John and June Martin, both in their 60s, are questioning the estate of John’s father who had recently passed away, and how distribution options could impact his mother. John is also looking for a career change and wanted help looking at the big picture, including estate and income tax implications. The Martins thought they were in a good position, but their lack of clarity is leading to a lack of confidence and inaction.
Challenges: Unanswered Questions and Further Uncertainty
- As executor of his deceased father’s estate, John’s question had not been effectively addressed by the Martins’ current advisor. His mother is well positioned financially and he thought he understood it could be advantageous from a taxation and gifting standpoint for his mother not to receive the account. John was told by their current advisor this is not possible.
- The Martins had done a good job saving and investing, but they were not sure how much income they would need to earn going forward. John wanted to change jobs but didn’t know what type of career to pursue and what his compensation minimum would need to be.
- June’s side business had tax implications the couple was unaware of. The Martins were also unsure how to coordinate and minimize their tax situation between John’s career, June’s business, inheritance money and their social security options.
How Would Legacy Planning Help in This Scenario?
Tailored and Informed Recommendations
- Estate adjustments. While the Martins’ current advisor doesn’t think it possible to pass some of John’s mothers assets directly to her children, we would work with the estate’s attorneys to disclaim those accounts and remove them from John’s mother’s estate. This would allow John’s mother to meet the estate tax exclusion limits while also benefiting her loved ones.
- Greater clarity. Legacy could help demonstrate the relationship between John’s possible salary and the Martins’ retirement goals in order to help the Martins make a decision with confidence.
- Long-term tax planning. Once the Martins gain clarity on their “big picture” goals, Legacy could work with their CPA to develop a flexible, forward-looking tax strategy for the next 10 years—structured to adapt as circumstances change while aiming to reduce their long-term tax burden.
Wiser Tax Decisions Are Possible
Families like the Martins can experience clarity and gain the confidence to execute a plan that potentially minimizes taxes and brings clear direction and capability to their lives.
Some financial plans are narrowly constructed and as a result lead to small accomplishments that only focus on a person’s estate or a one year tax savings. Legacy’s planning focuses on overarching goals first and can still include all the advantages of tax-savings and wise estate decisions.
