's actually a lot more control than people that are afraid to spend any money because they don't know what their situation is.
Speaker 3:So if you don't know that, that's where you are and if you're able to do that, we can have a conversation. In a technical sense, we can figure out where you are on that spectrum and figure out how to do that. But if you've gotten there maybe you've saved really well or planned for retirement and you've done really well and you have excess income, maybe there's a different conversation we need to have. You know, and I really I counsel a lot of my clients to consider gifting to family while they're here, proactively, because you know it doesn't have to be done irresponsibly. There's really thoughtful ways that we can do it. But I mean, imagine when you were 30, 35, 40, growing up and young kids in the house. A couple extra bucks would have made things a big impact, versus getting a lump sum when you didn't need it. Sure, and in a sense that's pretty inefficient actually.
Speaker 2:I mean, imagine giving your young family, your kids' family, enough money to go on vacation. They go to Disney World.
Speaker 2:They couldn't afford it. But you give them $15,000 here. Go to Disney World. Or you go with them, yeah, yeah, you can go with them. Or you can sit at home if you don't want to to Disney World. Or you go with them, yeah, yeah, you can go with them. Or you can sit at home if you don't want to do Disney World. But look at the pictures. Hey, send me pictures that my only requirement is post on Facebook or do something. But send me pictures and you see the joy in their life that you did that and they would not have done that but for you. I'm a huge advocate of planning and, yes, I do Medicaid, and Medicaid penalizes gifting. But you can do it appropriately and I encourage that people do that because you get to see the benefit of your money. We always talk about boats. If your kids really want a boat, buy them a boat.
Speaker 3:The two best days of buying a boat is the day you buy it and the day you sell it.
Speaker 2:That's why we're not buying boats, that's why we're not buying a boat. But I have bought a boat but you get to see the joy that it brings them and they know this came from you and they might invite you to come ride the boat sometime and they'll probably take pretty good care of it, knowing that you're watching. It's about impact.
Speaker 3:What is the amount of impact that those dollars can have? And I think the main reason, in my opinion, that more people don't do this is because they don't think they can Right, and if you don't have clarity about that and I guess I'm talking my book here but if you don't do this is because they don't think they can Right, and if you don't have clarity about that and I guess I'm talking my book here but if you don't have clarity about that, we need to fix that. We need to have that conversation. You know, because the I mean literally the scenario that you talked about I didn't, you didn't even know this one, a client that I was just working with that's exactly what they're going to do is take the family to Disney and you know, they came in and they did not think that they were in the position to be able to do that, and we rearranged some things and they're going to be able to give quite a bit of money away every single year and they are so happy they have been. They're like this is amazing.
Speaker 3:I never thought that we could do this. I'm just so excited and it's like to me it's like no big deal, it's like, yeah, I just did the right thing and we organized stuff, but we know exactly how much money you need and you're past that point and so, if you don't know that, we got to figure that out because, like, what holds you back from, what holds a lot of people back from living the life they want to live, is fear. I mean truly, if you think that you're not going to have enough and you haven't done the work or hired me to do the work to figure out if you have enough, of course you're going to feel uncertain and feel like you can't do this kind of stuff. It's natural to be afraid, but you don't have to be afraid. You can plan and we can get rid of that fear.
Speaker 3:Look, if you're not there, I'll tell you that and be candid and we'll make a plan to get you there Right. But I mean, if this sounds like something that is interesting to you and you don't know whether you can do that kind of stuff, but it's on your heart and you want to, we've got to fix that. You know that you just especially people that have worked hard and saved to not know what they can spend and when, and what that process is, is a planning failure to me who cares if the IRA gets another $100,000 if you're not confident that you can spend it or give it away? I mean it's kind of tough, but people will benefit from that.
Speaker 2:All right. Good topic Interesting stuff to think about.
Speaker 2:Hopefully that got people thinking and, as always, if we can help you, we would love to work with you. Call the Generations Legal Group office. She may be a little confused. If you're calling and you're asking about something, just say hey, todd and Ian said to call and can you get me in touch with Todd or Ian? Call and can you get me in touch with Todd or Ian and we would love to talk to you and discuss with you how to plan for those dollars after the terminal dollar and really make your life better and fun and enjoyable. And you've earned this money. You've worked hard. You've earned this money. Let's let you enjoy it. Let's let you do something correct with it.
Speaker 3:Do the rest of the work. Just a little bit of extra work to make sure that you can.
Speaker 2:All right, thank you all very much and we will see you next time.
Speaker 1:Thank you for joining us on the Lawyer's Money Show. We hope today's episode has provided you with valuable insights and actionable advice to enhance your financial well-being. For more information, to access show notes or to explore further, please visit our website at wwwlawyerstotalplancom. We look forward to guiding you through your financial journey. You can give us a call at 479-485-1911. Until next time, keep striving for excellence in both law and finance.