Wealth Transfer

Through the coordinated efforts of the Legacy team, an asset that had caused confusion and angst for the Johnsons for a number of years was sold. For the first time in their marriage they had an understanding of their combined assets and clarity on how those assets would be dispersed. Bill’s mother, Grace, is now having an impact ‘beyond mere riches.’ —Chris Cushman, Wealth Advisor

 

Challenges

  • The Johnsons, married for a few years, were overwhelmed by a fundamental lack of clarity created by the segmented nature of their multiple accounts, properties, trusts, and other assets that each had brought into the marriage.
  • Specifically, one of the properties was inherited, located out-of-state, and in a trust. The Johnsons had experienced a tax burden on the property due to phantom income, which had not been addressed by the couple’s previous advisor.
  • The Johnsons came to us with basic estate documents that split their estates evenly; however, upon analysis by the Legacy team it became clear that the documents, as drafted, would cause conflict among the inheritors; their respective adult children and grandchildren.
  • Grace Johnson, Bill’s mother, had estate tax issues complicated by ever-changing Federal estate tax rates and exclusions.
  • Grace also did not know how to maximize impact with her wealth while still preserving her financial security during her lifetime.

 

Solutions

  • Through a series of meetings, we provided the Johnsons with a simple understanding of what they had and how it would pass to heirs, through the construction of an estate flow diagram. The visualization gave them a new kind of clarity.
  • Due to the understanding gained by the couple, we were able to simplify their financial picture by selling the trust asset that was a tax burden because of phantom income. Their Legacy advisor coordinated with the Johnsons’ attorney, their CPA, and an out-of-state buyer to liquidate the asset in a positive manner.
  • Because of deep conversations with their Legacy advisor, the Johnsons realized there would be conflict caused by the estate dispersion after they passed away. The Legacy advisor recommended several scenarios, and Bill decided to pass along property during his lifetime in a way that his children agreed was mutually beneficial. Cindy realized her children might have similar issues as faced by Bill’s children, and is currently working with a Legacy advisor on the best way to pass her assets to them.
  • We also worked with Bill’s mother, Grace and coordinated with her CPA, to come up with a plan to avoid estate taxes. We made tangible changes as the estate tax law fluctuated while still preserving liquidity in her portfolio.
  • While making the estate tax changes, we addressed the most effective way Grace can impact others with her wealth. After determining her lifetime spending needs, Grace impacted both charities and her family through gifting, facilitating memory-making trips, and other family experiences.

 

Ongoing Results

Through the coordinated efforts of the Johnsons’ Legacy team, an asset that had caused confusion and angst for the Johnsons for a number of years was sold. For the first time in their marriage they had an understanding of their combined assets and clarity on how those assets would be dispersed. This has given them the ability to re-structure the design and dispersion of their respective estates for the benefit of all impacted.

After Grace reached a sense of peace about her asset needs, she was able to have a lasting impact on her family by building memories that will last well beyond her lifetime. Her Legacy advisor continues to connect with Grace and all her children through multi-continent online meetings. These meetings tie the family together and give them knowledge and confidence in their mother’s financial decisions.

 

While this client story is true, names and certain information have been changed to protect identities.

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