Jane is an executive at a large health insurance company, and she is married to Jim, who has been retired for about five years already. Jane and Jim have accumulated a sizable degree of wealth thanks to their 401(k) plans and executive compensation plans that include Stock Options, Restricted Stock Units, and SARS. Jim and Jane wanted a holistic roadmap to properly address their asset complexities, devise a strategy to reduce tax implications, and have a coordinated plan to diversify out of the company stock plans. Most importantly, Jane and Jim wanted to know how to purchase a second home in a warmer climate where they can escape the Minnesotan winters and spend holidays with future generations.

Finally, they wanted to make sure they were protected from future long-term care scenarios such as impacts on their family—financially and emotionally, and incorporate their charitable intents into planning. After getting to know Jim and Jane well, we helped them plan their retirement income stream with complex estate planning tools to (1) allow for current living standards, (2) provide tax efficiency, (3) accomplish the goal of buying a second home, and (4) combine charitable giving with their family’s legacy planning.

In analysis, we learned of low-basis stock Jane had from pre-2008 from her company. Our team worked with her to develop a diversification strategy to divest out of her firm stock options and invest in a more diverse portfolio considering the best timing and tax implications. In buying a second home, we helped them define their goals, comfort level of the home price, and what impact the decision would have on long-term security, if any.

Jane, in particular, has strong charitable intentions. After the home purchase decision, we helped Jane select the appropriate stock blocks to donate to a Charitable Remainder Trust, while minimizing capital gains taxes. Finally, our advisors worked to craft a strategy to minimize estate and transfer taxes by implementing an irrevocable life insurance policy for their children.

*The above is a hypothetical case study and is for illustrative purposes only. Actual performance and results will vary. These studies do not represent actual clients but a hypothetical composite of various client experiences and issues. These case studies do not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial advisor should be consulted.