Tax Planning

"Legacy’s plan focused correctly on their over-arching goals first and still included all the advantages of tax-savings and wise estate decisions. This is the power of correct perspective and experienced wisdom." —Chris Cushman, Wealth Advisor

 

 

Client Profile

John and June Martin, both age 63, were referred to us by a mutual friend. The Martins had a question about the estate of John’s father who had recently passed away, and how distribution options could impact his mother. John was 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 did not have clarity and this lack of clarity was leading to a lack of confidence and inaction.

 

Challenges

  • John’s father had recently passed away and as executor, John had a question about his father’s estate which had not been satisfactorily addressed by the Martins’ current advisor. His mother was well positioned financially and he thought he understood it could be advantageous from a taxation and gifting standpoint for an account’s beneficiary (in this case John’s mother) not to receive the account. John was told by their current advisor this was not possible. The advisors at Legacy knew it was certainly possible, but only by a certain deadline.

  • 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.

  • There were tax implications with June’s side business. 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.

 

Solutions

  • John’s mother did not need the estate assets to maintain her lifestyle, and Legacy correctly determined it was advantageous to pass some assets directly to her children. The Martins’ current advisor did not think that was possible. The advisors at Legacy worked with the estate’s attorneys to disclaim those accounts, removing them from John’s mother’s estate. This allowed John’s mother to meet the estate tax exclusion limits while also benefiting her loved ones.

  • Legacy provided the Martins clarity to see the exact relationship between John’s possible salary and the Martins’ retirement goals. The Martins could then make a decision with confidence.

  • Once the Martins gained clarity on their “big picture” goals, Legacy worked with their CPA to plan out their tax situation over the next 10 years. This plan was flexible, but also minimized taxes entirely and not just in one year.

 

Ongoing Results

After holding discovery conversations, performing an analysis and making our recommendations, the Martin family experienced clarity and gained the confidence to execute a plan that minimized taxes and brought clear direction and capability to their life. The Legacy team allowed them to see options that their previous advisor had not realized. Monies traditionally directed to the government (i.e. the payment of estate taxes) as a result of poor planning can be otherwise directed to causes you care about. 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 plan focused correctly on their over-arching goals first and still included all the advantages of tax-savings and wise estate decisions.

This is the power of correct perspective and experienced wisdom.

 

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