Bill and Cindy Johnson are both in their mid-60s. The Johnsons had each been widowed and their marriage to each other resulted in a complex, blended family. They had significant but fragmented assets, and expressed a desire to simplify their financial picture and make good estate decisions for their heirs. Bill also requested that we provide structured assistance to his elderly widowed mother, Grace, helping her to work through her charitable and family gifting decisions.
Challenges: Scattered Assets, No Clear Plan
- After being married for only a few years, the Johnsons 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 had only basic estate documents that split their estates evenly; however, it was clear the documents 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.
How Would Legacy Wealth Help the Smiths?
Clarity and Confidence
- New-found clarity. When working with estate planning clients, we start with a simple understanding of what they have and how it could transfer to their heirs, using an estate flow diagram as an illustration. The visualization helps provide clarity.
- Simplifying the complex. We help simplify complex financial pictures for estate planning clients. We coordinate with our client’s attorney, their CPA, and other professionals as needed.
- Educating heirs. In the case of the Johnsons, their heirs would encounter conflict caused by estate dispersion. We would help Bill and Cindy restructure their plan and perhaps introduce passing along property during their lifetime in an effort to make it fair and equitable to their heirs. If clients find it helpful, we’re glad to have the heirs join in the planning conversations.
- Estate tax mitigation. For Bill’s mother, Legacy Planning would work alongside her CPA to design a plan aimed at reducing potential estate tax exposure. We would help her make adjustments with estate tax law changes and build a portfolio aimed to maintain the liquidity needed to care for herself.
A Stronger Estate Plan is Possible
Wealth transfer always comes with nuance, as you can see in the above scenario. While every wealth transfer and estate situation is unique, we use our deep experience to make informed decisions and recommendations to each client. In the case of the Johnsons, an asset that had caused confusion and angst could become a vehicle for greater blessing for their family. Not only that, but when heirs are educated and informed, they are able to make wiser decisions with windfall. That’s why we encourage meetings and conversations that tie families together, giving them knowledge and confidence in each financial decision.
