Episode 1333: Wealth Planning Mistakes Successful Entrepreneurs Make with Todd Villarrubia

Building significant wealth is only half the battle. The real challenge is protecting it from taxes, lawsuits, poor planning, and what the next generation does. In this episode of Sharkpreneur, Seth Greene interviews Todd Villarrubia, Attorney and Owner of Wealth Planning Law Group, who explains how successful entrepreneurs can move beyond basic estate planning to protect, optimize, and transfer the wealth they have built. He shares his B. E. A. S. T. Mode™ framework, which covers business structures, estate planning, asset protection, succession and governance, and tax planning. He also explains why entrepreneurs should start exit planning years before selling their business. Todd explores strategies to protect generational wealth, prepare for long-term care costs, and build a family office structure that brings the right professionals together for proactive quarterly planning. Key Takeaways: → Wealth protection becomes increasingly important as an entrepreneur's net worth increases. → The planning strategies that work for someone worth $1 million may be inadequate for someone worth $10 million. → Properly structured trusts can help protect family assets and enable more tax-efficient wealth transfers across generations. → Entrepreneurs should consider shifting their focus from wealth creation to wealth preservation as they enter their 40s or as they build significant net worth. → The B. E. A. S. T. Mode™ addresses business structures, estate planning, asset protection, succession and governance, and tax planning. Todd Villarrubia is a tax attorney with more than 30 years of experience and an LL. M. in Taxation. He is Board Certified in Estate Planning and Administration, an Accredited Estate Planner, and a Certified Exit Planning Advisor. He has earned a Martindale-Hubbell A/V Preeminent rating and has been named one of America’s Top 100 Estate Planning Attorneys by Worth Magazine. As the founding partner of Wealth Planning Law Group and Fountainhead Global, LLC, Todd has helped thousands of entrepreneurs protect billions of dollars in assets from taxes, creditors, and other risks. His proprietary Entrepreneurial B. E. A. S. T. Mode™ process integrates business structuring, estate planning, asset protection, succession planning, and taxation. Through a holistic, proactive approach, he designs customized wealth strategies and long-term legacy systems for high-net-worth business owners and entrepreneurial families. Connect With Todd: Website: https://lawealthplan.com/ Facebook: https://www.facebook.com/WealthPlanningLawGroup LinkedIn: https://www.linkedin.com/company/wealth-planning-law-group/ https://www.linkedin.com/in/todd-villarrubia/ X: https://x.com/WPLG_NewOrleans YouTube: https://www.youtube.com/channel/UCkpE9FkBAbxsvjXowivgk_Q

• 0:00Speaker 00

  Welcome to the Sharkpreneur Podcast with Kevin Harrington and Seth Green. Kevin Harrington is the inventor of the infomercial, one of the original sharks from the hit TV show Shark Tank, and has generated over $5 billion in TV and digital direct response sales. Seth Green is the world's first trusted authority on cutting-edge direct response marketing, a bestselling author, and the only three-time marketer of the year nominee. On the podcast, Kevin and Seth interview sharkpreneurs who share straight talk on what it takes to explode your business.

• 0:38Speaker 01

  Forty-nine faces looked to him in triumph. Over the last 12 months, they had each taken turns and promoted his business for a week at a time, driving over $987,342 in revenue. What if you had a network of 50 centers of influence who promoted your business every week for a year? Grab your copy of the number one Amazon bestselling book, The Ultimate Guide to Growing Your Business with a Podcast. It's 33% off the Amazon price by going to ultimatenpodcastbook.com. Again, that website for 33% off the Amazon price is ultimatenpodcastbook.com. Welcome to the podcast. This is your host Seth Green. Today, I've got the good fortune to be with Todd Villa-Rubia of the Wealth Planning Law Group. He is a 30-year tax attorney with an LLM in taxation, board certified in the State Planning

• 1:22Speaker 01

  Administration, a certified exit planning advisor, and the founder of the Wealth Planning Law Group and Fountainhead Global. Todd, thanks so much for joining us.

• 1:30Speaker 02

  Thanks for having me, Seth. I really appreciate the opportunity.

• 1:34Speaker 01

  Our pleasure. So, let's go back in time just a little bit. What inspired you to go to law school and become a lawyer in the first place?

• 1:41Speaker 02

  Well, I always tell people, the first job I wanted was to be a garbage collector because I thought it'd be cool to ride on the back of the truck and whistle.

• 1:50Speaker 01

  I have never heard that one before.

• 1:53Speaker 02

  And then, I liked that lawyers got to dress up in suits every day, and I thought it would be cool to be a lawyer. So, I knew I either wanted to beat the government with being a tax attorney, or being a defense attorney to fight the personal injury attorneys. The only other one I ever thought of was patent law because I thought it was a really cool field, you know? But I'm very thankful I went into tax law. It's been a very, it's been a calling for me. I love what I did.

• 2:30Speaker 01

  Awesome. Who is an ideal client for you?

• 2:34Speaker 02

  We like clients that are high net worth entrepreneurs typically making at least $750 a year in AGI, $10 million and above net worth, people that have estate tax problems, specifically were able to do a lot of good stuff, can save families tens of millions of dollars.

• 3:01Speaker 01

  What has working with successful entrepreneurs taught you that you didn't learn in law school?

• 3:08Speaker 02

  You know, it takes a lot of work to build a business. People don't realize only the top 4% of businesses do a million or more a year. So, 96% of the businesses are doing sub $1 million and struggling frankly often, you know? But those clients that are above that million can really thrive, and I love that it's a virtuous cycle, right? Because the business owner benefits, the clients benefit, and then the employees of the company benefit by making money and being able to send their kids to better schools and so forth.

• 3:51Speaker 02

  So, I've always enjoyed capitalism and entrepreneurism.

• 4:00Speaker 02

  I even wrote a book recently that actually hit number one bestseller called Entrepreneurial Beast Mode, and you can get Entrepreneurial Beast Mode on Amazon for just a few bucks in the electronic version. So, I would encourage any high net worth people that are listening to get a copy of that book because it shows a lot of the techniques we use.

• 4:25Speaker 01

  That is a great title. After seeing thousands of families and business owners over the last few decades, what are some of the most common blind spots or mistakes that they're making that you're helping them with?

• 4:39Speaker 02

  Largely around asset protection.

• 4:43Speaker 02

  You know, people don't realize that when you leave assets outright, it can be subject to claims of personal injury attorneys, divorce, you know, bankruptcies, all sorts of bad things that can happen. Whereas if we maintain it in trust, we can protect those assets for generations. We often set up Delaware trusts that literally are perpetual, they're dynasty trusts, and each generation lives off the trust. And then, when they die, there's no estate tax if we structure it properly. And then, when the next generation dies, no estate tax.

• 5:26Speaker 02

  So, it allows the family's assets to grow within a state tax-free and asset-protected manner.

• 5:38Speaker 01

  So, entrepreneurs are taught to take risks to build wealth. Why does that mindset sometimes become dangerous once they've actually created some wealth?

• 5:48Speaker 02

  Because the plans that work when you're worth a million are obsolete when you're worth $10 million. You have to upgrade your planning to be more than just a will and living will and power of attorney. You need revocable trusts, you need domestic asset protection trusts, and you need a Delaware dynasty trust to really protect and insulate the wealth.

• 6:18Speaker 01

  Can, well, at what point does an entrepreneur need to shift from how do I make more to how do I protect what I built?

• 6:26Speaker 02

  I usually find, once they're in their 40s and/or above $5 million, they really start focusing in on, let me make sure we protect the nest egg we built.

• 6:43Speaker 01

  That makes a lot of sense. What's the difference between simply being wealthy and being financially resilient?

• 6:51Speaker 02

  You know, I know a lot of business people that at one point were very successful, who ultimately had to file bankruptcy, and then, much like a phoenix, rose from the ashes and rebuilt their career. And I think, you know, every business owner goes through some rough periods, and you have to be able to weather that storm.

• 7:18Speaker 01

  Absolutely. You've developed a proprietary framework that you talk about in the book, Entrepreneurial Beast Mode. What does BEAST stand for?

• 7:26Speaker 02

  So, it's an acronym for business structure. So, that's like looking at, do you qualify under 1202 for the exclusion on sales? Should you be an S corp. or a C corp. or an LLC? Which jurisdictions do you pick? You know, all those sorts of things. The E stands for estate planning, which is not just wills and living wills and power of attorney, but a revocable trust and typically a domestic asset protection trust. Then, we have A for asset protection, and that involves not only a domestic asset protection

• 8:10Speaker 02

  trust, but the creation of a multi-layered segregated LLC structure so that all the assets are protected and they're all segregated from one another in cases of a lawsuit. The S stands for succession and governance. So, that's everything from buy-sell agreements to family constitutions, development of core values, and a mission statement for the family, a philanthropic, you know, policy statement, all those sorts of things.

• 8:54Speaker 01

  Which of those do you think is the most commonly neglected?

• 9:00Speaker 02

  I think they're all neglected. I mean, taxes, which is the last one, is probably the most neglected. You know, people continue to be paying 40%, 50% in income taxes, and there's no reason for it. If they call us, we can usually cut the bill by at least half. If you're paying $100,000 or more a year to the government, we can cut that bill by at least 50%.

• 9:30Speaker 01

  Who should be on a business owner's wealth team?

• 9:34Speaker 02

  I think it should be your, your family office, which is a good tax attorney, your financial advisor, and a proactive CPA that is open to tax planning that reduces income and capital gains taxes.

• 9:52Speaker 01

  What is the biggest misconception about the A part of it, asset protection?

• 9:59Speaker 02

  That you can wait until after something happens and then plan and move assets. Once the injury occurs, it's too late. You have to do all this planning ahead of time.

• 10:16Speaker 01

  What is the biggest tax mistake successful entrepreneurs make?

• 10:20Speaker 02

  They're paying too much in income taxes. You know, we, we have one client that was paying over a million a year. And we were able to set up what's called a 412 E3 plan, which is fully insured. And save that client is making an $800,000 tax deductible contribution. Into a retirement account that's protected from creditors. And even if they had to file bankruptcy, that retirement account's protected in the bankruptcy.

• 10:55Speaker 01

  You are also a certified exit planning advisor. How far in advance should entrepreneurs start planning on selling their business?

• 11:03Speaker 02

  I think five years is ideal. It gives us a chance to tighten everything down. There's usually a pretty significant gap between what the business is currently valued at. And what, you know, a buyer is willing to pay versus what it could be worth. If you improve your written systems and get your financial controls in place. You have sales training, your marketing teams clicking. All those things that, you know, helps spur the valuation acceleration methodology. That the CIPA advisors teach our entrepreneur clients.

• 11:49Speaker 01

  What have, what have you seen as being more challenging? Building generational wealth in the first place or making sure the next generation doesn't destroy it?

• 11:59Speaker 02

  I think it's, you know, making sure the next generation doesn't destroy it. We know that 70% of businesses fail by the second generation and 90% by the third generation. And that's awful, you know, to see all that wealth disintegrate like that. But I think if you set up your family office correctly. And you proactively plan every quarter, you can mitigate those risks.

• 12:30Speaker 01

  You've developed something what you call a hundred year legacy operating system. What is that and what does it look like?

• 12:37Speaker 02

  So it looks like regular planning meetings quarterly. With your proactive planning team that makes up the family office. So your CPA, your financial advisor, your insurance agent, your tax attorney, your estate planning attorney. Your business planning attorney. And we all get together and optimize the wealth for tax and asset protection and financial planning purposes.

• 13:10Speaker 01

  What is, why is long-term care one of the biggest threats you say to a family's wealth that people don't plan for?

• 13:18Speaker 02

  I think from middle-class America, long-term care represents the single biggest threat to people's wealth. People don't realize that Medicare will not pay for your nursing home. You have to private pay that until you're destitute. But there's two planning opportunities. If the family members are healthy. We can transfer assets into a Medicaid asset protection trust, a MATT. And in so doing, we can still maintain basis in the property. For tax purposes, if we have to sell it.

• 14:02Speaker 02

  But it's out of the estate for Medicaid purposes and probate avoidance as well. And after five years, all those assets are protected. We did this very planning for my own mother and moved her house into a MATT. So that after five years from the transfer. Medicaid can't come back and take her house if she needs to, you know, go into a nursing home.

• 14:31Speaker 02

  The second thing is when people need to go into the nursing home right away. Emergency long-term care planning. And in those cases, there's several tools. But you have to work with an expert attorney. We actually refer that work out. Um, and we can usually save about half of the assets when it's an emergency case.

• 14:59Speaker 01

  You've helped thousands of families over the years. What's your biggest challenge now?

• 15:06Speaker 02

  Just getting the word out to high net worth entrepreneurs. They're busy. They get a lot of data and information coming in. And to get them to schedule a meeting with us. We can almost always improve their situation at some level. So it's just a matter of them making the time. It's hard to time down.

• 15:30Speaker 01

  You have done this for so long, your passion is obvious. What do you like best about what you're doing?

• 15:37Speaker 02

  I love working with entrepreneurs. They're just brilliant creatures, you know? And they're so unique and they're so driven. They work hard. They're street smart by and large, you know? Uh, I love the self-made men and women. I just recently rejoined entrepreneurs organization. And I'm so happy that we had a dinner last night. And it's just great being around all these brilliant clients, you know?

• 16:08Speaker 01

  Yes, I have been an EO for years. Love it. So, um, are you specifically working with entrepreneurs in your geographic area or you can help folks around the country?

• 16:17Speaker 02

  Uh, we help people around the country.

• 16:20Speaker 01

  And talk a little bit about what your firm looks like.

• 16:23Speaker 02

  So we're small. We only have five employees. Um, but we can handle the work, you know, full workload with that. And it's at a good pace right now, you know, we, we take on, we're kind of selective with the clients we take on. Uh, we don't take on every person that walks through the door. And that allows us to really work deeply. All, all of my clients have my personal cell number, my personal email. We talk at night, on the weekends, you know, whatever's necessary to be of service to them.

• 17:03Speaker 01

  And for our folks who are watching and listening and want to learn more. Where is the best place for them to go to learn about you, the firm, the book, all the things?

• 17:11Speaker 02

  So Entrepreneurial Beast Mode can be found on, uh, amazon.com. Uh, I think it's only like $4 for the electronic version. Uh, you can find me at www.lawealthplan.com. And at www.fountainheadglobal.com, which is our fractional family office.

• 17:39Speaker 01

  All right. Well, this, this has been Seth Green with Todd Villarrubia. Todd, thank you so much for joining us.

• 17:44Speaker 02

  Thank you, Seth. I appreciate the opportunity to be on today.

• 17:48Speaker 01

  Thank you, everybody, for watching or listening. We'll talk to you or see you next time.

• 17:54Speaker 03

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