Is That Even Legal?
Is That Even Legal?
Safeguarding Your Legacy: Estate Planning Lessons from Jay Leno's Story
Could your lack of estate planning be setting your loved ones up for a legal nightmare? Join us as we unravel the critical importance of having a robust estate plan, featuring insights from top asset protection attorney Ike Devji. Through the heart-wrenching story of Jay Leno and his wife, who suffers from dementia, we highlight the dire consequences of neglecting basic estate planning measures like revocable living trusts and powers of attorney. Our discussion sheds light on the emotional and financial turmoil Leno faced due to inadequate preparation, (he has since been granted conservatorship) emphasizing the essential steps high-net-worth individuals - and most everyone else - must take to safeguard their families in order to preserve wealth.
Do you know that the same types of principles impacting Leno's estate impact you too?
Dive into our hypothetical scenario of planning Jay Leno's estate, where we navigate the intricacies of ensuring that his final wishes are honored amid potential family disputes and diminished capacity. We stress the importance of rock-solid legal documentation, from healthcare directives to living wills, and reflect on how Leno's extraordinary career and unique car collection influence his estate planning decisions. Tune in to discover the pivotal steps that can protect your legacy and spare your loved ones from unnecessary legal challenges.
Is that even legal? It's a question we ask ourselves on a daily basis. We ask it about our neighbors, we ask it about our elected officials, we ask it about our family and sometimes we ask it to ourselves. The law is complex and it impacts everyone all the time, and that's why we are here. I'm attorney Bob Sewell and this is season five of the Worldwide Podcast that explores that one burning question. Is that even legal? Let's go.
Speaker 2:Today's guest on the show is Ike Devsey. Ike Devsey is a friend of mine. He's also one of the nation's preeminent asset protection attorneys. He helps his clients manage billions of dollars and, frankly, he's a hell of a guy. So, ike, welcome to the show. Thank you, bob, it's good to be with you.
Speaker 2:I want to talk to you about a story that came up in the news about Jay Leno. I love Jay Leno. I love his videos he puts out. I used to watch him on the TV when he had the talk show, and he's an interesting dude.
Speaker 2:He's been married to the same woman for I don't know how many years it seems like 50 years or around there and tragically, she has dementia. She's no longer able to recognize faces. She's really incapacitated to a full extent. She can't make an estate plan. And so here she is. She has no ability to ability to estate plan.
Speaker 2:Jay has managed their financial life his entire life apparently and and he and he has to go to the court in California and ask the judge to appoint him as her conservator so he can then execute an estate plan on her behalf.
Speaker 2:That he has to tell the judge is something that she would want to execute and convince the judge that that estate plan is the one that he would want or she would want to execute. You know and it struck me as I'm hearing this here's a guy who's got access to the best advisors in the world. He has millions and millions, a lot of hundred plus million, and he has the ability just to go down and say you, I create me an estate plan now, you know, and you would give him an estate plan, something that would work, and he didn't do it, and the result is he is now at the whim of the courts. The court doesn't have to do this. The court may choose to do this. The court also may say, no, I don't think this is the estate plan that she would want. The court also may say, no, I don't think this is the estate plan that she would want and but any subject to the whims of the court now, and it struck me as kind of tragic because it didn't have to be this way.
Speaker 2:What were your?
Speaker 1:thoughts when you read that story. Well, my first thought was how does a guy with that many people around him and that net worth level get to that point and not have a basic estate plan in place, right In the form of something as simple as a revocable living trust, which?
Speaker 1:is something that you and I would probably recommend to even what we would call a middle class family. Right, that's a good basic estate planning tool that tells us a few different things. Right, it tells us what you have. It tells us who your heirs are. It tells us who's in charge of those assets at the end of your life. It tells us how and when the heirs get those assets.
Speaker 1:And the other important thing that an estate plan does for us is that it designates people who will serve on our behalf if we have a tragic situation like Jay is going through, and we, in that estate plan, designate who has power of attorney, who has medical power of attorney. Right, we have all the incapacitation planning is built into that, and this is really basic stuff. And, as you mentioned, I work with high net worth clients and every day I am surprised that I talked to grown up millionaires who have no estate planning in place or have old estate planning in place in the form of a simple will or something like that. And when you look at what's happening with the Leno family, it is tragic. Number one, they have to air all of this publicly. Yeah, which a trust would have kept all of this private, where it should be, and none of us would have been part of their family problem or been aware of it.
Speaker 1:The other thing is that they're now going to spend and this is not as big a deal for Jay Leno as it is for maybe you and me, but potentially hundreds of thousands of dollars in unnecessary legal fees to fix a problem that could have been fixed for a few thousand dollars up front, right right. So that's another thing. The other thing, of course, is the trauma to Mrs Leno herself. From what I understand from some of the same reporting that you've probably looked at, they have asked that she not be required to attend some of these hearings where they are talking about her as an inanimate object in the room and talking about her mental capacity, her lack of understanding, her current state of dementia, her being in and out of lucidity. That's an unhappy place for that person to be as well and have a courtroom full of people staring at her while they're discussing her failing mental health.
Speaker 2:Yeah, and I want to comment on that, because when someone's in that state and if you've ever had to care for someone with dementia, it's that sort of thing A courtroom is an incredibly confusing, disorienting, frustrating place to be. They want to be at home around their stuff. They want to have the same routine day in and day out. They want to see the same faces day in and day out. They don't want any surprises and the courtroom is full of surprises. Yeah, I can't imagine how this. I can't imagine how this happened. And even, like you said, even just the most basic estate plan he'd been better off, was just the most basic. But a guy as wealthy as Jay, you wouldn't give him the most basic, would you?
Speaker 1:No, no, certainly not. I mean, look the plans that the kind of planners who work with folks at those net worth levels put together have many layers, and some of those layers include very basic tools like a revocable living trust. And then, of course, for somebody at that net worth level, for instance, one of the things that Jay is known for in addition to being a comedian is he's a world-class car collector, right? Yeah, so we would have a wrapper around that car collection to protect it and make it legitimately a business that was not just another personal asset, right? We do that for our car collectors right here in Arizona. This is a big car state. We just had Car Week.
Speaker 1:We had $300 million worth of cars change hands here in one week in Scottsdale, a couple of weeks ago yeah, I was at many of those auctions with friends and clients who are car collectors, and so for those folks, we take special care of those assets and make sure that not only are they protected during their life, but that we know what happens at the end of their life and how they want that asset or that collection managed. So all of these details, including sophisticated tools to protect real estate, to get the licensing and income and residual income streams that somebody like Jay Leno gets from all kinds of different sources, we would have a plan together that had many layers and many parts, as was appropriate for him, but this baseline tool is common to him and it's common to guys like you and me and what I would call working regular working people.
Speaker 1:Yeah, guys like you and me, who get up and go to a job every day and have a profession, we need that same tool as well, and that tool covers people at many different levels of success. And you know a lot of people think that estate planning in particular is only death planning, and that really is primarily what it is. But you, as a probate law expert, know that you're primarily called when the estate plan wasn't perfect or wasn't complete or didn't exist, or, as in you know my personal case I've had to deal with dealing with a family member who has a dementia issue, for whom I executed estate planning 20 years ago in a very top-notch and professional way, and that person never provided a signed copy of the estate plan back to the law firm and their original copy.
Speaker 1:They can't locate it, At least partially because of their dementia.
Speaker 2:Yeah, because a dementia patient has a great habit of losing things.
Speaker 1:That was part of the problem. So, in my personal case, this story this, this story, the Leno story is personal to me in the sense that I've had to go through this. I've had to even though we had the estate plan and it was lost. We then had to go through this exact same process of guardianship, conservatorship, marshalling this person's assets and protecting them from the con men and the people that started to get into their bank accounts and do different things because they didn't know any better. Right? So somebody like um, mrs leno is vulnerable to anybody who picks up the phone and asks for personal information, like those calls that you and I, or most people, would hang up on, or the email that says hey we need your social security number or hey, we're calling from the irs, or all the scams that you and I see targeting people, especially seniors.
Speaker 1:They become immediately vulnerable to those because they answer every question with you know, in a guileless kind of way, with their defenses down.
Speaker 2:Yes, dealing with the effects of this disease and what not having the documents, the additional burden, stress and expense of not having the documents in place, yeah, the reason why I do this and the reason why I love this is because I like to help people right, and I've experienced these things for myself, just like you. When you were going through that, you and I talked about it. I remember the stress you were under and the frustration you were feeling and the traveling you had to do to take care of all this. It's sad to see this happen. And a little bit of planning and some good advice from a good attorney and having open conversations with family and saying here, ike, this is my estate plan and this is what I want you to do. And then you're like you look through it. Yeah, ok, that makes sense, you know, ok, and and you know here's, here's, susie Lou, this is, this is your copy of it. Have this open conversation. This is so important to to have these conversations in advance, to do the planning in advance, to avoid just the tragic situations.
Speaker 2:And I think about the caretaker shark Right. Think about the caretaker shark right. Someone in Jay Leno's situation his wife is also subject to the caretaker who is a bit of a shark right Comes in, manipulates the old man or old lady and now suddenly the caretaker is inheriting a huge percentage, not everything. And the caretaker says and this is what he or she wanted, yep, this is exactly what he or she wanted, and really that's what he or she wanted, or that's what he or she wanted.
Speaker 2:Now that they're diminished capacity and now that you're the one standing over them, feeding them every day, helping them toilet, and you ask that person, who you're feeding every day and you're helping them toilet, and you say you think I should get the house right, right, you think that's? I mean, come on, really, do they have a choice at that point? No way. And that's why you know whether or not, whether Jay Leno gets that estate plan from the judge and is allowed to execute it. That's why that estate plan is going to be less creative than if has to be really nuts and bolts, has to be really simple, it has to be straightforward, it has to be, it has to be something that would that, that would happen under the laws of intestacy, essentially because otherwise, otherwise, you know, the court could say, nah, I'm not, I'm not interested in this one.
Speaker 1:Yeah, and that's I mean you've. You've could say no. I imagine my wife would agree to Right and this estate plan since we are in a community property state in California and I'm worth $100 million plus or whatever his current net worth is is going to control $50 million plus worth of assets. Yeah, and I think she would probably wanted to have left it to me. Yeah, right, right, right, right, right, and that's probably the case. Probably Most spouses name each other as their beneficiaries in addition to children and others. Right, so wife names husband, husband names wife. If we're both gone, it goes to our kids, right, I mean we're overgeneralizing, but in general, that's fairly accurate right.
Speaker 1:And now he has to go and sell this idea that this is what she would have wanted, right, and do it without her there. And you know the reporting I saw said that she's waived any objection and so on and so forth, to them doing this. It's a really interesting point that he's now in the position where he has to go and make this sales pitch of what happens to half of the money that he largely earned, right, it's community property, but that community property was I mean, we all know that, jason, if you've ever read any of his stories the guy was homeless. At one point he would sleep in the alley behind the comedy club the night before his stand-up when he was doing improv. I mean, that's where he started. He was sleeping in his car.
Speaker 1:And he has this incredible American success story that has been smart with his money. Clearly, and I'm sure, like all successful people, he's had highs and lows. He's been rich, he's been bankrupt. Maybe all of those things are in his past. Many of the wealthiest people I work for have had that same channel. They've had that same pattern of they made it, they lost it, they made it again and then they call me because they don't have to do it a third time, right, but you know it's his efforts, I think, primarily that created this wealth.
Speaker 2:Yeah, and the wealth is created from passion, right? I mean most people do not make the decisions in life that he would make. Right, most people are not going to say you know what I really love? I love comedy. And instead of having a job, I'm going to make it as a comedian. I'll sleep in my car, you know, I'll shower at the gym and then I'll write in the day and then I'll crack jokes all night. And I mean that's not a reasonable conclusion.
Speaker 1:I mean, I didn't want to be a lawyer bad enough to have slept in my car to do it, Did you no?
Speaker 2:I didn't, no. And then everything about his life seems to be like a passion project this car collection. I remember when he first started the website Jay Leno's Garage, and I had heard he had a car collection and then he would highlight the cars right, and they weren't just like fast cars, they were historic, they're pieces. He created a collection of automotive history. You know steam engines, electric engines, automotive history. You know steam engines, electric engines. This is a museum like an enviable museum-level collection. There's probably no better collection that I could think of, even among public museums, in automotive engine history. And so he's going to want to do special things. If you could give him some advice and it's 20, you know, 15 years ago, right 20 years ago, what types of things would you be saying Look at this, look at that, look at this no-transcript people I talked to said, oh, I did it for my family, I did it for my kids.
Speaker 1:I wanted to make sure they didn't have to go through what I went through. I wanted them to have what I never have, whatever. You know all the things that people say, and a lot of the folks that I work with, even though they are phenomenally wealthy and successful, are self-made. So they came from very basic, humble beginnings, average kind of middle class backgrounds and then, for whatever reason, they were able to succeed. So we obviously would have started with an estate plan that tells us what happens when you're not here, who gets your assets, who's in charge. That estate plan would have covered incapacity planning, so it would have included things like powers of attorney, healthcare powers of attorney, hipaa releases and agents, living wills, the revocable trust itself, and that's something that's confusing to people that I find. All the time you and I, as lawyers, we talk about a revocable living trust as if it's one thing and our clients don't always realize. They'll say, what about a will? Or what about the healthcare care thing? Or what about this, what about that? And we'll say, no, that's all part of it. Yeah, so when you and I say trust, we are referring to a combination of half a dozen different documents, right, and so all of those would have been in place for him as a first step.
Speaker 1:The next thing we would have looked at is how do we make these assets legally distinct from your personal and professional liability, and, whatever highs and lows come in your career and through your life and through your other investments, what do we need to do to make sure that you never have to earn any of this same money twice, that you don't lose it and have to earn it again and again? That requires some careful legal planning and, as I said, we try and differentiate estate planning primarily as death planning and asset protection as life planning, and we need both those plans hand in hand, working together. So I know where to point all of these assets at the end of your life. So we would have done that. And then I think the third thing we would have discussed is which we're having this discussion more than ever now with pending estate tax changes is how are we going to help avoid or reduce the estate tax that you are currently facing?
Speaker 1:And let's just do some basic imaginary math on Jay Leno For argument's sake. Let's say he's worth $100 million. Current estate tax exemption is about $27 million that he and his wife can jointly pass free Right. That leaves us. What about $73 million?
Speaker 2:Yeah.
Speaker 1:And then the government wants $0.40 on the dollar of every dollar. Yeah, if not more yeah, right, so let's call it $0.40 of $73 million of $73 million, so roughly $30, $20, $20, let's call it $30 million has to be paid to the government within how many months.
Speaker 2:Of the death of the second special. I think it's nine months, right Nine months.
Speaker 1:So do you think Jay Leno, even at his net worth, has $30 million in cash? No, no right.
Speaker 2:I mean he's got the assets. He assets he could gather it there's gonna have to be. He's got to sell something.
Speaker 1:There's gonna be a fire sale somewhere. Yeah, and one of the things that you brought up kind of, you know, made me jump a little bit when you said when he goes into court, he's gonna have to sell this estate plan to the judge in the court. And it's going to have to sell this estate plan to the judge and the court and it's going to have to be very basic and very, you know, very entry level, kind of nuts and bolts, kind of a plan that would deprive him of some of the more sophisticated estate tax, yeah, state tax avoidance techniques that are out there that we could have used, but that require somebody being willing to make a completed gift right now because we have this high exemption Right. So he's going to have to go in court and say, hey, she would like to give $13 million to X or Y today.
Speaker 2:And you're going to have to convince somebody of that.
Speaker 1:Or you're going to have to say that we want to skip a generation or we want to. You know all these different techniques that we use with the different trusts.
Speaker 2:She would really want to give, all you know, this huge car collection to a museum, a charity. She wouldn't want to sell it and give it to her family members. No, no, no.
Speaker 1:Right, wouldn't want to sell it and give it to her family members. No, no, no, right. So not only are those choices now subject to the whims of a third party, but the options we have in reducing the estate tax will be drastically reduced, potentially because, as you said, many of the sophisticated things that we would normally do that would require somebody's agreement and understanding and them putting some of their own money out of their own reach in order to pass it in the most tax efficient way the law allows, may not be at his disposal anymore. Yeah, so what does he do in that case? Does he spend down his estate and make big charitable contributions, which he's the kind of guy that I think probably?
Speaker 1:already does, probably already, would probably do that.
Speaker 1:You know. But let's not, let's not deprive ourselves of every option the law allows because we fail to do planning. That is at the most basic level, and this is not unique to Jay. Like you and I have discussed, like you see in your practice every day, like I see in mine, I talk to some of the smartest, hardest working, most successful people in the country every day. Husbands and children who are running corporations and building big businesses and are detail-oriented on every facet of how they build their wealth, have completely overlooked something this basic that will protect their family.
Speaker 2:Yeah, ike, thanks for coming on the show, my pleasure.
Speaker 1:If.
Speaker 2:I needed to get a hold of you or someone else and talk about estate planning and particularly asset protection. How would they do that?
Speaker 1:I think probably the easiest way to find me is at my website. It's proassetprotectioncom. So wwwproassetprotectioncom. It has contact information and it has a huge amount of educational material on asset protection, estate planning, risk management for business owners and family business owners and physicians and the kind of people that we protect. And there's no paywall, there's no click funnel. You don't have to put your email address in. If you want the information, it's there for you and I've made it easily available. And if you want to reach me, you can find me there.
Speaker 2:Excellent and I know that our heart goes out to Jay Leno and his wife and this is going to be a difficult time and I wish those two the absolute, most peaceful next few years of their life. Thanks for listening to the podcast next few years of their life. So thanks for listening to the podcast. Is that even legal is now listened to in a hundred countries and available on virtually all podcast platforms. Leave us a review, send us some show ideas and do so at producer at even legalcom. Don't forget, as smart as we sound and as lovable as we are, we are not your lawyers and we are not giving you legal advice. But if you need some legal advice, get some. There are some great lawyers out there and we are always ready to help. See you next time.