Tax Matters Specialty Group Podcast with Gary Weiss—David R. Schneider

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The Echelon Radio Network presents the Tax Matters Radio Podcast a conversation about money for everyone with your host Carrie Weiss

Gary Weiss 0:20
Once again, it’s time for the secrets of truth justice, and the Echelon way for another exciting and jam packed session of the Echelon Tax Matters Specialty Group Podcast. Today I will be your envoy as we explore the topsy turvy world of the Echelon tune down. FYI I am Gary also known as Gary Weis CPA, but you should know that if you listen to the great bumper Music provided by our own impresario, Brian Hemsworth at the board. Thank you, Brian for that. Today’s guest is David R. Schneider with DRS Law. David, welcome to the podcast.

David Schneider 0:57
Well, thank you for having me, Gary.

Gary Weiss 0:59
Great. We’re looking forward to this. This should be interesting. So you have some unique top talents I understand and some good stories. So tell us a little bit about your background, how you got started, where you’re from and bring us to where we are today?

David Schneider 1:11
Well, let’s see. I’ve was pretty well raised entirely in the city of Thousand Oaks. I’ve lived there since I was about 10 years old. I’ve seen that town grow from about 36,000 people to 136,000 people. Went to school there met my wife there raised my family there. All my daughters went to school there.

Gary Weiss 1:35
Where do you go to high school?

David Schneider 1:36
I went to the Thousand Oaks High School home of the Lancers. Yeah, way back, you know, a long time ago. And my wife went to school in town as well. And that’s where I started my professional career. Also in town. Many, many moons ago, I tried a number of different things I tried my hand at the restaurant business did that for a little while, eventually migrated over to working with my father, who was a 41 year State Farm Insurance agent. In fact, I thought I was going to do that for my life’s career. And in the late 80s, early 90s. I saw that the industry was changing. It wasn’t going to be my father’s Cadillac anymore. So I decided I got to do something else. And I put myself through law school night school until I graduated in ’98. Took the bar in ’99. And here I sit before you today.

Gary Weiss 2:38
Sounds like there’s some great stories brewing there. So let’s start with the restaurant. I’m curious where what kind of restaurant business were you in?

David Schneider 2:46
It was a pizza restaurant, pizza delivery. Very much like the existing fast food chains. Today. A couple of friends of mine worked in that business, and were to be awarded a franchise with the major player in town. And then subsequently could not for whatever reason get their franchise decided to go out on their own, and then reached out to me for my business acumen to come and help them run the business. So it was a pizza delivery in Westlake it is no longer there. But it’s like quite frankly, getting an MBA in business on your feet. Nice.

Gary Weiss 3:26
So what’s your favorite pizza?

David Schneider 3:28
I’m a very traditionalist guy. Pepperoni and extra cheese is my go to.

Gary Weiss 3:34
Nice did you get to make the pizzas?

David Schneider 3:37
Oh, yeah.

Gary Weiss 3:38
Oh, you did it all. Very nice,

David Schneider 3:39
Yeah, I could toss the dough spinning around, put on the show. If there, anytime there’s somebody who actually came into the kitchen because it was mostly delivery. Anytime anybody came in, all of a sudden, a dozen items are in the air at any given moment. From the dough to the pizza cutter taking the peel to move the pizzas around, it becomes a show. So I can do all those things. Although it’s been a little bit.

Gary Weiss 4:02
Well, it’s okay. But you’re it sounds it sounds like you were getting ready for law school by entertaining the customers for their pizzas.

David Schneider 4:11
Well, the main thing about about the lead for law school is the ego you’ve developed for being on show. Yeah, it takes a certain egomaniac to also get through law school as well.

Gary Weiss 4:20
Yeah, that’s true. All right. So and then you then you moved on to insurance?

David Schneider 4:24
Yeah, yeah, dramatic shift. My father had always been about, you know, trying to get me to come into the business. At this time, I am now married. And with one child on the way, and I decide, hey, I’ve got to get out of this. I’m killing myself in the restaurant working 120 hours a week, make no money and so I went to work with him and had a very enjoyable run. I was never certain how that would work out working with my father. It turned out to be a terrific experience for me. And it really brought us very, very close, much closer than we were before. So I’m very happy I had that experience, even though I didn’t end up staying with insurance.

Gary Weiss 5:13
So you got any great stories from your father that you can tell us about?

David Schneider 5:16
Well, my dad was very traditional, he wasn’t overly dynamic in business. So some of the best stories just involve me helping him sort of break out of his shell to try to take business in in a broader, broader sense, if you will. And but I, you know, he, he was a terrific pal to be with, and you know, even to go let’s go have lunch and just hang out. And, of course, he the one thing I perhaps disappointed him with, he was an avid golfer, and I am a horrible golfer.

Gary Weiss 5:57
No this I understand, I have the same affliction.

David Schneider 6:00
I like to see a lot of green area when I play. I like to get my money’s worth, I make sure that cart comes back almost dead. So, you know, but as far as dynamic personalities, we couldn’t be more apart.

Gary Weiss 6:15
That’s okay. But you still you got along with your dad you bonded with your dad doesn’t get any better than that. All right. So you’ve gone from the restaurant business. Now you’re in insurance. So what drove you to law school?

David Schneider 6:25
Well, as I was progressing in my insurance business, I went back to school, completed out my undergrad, and then got two advanced degrees through the American College as a chartered life underwriter and a chartered financial consultant. Through those I was exposed to the areas of estate planning and using insurance for methods other than, hey, we got to pay the widow if something happens. So with that, and as well as being married, having a mortgage, having a kid, there’s only a few things that you can do to earn the kind of dough you need, you know, to be responsible. And so when I looked at the handful of things that I was equipped to do, law school just seemed like the great fit for me, I enjoy the challenge. I enjoy the competition. And it was a natural fit for me.

Gary Weiss 7:17
So you did this at night while you were working? Yeah, I worked

David Schneider 7:20
Yeah, I worked Monday through Friday from nine to five. And then I found a law school in the San Fernando Valley College of Law, which at the time was the University of LaVerne College of Law. They had a full time campus here in the Warner Center, and I would drive into the valley, get there about six, eat my lunch, go to class at 630. Get out at 930 the law library was downstairs, I would stay in the library to lay me out while I was prepping my briefs for the next day. And I just did that Monday through Friday, Saturday went back to the Law Library from nine to six, studied, studied, studied and Sunday I was home.

Gary Weiss 8:00
Nice and what was the what was your favorite law topic in law school?

David Schneider 8:05
Well, funny enough. I really enjoyed the criminal law classes. They’re the most interesting, you get the most juicy facts in the case. And in one of my Crim law classes, I had a rather famous professor. His name was Barry Levin. And he was the lead counsel, defense counsel, in the Rampart cases, the LAPD Sergeant Ortiz rampart cases. He also was second chair on the second Menendez trial. So when he would come to class, we would always get a 15 minute update on what was going on in his case.

Gary Weiss 8:43
Fascinating,

David Schneider 8:44
So it was really, really interesting. I ran into him later, in court on wholly unrelated matters. So I’m in the hallway. Hey, Dave, how you doing? Great. I’m glad you’re here. I need you to make an appearance for me. Very, I’ve never done anything in criminal law. It’s okay. Just get in there. And tell the judge I need more time. And you know, and then he almost started to try to recruit me into the world of criminal law. Had to go home. Talk to my wife about that a little bit.

Gary Weiss 9:13
Yeah, she probably wasn’t real thrilled with criminal law?

David Schneider 9:16
Nah, she didn’t like that part. I liked the part about getting paid, but

Gary Weiss 9:20
That’s true. Do you ever say Do you ever watch that Netflix series? The Lincoln Lawyer?

David Schneider 9:24
No, I actually do not watch any lawyer television or movies.

Gary Weiss 9:29
All right. So tell us now you’re in law. So tell us a little bit you know, we’re going to come back to I want to get back to your hobbies but first we’re going to talk about what you do as a lawyer tell the listeners what kind of law you practice. You know, what’s what you really enjoy doing?

David Schneider 9:43
Well, I am an estate planning attorney which means I help families do their wills, their trust plan for the future, the what ifs. We all know that everybody’s going to pass away. But what if you don’t? What if you were to become incapacitated? What if these events occur unexpectedly sooner in life, when your children your heirs are minors, they’re immature. So I help people plan out that future to take all that worry off the off the charts, if you will. And then for those families that I don’t help, I find myself in probate court, helping the families that didn’t create a plan. Presently, I’m appearing in eight different courts on multiple matters up and down the state from Mendocino County down to San Diego County. So that keeps me pretty busy right now.

Gary Weiss 10:36
Yeah, as a CPA, I, when I talk to my clients, and they come in and I see their financial position, I constantly recommend getting a trust. And one of the things I tell them is, this is the reason why you should have a trust, and everything goes well, it’s always to avoid probate. Yeah, yeah, that’s part of it. So can you tell our listeners real reasons why a trust is so important for more than just avoiding probate?

David Schneider 11:03
Well, to begin with, not everybody is going to simply grow old and die. One in three people aged 68 or older in this country, we’ll have a significant period of incapacity before the end of the game. So when we can set the trust up in advance, we’ve got a steady management team people that you have focused on people that you have picked to take control over those assets to act in your best interest. Number two is the children. When are we going to give these assets to the children? I often say you know you, most people have learned that there are two constants in life. And I’m sure you’ve said this many times as a CPA death and taxes. Well, in reality, there’s three death, taxes, and 18 year olds do not make good decisions. You simply cannot give your 18 year old son a million dollars in cash, little little check tucked into his birthday card, we have to put a plan in place. And frankly, just age alone doesn’t create maturity. Maturity comes from both age and experience. So many times in the trust, we’re going to spread out when these people receive their money, what the money can be used for while it’s being held back. So that’s another exceptionally important point. Three is the ability to eliminate the infighting. Every single day, my phone rings with a family that can’t get along this Tuesday, just this last Tuesday, I received a call. Dad died on Saturday, the two sisters are demanding to be paid out. Now. He died three days, four, four days earlier. And the family was already fighting about

Gary Weiss 12:56
them. Yeah, I always say the death brings out you the best. And people are the absolute worst. And most of the time, it just brings out the absolute worst. And that’s where a trust really makes a difference. So let’s talk about a couple other aspects about trusts that as a CPA, I run into problems with one co-trustees. Now I’m you know, I have my good client that the mother said I’m gonna set my two daughters up as trustees. I know both the daughters, neither of them got along. And somehow the mother thought that well, once she died, they are going to come together. Of course that didn’t happen and they went to war with each other. So can you talk a little bit about, you know, co-trustees, who should be a trustee? And what is a trustee?

David Schneider 13:38
Well, you’ve really dealing with the co-trustees, you really nailed it right on the head, Gary, that parents have a very false sense of how well that their children are going to get along. I have found when the referee is not on the field, that’s when the teams tend to really fight. And I recommend against co-trustees almost in every instance. First of all, they got to act together. Second of all, it’s simply impractical in today’s world, given our transient society and where we tend to live and move. But overall, a trustees job is to manage the assets of the trust estate in the best interest of the beneficiaries. And there are some people that are going to have a difficult time separating, hey, I’m acting in the best interest of everybody or this will benefit me. So that’s another concern. Ideally, when I’m helping clients select who they’re going to pick as their successor trustees, I ask them to focus on who has the best head on their shoulders? Who is you know, going to be not intimidated or daunted by having to work with the CPA, work with the trust attorney? How are they going to be able to interact with other professionals and financial institutions? Look at the people that are around you who has your back come hell or high water, you know, this person’s gonna watch out for you. Because again, you might not die, you could have become incapacitated, and they’re working for you and not for them and their siblings. So those are some of the key things I focus on.

Gary Weiss 15:15
Right. So one of the other parts of trusts that are really important that people ask me about, or are curious are things like conservatorships power of attorneys, you know, like the durable power of attorney for health care. The I tell them, these are all important parts of, you know, how you’re going to administer the trust given, you know, different life situations that come along. So can you just briefly touch on that?

David Schneider 15:41
Well, you have, you’d never use just a trust by itself, you’re going to develop an overall estate plan. And the goal here is to take a look at all possible aspects. If you title an asset into the name of the trust, the trust controls it, but there will be some assets you do not title in the name of the trust, for an example, IRAs, 401k’s where our federal government does not allow us to title those assets in the name of the trust. Now, we’re going to have to have a power of attorney. If you have a 401k, and you’ve designated your wife as the beneficiary, that’s great. But that’s only going to work if you pass away. If you become incapacitated, we need somebody to be able to step up and take control. And that’s not the beneficiary. So we use a power of attorney and designate an agent to do that work. Similarly, if you have a car, most people will not title their cars in the name of their trust, unless, of course, they have very expensive cars. Most people do not live in Ferrari town. So how can we sell the car when you pass away? Can the trustee do that? No. Car wasn’t titled to the trust. Who’s on title? Well, in this example, it’s just Gary, Gary can sell the car. Well, but if Gary’s dead, he’s gonna have a little bit of a difficult time with that. So we utilize what’s called a pour-over will. And we designate an executor that takes on that task. Now the trust the successor trustee, the executor of the will, the agent under the durable power of attorney, these are one in the same persons, but he is going to use different tools, as similar as a mechanic might use a hammer and a screwdriver and a wrench. This person needs to use the trust, the will and the power of attorney. Health care, of course, a whole different animal unto itself. We again use an agent, but now our agent is going to be focused on making healthcare decisions, life decisions.

Gary Weiss 17:49
So one of the things is that what’s the difference between a will and a trust?

David Schneider 17:54
Well, a will, for lack of a better word is an instruction sheet. This is what you do with a dead person stuff. And that’s literally all that it does. Whereas the trust operates during your lifetime, during incapacity distribution upon your demise. And of course, avoiding the probate proceeding. Wills do not avoid probate. There are three factors that trigger a probate proceeding, death, ownership of the asset, and that asset is over a very low statutory minimum. Well, a will only works when you die. And it can only control the assets that you owned at your death. So if we get over that very limited, very low statutory limit, a will becomes actually a probate guarantee.

Gary Weiss 18:43
Now, these are real important things. The last one I want to talk about, and we’re gonna go to something else is conservatorships. You know, everyone knows that because of Britney Spears. She had a conservatorship briefly, what is a conservatorship?

David Schneider 18:55
A conservatorship takes place when we have an adult who is incapable of making either financial and property decisions for themselves or unable to make life type of decisions. So there’s two types of conservator. There’s a conservator of the person and a conservator of the estate. So in the Britney Spears, she had both conservators, but the one that was essentially in the press was conservator of her estate where her father was controlling her assets. The majority of instances will actually involve conservator of the person, and this is going to come in really three different elements. We have a child, perhaps that’s born on the spectrum. They have now become a teen. We need to put the parents in place or keep the parents in their traditional role, but with legal justification. We have a person that may have psychosis or perhaps due to drugs or bipolar, they have to have a conservatorship and then of course, As people perhaps become senile, develop dementia or Alzheimer’s, those persons might need to have a person to stand in their shoes in a legal capacity.

Gary Weiss 20:10
This is real important for everybody understand trust is a way to protect not only your assets, but you and your family, it’s a great way to do it. Just one point, when you do set up a trust, for the first time, it’s called a living trust is a disregarded entity for tax purposes. I get that all the time. Hey, do I have to file a trust return? No. You don’t have to file a trust return as long as the one of the husband or wife or both are still alive, then there’s a whole bunch of rules after the last to die. We’re not going to get into that. Because otherwise we’ll be here for hours. And obviously, I when I got my master’s in tax, I spent a lot of time with estate planning. I love this stuff. So David, I can sit here for hours talking about this. And I’m sure all of you don’t want to go much longer. But so I want to change you. Yes, I will do boufal Who will do it follow up podcast. But what I want to talk now I want to go back to you. I understand. One of your hobbies is poker?

David Schneider 21:06
Yes. That’s been a longtime hobby of mine. And a funny side to that is that when I play if I was to, you know, go into town and go pick up a game on Friday night. Very often at my table I’ll find two sometimes three lawyers playing it is a kind of an out shoot of a lot of the training and competition that we go through in school that very seldom Am I the only lawyer at the table.

Gary Weiss 21:33
Interesting. So what kind of poker Do you like? How good are you? How often do you win?

David Schneider 21:38
Well, I can play all the games every you know from stud through Omaha, but my usual game is No Limit Texas Hold’em. So I’m going to be playing that where there’s no cap on the betting. And you can win as much as you have in front of you as well as lose as much as you have in front of you at any given moment. I predominantly play cash games, meaning I’m simply there to take Gary’s money. But

Gary Weiss 22:06
By the ay that’s no challenge I lose every time.

David Schneider 22:10
Well, you know, there’s always beginner’s luck. But usually during the summer, I will take a couple of weeks off and play a series of tournaments out in Las Vegas at the World Series of Poker. So I’ve been doing that for the last 10-15 years.

Gary Weiss 22:23
I was just going to ask you about the World Series of Poker. So you do that?

David Schneider 22:26
Yes, I do that I go out there with the masses and do the big crunch. I had an abbreviated stay there this year. Some family things brought me back into town. But last year, I had some pretty deep runs that I was fairly proud of finished 38th out of a field of 3668. In the super seniors, I qualify now for the super seniors. Yeah, so that was that was a great time. That was three long, grueling days of playing the same tournament.

Gary Weiss 23:00
I see. So do you ever do trials in court?

David Schneider 23:02
No, I am not a litigator. The only court time that I spend is in traditional probate matters. And I also handle conservatorships. I handle what’s called limited conservatorships as those child children that have now become adult age who are on the spectrum. But in probate court, I handle traditional probate petitions.

Gary Weiss 23:27
Though something tells me some of those skills you use for poker you’re using with your clients in probate and, and, and and anything to do with estate planning. Because sometimes it’s can be very difficult to explain to people that there’s a whole bunch of rules that you need to follow once you die. One of the things about trust, that’s real important. If you have a bank account, and the decedent, that’s the person who died. The decedent is the only person on that bank account, you go into Bank of America and say, hey, you know, I’m in charge of this state. Now, guess what they’re gonna say, Bring me some legal papers, and off to probate you go. So that’s real important. This is a trust can avoid that. And a lot of things like that. So it’s really, really important that you pay attention if you if you have an even if you don’t have a lot of money. A trust is still something you should consider if you have especially if you have a family. Right, David?

David Schneider 24:20
Well, yeah, the statutory limit that triggers a probate proceeding is exceptionally low in the state $61,500. If you own real estate $184,500 for all other property, gross not net, find me a piece of real estate in this state of California that’s valued less than 61.5 can’t be done. Yeah, absolutely. So somebody comes to me and they say, Well, I just have my home. It’s, you know, half a million dollars. It’s paid off and I don’t really have anything else. You have a potential probate problem.

Gary Weiss 24:56
Right. This becomes a big bigger deal with because it includes taxes, it can affect how you do things. If you’re if you’re the decedent and the last to die is in the middle of the year now you’ve got a part of your tax return and a trust return. And we’re going to come back to all this another time. I want to have you back we’ll continue this discussion. Because I think for our listeners, it’s real important. They understand this. And it’s very confusing. It’s like Social Security. It has a lot of rules and nobody understands it. But I think it’s really important for our listeners to learn, you know, why they should have a trust what it means what, you know, all the things we started to talk about. So I’m going to have you back again. Hopefully, you’ll come back and I hope you had a good time.

David Schneider 25:35
I would love to to do so.

Gary Weiss 25:35
Excellent. Well, then intrepid listeners, that’s all the time we have for today. I would like to thank my guest, David R. Snyder, with DRS Law. That’s not doctors law. Those are his initials, pay attention. Please join us for future podcasts right here. Same bat time, same bat channel. I’m your host Gary Weiss. I look forward to spending time with you on our next podcast which could be David. Y’all come back now, you hear

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