SITUATION

A retired business owner and his wife made an appointment with their financial advisor for their semi-annual review of their assets. The motivation behind the review was to determine the most appropriate strategy for spending the husband’s large IRA account. The couple's total marketable securities portfolio was approximately $7,000,000, pre-tax retirement assets and other investments.

APPROACH  

In the course of conducting the annual review, the financial advisor was able to thoroughly cover all appropriate aspects of the planning needed by the couple:

• The first question was whether the couple’s current estate documents were still appropriate for their immediate and long-term needs. As the financial advisor expected of his client, their documents were very sophisticated and signed. However, upon review of the invested assets, it was clear that the couple had not been advised to separate their assets so that their well-crafted plan could generate the maximum federal death tax savings for their family. In addition, the matter of the trustee appointment had not been reviewed.
• After a complete review of the husband’s objectives, it was clear that his skillfully prepared documents did not match his current intentions. In addition, the husband was concerned about how to utilize as many non-probate techniques as possible for the convenience of his family. Throughout his lifetime he had cared for and provided for his family very generously and properly. He now desired, and insisted on, as much convenience as possible for his family in the event of his death.
• The couple also reviewed techniques to structure existing assets to accommodate their intentions. Their financial advisor was instrumental in identifying assets most available for lifetime spending. He also identified necessary changes in their asset allocation to match their long-term financial well being.
• Finally, he reviewed beneficiary designations of multiple retirement plans and consolidated accounts where appropriate for the convenience of the family and to lower overall costs.

RESULTS  

Unexpectedly, the client died within a year of organizing his affairs. Fortunately, his planning efforts with his financial advisor helped his family during this difficult time:

• As a result of his up-to-date review, various investment accounts had been consolidated to one brokerage account. The underlying assets which were sound remained in his portfolio. However, the consolidation of multiple accounts proved to be easier for him to manage and also saved duplicity of effort for his family after his death.
• Finally, the transition of his financial affairs for his wife was very thorough and quite organized. Perhaps best of all, his lifetime actions now serve as an example for the rest of his family to get organized before it’s too late.

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