It’s Law – Podcast Episode 3: Alternative Business Structures with Andy Unkefer Jul 31, 2023

It’s Law – Podcast Episode 3: Alternative Business Structures with Andy Unkefer Jul 31, 2023

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Welcome, everybody to It’s The Law. This is our third episode and I’m very pleased to be joined today by a good friend, and a business colleague, Andy Unkefer. Hi, Eddie.

I Troy, Thanks for having me here today.

My pleasure. So we’re going to deviate just a little bit from legal talk. There’ll be some of that here. But the we have something very exciting to share that Andy and a few of us are going to be engaging and embarking on. But before we do that, Andy, why don’t you give us some background about yourself and in your career?

Well, Troy, I think maybe I should just start with my roots. I’m a born and raised Arizona native from Phoenix and I know that’s we always consider that, you know, when we’re natives to be sort of a area of pride because gate access so much turnover, you know, people coming in and out and attended of all my school here with the Grand Canyon University and graduated from there and slipped into the insurance business connected with people that were close to my family. And I was always interested in getting out of the insurance business. But it’s like one of those things that when you find your path its starts to really take hold. And I was working specifically in the financial services segment of the insurance industry, where we were developing annuity products and life insurance products, I got involved in product design, and then distribution and working with different types of entrepreneurs who were helping their clients achieve their financial goals. And so we would end up working with people that were sometimes they were CPAs that were doing financial planning. Sometimes it was an insurance agent that was focused specifically in the financial markets. We worked with registered investment advisors and broker dealers and help develop a network of well over 10,000 representatives who would submit their business through my firm, and ultimately to the highly rated insurance companies that we would partner with. So that went on for for a long time. I started that business in 1994 and continued to operate that grow it, we ultimately were producing a little over a billion dollars in sales per year. That means that people were placing their assets not with us but with the insurance companies to help meet their financial goals. And we could probably talk about some of that a little later on. In 2012, I sold the company and have been working primarily as a consultant helping other businesses started ultimately focus on serving the end user, the consumer, the mom and pop the family that needs some good planning.

Thank you! And while Andy is truly a native of Arizona, this will show you how much of a native it is. He’s broadcasting today from Southern California, of course, it’s

yeah, this morning walking on the beach, I ran into several people I knew from Phoenix who were doing the same thing trying to get out of the heat.

That’s funny. So Andy and I have known each other for a few years and based on his background, we had been informally discussing some things that might be coming down the way that was going that would open up and broaden the possibilities of Law Firm Ownership. And for those of you who do not know, for ever before, the last year or so, non-lawyers could not have an ownership interest in a Law Firm only a licensed lawyer in Arizona can have an ownership interest in an Arizona Law Firm. And there are various reasons for that. But it goes back to, you know, way before colonial days back to the English roots of our jurisprudence. So one of the things that has occurred, which many people I’m sure are well aware of is the legal market has become so expensive that we basically have closed out the opportunity for the smaller consumer of legal services to be able to afford the services of a lawyer. And we can talk we’ve talked about that in the episode one, just how expensive it’s become to hire a lawyer. So one of the things that the Arizona Supreme Court did was they’ve created and they were only this is definitely forward thinking In Arizona and to a certain extent Utah are the only states that now allow non-lawyers to have an ownership interest in a Law Firm and the reason why that the Supreme Court chose to go that path is to try to open up opportunities for middle income families and small businesses to be able to have the same advantages of access to legal services as very wealthy individuals and wealthy corporations. And so in order to allow a non-lawyer to have an ownership interest, the Supreme Court created what’s called an “Alternative Business Structure” and an alternative business structure has to be approved by the Supreme Court in order for it to become valid and effective. And so Andy, if you would kind of share with us, you’re thinking behind what we’ll refer to as “ABS” which is the Alternative Business Structure.

So it was, I remember the day that you called me and told me about this new rule, the ability for non lawyers to be co-investors in a Law Firm and of course all the law work has to be done by Attorneys and we liked that. As I thought about that opportunity, I did think there would be a chance to make a difference in a very big area that affects people every year and I know we’ll get into that. But the the ABS is kind of rooted in the idea that entrepreneurs and innovative lawyers will be able to re-package what’s happening, use some of the skills and marketing that are successful in other areas, and bring them into the law world helping us deliver a product of better quality, better client relationships, and possibly even at a lower cost. And so that really intrigued me, it was also just from an entrepreneurial standpoint having helped people start businesses many times, I thought that this would be something that we’ll look back on years from now and say, Wow, look at the cutting edge opportunity that we jumped into at the right moment and I think Arizona has taken a novel approach to the delivery of the law. Some of the things that Arizona does, I’m not sure we all think are the best, but this idea that we can innovate that lawyers can build their practices more successfully. And with an eye on providing better quality to the consumer. I really felt like getting off the bench and going from consulting back into starting the business.

Yeah, that to me, that pretty much summed it all up when you were excited to do this, having worked so hard to retire and taking this on, is no small challenge is like any other startup enterprise. It’s a lot of the efforts and, you know, trials and tribulations, not so much but all the things that are in the background that no one ever sees. It has to be done.

Yeah, for those that are kind of like business walks, I think there’s there is a lot behind the scenes before you ever meet with that first customer where you’re trying to construct every single step of your business practice, so that it’s very effective for the customer but it’s also very efficient from a business standpoint, so that you can go from creating costs for the business to creating profits and that’s by delivering quality back to the customer and so that behind the scenes tinkering and getting the right team together, finding the right talented people that have high character that can develop processes from scratch with the idea the entire time with the focus on the customer experience. And I think that’s the biggest thing that will be an innovation for what we’re doing compared to competition out there is we’re going to be very client focused.

Well, that raises another question in terms of this ABS.. what’s its space? What is it going to be doing? Well, as you

As you know, there’s a lot of areas of the law, right. There’s Civil Litigation, there’s Criminal Defense, there’s Personal Injury, there’s Property Issues, there’s Corporate Business Law. The area that I felt that I could contribute the most assistance to is in the field of Estate Planning, Wills, Living Trusts, Advanced Estate Planning, with Irrevocable Life Insurance Trusts, and as more estates become more sophisticated we’ve got all sorts of tools to help them so it was really the estate planning arena that I have been around originally as an insurance professional. Remember I said I was in the financial services segment so we were working with Fixed Annuities, what’s called Fixed Indexed Annuities, life insurance. We weren’t in the stock market, we weren’t offering mutual funds, or variable annuities even. But we would collaborate with professionals in that space and then what we found really in the estate planning arena is that you have the opportunity when you’re working with a good law firm, to build a foundation, I like to think of the financial plan overall as like a big, strong house that’s customized directly to that family’s needs and it starts with the foundation for me. So having a great estate plan, thinking through how you want to hold your resources and transfer them to the people you care about most or your charity or your church. That foundation helps us inform the investment people, helps us inform the financial services focused insurance agent, helps us inform our real estate professionals as well, so that they understand what our actual true goals and objectives are. And then in a collaborative circle around that client focused on them, were able to do things and get more results with greater impact financially but also avoidance in some of the bear traps that are out there, like tax exposure that can be mitigated or reduced by the laws and certain products get more advantage in the tax code and other products. And so what we found is, overall, as I’ve been doing this for decades, is you know, when you’re a stockbroker, your every solution has the or every problem has the same solution, right? It’s like I have a hammer, so everything looks like a nail so I sell everybody stocks, when I’m a stockbroker, if I’m an investment advisor, similarly I’m moving them through the products that I can easily access in my firm and those are stocks, bonds, and mutual funds. And then I would talk with our insurance agents and guess what they always sold as a solution to every financial problem was a fight, it was an insurance product. So that’s short sighted. And it’s really that collaborative effort, getting the legal and estate planning done, working in the investment community, working with insurance professionals, to design an outcome that is unlike anything else. And so that’s ultimately where we want to take this ABS is do the legal work, offer the financial services in a wraparound way so that were truly meeting the client’s goals and doing things that they would have never expected when your lawyer collaborates with your insurance Pro and also with your investment advisor, you get a completely different outcome than if you visit each of them one each one separately on your own because they don’t know the whole story.

Yes, so one of the things that I have come to appreciate after 34 years of practice, is how important it is for that collaboration. Typically, I think this is the case client A comes to the law firm with the need to or desire to create a trust. The law firm creates that trust over a period of several weeks or months, then meets with the client, they review it all sign it and then the lawyer says good luck and you know, Peace be with you. Well, the danger is to multifold but one of them is that that client is going to take that trust document and shelve it away and never do anything with it thinking that everything is fine. They’ve done what they were told to do, which was make sure you have a trust. That’s a classic example. I think, all too often. And a where the law firm isn’t thinking about the financial planning because that’s that’s not what they do.

Yeah, and we’ve definitely seen that. So the most common experience I’ve had and understand I was selling and distributing product all over the country with about 10,000+ advisors and we found often when they would get really dug in with the client and they’re opening up their financial planning and they’re starting to evaluate their personal goals, their needs, their risk tolerance, the family dynamics that are out there, which can really affect a planning document, especially your trust. I mean, my goodness, if you’re having struggles with a drug addicted adult child, which we’ve experienced in our family, it changes the outcome of how you direct what’s going to occur to your ass such and so what we saw was many trust that were written beautifully and they had everything the client wanted in it, except that trust didn’t control the client’s assets and so it was like a giant paperweight really, it just sat there, it almost was going to do everything they needed. So there’s na gap between what the law work does and what the financial planning experts who have estate planning knowledge can do when those two worlds come together, you can really achieve something that’s beautiful for the family and avoid a lot of heartache. The worst thing that I’ve seen is, when someone did the work, they thought it through with their attorney and then they got that list saying, try to get all these assets, owned by your trust so that it can take control on your behalf and do the things that you described within that trust and then folks get home, or they get interrupted, they find that, wow, it’s a little more tricky than I thought, my bank’s not really listening to me, or they didn’t understand what I said, my mutual fund is not responding to me. And they really just want either deposits or withdrawals to be made. They don’t want to get into all this retitling. So one of the things that we’ve embedded in this practice, is that we’re going to walk with the customers all the way through assuring that everything is titled properly inside that trusts so that they as the trustee can control their assets and then when they leave those funds and assets on to their family, that the successor trustee has control of the assets in very clear instructions and then of course, if they need help on understanding how to be a trustee, we’ll walk right along with them through that and help them make decisions that are beneficial to all the beneficiaries of that trust. So we plan on doing this a very long time.

Yeah, the way I like to also look at it is, once a client comes through the door, we’re going to do our darndest to make sure that they don’t fail on the mission. And so I’ve been really surprised since we started this endeavor, at the number of clients of existing clients of my law firm FR Law Group, the individuals who don’t have a trust, in some of those include lawyers who don’t have a trust and everyone to you know, without exception, the common is, we’re going to set up an appointment, we’re gonna do this and some do some don’t what Andy, why do you think some people don’t follow up? Not just with? Well?

Yeah, I think, well, it’s always easier to procrastinate than do something right and I think most of us are, are creatures of habit and, excuse me, I think the reason people don’t do it is the difficulty of the heavy lifting, not only thinking about you know what happens at the end of my life that’s an unpleasant subject, but thinking about your kids in a intelligent and wise and thoughtful way and thinking about your grandkids in the same way, you know, you’re going to have to make decisions and sometimes those decisions include making the responsible choices. And so I think folks know that, that they’re going to have to face some of those things and to me, that’s an emotional barrier. But it’s beautiful to walk through it because, you know, loving somebody and helping them the best you can in the way that’s best for them is something that a parent and a grandparent can do and I think it’s a noble role. I love estate planning, because I think it’s a fantastic opportunity to leave a legacy to make a lasting impact to care for those people that you really love. So you got to overcome that emotional barrier and then there’s this sense, I think that wow, if I do this trust, everything’s going to really change like I’m going to have to be a trustee and and it’s going to be difficult, like how do I write checks and pay bills and all those sorts of things? Well, the good news is, it’s not any different. It’s just a different name on some of the assets like my house, you know, it’s in a revocable living trust that controls that house, I can still sell that house and I can add on to it, I can renovate I can do all kinds of things. So nothing really changes. So it’s kind of taken away the mystery of what’s it like being an owner, it’s just like owning it. As an individual, you truly are in a what’s called a revocable living trust, typically, and revocable means you can change the outcomes right up until you pass away. And so I think that’s that’s part of the barrier is there’s the emotional barrier, there’s, is it going to be complicated? And that’s what we’re trying to do for our customers is the heavy lifting, making those decisions more cleanly identified and able to support the customer in doing that and so what we’re finding is they enjoy it. They talk about their families, we see a lot of smiles and laughing during the planning process instead of you know, heartbreak and gritting our teeth. Yeah,

so I agree, to me, my experience in talking with folks about the need to have a trust, the younger friends and clients whether it’s procrastination, or this sense of, you know, you’re never gonna die. So don’t have to worry about it now. Even with them in older clients, I think I always see this sense of dismay and shock when I asked them would, are you they’re gonna work this hard, or did you work this hard to put all this work with a judge in the probate court to decide what to do with all of your assets?

And yeah, that’s a big one. Yeah. So I think that’s probably the big shocker is what happens if you don’t prepare? And what I’ve heard some people say is, you know, there isn’t a state plan for you. It’s just not the plan that you have. It’s the one that court comes up with, after you’re gone and after you’re not able to say what your actual desires are. This is a chance and honestly, if we didn’t have probate, I suppose you could just, you know, write some kind of silly document and everything will work out fine. But that’s not the way it is, you know, families are have like I said, a lot of dynamics, you don’t want to leave it up to the judge, you don’t want to get claims against your state that are unplanned. So when you get into that probate court, they actually post an advertisement that says and invites everybody who thinks they may have a claim against the state to come forward and make their claim. And nowadays, try if you think about it, in the old days, we used to publish that in the local newspaper, you know, the Arizona Republic and people from Arizona would read about that, and maybe they would do something about an estate that was going through probate but now it’s on the internet. It’s on and you can see the probate offerings out there. And you might get someone making a claim from another part of the country and estranged spouse, a divorced stepchild, or perhaps even someone that was married to your son or daughter that left the family and now they want to make a claim because they think they have an interest in that there’s a lot more opportunity for probate hunters to occur than there used to be. It’s digitized now and so yeah, I think it’s even a bigger reason.

Yeah, it also probated, contended, take any really family that is all harmonious and loving and create problems and so one of the other features that trust us, it eliminates that because your intentions are carried through by the successor trustee.

Yeah, yeah. And it has the weight of the attorney behind it if you use a law firm and I in Arizona, that’s one of the things I guess it’s worth talking about. There are many document preparers out in Arizona that can prepare documents and they can prepare living trusts, they can’t give you legal advice. But they can prepare that living trust and you can try to get your assets to kind of a do it yourself model. But having a representative that’s a lawyer that’s bar accepted, that can speak to the court on your behalf when you’re not there. I think that’s if it comes to that, that’s very weighty and it’s a lot more defendable than if you did it over the internet, you know, or Legal Zoom, or something like that having the lawyer at that moment in time is to me it’s like going into the hospital and having somebody cut you open who watched a lot of ER on TV or something, you know, it’s like we need a professional at times and that’s where I think we’ve got something great to offer these customers who come to us because we’re able to drive down the cost because of the business. Know how that we’ve got and speed up process and make it more accurate.

Well, you just anticipated my next question, which is, what do you say to those who say, Well, I have an estate plan, but I’m not sure all my assets are properly titled.

Yeah, the worst thing you can have, in my opinion, it’s almost better to have nothing, because then you just say, I’m gonna let the courts decide I don’t want to make any of these decisions and I don’t care how it affects my kids. I don’t I’ve never met anybody like that, but to produce the the estate plan, and then not get your assets in there funded. It’s as if you didn’t do it anyway so it’s almost more painful for the family that they know you tried and yet, all those assets, every single one, including if it’s just a single asset, we’ve seen that single asset probate where something wasn’t named, it was too high of a value, and it went through probate process and then decisions get made by the court, not by you and not by your kids. So I think that’s, that’s really critical to get it done.

So what, how often, let’s say somebody has a trust in place, they did it with a law firm, several years ago. Is there some standard practice of how often you should have a lawyer review your trust?

Yeah, I think there’s really good practices if you do it in the way we’re suggesting that you do a wrap around practice where you have your investment advisor, your insurance professionals, you’ve got a state planning knowledge, and you’ve got the law firm. At that point, I would say you should meet annually, at a maximum, I would say every 18 months and here’s why. I’ll give you one example. So I’m 56 years old. I’ve got adult children. And I’ve got our first grandkid, on the way, November 26, hopefully, God willing, we’re gonna have our first grandchild and we’re all excited about that. So with that said, Our plans are going to change because of that baby, we want to include that baby and be there. If we have resources to pass to my daughter and her husband, we want those to also benefit our grandchild. So things keep going no matter what we want to do, life keeps moving. And another example is I recently adopted my nephews, there was hardship in our family. Three years ago, I wasn’t even thinking about that. So now I’ve got these two young men that I’m trying to grow up that are 14 and 11 and guess what I want to do now I want to include them in the future and they’re part of our family and we love them. But you just have to recognize no matter how much we want everything to stay the same. It doesn’t. And so yeah, the annual review is very wise, you might find that you inherit assets of your own, from grandparents, from aunts, uncles, you name it, and or you’ve had a divorce in the family. Sadly, that’s very common in America and, and you have to change your plans around that you have to be very precise, when you’re talking about a family versus a split family, and where those resources are going to go and who specifically are you leaving the money to, or the asset or whatever it might be. So there’s the the annual review is critical and if you have any assets, where you’re in the investment community, even in these insurance products, which are very, very safe, there’s opportunities to make small adjustments and get a different outcome year over year. Same thing with your real estate holdings, that it just needs to be looked at and that can also become a nice kind of cadence and routine and then it gets easier and easier because you’re making incremental small changes versus sweeping changes because no one’s looked at anything for 10 years.

Yeah, and so currently, until the our ABS is up and running and certified by the state Supreme Court, FR Law Group, we’ve hired an Estate Planning Team and they’ve been meeting with clients since March and it’s been exciting from my viewpoint because like, I like to say I’m a simple trial lawyer and it’s nice to see people come in and enthusiastic about estate planning, which I would never have thought about prior to, you know, this affiliation. But once the ABS is set up, maybe you can just kind of generally identify the name and then the three separate entities that belong within this whole group.

Sure, sure. So what we formed was a Holding Company called Reliance Group Holdings and the first entity that we began chiseling out in the business plan was Reliant Law Group, which would focus on introducing people to the idea of estate planning, educating them on the need for estate planning, which we haven’t touched on all the needs yet. One is the financial world. The other is what happens before you pass away and that’s I in my book that’s equally if not more important. So we’ve got Reliant Law Group that will do that work, prepare the documents and work with reliant estate and insurance services and rely on investment management to offer a comprehensive package that has all the investment products and other fixed insurance products that someone might need to really leverage what they’ve got to get the best outcome. So there’s certain financial products that don’t fit well for a person that’s in retirement and others that fit perfectly for that. So we help people understand all that. But yeah, those three entities collaborating together with a depth of estate planning, decades of history and experience allows us to take those documents that are produced by the law firm and then really bring them to life.

Yeah, it’s exciting process that we’re we’re seeing unfold. And what you mentioned just a minute ago, which I think it’s extremely important, what are some of the other documents or services that come along with the creation of the trust?

So, the other one of our speakers, she was a really good educator on the trust breaks it down into two things is, the trust is there to to identify and clearly describe what happens after you die and it’s also there to describe exactly what you want to have happen if you become incapacitated. So as we age, there might be an accident that occurs, it could be just a car accident, and you become incapacitated. If we have the blessing of long life, we might form dementia or have other cognitive impairment, or we’re tired of making the decisions, and we want someone else to do it for us. And we’ve got these instructions on what to do. You’ve also got medical power of attorney, you’ve got your end of life decisions. And when I said, you know the importance of it, you know, money is one thing and resources all that’s great to pass on. But imagine being in a situation where I have to choose if I’m going to unplug my mom or not and I don’t want to be faced with that I want her to instruct us as to what she wants to happen when she gets to those end of life decisions. And if you have the opportunity to remove that burden from the people you love most, they’ll agonize over that if you leave it in their lap and they’ll have nightmares about it. They’ll think about it the rest of their life, that they had to make a decision that they knew was right but they wish they never had to make it. And I think that that area is so urgent and those extra documents that go into the trust that deal with that area, the medical area, the end of life decisions, the care that you want to receive. That’s something that you get to take control of, you get the outcome that you desired and you took the burden off of the the family members who, you know, they’re going to be grieving. So I think that’s one of the most beautiful things that we can do through the trust, which isn’t really a probate topic, right? So if I go into a hospital, probate doesn’t really care about that. It’s not even in the cards yet. It’s after I die, that probate starts. So that’s something that it’s a very family critical set of documents that we can make that easy and make that process something that is a gift to the family and not a burden.

Yeah, in addition to that, the power of attorneys, I think, are critical documents. Let’s say that you are incapacitated without the power of attorney trying to get medical records and information from medical providers because of HIPAA and other regulations. It is nearly impossible and certainly there’s a very long delay if you need critical medical information. Likewise, if there are bank accounts and other things that you need access to without the power of attorney, unless you are named as a joint account holder If it’s again, going to be almost getting an act of Congress to try to get the financial institution to even communicate with you. So there are a lot of different things that go into this process. One of the things that really has occurred to me as I’ve watched these client interviews and participated in our weekly meetings is that while there is a standard form sort of everybody has a unique situation that has to be taken into account and so it’s really almost like doing a genealogy trace sometimes in these meetings, and you really get to know the people in their lives because, you know, that’s really all we have left, at the end of the day, is our legacy in that trust document is a prime example of fulfilling your legacy.

Yeah, yeah. And it’s, you know, I think about one other area that we’re going to offer some services is for the families where they know there is a family dynamic that can be a bit challenging and they want to remove that after their passing the grief that happens there and we see a lot of struggles, where money’s involved, and family members have different opinions of what they thought they heard, mom or dad say, we’ve seen people get greedy at the wrong moment. If they happen to be the successor trustee, they may violate their duties, and things can happen that disadvantaged their other family members. So one of the things that I really liked about the ABS, Troy was that as a law firm, and with our partners, with our fiduciary advisors, we can offer successor trustee services to the clients and what we’re finding is about 1 out of 10 of those clients, is looking for a way to have the trust managed without forcing one of their family members to do it. Because they might not be equipped in it, or they don’t have financial experience, or they just don’t want conflict for the kids. They just want them to do what mom and dad said and let this trustee follow the exact precise words of the trust and do that. So that’s a big plus, I think, to be able to offer that we’re other law firms aren’t capable of doing that, because they don’t have the investment management wing within the family of their operation.

Yeah, and one of the things I also that the trust, basically, obligates you to do is, you know, in addition to your fixed assets and other things of that sort, family heirlooms, where do you want that to go? Because you don’t want there to be armwrestling at the end of the day?

Yeah, there’s some some of us have high value or high sentimental value assets. I know, I heard somebody talking about a big argument over a cookie jar after mom and dad died in. So we don’t want to do that. But you can name specific assets that you know, are near and dear to certain family members and you know, that that’s really theirs, and you want it to be theirs. You know, I’m thinking about my mom, again, she’s got this Ukulele that she taught me to play. And, you know, I always am hoping she names that to me. Because it means a lot. She taught me how to play, you know? So, yeah, there’s all kinds of little things that come down in there and you can specifically name them in the trust as well.

Yeah. Well, Andy, this has been very helpful and appreciate you taking your time from your vacation to share this with us. It’s very important message. One of the things that if you come away with nothing else, the importance of having a trust, funding the trust, and with the organization and the ABS that Andy’s rolling with. It gives and affords the clients the opportunity to maximize what they’re doing not just with creating the trust, but funding it and being good stewards.

Yeah, that’s it and a great opportunity to do comprehensive financial planning that’s tied to your actual long term plans and so as life changes you got to change with it as I talked about, but having the assets in the right place at the right time. There’s a time for growth and risk. There’s a time for income and security. There’s a time to take advantage of tax opportunities that are there and then knowing which assets are best to leave untouched so that they can transfer to your heirs without any tax exposure. There’s ways to do all that and that collaborative effort overall with the law firm with the insurance professional, and with the investment management professional.

Well, Andy, thanks again! For those of you who don’t want to wait until the end of September to create your trust, you can come to FR Law Group because we’re collaborating with the folks who will eventually be part of reliant Law Group. So feel free to reach out to us at and we will get you to the right person. Thanks, Andy. Have a great rest of your vacation.

Yeah, thanks. It was great talking to you.