Case Study
Providing for the Third Generation
We helped this family revise their estate plan to meet a key planning concern: providing for their children and grandchildren.
Meet the Joneses.
In 1997, Jim (68) and Sally (64) were working with their CPA and attorney to negotiate the sale of their business. When their business sold for $1.5 million, they began to worry about estate taxes. Jim and Sally wanted to make sure their two adult children (son Dan and daughter Tina – a single mother of two) inherited as much of the estate as possible. They were also looking for a trusted, proven financial advisor whom the family could rely on once Mr. Jones was no longer around.
The initial plan.
Their CPA and attorney recommended that, to minimize estate taxes and provide for professional money management, they develop an estate plan that would include a revocable living trust, with Mr. Jones acting as trustee, and a bypass trust to benefit their children. They also recommended that the couple contact Broadway Wealth Management to implement their plan and manage the investments.
When we met with the Joneses, we reviewed the plan and thoroughly discussed their concern.
The Joneses were worried about how their children would handle money when inherited. Additionally, Jim and Sally wanted to make certain that Tina’s two teenage children, Tom and Kay, were also provided for.
Over time, we continued to refine the plan to give the family everything they needed.
The adjusted plan.
First, acting as agent for the trustee (Jim), we began managing the assets of the initial revocable living trust. As time went on, the investment management of the trust assets was complemented with bill paying - one of the many trust administration services we offer.
We also recommended that two more trusts be created: an Irrevocable Life Insurance Trust which would keep life insurance proceeds out of their estate, and a Charitable Remainder Trust which would take assets out of their estate and provide a charitable deduction. Both of these strategies were designed to reduce estate taxes.
At the passing of Mr. Jones, all of the planning fell into place and their goals were accomplished.
The Irrevocable Life Insurance Trust was funded with the life insurance proceeds from Jim’s death. It became a trust for the benefit of the grandchildren Tom and Kay, helping to pay for their educations and later assisting in the purchase of their first homes.
The plan today.
Today, the Charitable Remainder Trust continues, with the income going to Mrs. Jones. As agent of Mrs. Jones’ revocable living trust, we continue to assist her with bill paying and investment management of the trust’s assets – providing the peace of mind that Jim had wanted to ensure. Sally would like to continue living in her home and remain independent as long as possible. We will recommend health care providers and other services that will help her do so.
INVESTMENT PRODUCTS:
NOT FDIC INSURED • NOT A DEPOSIT
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
NOT BANK GUARANTEED • MAY LOSE VALUE
Note: As with all Case Studies, client names and details have been changed.
