205: Lessons in Probate, Wealth Transfer, and Avoiding Family Feuds
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Welcome back to another episode of The Richer Geek Podcast! Today, Mike is joined by Paul Deloughery, a seasoned attorney with 25 years of experience in probate and trust law. Paul is the author of Lasting Wealth: A Revolutionary Method of Family Wealth Transfer and Probate Made Simple.
Paul’s journey into the realm of probate law is deeply personal. After facing the challenges of managing an unexpected inheritance without proper guidance, he recognized the profound need for expert legal support during critical times. This experience inspired him to create Probate Made Simple and shaped his philosophy of offering compassionate, clear, and personalized legal assistance.
In this episode, we’re discussing…
Lessons from Losing Millions: Paul’s journey from inheriting $28M to losing much of it, and the valuable insights he gained along the way.
The Realities of Probate Litigation: Why even well-drafted trusts and wills can lead to family disputes and court battles.
Family Wealth Transfer Myths: Understanding the "shirt sleeves to shirt sleeves" phenomenon and why most financial windfalls don’t last.
Essential Probate Planning Tips:
The importance of clear communication with beneficiaries.
How to build trust and prevent disputes before they arise.
Why documentation is necessary but not sufficient for a smooth wealth transfer.
Breaking Generational Wealth Cycles: Steps families can take to ensure long-term financial stability and harmony.
Resources from Paul
LinkedIn | Sudden Wealth Protection Law | Lasting Wealth: A Revolutionary Method of Family Wealth Transfer | Probate Made Simple
Resources from Mike and Nichole
+ Read the transcript
Mike Stohler
Hey everybody. Welcome back to another episode of The Richer Geek Podcast. Today we have Paul Deloughery. We're going to talk about his journey into the realm of probate law and a little bit about the importance of this. He's a member of the State Bar of Arizona Probate and Trust Section, Wealth Counsel, Certified Family Wealth Advisor. And we're going to talk a little bit about his journey. He unexpectedly inherited and then subsequently had that challenge of, "Oh my God, I'm young, got all this money. What should I do? Yeah, let's spend it." Let's do all this sort of stuff, all the things you probably shouldn't so we're going to learn from his story. He had that realization it didn't lead just to the founding of Probate Made Simple, but also shaped his philosophy. He wants to offer compassionate, clear, personalized legal assistance to those grappling with the probate process. He's also the author ofLasting Wealth: A Revolutionary Method of Family Wealth Transfer and Probate Made Simple. How are you doing, Paul?
Paul Deloughery
I'm doing great. Mike, how are you doing?
Mike Stohler
Well, you know, enjoying the under 100 degree temperatures in Arizona, finally.
Paul Deloughery
Amen.
Mike Stohler
It's very good. So before we dive into what happened with the inheritance, tell us a little bit about yourself and how you became or wanted to become an advisor, becoming an attorney.
Paul Deloughery
I was a musician when I was in my 20s, and go figure, I wasn't making a lot of money. So I actually played bagpipes, some of my bagpipe students were lawyers, and you know, they always had really interesting stories. And so in my early 20s, what did I know? So I went to law school, University of Iowa, graduated with honors, all that stuff. And then, yeah, then I got out. It took me a little while, like during law school, I was also a partner with my mom in a home health agency. So I was running that. I liked it, because my mom was really on a mission to help people stay at home. And prior to that, when I was younger, my mom had a nursing home, a small, 22 bed nursing home in rural Lewiston, Minnesota. So my dad and I used to go on the weekends, and we were the maintenance men. We would paint and try to figure out why the bathroom smelled like urine, or, whatever the thing was, or get using a screwdriver to get the hair out of the wheels of the wheelchairs and all that kind of stuff. I grew up doing that, and I don't know, somehow it ended up just being natural for me to get into kind of the area of elder law and helping people plan for when they get older. I got into that. And then I was a partner with John Goodson here in the early 2000s he was a well-known attorney for decades. He did high-end asset protection planning for people around the country. I learned from that. And then I felt like what I was doing was a little bit too theoretical. So I kind of was drawn to finally get into probate and specifically probate litigation. Probate litigation is the ER of the legal field. I mean, we're dealing with death and dying and incapacity and people fighting over family heirlooms. I've had brothers spend $20,000 each to fight over a $5,000 Rolex watch and things like that. So I was involved with that.
Paul Deloughery
And then in 2009, I was finally contacted by my biological father. So the dad who raised me, who I was talking about, that was my stepdad, it turned out. And I didn't know about that when I was a child. I just knew him as dead anyway. So I ended up meeting my biological father for the first time at age 42, he died six weeks later. Long story short, I ended up going into his house because I was the only relative. By the way, like we had already done a genetic test and we figured all this stuff out. There's a long story about why he was not part of my family, not part of my life. But anyway, so I went into his house, and I looked at his desk. There's a big desktop computer and a printer, and on top of the printer was his 2008 Federal Tax Return, and on the bottom of it showed a million dollar passive income. But it happened, he had used his military retirement and invested it in penny stocks. He was just obsessed with it, and learned it. I guess it was part luck and part skill. He had tons of books and was reading about it and all that. Anyway, he died. I ended up getting $28 million half of that went to estate taxes, and then the rest of it, you were talking in the introduction about being spending it on this or that. Well, I was investing it. I mean, I thought I was investing it. I invested in oil wells in Texas, back before oil was discovered everywhere. And then the value of that crashed, the oils kind of ran dry, they ended up not being as good. And then I invested in this and that.
Paul Deloughery
Basically, because I was an accredited investor, I could invest in anything. I wasn't very discerning at the time. Yeah, so I ended up losing most of the money. Then I was in a real slump for a while, trying to figure out what in the heck just happened. And most people looked at me like I was an idiot, and I didn't really know how to explain to them. Then I studied it, and it actually turns out that well. So there's a saying, 'Shirt sleeves to shirt sleeves in three generations.'Basically, what that means is you have one generation that makes money, the second generation keeps it. But the second generation keeps it, and then the third generation ends up blowing it. It's a common thing. They have different versions of the saying in different traditions, different countries. It's been studied. The majority of financial windfalls are not kept like it's a real thing. If the listeners remember when you used to go through that grocery store checkout lane, and the National Enquirer would have this lottery winner that was 1X amount of money, and I was in bankruptcy, or this musician or sports star is in bankruptcy or lost money or whatever, and it was kind of put on there for shock value, and I imagine, like the public was supposed to go by and say, "Oh, what an idiot." In people's minds, I'm sure they thought, "Well, I would never do that, a $5 million, $50 million contract. I'd be smart with it." You know, before we started recording, so there's different levels of awareness that people have to get money to inherit money. It just requires that you have a heartbeat, basically. I mean, if it's something like that, or winning the lottery, or whatever it requires no consciousness or level of thought or awareness, or any of that, then to accumulate money requires the ability to do so the receiving money, that's just getting okay, then to accumulate money. Well, that requires doing something, organizing a business, knowing how to make good investments, that kind of thing. The trap I ran into was I just thought, "Well, I'm related to my dad and he was smart, so I must be smart, so I must be able to just instantaneously learn how to keep the money." Well, no, it required a lot of bumps and bruises and lessons and all that kind of stuff. But the money didn't last long enough for me to go through that. Having money, getting or doing and then being is more of a higher, I guess, level, that's where you've gone through life enough, if you get money, you're okay. If you lose some money, you're okay. That's a different kind of awareness. I guess. The interesting thing is, most financial advisors, most estate planning attorneys and whatnot, think that you can just kind of create structures, and it'll solve all the problems.
Paul Deloughery
For example, if you have this trust and you have this will, yeah, if everything goes perfectly, if you have your house in a revocable trust and you pass away, and there's a trustee named and the trustee is responsible, and all that kind of stuff, yes, you can avoid probate. Yes, that's a true statement. But if the beneficiaries or the next generation, if they don't know how to use the money, or they don't trust each other, or they don't like each other, or they don't like the stepmom who's the new trustee, or any of that kind of stuff, they can still end up in court. That's actually where I make a lot of my money is just doing probate litigation, just a whole lot of litigation. I will say that from my experience, in terms of the contested probate litigation cases I have, there's basically no correlation between if it's going to be in a protracted, two year long litigation case and whether there's a trust, there's almost no correlation between those two. You can have a trust and and it can be perfect, or it can be litigated, and it all has to do with the family and whether they're prepared, whether there's I'll boil it down for your listeners who have money and want to make sure that things go to the next generation in a smooth way. There needs to be communication. There needs to be trust. It definitely helps to have things documented for sure. I mean, if you have, trust says this, goes here and that kind of thing, that's definitely good. And there should also be communication, kind of giving a context to that. So in other words, it's not a great idea to surprise your kids with what your documents say and let them figure it out after you're gone. It makes a lot more sense if you care for them, and if you want to prevent contests or arguments later on, have the talk now when you're around and you can explain, "Well, I'm giving this house to this son, because, you know this or that, we actually worked on building it together. And my business, I really want my business to go to this person, because, whatever. And I'm going to have my youngest child be the trustee, just because they were really good in school, and they're an accountant. You know, I still love the rest of you, but it's just a choice I made."
Paul Deloughery
Just by virtue of communicating that that really helps. And hopefully there's some trust. I mean, in the process of communicating it, you'll hopefully learn there's a lack of trust. I mean, hopefully when you've said that, "My youngest child is going to be the trustee," and then some of your other kids say, "Well, I don't know. I don't think you should do that because of this or that." Then you can kind of, hopefully address it and try to nip it at the bud. So I said a lot there, but...
Mike Stohler
That's all right, there's probate. There's also worry about Uncle Sam getting too much. It's like, "Look, I've worked my butt off for three quarters of my life, and I want multi-generational wealth." Have you seen anything like within the probate or within the wealth protection? It's to ensure that my heirs get the fair share, or because it goes into probate, it opens up the door for big brother to take more of the money.
Paul Deloughery
Probate doesn't have anything to do with whether there's going to be tax, the estate tax amount, there's estate taxes, and then there's capital gains taxes. Capital gains taxes,that's a kind of income tax. Boy, it's a complicated thing. You can plan for that and definitely maximize it. You know, depending on the amount of money that you're talking about, it can start getting really cop definitely. You can have generation skipping trusts where it can stay in place more for multiple generations and avoid some of the estate taxes. But anyway, luckily, right now the estate tax amount is different. Yeah, I can talk about techniques and all that kind of stuff. But yeah, I think a lot of people get emotional, I guess, about wanting to avoid taxes for good reason. But the other thing too is to balance that with all the different other ways that money can get lost. I see money get lost in ways, other ways that are, I think, more common than taxes, like just getting squandered by the next generation, or having a caretaker come in like during the last year or two of the person's life, oh my gosh. And that's incredibly common here in Arizona. It's like a cottage industry caretakers come in and all of a sudden, they get put on the bank accounts and all this kind of stuff, and they exclude the kids from being able to go visit the parent in the care home and all that, and then, yeah, then you're stuck afterwards, trying to fix it, and it is a little tricky to try to avoid that, but it can be done, you know, if you do it proactively. And I guess if, maybe the thing is that a lot of people just don't want to think about it, or kind of assume, I hate that word, but people assume that things will just kind of work out. But give us some examples of some of the things that you've seen during your time doing probate litigation.
Mike Stohler
And you know, you mentioned communication with some of them, but here's the thing. It's like, "Hey, if I want that watch, Dad gave it to you, but I still want it." Anyone can sue anybody, right? It just doesn't stop or doesn't say that the trustee goes, "You know what? No, dad gave it to you. You get it."
Paul Deloughery
Let me answer your question this way. There are a couple different ways that people go about fighting over documents. So you gave the watch example, okay, trust says that someone's supposed to get the watch and you want the watch? Well, okay, you can't just say I want it. I mean, that's not a legal theory. The court's not going to listen to that. But what we end up doing is looking at three main things. One is testamentary capacity. That just means, do you have the mental ability to designate in a document who's supposed to get the watch. And that it's a pretty low bar in Arizona, and I think in most states, it's a pretty low bar. You need to know who you are, who the natural objects of your bounty are, and know what you own. You can think that you're Jesus, you can think you live on Mars, any of that stuff. But as long as you know those things. You still know who your kids are. You realize you're still married, or that you're not married, or whatever it is, and you know what you own, then you can sign documents. Sometimes, there's an Arizona case where someone had some kind of serious mental illness, and it's kind of confusing. I mean, they knew who their kids were, but they were confused about their relationship with their kids. That ended up being a way of disregarding documents anyway. So there's capacity number one, second one is undue influence, like I was talking about the caretaker example. So the caretaker comes in and says that the caretaker wants to get the watch and so you don't get it. Well, if they were involved in having the document signed or they were in a confidential relationship with your parents, then there's a way of going to court and having it done that way. The other thing has to do with financial exploitation. That's a whole different thing. But basically, yes, there are ways that you can attack the documents.
Mike Stohler
Okay.
Paul Deloughery
So, yeah.
Mike Stohler
So let's talk about your book a little bit, got a couple minutes. Lasting Wealth, The Revolutionary Method Of Family Wealth Transfer, and Probate Made Simple. Tell us what's in the book.
Paul Deloughery
Okay, yep, thank you. So Lasting Wealth basically tells my story. I gave you the short version of it, but what I talk about kind of is that there are families who have figured out how to pass wealth from one generation to the next. And for example, the Kikkoman Family, okay, in Japan. Kikkoman soy sauce, everyone knows about that. I mean, that's actually a centuries-old company. And there are other examples like that. I mean, there are companies and families that have, that remain successful, but it's not typical. Actually, one of the things that they have, I mean, I call it a ‘code of honor’, and I talk about it in my book. They have, like, fundamental rules within the family, for example. You know, if there's a dispute, they're going to resolve the dispute, like, go in a room, close the door, resolve the dispute, and then when everyone leaves, no one talks about it, just like some rules like that. So that's that. And then the other thing, yeah, I wrote a book here about Probate Made Simple, just how to kind of streamline the probate process. So I help people with both areas, hopefully planning, hopefully you don't have to go through probate. Don't have to have problems in court, but if they do, then we try to simplify it.
Mike Stohler
Sure, absolutely. And the website, everybody, suddenwealthprotectionlaw.com.
Mike Stohler
Paul, is there anything else you'd like to say to our listeners before we let you go?
Paul Deloughery
No. Thanks a lot for having me on. Do you have any questions or no?
Mike Stohler
No, you know you answered everything. Again, everybody. Paul with suddenwealthprotectionlaw.com. Check out his books. Paul, thank you very much for coming on The Richer Geek Podcast.
Paul Deloughery
Thanks a lot.
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ABOUT PAUL DELOUGHERY
Paul’s journey into the realm of probate law is as personal as it is professional. After an unexpected inheritance and the subsequent challenges of wealth management without guidance, Paul realized the profound impact that expert legal support could have during such crucial times. This realization didn’t just lead to the founding of Probate Made Simple but also shaped our philosophy — to offer compassionate, clear, and personalized legal assistance to those grappling with the probate process. Paul is the author of Lasting Wealth – A Revolutionary Method of Family Wealth Transfer and Probate Made Simple.