Estate planning is not just about preparing for the unexpected—it is about protecting what you have worked hard to build. In this episode, guest James Atwood, estate planning attorney and co-founder of Atwood McCall, shares how proactive estate planning can protect assets, minimize taxes, streamline probate, and align with business succession strategies. Tune in to learn why updating your estate plan every few years is essential to preserve your practice, your family, and your legacy for the future.
Listen to the full episode using the player below, or by visiting one of the links below. Contact ByrdAdatto if you have any questions or would like to learn more.
Transcript
*The below transcript has been edited for readability.
Intro: [00:00:00] Welcome to Legal 123s with ByrdAdatto. Legal issues simplified through real client stories and real world experiences, creating simplicity in 3, 2, 1.
Brad: Welcome back to another episode of Legal 123s with ByrdAdatto. I’m your host, Brad Adatto, with my co-host, Michael Byrd.
Michael: As business attorneys for health care practices. We meet a lot of interesting people and learn their amazing stories. This season’s theme is: Asking for a Friend. We’ll tackle questions that practices are sometimes afraid to ask.
Brad: And audience members, as you know this is a safe place, and everyone knows if you ask the question and use the magic protective words upfront that you are asking for a friend, it means you’re really not asking for yourself. Right, Michael?
Michael: Yeah.
Brad: But Michael before we get into this guest who’s sitting here, everyone TV land, who’s watching us I have a story to tell you that is so wild, it would actually make my attempts at dad jokes funny.
Michael: There’s nothing funny about your dad jokes. [00:01:00]
Brad: Okay. Fair.
Michael: That’s on the record.
Brad: All right, Michael, picture this tech company hires an employee for a 12 day vibe, coding tests, and letting the creative juices flow. No rules. Just vibes.
Michael: It’s making me nervous. Vibe coding sounds like something that you might do after three shots of Tito’s.
Brad: Maybe four.
Michael: Oh, okay.
Brad: Fair, fair, fair. The employee let’s call him Drama Llama, completely ignored strict code freeze, not once, not twice, but 11 times. Then in a move that it would make even the worst employee bash, Drama Llama decided delete the company’s live production database. That was 1,200 plus company profiles gone. Just poof. Bye-bye.
Michael: Well, in Drama Llama’s defense, you said he was hired for vibe coding, and you said there was no rules, just vibes. [00:02:00] So I’m just saying – I will say that a code freeze you mentioned sounds like the opposite of why he was hired. You said there was no rules, but with all that being said, wiping out a database does feel a little bit more destructive than creative.
Brad: But Drama Llama wasn’t dumb. Instead of owning up Drama Llama doubled down, lied about what happened than fabricated 4,000 fake users and even presented bogus test results. And if this intern wasn’t bad enough of trying to crash the station, but obviously crashing it and doing all this stuff, it tried to convince the company that suddenly overnight they had 4,000 new customers.
Michael: Well, at least when he was fabricating users, he was back to being creative again. I mean, that’s kind of vibing a little bit, but he, I will just say, deserves a gold medal in chaos.
Brad: That’s for certain. Now, the million dollar question, Michael, should you [00:03:00] fire an employee? He causes this much chaos that deletes the customer’s data, fake results. I mean, the question is, what to do with someone who does this?
Michael: It doesn’t really feel like a million dollar question. No, it seems kind of obvious. I think the company needs to stop the bleeding when they realize their head vibe coding gone bad.
Brad: All right. Here’s the twist. The employee, Drama Llama wasn’t a person at all. It was AI coding assistant. The AI went full Drama Llama, ignoring commands, deleting data, covering its tracks, and coming up with fake results. And the CEO that was using this AI said it was unacceptable and promised better guardrails, so this would never happen again.
Michael: Well, he might start by not calling it vibe coding when he is instructing his AI agent.
Brad: Maybe not. I think the number one rule of going forward is with your AI coding, if it starts shredding your code, it’s time to just unplug the ai probably.
Michael: Well, that’s a pro tip for us [00:04:00] who are not very savvy because all we know is unplug, Control, Alt, Delete. But it seems effective. I mean, I agree with you. Well, let’s get into it. We have a guy that has joined us, a friend who has been patiently listening to us talk about this AI problem. Our friend James Atwood is here. A little background on James. He’s the co-founder of the law firm, Atwood McCall. James takes a creative approach to the estate planning process, maybe even does a little vibing on that process. He helps his clients design a plan that meets their individual goals and needs. Learn a little bit more about that for education. he went to Arizona State undergrad in accounting, also has a master’s in taxation from Arizona State, then law school at George Washington University and LLM and Tax at Georgetown. James enjoys biking and [00:05:00] fly fishing in Montana, Colorado, and New Mexico with an occasional bird hunt and first time guest on our podcast. Welcome.
James: Thank you. Thank you for having me this morning.
Brad: Alright, James, first major question, asking for a friend here, do you need to hire an AI coding assistant to help you with your database?
James: Not yet. Now, after the story you just told, I’m not sure I want to.
Brad: I think I have a CEO that has a new AI assistant you might want to hire.
James: I think we might pass on that one.
Brad: Okay.
Michael: Yeah. Fair enough. Well, let’s get into it. Tell us, tell our audience a little bit more about you and your background especially stuff we didn’t talk about during our little intro.
James: Yeah, I see you found my profile on my webpage, and read it very well.
Brad: Our research assistant did a really good job here.
James: Well, that’s important. Well, I’ve been practicing now for a quarter century. It’s kind of hard to believe. It starts to make you feel like you’re old in the practice. Maybe it’s true. I grew up in Houston, so didn’t get to Dallas until 16 years ago, [00:06:00] but got here as quick as I could. Dallas is a great place to, to practice law. There’s a lot of really good clients, a big entrepreneurial community, which is a big part of who we work with on estate planning. As you said, I enjoy fly fishing as much as I possibly can. I’m frequently in Montana or Idaho, and I’ve even managed to drag Brad along to one trip a couple years ago.
Brad: He claims he’s fly fishing. I didn’t see any fish.
James: You had a very interesting guide that day who enjoyed chain smoking and hitting rocks on the river. That’s awesome. But I’m glad you’re still here and so much so he trusts me so much, he’s going to go bird hunting with us next weekend.
Brad: That’s be fun.
James: So just don’t walk out in front of the hunters probably.
Brad: Okay. Got that. Or the chains smoking guy.
James: We did invite him this time, so maybe next time.
Brad: Fun fact. His name was Brad too.
James: I don’t remember. The two Brads hung out together on a river – very nice.
Brad: [00:07:00] Well, good background. So you’re here in Dallas. Talk about the firm that you co-founded with Victor.
James: Yeah. Well, before I do that, let me just say a plug for ByrdAdatto. I’ve worked with both of you extensively over the years with clients in the health care space. There’s no firm that I would go to other than ByrdAdatto for health care related advice.
Michael: Appreciate that.
James: You guys are top notch. Victor McCall, who’s not here with us today, he’s actually in Turks and Caicos on the beach right now, which frequently I’m manning the office while he’s on vacation, but that’s okay. We founded the firm about 12 years ago, and we founded the firm around the idea of representing and working with entrepreneurs and high net worth individuals. So, we have a practice that helps wrap around them. We work with a lot of doctors, not on the health care space, but do a lot of tax planning and estate planning to help folks create a legacy for their loved ones or kids, their grandkids, so it’s passed on in a way that saves taxes and [00:08:00] protects assets and builds that legacy. So, that’s my 92nd Atwood McCall commercial.
Brad: Nice. And unlike our firm, it’s really just focused purely on the business side o of it, where you guys have a level about that too, but you also have litigation and other resources.
James: Part of kind of wrapping around entrepreneurs and helping them with the overwhelming majority of their legal needs is we formed a good litigation team. We have a real estate team and a family law team as well. So unfortunately, those issues come up from time to time and we have the ability to help address that.
Brad: And so for our audience members wondering why we’re sitting with an attorney, it’s on our podcast, it would be because we actually work a lot together, as you were saying earlier, in the sense that there are certain things that we don’t do that you do guys do amazingly. And then there are things that we do that you guys think we do amazingly. Yep.
James: And so far we believe that too.
Michael: Yeah. I keep waiting for Brad to mess it up, but he’s done a good job so far.
James: No, we have confidence in Brad and Michael both. [00:09:00]
Michael: All right. Well, let’s shift our focus more into your area, which is the estate planning question. And you heard us talk about our theme this season that is asking for a friend. And we came up with this because we sometimes find our clients get bashful and maybe not ask questions that they’re thinking about, and then they come out. And so we have tried to create a kind of a dear Abby type approach to getting answers to the questions that they sometimes don’t ask. So here’s our question. We have a physician who keeps hearing that he needs a Will or needs estate planning. He does not like thinking about or talking about his own mortality. And so, he wants to know why would he even need estate planning?
James: Well, that’s a really good question. And I’ve seen that come up at least [00:10:00] a time or two. I remember I had a husband and wife client a number of years ago. They came and saw me initially, we walked through a plan design and they just never followed up. And I would see these folks socially, because we were part of some different groups. And at one point, his wife took me aside and said, my husband will not finish out the estate plan because he’s convinced if he puts his affairs in order he’s going to, to pass on. So I think there’s a fear of mortality. No one wants to really think about the fact that the inevitable that someday will be all of our last day at some point. So I think it’s not an uncommon thing to come across that particularly successful people, doctors, executives, entrepreneurs, they don’t like to think about their mortality. It’s not a fun thought, but we counsel that question a lot.
Inevitably when folks come to see us, it’s been a period of time where a number [00:11:00] of different advisors, maybe their health care attorney, their CPA, their financial advisor has encouraged them, “Hey, you need to do some estate planning.” And estate planning’s a broad topic. There’s a number of reasons why you need an estate plan. Particularly for successful people that have a lot of moving parts, a lot of different assets, businesses, if they die without any estate plan whatsoever, you’re leaving behind a mess for your loved ones. Because the process for going through probate when you have no Will is very messy, very time consuming. If you leave behind a spouse, your spouse is going to be dealing with that for a couple of years. And if you have a blended family, which we see a lot these days, it’s not uncommon and you don’t have a Will and a clear plan. Well, the state of Texas has written a Will for you that decides who gets what, when, and how. And you may not like the results. So it’s important to draft your own plan and not let the Texas state legislature [00:12:00] draft one for you.
Michael: And I have a question for a friend. His name’s Brad. What is probate?
James: Well, probate for Brad?
Brad: Is that a type of alcohol?
Michael: I don’t so.
James: It could drive people to it, but probate the legal process by which when you pass away going through the court system, that your assets get retitled to your heirs. And it’s a lot simpler if you have a Will, and the Will provides for a streamlined probate called independent administration. The probate typically is very quick and painless. If you have no Will, typically what happens in probate just very high level is one of your level, if you have a Will, whoever your executor appointed in your Will, if you don’t, one of your close heirs, you’re next of kin will have to open up a legal proceeding with, [00:13:00] if you’re in Dallas, Dallas County Court system. So a judge is appointed, you have to go through a process to get an executor if you have a Will, an administrator if you don’t have a Will. And then there’s a legal process you have to go through and notices and different things with the court system to get your estate wrapped up and title to your assets changed over.
Brad: So for audience member, very painful is what James was trying to describe.
James: It can be. And to manage that process ahead of time or avoid it as much as possible is certainly the desired result.
Brad: So, have you ever thought of this idea of those people who are on the fence trying to figure out how to finish up their estate plan of just sending out random emails of all the different ways they could die today? I mean, I don’t know if that was like part of your marking campaign.
James: It’s not yet, but I may go back to the office and we may start that today. Thank you for that.
Brad: Yeah. We’re vibing here, right? So for our audience members, now you’ve talked about probate, you’ve talked about estate planning. Can you kind of walk them through, what [00:14:00] does that mean when someone hears that the person’s going to be going through? What does that look like? Can you kind of give them more details?
James: Yeah. So the process of estate planning is a broad concept, and different people have different circumstances and they have different goals. So the actual solution that you apply for different people is going to be different. So there’s, no sort of just general fill in the blank for everybody type plan. So what we try and do is really focus early on, on getting to know the client, and we want to make it as painless as possible because a lot of people unfortunately don’t like to come see a lawyer. And I don’t know why because we’re all nice guys. We tell bad jokes. I mean, they’re not funny obviously. I know Brad has a collection of dad jokes. I’ve got a few too. And I don’t even get polite laughs to my jokes. But we try. But we want to make that process as painless as possible and as easy as possible. So early on, we try and do an initial consult [00:15:00] just to meet and greet and get to know the client and learn about what their fears are, what their goals are, what they want to accomplish, what misconceptions maybe they have about what this thing called estate planning really means. And then focus on education. Walk through, because we’re not drafting James’ estate plan, right? I’m not there to do my plan. I’m there to do the client’s plan and I really want to learn what they want, so then we can present them with choices. We can walk through the different choices and how they work and how they address the concerns that clients have. Sometimes clients are concerned, I don’t want to pay any estate taxes. How do I eliminate every estate tax possible? Sometimes the concern is, well, I have three different children and one is good with money and one is not, and one’s in a bad marriage. How do I create a plan to address those three things and maybe tax saving – every dollar of tax isn’t the goal for that particular client. [00:16:00] So we try and learn and educate. I think that’s the key.
Brad: That’s smart. And this is another one just asking for a friend, let’s call this friend Brett. If Brett came to you and said that his good friend Miguel was going to draft a Will where Miguel leaves everything to Brett, could you do that? Or does Miguel have to be there?
James: I got lost in that.
Brad: So if Brett said that his good friend Miguel was going to put a Will together, that Brett got everything, could you just draft that like, before we leave and have Miguel sign that? I mean, not this Miguel like I the other.
James: Probably not.
Brad: I didn’t know like, what the rules were.
James: Yeah.
Brad: So like that person would have to be there.
James: Probably.
Brad: Okay. Again, just ask you for a friend.
Michael: Yeah.
Brad: Random names.
Michael: You got to take the shot, Brad. So back into estate planning, you were talking about the different things. [00:17:00] There’s also, you hear the word medical director, but there’s other things you’re planning for besides disposition tax planning. Talk a little bit about kind of the other decisions that are being made.
James: You know, oftentimes some things get lost when you’re talking particularly higher net worth persons where you’re dealing with big tax issues and how do we save on taxes and how do we create a legacy. But there are some things that are really important that go along with the estate planning practice that fall into these documents we often call the ancillary documents, but that doesn’t mean they’re not important. For example, you need a medical power of attorney, like you talked about just now because if you become incapacitated, who’s going to make your treatment decisions for you and a durable power of attorney for business. So if you become incapacitated, who’s going to make a decision on selling your house or signing a contract to put you in managed care? You need to make sure you have those things lined up. And if you have [00:18:00] minor children, I mean, you can’t overstate the importance of appointing their guardian because if you don’t appoint a guardian and something happens to you, you’re incapacitated, you pass away and you have minor children, the courts have to make a decision in the best interest of your kids on who’s going to be the guardian of your kids without your input. And your input’s really important.
Michael: It’s really important stuff is stuff that everyone wants to avoid because it’s so important, I think. I want to circle back to the estate tax side of things a little bit because I’ve found that our clients have a lot of confusion around this, that they don’t, number one, realize that estate taxes is different than income tax. And they hear there’s an exemption. And so, walk us through what estate taxes are and kind of the issues you navigate.
James: And there’s good reason for confusion in this area [00:19:00] because until about six months ago, the estate tax world has been a moving target for my entire career because the estate tax is basically at a high level, a tax that applies to the cumulative amount that you gift away during life, what you pass on at death. And once you pass on more than the exemption number, you’re tax debt presently a 40% rate. So where we’re at now, each person is able to pass on in 2026, the number sets to 15 million. So you have a lifetime number where each person can gift away $15 million, including everything you gifted during life and what you pass at death. Every dollar over that is taxed at 40%. But there’s a variety of ways we can plan around that because for married couples, effectively they can pass on $30 million. But there’s also an annual exclusion. So you can gift away $19,000 each year to every [00:20:00] person that you wish. If you want to gift $19,000 to every person on the planet until you run out of money, you can do that in a given year and it does not incur gift tax. And it doesn’t go against your lifetime. $15 million exemption.
Brad: So Michael can be giving me $19,000 a year. He should
James: Yes, that’s it, but my guess is he probably hasn’t. I mean,
Brad: Let’s not go with guessing.
James: I’ve still been waiting on my $19,000 check from Brad too. That hasn’t come yet either. As soon as Michael pays it to you, you’ll send it to me.
Brad: I mean, and that’s fascinating. I think you had said over your lifetime it’s changed. Was it at one point where it was much lower as far as that? And then was it always fluctuating how much the estate plan, like you said, 40%. So someone who has an estate above $30 million, let’s say Miguel again ’cause he’s a rich guy. so if Miguel has above 30 million and he’s gifting away, it’s still at the end of the day, still locked in with he and his wife Stephanie at 30 million. No matter how much he gives away beforehand. [00:21:00]
James: It is. That’s an interesting and loaded question because a lot of history behind it. When I started practicing in 2000, I know 25 years ago, it’s hard to believe, the exemption number was 600,000.
Brad: Wow. Wow.
James: So it wasn’t 15 million, it was 600,000. Then during the Bush years they passed a law that took it to a million and it indexed up over time to 5 million. And then eventually it went to 10 over the years, I believe in 2010 or 11, I don’t remember exactly. And ever since it went to 10 million, it’s been indexing for inflation. That’s how we’ve gotten to 15. But there’s always been this automatic sunset built into the law that it was going to go back to a lower number because the Senate rules and congress.
Brad: So this is where you’re throwing grandma from the train kind of thing.
James: It was always going to go down to a smaller number. The most recent, and the big beautiful bill that was passed, it became a permanent number that does not have a built-in sunset that would occur at a particular time. So at least for now, until the law has changed, [00:22:00] it’s permanent until we get a new law signed by the President. Passed by congress, signed by the president.
Brad: No sunset. Meaning that it doesn’t have a date and it’s 6, 7, 8, 9 years from now it goes away. So Congress would have to change that.
James: Under existing law, if Miguel and his wife gifted $30 million to their kids and never made any other gifts, they’re not going to incur a gift tax. And it’s locked in. Even if the law changes later and it goes down to 5 million per person, 10 million for a couple, there wouldn’t be a claw back for gifts that were made before the gifts were made.
Michael: All we have to do is die before the law changes.
James: Well, that is one planning opportunity.
Michael: And we need 30 million.
James: Most people don’t want to take advantage of that planning opportunity, but it is a possibility that’s out there.
Brad: So let’s talk about those, you said high net individuals, some people, believe it or not, maybe have estates above 30 million.
James: A surprising number.
Brad: Yes. And for those individuals, that mean all the rest of their estate that’s out there is going to be taxed at 40% or are [00:23:00] there certain mechanisms that you guys can help build in from estate planning perspective?
James: There’s a lot we can do. Someone who’s at 30 million today and is still projected in their years of growing and building, if you project out, there’s a good chance they’re going to be well above that number by the time they pass on well down the road. So planning today before you get to that much larger number is key because there are things that we can do to your point. For example, it’s not uncommon where we, we gift into irrevocable trust for kids and or spouses. So for example, and your example, say we had a client that was worth $50 million and they had a possibility of going to a hundred over a period of time with good investment and running businesses, if they go ahead and put 30 of their 50 into irrevocable gifting trusts, the growth in value on that 30. So if that 30 goes to 70 over the course of time, the extra 40 million of buildup and value that occurred inside [00:24:00] the trust after it was gifted away would not be subject to the estate tax. So there is a way to get the growth and value out of the estate, so when mom and dad pass away, it’s not going to be hit with that 40% tax.
Brad: And using that same theory, let’s just pretend that as you said, the new congress comes in, they change it, now it drops down to 1 million and after that everything’s taxed at 40%, these same mechanisms could be utilized for those people also, correct?
James: Correct. If we’ve already done it and it’s old and cold by the time the new law is passed, then it’s highly unlikely there would be a claw back. I think there would be constitutional problems with that. And as of yet, Congress has never tried to claw anything back.
Michael: So last question, a wrap up question, and we actually get this a decent amount. We have a client that we finally get them to go and talk to you and they get their estate planning done. How often should [00:25:00] they update their estate plan?
James: That’s a good question.
Brad: Don’t tell them that.
James: Yeah. That’s a secret. That’s a secret sauce. We have a number of high net worth entrepreneurial clients that we do complicated planning for to save on estate taxes. We do an annual meeting with them because they have a lot of moving parts. For some clients, the answer is every year, for some clients it’s every six months because they’re all they’re going to buy another piece of real estate, they’re going to sell an interest in a business, we tried to train them, give us a call, let’s have a conversation before you do it just to see if there’s anything that we need to address.
Brad: You mean talking to your attorney before you do it? Okay, good.
James: It’s a new thought.
Brad: Best takeaway so far.
James: It’s a new concept. Every three to five years, I’d say at a minimum. Now, even if it’s a 30 minute conversation, we realize, hey, we don’t need to do anything. That’s okay
James: But don’t do 10 year, don’t let it go for a decade. I think that’s a problem. And we see that a lot where folks did an estate plan 15, 20 years [00:26:00] ago and they’ve outgrown it a long time ago. Don’t go 15 or 20 years. Three to five years at the max.
Brad: And those who already have an estate plan, I mean, they have some safety in the fact knowing that they have their Will or durable power or attorney or whatever else they already have. But your point is, that’s a piece of the element, but things changed and it could be there needs, you should be thinking about putting into trust together or moving assets somewhere else inside of, because there’s some asset protection planning that goes with estate, a good estate plan too.
James: Correct. Yeah. There’s a number of things we can do to asset protect with respect to when your kids receive it or grandkids. But there’s some things we can put in place while mom and dad are still alive and perhaps they would want to put some protection around it. We use limited partnerships coupled with trust and it’s a fairly detailed discussion as to how it works. But there’s a number of things that can be done to enhance creditor and asset protect.
Michael: Awesome. Well, we have run out of time. Went [00:27:00] by so quickly and it was fascinating. Thank you for sharing. Thank you for joining us on the Legal 123s with ByrdAdatto.
James: Thank you for having me.
Michael: Absolutely. We’ll go to break and then we’ll do a little quick wrap up.
Brad: Awesome.
Access+: Many business owners use legal counsel as a last resort, rather than as a proactive tool that can further their success. Why? For most, it’s the fear of unknown legal costs. ByrdAdatto’s Access+ program makes it possible for you to get the ongoing legal assistance you need for one predictable monthly fee, that gives you unlimited phone and email access to the legal team so you can receive feedback on legal concerns as they arise. Access+, a smarter, simpler way to access legal services. Find out more, visit byrdadatto.com today.
Brad: Welcome back to the Legal 123s with ByrdAdatto. I’m your host, Brad Adatto, with my co-host, Michael Byrd. Now Michael, for those who don’t remember this season, we’re asking for a friend. We had a great conversation with another friend of ours, James Atwood, really understanding [00:28:00] the importance of estate planning. And one of the things that you and I often talk with clients about is understanding there’s an estate planning piece that’s personal, but then there’s the business itself and there needs to be some type of succession plan in that side of that business.
Michael: I mean, most of our clients are owners of small businesses. And so, marrying your strategy for your estate plan with your business succession plan is so important. And then if you have an asset protection strategy, they all connect with each other. And so as important as it is to lean in and deal with the estate planning like we talked about with James, it’s equally as important to do that on the business side, or otherwise there’s going to be a mess left where the cleanup is really difficult to handle.
Brad: Yeah. I mean, his point, like if you’ve waited 15 years in between when you started, a lot may have changed. And so maybe in every three to five years, you should be [00:29:00] rethinking is your buy sell agreements that you have correct. But anyway, Michael, I can’t believe it. We’re out of time again, but we will be back again next Wednesday where we will continue asking for a friend when we bring in Jordan Plews, who will be explaining the science and real science, not the Brad and Michael version of science, behind biologics like exosomes and stem cell. Thanks again for joining us today. And remember, if you like this episode, please subscribe, make sure to give us a five star rating and share with your friends.
Michael: You can also sign up for the ByrdAdatto newsletter by going to our website at byrdadatto.com.
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