Human Side of Estate Planning: Considering Human Capital in your Plan
Sandy Pollack
Founder of Trimaran Advisory Group Ltd
Advisor & Author
Sandy Pollack, CFP, CLU, TEP, FEA, MFA-P is the founder of Trimaran Advisory Group Ltd., a financial advisory firm that goes beyond traditional business and estate planning. Sandy and her team recognize the unique family dynamics, as well as personal and economic complexities, that entrepreneurs and self-employed professionals face. She has built an advisory firm based on the understanding that each family business has its own unique set of values and issues. Her priority is to take the time to appreciate the qualitative aspects of your family and business before taking quantitative factors into consideration. This commitment to understanding “what” you want and “why” has been the basis of creating deep relationships that extend well beyond generations. Serving as both principal and Lead Financial Advisor, Sandy is an advocate for values-based legacy planning—believing that building wealth and managing wealth are not the same thing. Sandy is certified as a Family Enterprise Advisor, Certified Financial Planner, Chartered Life Underwriter, and Trust and Estate Practitioner. She lives in Ottawa, Canada, with her husband, Steven, their three children, and their family dog, Mia.
To purchase the book, Don't Leave a Mess visit: https://www.dontleaveamess.ca/
Kirby Rosplock
Welcome to the Tamarind Learning podcast. I'm your host, Dr. Kirby Rosplock. And today we're talking to Sandy Pollack. She is the founder of Trimaran Advisory Group, which is a financial advisory firm that goes way above traditional business and estate planning. And we're talking about something near and dear to my heart, which is the human side of estate planning and really thinking about human capital. So, Sandy, welcome. It's so great to have you on the podcast and to talk about this juicy topic.
Sandy Pollack
Thank you for inviting me, Kirby. It's a pleasure to be here.
Kirby Rosplock
So, Sandy, you and I met through the Purposeful Planning Institute in Denver. We got to have dinner, and we just connected on so many different levels. But one important thing that we both share is we're authors. I see your book in the back corner, Don't Leave a Mess, which, again, I love the title because it means so many different things to so many different people. But we're talking about, really, the disaster-proofing of your legacy. You took this upon yourself above and beyond your day job as a founder to write this. Tell us more about this book, why you decided to write it, and what's it helping you do with the clients you work with?
Sandy Pollack
Thank you, Kirby. So, what compelled me, well, back in, I think it was January 19, 2001, I was in a coaching course, and this is a course that was a room filled with entrepreneurs. You can imagine, mostly men. There were a couple of women in there, and they said, okay, pick the date that you're going to die, and then add five years. If you knew that you could live those five years, what are the five things that you would want to do? And then you knew that you would drop dead in the fifth year. So being in the industry that I'm in, I thought 85. That's my life expectancy. Take me to 90. Aside from spending more time with the family, taking vacations, and doing something for the community, number four was writing a book. And so now, quite frankly, Kirby, I finished my list of five. And if I were to be struck dead today with lightning. Or where we are right now, where it's snowing, a terrible blizzard. I'm okay. I've done what I intended to do, and I don't feel that I have any regrets.
Kirby Rosplock
Well, that's incredible. But I must ask you, you could have written creative nonfiction, fiction, romance, a whole number of things. And you chose the pretty meaty topic of estate planning and risk management and disaster proofing. Tell us more about this topic and why this is so important to you.
Sandy Pollack
So, I have been in the financial service industry for over 30 years, and having very interesting conversations with entrepreneurs, from founders to second-generation children of very successful individuals. And I kept seeing everybody focusing, like doing a silo approach to advising. So, you'd have your lawyer there to do the wills in their legal. You'd have the tax; you'd have the accountants doing their thing. You'd have financial advisors, whether they needed insurance or investments or whatever, but nobody was working together. So, in the end, when that wealth builder died, you had family members that were left unprepared. They were in shock. They were angry. There was built-up resentment, and misunderstandings which could have been avoided if the wealth holder, a wealth creator, would have taken the time, or someone would have helped them take the time to really think about planning from a different lens, and not just in silos. So, I was tired of seeing family members sue each other, and families being broken up over money. And I thought, you know what? I know there's a better way. And so that is what this book became, was a way to help families, particularly family businesses, enterprises, and wealthy families look at their planning through a different lens that will keep their families together instead of dividing them because of wealth.
Sandy Pollack
And that was why I was tired of seeing messes. I was tired of seeing estate litigation become what is soon to be one of the biggest industries in the legal world because of missed conversations, and missed questions that maybe things that could have been avoided. I mean, you have billionaire families where they're suing each other, and it's not over the billions, right? It's over other stuff. And I think that that is why this book came about. And it was always a mess. And if you ask anyone, oh, boy, let me tell you about my uncle. Did he leave a mess! Or my dad left such a mess. For me and my siblings, we don't talk anymore, or cousins that were very close at one time, but then they must take sides. And so, this book is a labor of love, a labor of grit, a labor of me falling on my face sometimes with people who don't want to have those somewhat more touchy-feely conversations. And yet, when you ask any successful entrepreneur, why are they doing what they're doing, they'll say, it's for the family. It's for the family. And yet, when does a family enter a financial statement or a tax plan or a will, other than plugging in some names in some templated document?
Sandy Pollack
So that was why I was trying to make a dent and avoid messes, because, and I know this is a long-winded answer, but the family business is the backbone and the foundation of any strong and vibrant economy, because they feed families, and I'm not talking about their own. They're employing families, and those families are going to get their groceries, and they're feeding the people that are working in the grocery stores. And that dollar just keeps repeating and growing. And the more that that dollar is being used, the stronger an economy that you have. And I think that we forget to pay homage to these unsung heroes who took risks, had grit fall on their faces, and often, they've created something beyond what their expectations were, because, quite frankly, they just wanted to start a business and feed their family. And it grew beyond that.
Kirby Rosplock
Yeah. Well, it's so interesting to me to think about the intention of estate planning, which is to get your affairs in order. We're thinking that this is helping people get prepared for an efficient and effective wealth transfer. Tax efficient. We say all these buzzwords. Why do you think the human capital discussion or element is often missing? What goes awry?
Sandy Pollack
That question. I'll just peel it back a bit. What goes awry? Lack of communication, lack of understanding of someone's wealth journey, and lack of empathy and compassion. Often, I have seen entrepreneurs create enormous amounts of wealth beyond what they thought. If they had to choose between discussing what they want to do with it, how they want to transfer it, what they want to do for their families and their communities, or if they have a choice of buying another commercial building, they'd rather buy another commercial building. Because that's easy, that's quick. When you're talking about human capital when you're talking about the fact that wealth can sometimes soften the edges of life. However, it's not about preparing the estate. It's about preparing the heirs who are going to receive it or who is going to receive it. I think that we spend so much time on the thing instead of the people. And in my practice, I had a couple that was a lottery winner. They had already gone to banks and other people, and they told me you're the first advisor, Sandy, that's asked us all these other questions, and you're helping us understand that there's more to what we have.
Sandy Pollack
I think it was $10 million and so they ended up engaging with me. We had them on this wonderful path. There were a lot of family issues and things, and then they went off the rails and we lost touch with them because they didn't want to come back and have a conversation about the children. One of them was a little wayward, and they didn't know how to manage that and deal with that and accept some responsibility to make that situation and that relationship better. So anyway, they squandered through a lot of it, and we had to let them go as clients. And it was almost like freedom. Three months after we let them go, we hired a portfolio manager to manage their assets, which had dissipated quite a bit. I got a call from the spouse who said, Sandy, I just want to say we are so sorry. And I was somewhat shocked. And she said we've been horrible. You tried to put us on the right path, but we just got tangled up in other things. And it's unfortunate. It helped me realize that talking about relationships, misunderstandings, contexts that weren't understood, and having compassion for maybe not being the perfect parent.
Sandy Pollack
Maybe making mistakes and saying, you know what? I did the best I could, and I did a hell of a lot better than my father did for me or my mother did for me. That is when you have these frank conversations. It's amazing how forgiveness becomes something that helps people move forward. And then they can talk about, aspirations, what they want for their children, what's great about their family, so that they can continue to create not just relationships within the family, but to create a future that includes community, that includes causes that are important to them, that ensures that a business that employs 100 families continues to thrive. And that could be by selling it, that could be by putting in professional management, whatever the case is. But until people take the time to gain clarity on values, their history, the good and the not-so-good, right? Because we always learn from things that don't work. We never learn from things that work. But just accepting the fact that, oh, yeah, I took a sword on that one, or did I ever blow that? But what did I learn? And sharing those lessons with your family, I think that is part of human capital which is not the financial right, but there's a human element, and it's like estate planning.
Sandy Pollack
It's not about estate planning, Kirby. It's about estate thinking. What do you think about what you've built? And quite often, people don't even want to look at the number. They say I don't want to look at this number. That's not me. And I'll say, well, that's not what I'm saying. This is what you've built. Now, what does it mean to you, and what would you like to do with it? Because we don't always have to leave everything to our children. We can leave it to charity. We can help other people. But if you haven't had an opportunity to reflect or have an advisor or a team of advisors asking you thoughtful, interesting, and meaningful questions, then, of course, you're going to do the same. Okay, let's set up a trust. Let's set up a holding company. Let's buy insurance. But it's all disjointed, and that is where messes begin because there are little cracks that end up becoming big holes.
Kirby Rosplock
So let me play devil's advocate because I hear this a lot. A family member, particularly a matriarch or patriarch, says, well, you know what? I'm setting this up, but I don't know if it's going to be what I want to do. So maybe I won't communicate about what I've made, what I have, what I want to potentially transition, or what I want, at my death, for them to receive. How does that impair or impact this idea of estate thinking? If you have a real fear that you're not sure, like, maybe stuff will change. Maybe I need more because I live longer. Or maybe it turns out that my son or daughter, who I thought was going to be just a great champion and great steward, maybe they are a little wayward, as you said, or not interested, or resent me because they feel like I'm trying to control them with the wealth that I pass on. So, talk to me about how human capital and relationships could estrange or make the estate planning process even more estranged.
Sandy Pollack
That's a lot of layers, Kirby. So, let's start with the big C word. And I'm not talking about capital, I'm talking about control. Most entrepreneurs start their businesses because they're unemployable, and they don't like people telling them what to do, and they found a better way to do something so they're going to move forward on it. It's one of those three or a combination, in my experience. So, let's talk about control. In these conversations, and again, I think that you need a team and you need to have people that you interview and find that are trying to understand you instead of just explaining to you what you should do because there's a lot of “should”. Run away from the advisors that “should” all over you because that “shoulding” is not good. It's more about what you want. What's keeping you awake at night? If we were sitting here three years from today, and you were hit by a Mack truck and you were looking down from heaven, what would you like to see for your family? How would you like that to play out in your business?
Sandy Pollack
How would you like that to play out in your community? What type of values would you like to impart to your children or grandchildren, or what stories and lessons that perhaps you’d like to share? And there's a saying that you can't read the label when you're sitting inside the jar. Often, the very successful type of entrepreneur is in the jar, and he needs to be gently lifted outside by a team of advisors who truly want to take the time to help that individual unpack some regrets, unpack some lessons learned, and share what their aspirations are. This idea of saying, well, if you die, you're going to leave a mess. No, the book wasn't meant to kind of scare people off. It was to provide them with some guidance so that they could see that there was a better way. There is a better way than just worrying about, well, if I die, I need insurance. There may be a need for liquidity if you have a big real estate portfolio, but I think that it's understanding that it's more complex and there are different layers, and it's about having the right individuals that help you think about your values more than your valuables.
Kirby Rosplock
Yeah. And I do sense that sometimes this is a very unfamiliar, uncomfortable place to have someone say, well, can't you just fix it? Just give me the plan. Just tell me what I should put in there, and that's good enough, right? Why is this sort of extra element of going the distance to have thoughtful communications while you're in the living, and with those people, you can share more and what the meaning is behind why, potentially, your trust assets that you want to put in trust for somebody is less than somebody else. I mean, I see this quite frequently, especially when we have differently-abled heirs, right? Someone who has a permanent disability and will never be able to earn the same income that somebody else might be able to. And so, there's usually, like, sometimes that's a very clear and obvious distinction, but sometimes there's not as clear distinction of why not everyone may be equal in what they receive. And so, I feel like sometimes the estate plan doesn't give you that memo, right? That gives you the wishes or the intentions behind it. Is that something, sandy, you see that you do a lot of work with clients.
Sandy Pollack
Well, like, I have a situation of a client that amassed a significant amount of real estate and had a subsequent marriage, and there was a lot of pain, right? He had four children. The four children have no idea of the wealth. And after coming to me, we pinpointed, yes, it was an estate tax obligation, and it needed to be properly dealt with in a planning way. And I brought in a tax lawyer and their accountant into the client's boardroom, and the tax lawyer started talking about, well, hey, there's a great way to defer the tax. You put it all in this trust, this spousal trust, and then when she dies, the kids get it. And my client started kind of wiggling in his chair a bit, and I could see that. And I said, whoa, whoa, whoa, whoa. What if the children don't get along with wife number two? Right? Do you think that they're going to be looking at the obits every day? Like, the purpose here is not to defer tax. There's a combination of goals that this gentleman had. So, I ended up taking the accountant and tax attorney out for lunch, and I said, basically, there's tax, and you could minimize tax, and then there's control.
Sandy Pollack
And you have to try to find a balance. And he wants to know that he can save some tax. We'll deal with the tax problem, with life insurance to fund it. But he wants to know he has control, that if he wants to give his children during his lifetime or at the time that he dies, that there is some kind of equality in there, or fairness that would be more important than just looking at it through a tax lens. The accountant looks at me and says, you have been dealing with my client for the last two years, and I've been his accountant for 20 years. You know, more about his situation, the interesting dynamics, and what he wants than I do. The tax accountant said, oh, I didn't realize that. Let me change my plan. And he did. He revised his plan, but still, there was an element of unknown. So, the client did not feel that it was the right time to disclose his financial wealth to his children. And so, I said, well, if that's the case. And it worked out that he had four children, and he was going to leave it so that his wife was going to get something like 20%, and each child was going to get 20% so that it looked even.
Sandy Pollack
But if you just looked at it from the family, the children group, and the spouse group, right? It was 80-20, which was not the case. So, we coached him, and I shouldn't say coach, we guided him to share his stories and his whys, and we helped him write a letter, and he wrote a letter to his spouse, and he wrote a letter to his children, and there were Kleenex boxes in the conference room. But at the end of each letter, he explained his decision. Right. And why he had kind of constructed his plan that way. And I remember after he signed it and he put it with his wills, and I went, okay. I said, well, I just want you to know you've just put a Band-Aid on a hemorrhage. And he looked at me and he said, well, what do you mean, Sandy? I said this is temporary. We must have a family meeting. We must discuss your stories and your values and bring the family together to have these frank conversations before an all-out war, because there will be estate litigation, and there will be marriage contracts and all these other things.
Sandy Pollack
I'm not telling you the full details, but the point is that it takes a lot of courage to have a courageous conversation about what you envision for your family. And it's the same thing if you have one child that's done exceptionally well financially and another child that hasn't, that may have special needs, then either have individual conversations with each one or say, this is what I'm thinking. What do you think? And if they say, oh, okay, it's not that you love the needier one more than me, because that's what it usually translates to in people's minds and our emotions when they get control of us. Kirby, you've got a PhD. You know that little amygdala, when it's on fire, nobody listens. But if the person that is planning their estate has conversations to say, listen, I love you a lot, but I think your sibling needs a little more help. This is what I'm thinking. And if that sibling said, well, I don't think that's fair, then let's have a conversation. Maybe it's okay. Is there a charity? Because I want to try to equalize it in some way.
Sandy Pollack
Let's say one child has special needs and the other one doesn't. Maybe you would be open to splitting it, but in a way that I give to charity as well. That takes care of this special needs person, and suddenly, they're becoming part of the conversation instead of just, this is how I want it. And that's it. Because, gosh, I'm from a family of six children. We're blended, and there are almost two generations in there. My youngest sister is ten years younger than me, and she lived a very different life than when there were six kids. So, there's a lot of stuff. And it's about having that conversation to deepen a relationship, maybe, or put a fractured relationship together. And that takes courage. Kirby. I don't know. It's very challenging, but I think that part of it is talking about what you're thinking, and then maybe there's a better way, by having children or grandchildren be involved.
Kirby Rosplock
You take such a fresh approach. I think it's courageous that you do the work that you do, because, quite honestly, it puts you in the middle of a lot of heated and potentially conflicting situations. But I feel like when you're able to head off conflict by just owning it up front and saying, this could be kind of an unintended consequence, right? And even if you're not fully transparent on every piece of it, at least if they start to understand where you're operating from. To your point, your values and how you see the world and how your values were informed by these three or four major things that happened in your life that can just arm the next generation or those that are going to be impacted by your wealth with a good grounding to say, oh, well, I get it now, because he shared, or she shared this formative story. Or he grew up in the depression and witnessed XYZ, or it wasn’t a handout. So, these kinds of lessons are formative to imparting values and insights into someone's intentions.
Sandy Pollack
And sometimes people, their intentions are not so great because there could be envy. I worked so hard, and I built this up, and now I just am handing it to you. Well, listen, it's up to you. They're not asking you to hand it to them. Why not? As I think I mentioned previously, would you give your four-year-old the keys to your Maserati? You have to train them. They’ve got to get a driver's license. They must be the right age. So, when do you share this information? When you think that it's age-appropriate. Teach your children how to manage money, the importance of saving some, saving some, spending some, and sharing some, all those things, and having conversations about that. And I think that wealth can soften the edges of life. I really believe that. And yet, if it's not transferred or gifted, and it depends, it could be a transfer, it could be a gift. Who knows? But whatever that mindset is, if it's not done in a well-intentioned way, then talk about human capital. You're going to be creating a legacy of damaged capital, and that's damaged relationships, damaged children who feel guilty, who feel angry, who don't understand, who feel deceived when that wasn't the intention of the wealth builder or the person that's gifting.
Sandy Pollack
It was not their intention, but they didn't know what they didn't know. And I think that we're in 2023 and going into 2024 or 2025, the world is changing. There's a lot of misinformation out there. Someone called it a digital distraction, and I think there's a lot of that. And people think that what they see is real when it's actually made up and there actually is no one in charge. And as someone said to me, life's not fair. Well, share that with your family, and then explain to them that whatever your planning is, if it's from a place of the heart, have the courage to share that with them. And yet, sometimes we don't even understand our own money scripts because it's kind of beneath the surface. It's deep in the recesses of our minds and behaviors. And I think that sometimes we have healthy ones and sometimes we have not-so-healthy ones. I want to give my child everything because I had nothing. Well, that's not a healthy one. I want to give my children nothing and make them suffer the way that I suffered. Well, that's not a healthy one either.
Sandy Pollack
Right. And so, money, there's financial. When you look at the human capital, there's a financial element, but there's a human element. And I think that we have to somehow or another harmonize the two so that when someone makes their planning decisions, it's somewhat of a balanced approach. Maybe the human element is more important than the financial element. Maybe having guardrails on financial planning is important. But if you don't know why, and if you don't take ownership of that why and share the reasons why and communicate it, then you're going to end up leaving a bigger mess than you thought.
Kirby Rosplock
Yeah, well, and I love the guardrails concept. If I'm a tax expert or tax advisor, and I'm working with your accountant, why wouldn't I do what I do best, which is tax efficiency, and getting as much wealth or much business ownership or whatever, to those responsible parties, those heirs. But if they don't know the full human capital side of the story, just what you shared in that last example, you can find that they do a really good job in their technical lane, but it doesn't necessarily fit. It's not, like, the right size to the scenario or the wishes of the person that's supposed to empower. And I just want to jump to one other thought before we wrap it up here. I also find that a lot of times, there's a lot of work done for the founder or the wealth creator or the person passing on wealth. Give me some thoughts or some ideas on how to shore up or support the human capital of those in the system that may not have the control or the power, who might be the ones impacted by that wealth transfer. What are your thoughts on how we support that element of the family system?
Sandy Pollack
Kirby, I love that question, and I will share with you. What we're doing is we are facilitating family meetings to open up the doors of communication. And what's happening is all of a sudden, this generation is now being connected to the stories and the history so that they really feel that it is a legacy and not just a lottery. That's number one, and having them share stories and values. The other thing is financial fluency. People call it financial literacy, but I believe that in order to empower the second and third generation, it's how can we give them the tools so that they can make financial decisions that will empower their own self-confidence and not just be part of a family office where they get a check every month, because that can be very destructive for a person's self-confidence and even their sense of purpose. All of a sudden, that becomes nonexistent. And that's when you have family members get into trouble. And that could be drugs, it could be relationships, it could be health. There are so many things. So, I think that empowering that second and third generation and having conversations and asking them what they'd like to learn, which is what we're doing now with some families, like, let's model your own individual plan.
Sandy Pollack
I had one person, a rising gen, that thought that if you only paid the minimum on your credit card, that was good for your credit rating, not realizing there's 28% interest. Well, that tells me that's financial fluency and that's a digital distraction of what she's hearing all around. Right? And we said, well, that's not really the case. Let's talk about this. And what would you like to learn? And I think having them feel safe in an environment to ask questions and reassure people that questions don't mean that you're dumb, questions mean you're curious. And I think that does a lot to help someone either build or restore someone's confidence.
Kirby Rosplock
Oh, Sandy, I love having you on the podcast today, and I'm so excited about your book. Thank you for having the commitment to see it through and put words to paper. It's a great read. It's accessible, it really provides some clarity of thought around disaster proofing, which I love, and transition planning, and just the more humanistic components of estate planning and risk management. So again, thank you so much for that contribution to the literature. We're going to have more links on how people can purchase the book, learn more about the book, and certainly I feel like we have a lot more to talk about. So, I hope you'll come back at some point in the future to the Tamarind Learning podcast. Is there anything, Sandy, you want to wrap up with? One or two thoughts to leave behind?
Sandy Pollack
Well, firstly, I would like to thank you, Kirby, for inviting me. What you have created in your book and what you are trying to do for families of wealth so that they are empowered and inspired and have purpose is more than commendable. It's pretty awesome. And I'm hoping that there's going to be a whole wave of advisors and specialists and professionals that can continue to make this, as Jim Grubman said, wealth 3.0. Well, let's get on our way to making money more meaningful than just dollars. Because if it's just about dollars, that's when you will be creating a mess. Not might be, will be. And I'm hoping that between the work that you do and my book and the work that we continue to do with our clients will help them make decisions that will provide clarity and confidence for generations to come. And that's pretty much what I have to say. So thank you.
Kirby Rosplock
Awesome. Sandy. It's been such a delight. Sandy Pollack again. She's here with us from the Trimaran Advisory Group and the author of Don't Leave a Mess. We loved having you at the Tamarind Learning podcast. And we're signing off.
