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Pro Tips In Not Having Your Family Sue Your Estate

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In this very informative episode of David Vs Goliath, host Adam DeGraide interviews Marcey Whitney and discusses the differences between Financial Accounting and Fiduciary Accounting when it comes to your Estates. A lot of great advice in here folks!

Transcript:

Adam DeGraide:

Coming up today on David Vs Goliath. Even though you have a trust, even though you have an estate, you can’t plan too much.

Your sultry… Sultry? Is that a word that I’m going to use about myself?

Speaker 2:

Welcome to today’s episode of David Vs Goliath, a podcast dedicated to helping small businesses leverage technology to not only help them compete against their large competitors, but win. Your host is currently the CEO of Anthem business Software, a three time Inc. 500 recipient and a serial entrepreneur with a passion to help small businesses everywhere find, serve, and keep more customers profitably. Please join me in welcoming your host, Adam DeGraide.

Adam DeGraide:

Hey everybody, it’s Adam DeGraide with the David Vs Goliath podcast. Hope everyone’s having a fantastic day today. It’s going to be a great episode with Marcey Whitney from the Pace & Associates out of Austin, Texas. This should be a ton of fun. Today’s episode is brought to you by automatemysocial.com, where you can automate up to 100% of your business’ social media, all while saving thousands of dollars. Visit automatemysocial.com to take the test drive. Also visit us online at davidvsgoliathpodcast.com where you can subscribe to receive updates on the podcast and also apply to be on the podcast. Well, let’s get right to it today with Marcey Whitney. Marcey, welcome to the David Vs Goliath podcast.

Marcey Whitney:

Hi, Adam. Thank you. It’s good to be here. It’s my pleasure.

Adam DeGraide:

I am so excited. I want to read your short bio really quick. It says, Marcey Whitney, CPA, is the Managing Partner of Pace & Associates, CPAs and LLC. Having worked full-time while earning her undergraduate degree in Houston, she has since garnered over 25 years’ worth of experience in the world of accounting and finance. Marcey is honored to be a CPA, and while her experience has spanned all industries, she dedicates her focus to trusts and estates. You now live in Austin, which is the live music capital of the world. I don’t know if you know this or not, but I love music. I play music and it’s a lot of fun for me. So I love Austin. And so how are you today, Marcey?

Marcey Whitney:

I’m doing fantastic, thank you. How are you?

Adam DeGraide:

Awesome. I had the privilege of meeting Marcey and her lovely family at a convention here in Orlando. It was called the, is it Heckerling? Is that how they pronounce it?

Marcey Whitney:

Yes, the Heckerling Institute.

Adam DeGraide:

There you go. Look at that. I got it right my first try. And her father, John, was there at the time, and I just fell in love with this family and I thought it would be awesome to have you on the David Vs Goliath podcast because a lot of people, they know what trusts are, they’ve heard of estate planning, but there’s a big difference between what you do and other CPA firms do. And I’d love for you to tell the watchers and listeners a little bit about your big vision and your goal you have for Pace & Associates going forward.

Marcey Whitney:

Yeah, absolutely. Thank you. Right, so as you mentioned, my father, you got to meet John, he has been working in the fiduciary area for over 40 years. And during all of this time, he saw many, many individual trustees and executors get into trouble because they did not provide the beneficiaries with at least an annual accounting. And the trustees did not adequately document their files for their investment decisions or distribution decisions. And this happens more often than one wishes to believe, and the division that can be caused between families when children or grandchildren will sue their own parents and grandparents over what is simply just a lack of communication. And so our number one goal is just to try to help families avoid this.

Adam DeGraide:

Oh man. First of all, it sounds horrible. It sounds like a bad movie playing out on TV. Normally this is in regards to families that have wealth though, right, in assets?

Marcey Whitney:

Yeah, that’s correct. That’s correct. So when these families set up these trusts, these documents, everybody does it with the best of intentions. It’s a very loving thing to do. I want to take care of my family, I want to take care of my future generations. And to do this, they will create a trust and they hope that it extends for perpetuity. But sometimes over time, money can bring out the worst in people. And so it’s just a matter of just making sure that everything, just the trust and the assets and all that is involved is being tended to so that we can cut out any of that liability that might arise.

Adam DeGraide:

Yeah, I thought that was interesting. One of the things when I was reading it here too, it talks about how it’s now required. Financial accounting is different than fiduciary accounting. And I think people, the watchers and listeners, we have people that understand what you’re talking about right now, and other people’s eyes are glazing into the back of their heads trying to figure out exactly what Marcey’s talking about. Really quickly, what is the difference between financial accounting and fiduciary accounting?

Marcey Whitney:

Well, the main difference with, let’s say, financial accounting. You think of, oh, a balance sheet or a profit and loss statement, and that’s typically what people are looking for. And then the third document is known as the general ledger, which is just simply a list of all the transactions that happened in that period, and which is typically ignored. But with fiduciary accounting, the general ledger, that list of all the detailed transactions, is the most important part of the accounting, and this is what protects the trustee. So that’s the major difference. You don’t utilize the same software even for fiduciary accounting that you would for financial accounting. So like with financial accounting, one of the most popular softwares out there is QuickBooks. You would not ever use that for fiduciary accounting.

Adam DeGraide:

So what would be some of the tools that you would use for fiduciary accounting then?

Marcey Whitney:

Well, there’s a few software programs out there. We use one namely by Thompson Reuters. And it’s all about principal and income accounting. It’s not about your profit and loss statement and your balance sheet. And so this is required because the courts have said that the trustee is responsible for giving the beneficiaries enough detail to be able to accept or reject each transaction. So the proper allocation of these transactions amongst principal and income is key since there are two types of beneficiaries. There are the income beneficiaries, the current ones, and there’s the remainder beneficiaries, the ones in the future.

Adam DeGraide:

That is very interesting. And I would imagine that a big part of your segment of your target for Pace & Associates is lawyers and people that have high net worth clients in general that are trying to get this type of information. And I think that’s going to be fascinating to learn about. I am going to take my first break from my first corporate sponsor, but when we come back, let’s talk about your market and how you reach out to these people because people love knowing how businesses are grown here on DVG. You are with Marcey Whitney, your handsome host, Adam DeGraide. Here’s a very important message from Automate My Social. We’ll be right back.

Speaker 4:

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Adam DeGraide:

And we’re back with Marcey. She had an amazing backdrop of Austin behind her and then we couldn’t see her face, and so she flipped it around and now there’s just a beautiful black background. We’d much rather see you, Marcey, than Austin. We can all look at pictures of Austin. As a matter of fact, my producer right now is putting up a picture of Austin. There you go, folks. That’s what Austin, Texas looks like. So now you know. Marcey, markets are important for our clients. So your dad started the business years ago, you’re now working in the firm. You guys have shifted focus over the years. And now you’re trying to target a different segment more heavily focused than maybe over the past where it was more broad. So for the watchers and listeners, talk about who your primary customer is today and how you serve their customers, and then how you plan on finding them.

Marcey Whitney:

Yeah, so our target audience really are estate planning attorneys, family offices, individual trustees who are already in the process of managing their own trust, things like that. So we really just want to talk to those individuals and we’re just excited to be able to provide this important service. This is an area of accounting that very few people have an understanding of. And so the ability to provide the service to those individual trustees who may be very unaware of this duty so as to ease their burden of liability. So when you agree to act as a trustee, more is involved than just signing on the dotted line and then walking away. You’re now obligated to do your best for the grantor in carrying out their wishes as set forth in that trust instrument, which clarifies and specifies their duties, along with being governed by the Uniform Principal and Income Act.

So the trustees need to understand how to invest the trust assets not only to protect the trust principal, but also produce the income that the income beneficiary has a right to expect. So what we are looking to be is a part of that fiduciary administrative team. So we have the estate planners who work with their clients about coming up with how to structure the trust. You have the investment advisors, how can you invest all the assets in a balanced way so that you’re not giving priority to one type of beneficiary versus another. And then you have us, which we come in and we take care of all the administrative factors of the accounting aspect of it.

Adam DeGraide:

That’s really great. And it sounds like something my wife needs. We have a lot of trusts in our family. We have foundations in our family. We have trust structure with four children in our family, brothers, parents. And there’s going to be a lot of money left when I bite the, God rolls the seven on me and sends me home. And I can see how that would be important because if you treated one child differently than another and they didn’t explain it or understand it, that’s where the animosity could come in and the frustration could come in. Give you a great example.

So if you have two older children and then you have two younger children, like I do in my life, the two older children, the two younger children are treated equal except for the fact that the two young children are minorities. And so if something happened to me before they were not minorities, there should be more allocation in regards to those younger children to help them get to that point where they could be out on their own. But if you don’t explain that to the older kids and they get to the end and the lawyer’s reading the estate plan, next thing you know, everyone’s getting sued and it doesn’t make any sense. They’re suing their brother and sister because they just didn’t understand. Is that a great example of how something like that would go down?

Marcey Whitney:

Sure. I mean, that’s absolutely a great example of it. Yeah, exactly. So it’s just this communication gap where they don’t understand why little Johnny is getting more than they are and how that can be. And this could happen within a short amount of time, or it could happen 10 to 20 years after the trust is created and disbursements have been going on and allocations have been going on this entire time.

Adam DeGraide:

And all of a sudden they need money. And now they look… Yeah. I got to tell you-

Marcey Whitney:

That’s the main thing.

Adam DeGraide:

Listen very carefully what Marcey’s saying. You can’t plan too much is what she’s really saying. And even though you have a trust, even though you have an estate, fiduciary accounting is critical, especially in high net worth situations. You got to take advantage of it. Now, I know you’ve revamping your website, you’re doing some articles and content. You’re going to also be doing some video promotion yourself in regards to your practice. This is all relatively new for you guys, a little bit more on the social media side than you’re used to. What was that like for you and your family to get a little bit out of the comfort zone to now shifting directions over the years to really, really making this an emphasis? I think people love that to find out transitioning something that’s been successful in the past or migrating to something else that you want to do more of takes a challenge and it’s a pivot. What has that been like for you and your family?

Marcey Whitney:

For sure. Well, I think we’ve just been realizing over time that we get referrals all the time from larger practices, other CPA firms, they don’t have any focus on the trust and estates and they say, “Oh, send it over to Pace. They’ll take care of it.” And we do. But what we’re recognizing is that there has been kind of this sort of black hole almost of a need of that everybody needs all of this. They need more tending to, they need more information, and they need also to make sure that all of these boxes are checked, because you don’t want to find out after the fact. And I think that’s what ends up happening, is that too late down the road and all of a sudden you’re in a court environment. That’s when people tend to find out, “Oh, oh, I should have been doing this all along.” And we just decided we need to get it out there that this needs to be known, and we actually want to make this more of a focus.

Adam DeGraide:

That’s awesome. Good for you. I’ll tell you, it’s really exciting. I thought it would be interesting too, one of the questions we have on our pre-show sheet is what has been the biggest failure that you’ve ever had? And this story was fascinating. You were in college, you were assigned a group project and tell the watchers, listeners what happened here.

Marcey Whitney:

Yeah, well, exactly. So college is a great place to fail, right? Because you can always pick yourself back up, hopefully. But in college, a handful of us were assigned a group project, which I know is not uncommon for college classes. But I worked full-time in school, so I always felt a little stretched. But I did my portion that was assigned to me, and everybody else did their portion. But I didn’t really review other people’s. And at the end when the project was going to be turned in, one person was assigned amongst the group that was going to combine everything, make the transition smooth, and then turn it into the professor. Well, we never looked at it. I never looked at it. And then it was turned in and apparently it was so pieced together, it was incomprehensible. And the professor wrote us the nastiest note and said, “I’ve never seen anything like this in my college career.” And she gave us a 30 on the project, and it brought my class average down so far. I almost did not pass the class. And it was like-

Adam DeGraide:

I got to tell you though, Marcey, even though you got a 30, it’s probably better than what I would’ve gotten on any assignment given to me because I jokingly told somebody a few podcasts back, my nickname is Mr 2.0 in school. I hated school. It was not built for me. It’s a miracle I could even sit still as long as I actually do on the David Vs Goliath podcast. Anyway, with that being said, we’re going to take another break from another awesome sponsor. We’ll be right back to continue our conversation with Marcey. Thanks for listening. We’ll be right back.

Speaker 5:

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Adam DeGraide:

And we’re back for our final segment with the amazing Marcey Whitney and Pace & Associates out of Austin, Texas. And of course, your sultry… Sultry? Is that a word that I’m going to use about myself? Your host, Adam DeGraide. It’s great to have you. Marcey, it was such a pleasure to get to meet you. One of the things we talk about is courage. Courage is something that everyone in business needs, and it’s something that you guys need right now in your lives as you pivot, right? As you’re pivoting as a business, as a family, as a strategy, it takes courage to do that. So I know it’s a family business, but that’s not even easy to come into and work alongside family, or was it easy for you?

Marcey Whitney:

It was actually really easy. It was surprising. It’s amazing because we all get along so well, but even if there’s moments where, say, things are tense during deadline season or whichever, we know each other so well and we love each other so much, we just let it flow through. And it’s been really, really interesting and fun to be able to work and talk and learn from each other. And we share this great passion for numbers and helping people with their finances. And we’re just a big family of accountants. So it’s been really, really great. I wouldn’t have it any other way.

Adam DeGraide:

[inaudible 00:21:03] I met Marcey, I’ve met accountants that are very somber, and I don’t want to use the word stale, but sometimes can be a little bit less than enthusiastic. One of the things I loved about you and your family is that you had passion. You clearly had love for each other. You clearly had love for what you do. You clearly had love for your clients. And you just struck me as a family that no matter what it took, you would get through it and you would come out on the other side just totally successful. And I think that’s something to be admired because some families that work together don’t do that well. What has been the biggest secret for you guys to do that well?

Marcey Whitney:

Well, I just think the communication. I think we communicate really, really well together, and we work really, really well together. So there is not a client that we have that my mother or my father don’t know anything about. We all share all the same knowledge and we all work together to make sure that we give the best that we can to that client. And I think just the communication factor, of course.

Adam DeGraide:

That is awesome. So any pet peeves? I didn’t read this one. Oh, yeah. Look at this. This is great. Being at a concert or a performance, and there’s always somebody right behind you who takes a video of photo on their cell phone and doesn’t turn off the camera light. This just happened to me at a Mark Tremonti concert. He was performing as Frank Sinatra with the Frank Sinatra band. And this older couple, God bless them, film the entire show with the beam of light hitting my reflection of my glasses. I thought I was having a scotoma.

Marcey Whitney:

That’s the worst.

Adam DeGraide:

I can totally relate with that. Marcey, it has been so awesome having you on the podcast. How can people learn more about Pace & Associates and what you do?

Marcey Whitney:

Well, we are on pretty much every social media platform out there. We’re on Twitter, LinkedIn. They, of course, can go to our website, www.joea132.sg-host.com. And of course, I’m in the Austin area. Please look me up.

Adam DeGraide:

That is awesome. And I’m pretty sure, Marcey, my instincts tell me that after Crystal watches this episode, which is my wife, by the way, for the watchers and listeners, she doesn’t watch them in real time though. So it’ll probably be like three or four months from now. All of a sudden, you’re just going to get a random call from Crystal going, “I watched the episode. I think I need to learn more about fiduciary accounting for our own trusts.” And I think that would be amazing. What is the final piece of advice you would give to somebody that’s in a family business about to go into it, and they might be a little nervous about it?

Marcey Whitney:

Oh, I think, of course, any trepidation is understandable, but just knowing that you are in good hands with people who love you and care about you unconditionally is probably the best place to be. So I think that you’re in good hands going into [inaudible 00:24:02].

Adam DeGraide:

I sometimes wonder about that. I sometimes feel like my kids have conditions in their love towards me. No, I’m just kidding. I would hope to think that that’s not the case. Marcey Whitney from Pace & Associates, thank you so much for joining us today on the David Vs Goliath podcast. Look at this, folks. You learn about things that’ll blow your mind every single week. You didn’t even realize it as you’re getting ready to start your own business or you’re growing your own business. Get your estates and trust together, and then work with Pace & Associates to make sure you have the right fiduciary accounting. Marcey, thank you so much for joining us today.

Marcey Whitney:

Thank you.

Adam DeGraide:

Watchers and listeners, we’ll see you next week. Have an awesome day.

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