Simplifying Life After An Inheritance
The story of Dolores is a common one. She received an inheritance many years ago and continued to accumulate and grow her wealth over time. Although Dolores had worked with a broker for years, she did not fully understand the nature of her investment portfolio, where her investments were held, or the fees she was paying to both her broker and other investment managers. In her words, she was “bewildered” by how her broker had managed her portfolio. She felt she needed more than just investment advice, and a friend recommended she hire Daintree.
Our first goal was to create a balance sheet for Dolores so she could understand her complete financial picture. Her investment portfolio was an array of mutual funds, stocks, bonds, annuities, and private funds purchased by her broker over many years. Securities were held at over ten different financial institutions. It was enlightening for Dolores to finally understand the scope of her investment portfolio and begin the process of creating a comprehensive plan.
After discussing how comfortable Dolores was with investment risk and understanding her long-term goals, Daintree constructed a thoughtful investment portfolio and financial plan. She was charitably inclined but was concerned she did not have enough to give away during her lifetime. Daintree showed Dolores multiple financial projections, each of which suggested she could act on her charitable interests while still living the comfortable lifestyle she was accustomed to.
Finally, Daintree worked with her estate planning attorney to ensure her plan was still optimized now that the attorney had full knowledge of all assets and liabilities. Dolores told us she felt such relief to know she could now focus on charity and family and her team of experts would take care of the rest.
Changing Lifestyle Requires Changes to Financial Plan
We first met Robin as a single woman. She had received an inheritance from her mother and a portfolio of “blue chip” stocks from a grandparent. With limited financial training, she turned to Daintree for help. Her goals were to be philanthropic with her assets, maintain her current lifestyle, and ensure she had an estate plan that would carry out her wishes.
Robin’s situation changed in her 40s when she fell in love with Greg and married. The two decided to adopt a beautiful baby girl, Emily. When Emily reached school age, she attended private school and received tutoring.
We worked with Robin and Greg to make sure their portfolio could support their new life situation by balancing current income needs, charitable giving, and a cohesive plan to leave an estate for Greg, Emily, and her cousins. To accomplish these goals, Daintree designed a plan that included setting up a Donor Advised Fund as well as a Charitable Remainder Trust. A previous family trust was already in place that no longer met their current needs. They didn’t know this trust could be changed until we helped them decant it, allowing for new trusts to be established matching their current family plans.
Maximizing tax deductions had also been a challenge so Daintree worked closely with their CPA on the timing and type of donations. Robin also felt close to her nieces and nephews so her estate plan now includes an expanded distribution of her assets when the time comes.
Robin felt comforted knowing her financial plan is in place for her family and she is thrilled her assets are well managed both today and for the next generation.
Sonia and Peter Gripsin had invested all their energy and resources into their business. Friends and family had invested as well. There came a point that if they did not win a particular customer’s order, they would have to close the business. One year later, their rapidly growing company caught the attention of a venture capital firm whose capital infusion not only set the stage for exponential growth, but also provided them liquid capital they had not had before. They had gone from needing the help of friends to fund their business to needing strategic advice on how to manage and plan for their wealth. One of those friends suggested they speak with Daintree.
Over the next few months, we helped the Gripsins build their advisory team. Daintree would oversee their portfolio management and act as the overall coordinator for them, making sure all the planning was done and implemented. We involved their CPA in regular meetings to get their best thinking on minimizing taxes on capital gains, and we recommended an estate planning attorney and an insurance advisor to craft an integrated estate plan to make sure their young children would be cared for. Gradually, and at their pace, the pieces of their financial plan were put in place.
When the business was being prepared for a sale three years later, their team was primed to help them reduce taxes and shift some of the business’ value to future generations. This time, the Gripsins knew what questions to ask themselves and their team. They had come a long way on their journey and were confident their financial and estate plan would serve them well into the future.
The Retiring Executive
After three decades serving a large public company in several executive roles, it was time for Rich Parson to retire. He and his wife Sandy were ready for a new phase of life: more travel, building a second home, and spending time with their children and grandchildren. This left them with many questions to answer and decisions to make. Their CPA recommended they speak with Daintree about the big picture and the little details.
The first step was to tackle the short-term decisions Rich had to make about his deferred compensation plans, vested stock options, pension benefits, 401k plan, and insurance (life, health, dental, and home/auto/umbrella). We worked with the Parsons, the company’s benefits staff, and their CPA to sift through all the parameters and come to the right decisions for the couple.
We next focused on longer-term planning around their estate plan and charitable giving. Though their estate plan was only ten years old, much had changed in their family and in the tax laws. Daintree helped them crystalize how they wanted the future generations to responsibly handle the financial resources provided to them. Working with their attorney, we helped show them how all their assets would flow and the tax impact of various planning ideas. The Parsons appreciated that the planning was flexible enough to adjust to their family’s situation in the future.
The planning incorporated their philanthropic goals as well. Aside from the income tax issues involved, Daintree helped them choose the best vehicle–a Donor Advised Fund with a local community foundation–to be the repository for their grant making.
Rich and Sandy recognized it took them 30 years to accumulate their wealth. It was important to them to handle it in such a way that their values and priorities are reflected both during their retirement and in the future.
An Example of Family Office Services for a Multi-Generational Family
A large family with dozens of members across several generations engaged Daintree to lead their multi-family office, including their strategic planning and their investments. This family’s original source of wealth was money management and some family members continue in the investment profession today. The family patriarch was at an advanced age and knew he was nearing the end of his life. He had the pleasure of knowing he would leave behind not only a robust financial legacy but more importantly a healthy family life with remarkable unity around shared values.
Daintree helped the family to clarify their goals, refine their strategies and to coordinate and administer multiple trust and charitable vehicles for the family’s benefit. Advanced planning saved taxes and enhanced the family’s large and ongoing philanthropic legacy. Open family communications helped the family not only to cooperate for common goals, but also to know when to separate trust and charitable vehicles for the sake of the different family branches. Daintree staff have been deeply engaged in the core issues of the family mission, values and goals, helping to develop and implement wealth and investment strategies for the family.
Empowering, not demotivating—thinking about how much wealth to leave to children
One of our clients who inherited a significant amount of wealth at a young age, appreciated the lifestyle his wealth enabled him to lead, but shared with Daintree that he felt that it limited his motivation to achieve as much as he might have achieved. He and his wife have three children, and during the course of our conversations, it became clear that their primary goal was to empower their children to lead meaningful lives. They defined this as a life in which wealth would allow their children to pursue their individual interests and provide a safety net for them while not sapping their drive to achieve. In particular, knowing that their children were in line to inherit a substantial amount at their deaths, they were concerned about leaving such a large sum under their children’s direct control, regardless of their ages at the time of inheritance.
The clients also had strong philanthropic interests. Daintree helped them quantify the amount of wealth that they deemed appropriate for their children to receive outright and the amount they wanted to leave to specific charities upon their deaths. Daintree worked with the clients to establish a plan providing a tax efficient approach to funding their charitable interests. Additionally, in consort with their estate planning attorney, their estate plan was amended to cap the inheritance to their children, with any excess paid over to a donor advised fund, allowing the children to pursue their own philanthropic goals.
All Daintree clients have unique situations and customized solutions. The clients depicted here are actual Daintree clients, however, to protect their privacy we have used fictitious names and changed certain nonmaterial details.