Trust Assets: Dealing with Family Finances
Client Situation:

Marcus Jacobson recently passed away, leaving his wife Judith in hospice care and his two children, Mitzi and Barry. Mitzi and Barry are Trustees given Judith’s inability to manage her investments. Barry lives overseas and is frequently offline for weeks at a time, making it difficult for Mitzi to facilitate the use of Trust assets as primary caregiver to Judith.

Investable Assets:

Investable assets include three Family Trusts ($1.6M) two Rollover IRAs ($1.6M) and a Traditional IRA ($250k)

Beacon Pointe Value Add:

We understand that every client has their own unique financial circumstances. Our success in the case was predicated on:

  • Transition: The key here was sorting through accounts, consolidating the investments, and setting it up with Mitzi as the delegated Trustee so that she can effectively administer monthly distributions to cover Judith’s care and home maintenance.
  • Financial Planning: A cash flow analysis gave us insight into the incoming (required distributions from the IRAs, a spousal pension benefit from Marcus’s Northrup Grumman pension, social security…) and outgoing expenses. From this we narrowed down the ideal asset allocation to achieve income to support Judith during her lifetime, while projecting the rest of the assets to grow and create a legacy for Mitzi and Barry.
  • Portfolio Management: Marcus Jacobson was a very active investor, making trades from his hospital bed all the way up to his passing. He was comfortable with risk and left behind a portfolio of individual stocks with high volatility. To meet family income needs and align the portfolio with Judith’s goals and time horizon there was significant repositioning and de-risking required.
Goals:
  • To organize Judith’s financial life after the passing of her husband
  • To provide regular income to cover Judith’s care and ongoing expenses
  • To protect family estate for current and future generations
  • To keep Barry in the loop while not bothering him with day-to-day administration of Trust assets
Beacon Pointe Action Items:
  • Transition Items
    • Coordinate with CPA to understand tax withholdings required from IRA distributions, in order to deliver after-tax income for Judith’s expenses
    • Coordinate with Estate Attorney to prepare a Delegation of Trustee, giving Mitzi power to sign off on time-sensitive administrative items such as re-titling of investment and bank accounts
    • Open a new inherited IRA in the name of Judith, with a new Power of Attorney for Mitzi (previous POA had expired) to ensure ease of distributions and account maintenance
  • Get Financially Organized Utilizing Beacon Pointe’s Online Financial Planning Dashboard
    • 5 Year Cash Flow Plan/Projection
    • Consolidated Net Worth statement provided to Mitzi, Barry, and Estate Attorney
  • Account Consolidation and Setup of Distributions
    • All checking and savings accounts were re-titled into name of family Trust
    • Monthly distributions set up for Judith’s expenses starting with IRA distributions and later from family Trust account
  • Beacon Pointe Portal and Performance Updates
    • Set both Mitzi and Barry up on Beacon Pointe’s investment portal to ensure that Barry is aware of everything going on with the Trust investments despite him living far away and in another time zone
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