One of my secret agendas with Radical Personal Finance is to expose the world of financial advice to the light and see what stands up and what doesn't. Now, it can be bad or we can point out some of the problems in the financial advisor world or as in today's show it can be pretty cool.

Today we get a chance to talk with Patrick Wren, a long, tenured financial advisor. We're going to talk about what it means to find your money's greater purpose and most importantly, or I guess most interestingly, not most importantly, but very interestingly, we're going to talk about some specific tools and strategies that you can use to leverage the power of your money to increase your charitable contributions, increase the money that goes to your heirs, and you know the only person that gets shorted on this deal?

The IRS. Not about you, but I'm pretty cool with that. Welcome to the Radical Personal Finance podcast. My name is Joshua Sheets and I'm your host. Thank you for being with me today. This is a show where we're all about living a rich life now and building a plan for financial freedom in ten years or less.

But hey, guess what? You know what happens? If you do a good job of living a rich life now and you become financially free, most likely you're going to wind up with way more money than you can spend. So what do you do then? My guest today is a man named Patrick Wren.

Patrick is a 69-year-old financial advisor. He's been a financial advisor for over 35 years. And the way we got connected here was his publicist contacted me. And this is a regular occurrence when you're a podcast host. You get lots of contacts from people wanting to just talk with you about, wanting to use the show as a platform for them.

And I turned most of them down. But today I really wanted to talk with Patrick because of his tenure in the financial advice business and also because of his area of focus. He's written a book called Find Your Money's Greater Purpose, How to Make Your Legacy Count, which is a slim little volume that's just simply focused on giving you some tools and strategies and techniques that you can use to really enhance your charitable opportunities.

But Patrick focuses on working with people at that kind of traditional retirement age, 60s, probably 60 to 80 years old, and helping them manage their retirement income needs as well as helping them manage their charitable needs. And so you're going to enjoy today's conversation, especially if you have a bent toward the technical financial planning side of things.

We're going to talk a little bit about some estate planning strategies. We're going to talk about charitable remainder trusts and grantor. We're just going to talk about a few charitable remainder trusts. We're talking about gifting life insurance policies. So if you enjoy some of these little techniques, you're going to enjoy today's show.

Patrick is a good guy, and especially if you're a financial advisor, if you like the idea or the topic of financial advice, this will be a show for you. Not a lot of rah-rah, not a big business-making show, just very practical, down-to-earth experience from somebody who's been there in the trenches for 35 years as a financial advisor.

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Check out his podcast, "The Student Loan Show," and also make sure to use the special referral link, and you get $25 off on initial email consultation at studentloanshow.com/radical. studentloanshow.com/radical. And here is the interview with Patrick. Patrick Oren, welcome to Radical Personal Finance. Thank you, Jay. When your publicist contacted me about potentially bringing you on the show, I usually say no to most of these inquiries, but I said yes to you because of the topic of this book that you've written, which I hold here in my hands, called "Finding Your Money's Greater Purpose, How to Make Your Legacy Count." And this is a topic that I've done short shrift to on the show.

I'd like to have covered it more, but I just simply haven't gotten around to it. I said, "Well, let me have an expert who's written the book to share with us on the topic." So before we dig into the specific topic of the book, though, share with us a little bit about your professional background and the circumstances that resulted in your writing this book.

Sure. I've been a professional financial advisor really all my adult career. That spans 40 years now. And I'm at the point of my life, along with most of my clients, where it's a little more reflective and a little more interested in what ultimate legacy we might leave. So really the book is part of that for me.

It is what I refer to from time to time as my instructional manual to the next generation. And tells a lot about some of my personal experiences and my life and how financial planning has played a part in that to enhance what I'm doing. Do you practice in this area as a specialty or is this more of, as you said, simply because your clients have gotten to this stage of life, it's kind of a natural growth process?

I think it has developed into a specialty. It's a niche that I'm known for in my community. I work with several nonprofits and their donors and most of it has to do with integrating mission with those donors desire to really enhance their situation financially, but also to see if what they're doing can be improved in terms of their own personal situation, their family legacy, and those institutions and causes that they care about, if that can be enhanced financially.

And the answer is that it can in most cases, people can come out better financially when they include philanthropy in some of their plans, believe it or not. - I wanna talk about some of the tactics and specific strategies, but I wanna start more with the bigger picture overview before we go below the horizon and dig into those things.

Is philanthropy something that's only appropriate for people to think about at a certain stage of their life? - Well, I don't think so. I think frankly, today there's this whole group of social entrepreneur, the younger 30-ish to 40-ish, entrepreneur who has more of a social consciousness than perhaps my generation did.

I'm part of the baby boomer generation. We did a lot of whining early on, (laughing) we're kind of known for that. And we complained about a lot of things. Then we went to work, and then after working for a while, we realized that we could integrate some of the bigger picture issues with our life's work.

But to answer your question, I find younger people, frankly, that generation of Gen X and millennials are much more socially aware of what they might be able to do at an earlier time in their life. It's been a surprise to me, frankly. - Does this approach involve money and giving money, or are you simply talking about it just from the perspective of working?

- Well, it involves giving money, but it also involves giving time and talent. I mean, I think you can do an awful lot without strictly looking at money. I'll give you a personal example. I've been involved with Special Olympics. That was one of the causes that early on kind of instilled a wake-up call in me.

And I got my children involved in it. I had two boys, and I got them to volunteer. I got my employees involved in the program. And my children were preteen. They were in their years, I would say, was around six, seven, and eight. We'd go to the games, volunteer, spend the night.

And I think it instilled in them some values that are not necessarily simply financial. - Where do you start in trying to figure out how to make your money count? - Well, I think you start with what is it that the money needs to accomplish? Typically, it needs to evolve into a nest egg or a pile of money that will support an individual, the family, and then eventually institutions and causes they care about.

So I would start with the idea of present and future cashflow. What does that really need to be? And then see what the number is that would produce that. And how obtainable is that? Is that something easily obtainable? Or does the individual have to adjust a little bit in terms of their desires and objectives?

- Do you find in practicing this segment, 'cause when I was a financial advisor, I had a few clients who were entering retirement. That was my competitive advantage. I said, "I'm gonna be the 30-year-old financial advisor "who specializes in working with 55 and 60-year-olds." That way I could tell them, "Listen, your advisor's "gonna be retiring when you are.

"Don't you wanna work with me? "He's gonna be here for your whole lifetime." I figured I could cut against my smarter, more experienced competition by rephrasing the opportunity. But I didn't get deeply, I didn't have a broad client base of clients that I'd worked with on this topic for years.

So I'd like for you to share your perspective specifically with specific situations and examples to help people begin with the end in mind, to help see where they're likely going to be. So when you're dealing with somebody who's at this traditional retirement stage, do you find that they wanna spend all the money, they wanna give it away?

How do you find people approaching that problem in their own situation? - Sure, I'll give you a concrete example. I had a neighbor that worked with one of the financial institutions here in town for many years and was given an opportunity to retire early. This is not unusual when you get to a certain stage of the corporations may want to make an exchange of an older, more costly employee for a younger, lesser costly employee.

And we have quite a few clients that were given that opportunity. So the whole question was, was there enough there to support the lifestyle they wanted to? They were still relatively young, this was a couple. They had two children who were adult children. So it boils down to a financial analysis to see if what is doable.

I would tell you that for most of our clients, they very much live within their means. It's just one of those things that has happened to us over the years. We've attracted that kind of client. So in this particular instance, we work with these folks. He retired about five or six years ago now.

And what is very common in our particular practice is we're now working with those children and the grandchildren who don't even know us frankly yet, but we're developing a family legacy plan such that the money is not gonna run out based on the way they're situated. And what happens to the money with the future generations is part of our planning as well.

- Do you find, talk to me about how people should think or just talk observationally. How have you observed your clients considering the value and benefit of transferring money to their bloodline, to their heirs, versus the value and benefit of transferring money to external institutions with charitable, with a charitable focus?

- Sure, you know, many times you can leverage because of the tax advantages of gifting and the fact that you can make a future gift, even one that will occur after you're long gone from this life and receive a current tax deduction. The fact that that tax deduction actually puts money back into your pocket, allows you to do some planning with respect to the family.

The other big advantage we have today is that for a couple, we have about $11 million that would not be subject to a state tax. So then the real question becomes how much of that, let's just say it's right at 11 million, how much of that 11 million should go to family?

And usually there's a number that does not approach 11 million. And if that's the case, then where should the rest of it go? And most of us have some form of payback desire, let's put it, to our school or our church or synagogue or some institution that somewhere along the line had a beneficial effect on our life.

And now we're in a position to maybe give back and help that institution thrive. And in some cases just survive, if they're financially in not the best of shape. - How do I decide on how much is the appropriate amount of money to leave to my kids? - That's a very subjective question, I believe, and a very subjective answer.

And I would tell you that it differs tremendously within the family unit. Usually, and I tell people this, fair is not necessarily equal. So if there's more than one, I would caution against automatically assuming that everyone should get an equal amount. And usually we find in family discussions with siblings, they're okay with that.

You may have a professional person on the one hand that is gonna have plenty of income and plenty of assets, ability to accumulate plenty of assets over their lifetime. And you may have someone else who is not in the same position, maybe a teacher, maybe in the ministry, maybe has some special needs, maybe just hasn't gotten their act together.

And usually siblings are, I find very aware of that. And are okay with it. The ones that are, the successful ones are okay with helping out the other sibling financially. That usually means that the money needs to be somehow managed beyond the control of the sibling that is the one that needs the help.

Because if they got their hands on the money right away, it could be a disaster. You can help one person by giving them money immediately and you can also hurt a person doing that. So I would say you have to spend a lot of time trying to figure that one out.

- What would you look for to understand whether you're helping or hurting somebody? - Well, I would look at a little bit of history. I would look at what the expectations are going forward. Certainly health and mental condition are all factors that I would look at. And then that would determine the timing of these, of the gifting.

It could occur while the parents are still here and sort of a dry run to see how that would happen. It might have to occur after they're gone because they need the money currently. So I would tell you every situation is quite, quite different but what determines it I think is mostly history, personality, what is their current occupation or profession?

What is their, are they married, not married? Are they, what are their plans for their life? - Let's talk about formal financial planning. I'd love just for, if you're practicing in this area, you must have some interesting stories. So think back over the last couple of years of your practice and choose for me perhaps a very interesting case that you worked on where clients came to you, started talking through this process.

You did your fact-finding process and then you put together a financial plan using the tools of financial planning. Describe the case, describe the scenario and describe the solution. And please don't be scared to be specific with technical details. My audience is interested in that topic. - Sure, let me tell you, let's call him Joe, okay?

So Joe was someone that showed up at one of our, we do donor workshops for charities and Joe showed up and he was what I would call a modest donor, at least in the pyramid that the charity had. He was not one of their top benefactors and he came and heard some things about how he might do some charitable planning and what it meant, what it would mean to him.

And he decided to take some action. He changed the beneficiary on his IRA. He changed the beneficiaries in his will and he had some stock and made a charitable contribution to a trust, to a charitable remainder trust and got a tax deduction for that. Increased his income currently by about 20 to 25%, somewhere in there.

And as a result of that, he was able to double the gift that he was making to the institution. In this case, it was a hospital. So I always tell charities, you know, if you do it right, you can increase current giving with planned giving. And that was a perfect example.

Joe died a couple of years later, the children showed up and this was a while back when the tax laws were a little bit different. And, you know, they were very interested in why Joe had made these gifts to, it was to the hospital, to his church and to his school.

And as a matter of fact, the gift to the hospital was over $900,000. It was the largest gift they had received. - These were gifts as given as part of the estate distribution or these were gifts, lifetime gifts? - Yes, exactly right. That's exactly right. During the estate distribution.

So the children, as you might imagine, question the motivation behind this. They felt maybe they were out a million dollars in inheritance. And so we sat down and we showed them a before and after. And as it turns out, they actually received more inheritance than they would have before because of the leverage that was obtained from the tax deduction and the fact that that was used to make some other inter-family transactions.

And they actually came out about 30% better in their inheritance. The charities received about a million dollars. Well, I think it was a million three total. And the only loser in this deal, of course, was the IRS. And that's a concrete example. I use a good bit, both with families and with charities to help them understand that the tax leverage can be tremendous.

It can benefit the individual. In this case, Joe got more income, got a tax deduction. It benefit the family. They got more inheritance and it can benefit the charity. - Explain the tools involved. Did he set up, did he give, what did he give, when did he give it, and why did he use those tools?

- It was charitable remainder trust, primarily to produce more income and a tax deduction. There were gifts through will and IRA. And there was a trust that was set up for the benefit of the family, into which he put in some life insurance as a result of the tax deduction that was obtained from the gifts.

There was more discretionary income that he could use and replace to the family. Those gifts that were going to go to charity. - So let's walk through-- - Through the life insurance. - Perfect, that's exactly what I was hoping. And I know normally you're not accustomed to talking about necessarily the technical details, but it's of interest to my audience here.

So what is a charitable remainder trust? How does it work and what did it do for Joe and what did it do for the charity? - Okay, Joe transfers stock into the trust. He names the charity as the beneficiary at his desk. - This was stock, publicly traded stock or stock of his own private company?

- Publicly traded stock with very low dividends. - Okay. - So under 1% at the time. - Appreciated stock? - Transfers that in. - Sorry. - Yes, appreciated stock, low cost basis. So if he sold it, he was very reluctant to sell it and pay the tax. Kind of a classic, what you look for in these types of transactions.

So he transfers the stock into the trust, gets a tax deduction. This is a function of his age, life expectancy, and the amount that he's putting in. So he gets a handsome tax deduction for that, current tax deduction. Now the trust can sell that stock without paying any tax, reinvest those proceeds into some income-producing property, stocks, bonds, whatever they happen to be, and produce more income for Joe.

So now Joe's income has gone up by 20, 25%. He got a tax deduction in the front end. So those are the benefits to Joe. - And let me clarify, the reason why that's permitted is because this is a charitable remainder trust. So the remainder of the account will transfer to the charity at the time of Joe's death.

- At his death. Okay, so now you disinherited the children by that amount of money. In order to replace that-- - Real quick, Patrick, do you remember, or are you willing to say about how much he put in and about how much his income was from it? - There was, oh, jeez, I'm trying to remember.

- Ballpark. - Yeah, I think the trust was in the neighborhood of $900,000. And the income would have been in the 35 to 40, which is substantially more than it was before. Does that answer the question? - Yes, it does. And the reason I'm probing on this is often, so the world of estate planning, we've done a good job as financial advisors of trying to keep a sense of mystique here.

We feel it's one of those ways where we try to pretend we're better than everybody 'cause we know how to do estate planning. But I wanna demonstrate to people that it's very accessible. And certainly you don't need to have $100 million to do good estate planning. Sometimes, if you're dealing with a couple million bucks or somewhere in that modest seven-figure range, you can still use some of these tools and strategies to substantial effect.

That's why I'm asking for the details to demonstrate that to my audience. - Sure, sure, and if we have time, I'll give you a very simple one after we talk about this. But now you have a tax deduction, you have increased income. So Joe increased his current giving to the charity.

The fact that he got a tax deduction and increased income allowed him to fund a life insurance policy into a trust. And the reason you would do the trust is to keep it out of the estate. And so you replace the lost inheritance with the life insurance, which is now in a trust and does not get taxed at all in terms of the state taxes.

And that goes to the children. It has replaced the wealth that is going to the charity. So who's benefited here? Joe has benefited from increased income and less taxes to pay. The children have benefited in that it actually, he replaced the insurance was more than what the inheritance was going to be.

So that he was afforded that opportunity because of the tax deduction and the increased income. And then the charity received the million dollars at his death, million three at his death. So to me, it's a win, win, win. Obviously Joe was charitably inclined. He came to the workshop because he was a donor.

So there was motivation there to begin with. - And yeah, and so the reason we go through it in detail is because it demonstrates how by locating, by looking at an asset structure, and it's impossible to teach, the reason the scenarios are useful is you can't teach this subject and say, well, you should always do this because you have to look at the asset.

If you have, for example, okay, if the stock is privately held versus publicly held, that's gonna make a difference. If it's appreciated stock, if he has a low tax basis in it, he paid a little bit of money and now it's worth a lot, that's very different than if it's depreciated stock.

He paid a lot of money for it and now it's not worth much. So in that situation, you would never put that asset into a trust. You'd sell that asset. And if you wanted to convey some money to the charity, you would always sell it, take the loss and then transfer it.

So these scenarios I think are useful to demonstrate to the interested lay person that here are some actual techniques and everybody wins in that scenario. Joe gets more money. He fulfills his charitable goals, which are important. The charity gets more giving now and more money at the termination of the trust.

The children have their inheritance secured and they get more money. And then the financial advisor wins and provides a valuable service and you earn money on the transaction. But everybody wins. The only person that loses is the IRS, but I don't feel so bad about that. I feel pretty good about that.

- Well, you hit the nail on the head. I think most people would agree with you. - So is there anything else we can learn from Joe's example before you go on to the other example you mentioned? - Well, I think what you can learn is that in most cases, people are not aware of techniques that would increase and benefit them, increase their financial wellbeing and benefit them only because no one has brought it to their attention.

And if you have been around for a while, you know as well as I do, that many people feel that their situation is well in hand. They've done some planning. They don't need any more. They're resistant to having someone take another look. But in most cases, if they haven't been exposed to some of these techniques, they're really doing themselves a disservice, I feel.

And I can tell you there are numerous cases where we've reviewed documents that were outdated in terms of what clients thought their desires were reflected in these estate documents were not the case for various reasons. - Right, and I know for me, people often build these barriers because frankly, as a financial advice community, many of us have abused, people have felt abused by us, we who are financial advisors.

And in the scenario that you explained, there's the appropriate placement of an appropriate life insurance policy. And so what a new financial advisor or a new insurance agent would do is say, "Listen, let me tell you about the islet. "Let me tell you about how an islet, "an irrevocable life insurance trust works "and looks so great, "and you can put a life insurance policy in there." But a new life insurance agent is not gonna know how to structure a charitable remainder trust and is not gonna have the connection.

So what happens is that we who are new in the business, we go out and burn a bunch of bridges for people and they don't wanna hear about it. And then they gotta come along down the road and say, "Well, listen, okay, hold on a second. "Let's talk about a specific situation.

"Let's run some math and let's see if there's a way "that we can use these various techniques "and tools that are at our disposal in an intelligent way." And in the example that you gave, it's not the life insurance policy that did the magic. That's just one way of assuring the estate for the kids within that trust.

And the reason the life insurance policy works so well in that example is because Joe already gave away all the money. He put the money, or he gave away a lot of money, and he gave that away into the charity. But with a life insurance policy, he just needs to buy some money to transfer to his kids at the date of death.

And within an irrevocable trust, he can go ahead and make the transfers in there that are sufficient to pay the premiums, and he can buy some more money for his kids with the use of the life insurance policy. But it only worked because of the other offsetting tax savings.

And so that's why when I, frankly, I mean, Patrick, the reason you're on is because you're working in this area, and this is the type of conversation I have been wanting to expose the radical personal finance community to, and I haven't. Too many financial advisors are stuck behind their compliance department.

They can't come on and talk about these things. So I think it's valuable that we can share this with people in a useful format. - Well, Joshua, you make a good point. I think that what happens is in so many cases is that advisors lead with techniques and before they really have a full grasp of the situation.

And it's so helpful to know everything that you possibly can about that client or potential client, including reviewing tax returns and documents. But even more importantly than that, what are their desires? What do they really want to accomplish in life? And once that communication develops, then these techniques just kind of fall into place.

- Right. - And you don't need to, like you say, hammer on an eyelet. It may be appropriate, it may not. In this context, it was, because as you mentioned, some money was freed up, and I liked what you said about buying some money. That's exactly what happened here.

- Yeah, and Joe was insurable. I mean, if Joe hadn't been insurable, it wouldn't have worked. He'd have to find another solution. It doesn't mean that there's not an option. It just might mean you're transferring a policy that's elsewhere or you're using another technique. - Absolutely, there may be one, yeah.

If there's an existing, you always want to take the lowest cost option. - Amen. - And if there is one already existing, restructure what is already available. - Yeah, give us that next example, Patrick. - Okay, so you don't have to have tens of millions of dollars, a colleague of mine who works in the planned giving area at the charity has told me over the years that one of his favorite situations is to find one of their donors who is elderly, who is single, and either widowed or never married woman, who has an interest in the charity, owns a home and has an IRA.

And he talks to them about donating the home currently. You can donate your home, live in it for the rest of your life, retain an interest to live in it for the rest of your life, get a current tax deduction for this gift of the home. And even if you're in the lowest tax bracket, 15% tax bracket or so, this gives you a tax deduction that would allow you to take more money out of the IRA without paying tax on it.

So it accomplishes very much what a Roth IRA would if you were to take withdrawals without having to do the conversion and pay the tax. So that's a very simple example. There are a lot of people out there with a house and an IRA. And if they don't have beneficiaries, this is a technique that works pretty well in those cases where they're gonna live there for probably the rest of their life.

They can get the current tax deduction, the charity gets the home, and they can increase their income and maybe go take a trip as a result. - And then, yeah, it's a good example. What is the mechanism? Would you donate the house to the IRA and retain a lease?

What's the mechanism that you would use? - You donate, yeah, life interest. You donate the house to the charity, retain a life interest. - And a life interest for the layperson is a legal right to live in the property for the duration of your life. - That is correct.

- Let's talk through, in your book, you provide just a few pages where you talk about the sampling of strategies. Just wanna talk through these at a high level. Tell me about what a charitable gift annuity is and how it works. - If you're familiar with a commercial annuity where you just transfer money in return for an income and get a current tax deduction, you don't get a current tax deduction in a commercial annuity with an insurance company.

This would simply be the same concept, only the charity would act as the insurance company. They would guarantee you an income for the rest of your life. You would make a donation of, let's just use a simple example where you donate $100,000 and maybe you get $5,000 for the rest of your life.

You might get a 15 or $20,000 current income tax deduction, depending on your age. And the charity would guarantee that income for you or you and another beneficiary, typically a spouse, for the rest of your life. Given low interest rate environment we're in, many times this is an attractive option for people that are in their advanced years, need more income, and could benefit from the tax deduction as well.

- Tell me about the pros and cons of leaving my retirement plan to charity. - Well, I would tell you that the pros are pretty strong. The retirement plan is subject to both income tax and estate tax. And one of the advantages of leaving the IRA, there are two options today.

One is you can leave it at your death. That would avoid the estate tax if you're in a state taxable area. And it would certainly avoid the income tax on those distributions. Your beneficiaries are going to have to take that money out and it will be taxed. So it'll avoid all of that.

So it's one of the best assets to give away. I would tell you that it is preferable in many cases to naming a charity in your will. So a very easy thing to do to just add charity to your IRA. Also, we now have clarification on what's called the charitable IRA, which is if you're over 70 and a half and you're taking what are your required and minimum distributions, you can make a gift to charity and it will satisfy that required minimum distribution to the amount, up to the amount that you give.

And it will not affect your adjusted gross income. Now that's a small item that a lot of people miss, but it will not, if you were to take the money out first, it would increase your adjustable gross income. And then you make contribution to charity, it would not be as effective as doing the charitable IRA directly to the charity from your IRA.

And that's a current gift while you're alive. - What's a donor advised fund and why should I consider using one? - Donor advised fund is set up by either a charity and today the largest ones are financial institutions. Fidelity, Vanguard, Schwab are the three largest donor advised funds. The advantage is you make a gift today to the donor advised fund, and then you can later designate the beneficiaries that would receive these gifts and the timing of them.

This is used a lot when you have an event, like a sale of a business, or I don't know too many people that have won the lottery, but if you were to come into Sudden Wealth and you needed a tax deduction today and you were charitably inclined, you could make this contribution into the donor advised fund and then take your time deciding which charities would benefit.

No full well though that this is a gift. You are getting a tax deduction today, but ultimately this money is going to charity. - Right, and let's just hammer that point home. A lot of people might be thinking, well, there's some way that I can manipulate this system. After all, I've heard if I just set up a trust then I get tax advantages, and of course a trust, I can control that, so the answer is no.

The law is very clear. When you get a deduction, it's because you have abandoned your control of the money. You've made a legitimate bona fide gift. So at the foundation of your planning, you've got to have that as an intention. Now, of course, there are some techniques that can be implemented to allow you to make sure that your goals are furthered.

You can write a trust document in a way that's gonna get you much closer, but you are actually giving money away. You've gotta actually give it away, and that is going to be an irrevocable transfer. So some techniques and tools give you a little bit more control than others, but you are giving money away.

You can't just, these are not games that we're playing here, just making stuff up. It's a proven out, developed body of work where, yes, you can leverage the money, but you're actually giving it away. - That's exactly right. Finally, as far as technique, and then we'll go back to big picture.

So I've got a life insurance policy, and I'm sitting here looking at this thing saying, well, I don't really need it, and my wife doesn't need it, my kids don't need it. What should I do with this thing? Talk to me about the idea of using that life insurance policy.

- Sure, I think this is one of the most overlooked areas there is. There are plenty of folks out there that took out a life insurance policy when they were maybe younger and had a mortgage and children to educate and a spouse to take care of if they stepped out of the picture and they paid on this for years and years and years, and now they're older, they have some wealth.

There's not a need for the insurance for any income replacement. There's not a need for the insurance to pay any estate taxes, for example. A gift to that insurance policy to a charity is, I think, a tremendous leverageable tool, and the reason I say that is you get a current tax deduction for whatever value is in that policy, typically cash value that's in that policy, and that's a shortcut.

There's something a little more complicated to that. - You don't wanna talk about the interpolated terminal reserve? - Yeah, I don't wanna talk about the interpolated terminal reserve, but you do have to get a qualified opinion on it and make sure that your CPA understands that what that is and is willing to sign the tax return for that value.

There's not huge risk in this, but there is some difference of opinion from time to time, so you do have to get that analysis performed, but once you do that, you get that full tax deduction. You can either continue paying premiums if that's what you wanna do. You can gift an equivalent amount of the premium to the charity.

They can pay the premium. We know for sure everyone's going to die, so there will be a point in time when the charity will benefit from this, or you can just take a paid-up policy. The charity can take a paid-up policy and just wait. Now, the charity can also access those cash values if they want to, but typically, that's beyond your control and really not something that would affect you, but I think this is one of the areas that is overlooked both by charities and individuals.

A lot of people just cancel their policy. They pay a lot of tax. The net effect is not as good as if they donated it. - Yeah, I'm with you. This is a particular passion of mine. One of the reasons I started Radical Personal Finance was I got sick and tired of hearing financial pundits say, "Bob, you have a whole life insurance policy.

"Just cancel that thing." I got tired of screaming at whatever radio or speaker I was hearing and saying, "You are stupid. "That is absolutely the wrong advice. "Stop and look and find out if there's a way, "something effective and efficient that can be done." I mean, you get a nice, healthy policy and exactly what you said, you transfer it to a charity.

Let's say you continue to pay the premiums. Now you've turned your premiums from a non-deductible expenditure to a deductible expenditure. You've received a deduction for the value of the policy, the cash value or the ITR. The charity has the, if they need the money, of course, they could always cash it out or they could even just use it as a form of collateral.

They could take a loan against it. They could pledge some of the cash value. Now you might be able to take a charity from a poorly funded charity and now they know they've got a solid asset behind them that could be a sizable asset. And then the board of directors there could possibly take that leverage ability and use it to leverage their own finances by having such a healthy asset backing up their plans.

And then at the end of the day, it's gonna pay out. I mean, it's a really under-talked about option. And I get, yeah. So what you just went over is exactly the reason why I started Radical Personal Finance 'cause I got sick and tired of people not, who didn't know how to use some of these techniques, not discussing them in public.

- Well, I tell you, it's refreshing to hear someone that feels the same way I do about this. This is one of those well-kept secrets. And a lot of people make a mistake in this area only because they don't get advice about it. And just, as you say, go ahead and cash it in and that's the last option.

I think, you know, unless you're in dire financial straits, I think these other options, especially the charitable one, is very, very dynamic. - Yeah, I'm with you. Patrick, let's go back big picture. What have you learned about your own finances and your own plans for your money since starting to work more heavily with clients in this space?

- Well, I guess the process has been one of, it even goes back to, you know, my father and some of the values he taught me. He was a very conservative guy and was an accountant by background. But even with that, I found out later that there were some things that if I would have had the opportunity, I could have helped him a great deal, enhance his wealth more than he did.

He did okay, but he could have done really well. So it starts with that. And I vowed to study enough about this area. It attracted me such that I could take advantage of that knowledge and not make some mistakes and continue to build wealth and live a good life.

And once I got to a point where that looked like it was pretty assured, I would devote myself to what I'm doing now, which is pretty much helping charities thrive financially. I think it's important that they grow their endowment reserve funds so that they're around and a great example was in 2000, 2001, and again, 2008, nine, those charities that had reserves that could call on those funds did fine.

They were able to meet payroll. They were able to make some expansion plans and see those through. So I would tell you what I've learned is that, you know, with a little bit of knowledge, well-applied, it can do an awful lot of good in a lot of places. - I have a lot of financial advisors who listen to my show and I receive many emails from people who have either thought about or have become financial advisors because of radical personal finance.

I'd like you to share, what was your path through this industry to where you are today? Where did you start? What were the career turns that led to your current practice? - I came out of graduate school, was hired by a life insurance company, went to work in their home office.

And my job was to, what was called advanced underwriting. I worked with agents that would go out on a death claim and we had bought a Boston money manager and I would design the investment plan for the widow and the children so they could continue to live in what was a lifestyle they were accustomed to.

Also, we had some Fortune 100 companies that had their executives. We counseled their executives in the use of stock options and retirement plans and how to tactically use what was available in those days to help them get to a retirement where they would live a comfortable retirement. So after a few years of that, there was a company in Atlanta that I met some of the people, they hired me away.

I came to Atlanta, worked with them for a while, met my two future partners there. We left after a few years, they were having financial difficulty, we were not. And we started a firm and for 25 years grew that, became very successful. And then back in 2000, I decided that I would sort of downsize my life, if you will.

It's fun running a firm with 30 people and growing assets, but you kind of get away from what you love and you spend a lot of time in administration and HR issues with folks. And so now I've got four people and we have 65 clients and it's very manageable and I really enjoy what I'm doing.

- How old are you now? - I've enjoyed all of them, I've enjoyed all of them, but I really enjoy what I'm doing now. - How old are you now? - I am gonna be 69 on Saturday. - Congratulations. Do you intend to retire? - I don't. It's a wonderful business in that it's very much a lifestyle business.

I played four days of golf at a golf tournament at a resort last week. I go on trips whenever I want to, I've got a great staff, they're very tolerant of that. We've got great clients. So it's a wonderful lifestyle business, but it also turns me on enough that I wanna continue doing it as long as I'm able.

And I think I'm still sharp enough that I can do it, I'm healthy. So as long as that continues, I'd like to continue working. Retirement for me is not attractive. I like doing it two or three or four days at a time, but not forever. - In working with your client base, who's in probably an age range, bracketing yours by 10 years below and 10 years above if the normal experience of a financial advisory practice is applicable, what have you seen, have you traced any threads of retirement from those that you've watched retire?

Have you found that most of your clients who've been able to retire haven't wanted to? Have you found that some of them have been very enthusiastic about it? What have you learned about retirement from watching your clients? - I'll tell you what I learned from actually a client of mine spouse of a client.

She said, we always have the conversation about how long am I going to work? And I have young people here that work with the next generation and also give some comfort like you were referring to when you were in your thirties working with retired people or those about to retire, they're comfortable working with younger people 'cause they know they're going to be around.

So I have that here, but here's one thing I learned that the more I see this, the more right she is. And she said, what I have found is that people that work for themselves typically don't want to retire. People that work for a large corporation, a financial institution, where someone else is making decisions for them and telling them where they need to be on Wednesday and their metrics they have to meet, no such things.

Those people are anxious to and really enjoy retirement. And I've seen that played out more ever since she said that. I've been very aware of that. I will tell you most of the ones that I have that love retirement, don't do anything but play golf, work out and go out to dinner are those that work for large corporations.

- Yeah, my own anecdotal experience more limited than yours would corroborate that. That's why I think that the simplest way to retire is simply first get control of your life with your own, get a little bit of autonomy over your daily comings and goings. And all of a sudden you think to yourself, well, this is what I wanted.

This is what I was after. Even just going from managing 30 people to managing four people. I mean, you would have, my guess, feel free to disagree, but if you were still trying to manage an office of 30 people and you're trying to meet growth targets and you're trying to expand from 30 to 60, that wouldn't be nearly as fun as you're having, as much fun as you're having now.

And you'd be much more likely to wanna hang up your hat and turn in your calculator. - I think you're right. I think there's a big difference the farther you get removed from the client contact. - Yeah, definitely. Patrick, when you look at the financial advice business with 30 years of exposure, are you optimistic about some of the trends?

Are there things that concern you? What's your perspective on the overall industry? - I would say I'm optimistic. I would say that because there are more people with more wealth, there are more challenges. I can tell you that every year I've been in this business, I can always reference the recently changed tax laws.

You can make that statement every year because Congress meets every two years. They either tweak or totally change tax laws. That's always a challenge. So what was done five years ago is not appropriate today, perhaps. So that keeps it interesting and makes it worthwhile to engage in financial planning.

And I think this whole issue of transfer to the next generation, this current generation is the richest that ever existed on the planet in terms of per capita wealth. And it's a worldwide phenomenon. And how they go about that and some of the issues we talked about earlier about what's an appropriate amount for children and how do you train them up to be good stewards of this money, all of that I think offers continuing and even expanding opportunity for financial planning.

- Patrick, tell us, so you're in Atlanta. Go ahead and tell us about your firm, your book. Do you work with clients across the country? So if anyone's interested, go ahead and share how they can get in touch with you if they're interested in engaging with you. - Sure, I'm in Atlanta.

It's Ren Wealth Management, R-E-N-N is the way you spell my last name. And there is a website, renwealth.com. Also, the book is entitled "Finding Your Money's Greater Purpose." And there is a website, Money's Greater Purpose. And if you visit that website, you'll see some information about the book, about me.

You can download a free chapter. You can get in touch with me by email. You can join our mailing list and I'll periodically update you on items that I feel are important. But those are the two main methods, renwealth.com and moneysgreaterpurpose.com. - I hope that you can see the value that a good financial advisor can bring in a situation.

I encourage you, if you are in a stage, I'm happy to help good guys. I can't personally endorse Patrick. All I know from him is, of him is what you heard on the interview. But he certainly sounds competent to me. If you're in the Atlanta area, that's where his practice is based, feel free to check with him.

Or if you want a consultation, he might be a good guy who can help you with some of your charitable needs. My hope in profiling, I know many of you who listen to the show are younger financial advisors or who are people who aspire to be financial advisors. And my hope on profiling Patrick today is to encourage you to focus on the actual value that you bring to a client.

It's not just a matter of selling a product. It's a matter of making a plan work. And when you do it, you build these lifetime relationships that can just dramatically transform, you can transform people's lives. And that's the cool side of the business. It's tough to build, but once you're there, it can be a lot of fun.

Even as you hear Patrick's story, he's doing well and he's having fun. And he's 69 years old and he doesn't want to retire. And that to me is the dream life. And notice what we talked about with retirement. All those themes corroborated again. Never talked to Patrick before what you heard.

About 30 seconds before the interview, told him a little bit about me, and then we hit start. I didn't even correspond with him. I corresponded with his publicist. But just notice the themes that we talk about on this show every day. Just jumping out from his vicarious experience with his clients.

And figure out how to apply them to your life. Hope this interview has been useful to you. Hope you've enjoyed it. I intend if you were, if you got your mind lost by what is a charitable remainder trust, or what's a charitable lead trust, or what's a donor advised fund, I will, over the course of Radical Personal Finance, I will cover each of those topics in depth.

And some of you have been frustrated with the paucity of in-depth financial planning discussions on the show. I understand that. I would like to have them back. I like doing them. I'm sorry, I'm doing the best I can. And I've got to solve, I got to solve some of the back end things first.

Since I'm doing the best I can. Those shows are very time consuming. I'm doing everything I can to get to them. And I will get to them in the course of the show. I promise you that. If you want to support the show, radicalpersonalfinance.com/patron, and I am out of music.

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