Client Situation: Bethany Scott was living a wonderful life married to her college sweetheart Andrew Scott, who unexpectedly passed away Jan. 12, 2019. They are the proud parents of three children and their two spouses and receive constant delight from their seven grandchildren. Her late husband was a doctor in Omaha, Nebraska. His philosophy was that everyone was entitled to good medical care and he followed that ideal during his entire practice by treating anyone in need. He also served on the board of trustees of a local Texas college for over a decade.
Investable Assets: $14,123,000 which includes: IRA assets of $2,818,000, a Roth IRA of $680,000, an Irrevocable Life Insurance Trust of $1,500,000, a Living trust of $4,000,000 and an Irrevocable Family trust of $5,125,000. This is not how the estate was structured before Andrew passed away. Bethany had a very difficult time consolidating assets and settling the estate.
Beacon Pointe Value Add:
- Portfolio Management: Throughout their 43 years of marriage, Andrew managed the assets on his own. Bethany was aware of the overall financial picture but was not involved in the day-to-day investment selections. Assuming the responsibilities and managing the assets on her own was a daunting task. To meet her income needs and align each portion of the portfolio with Bethany’s goals and time horizons, a significant shift needed to be taken. The state of the economy and volatility in the markets also required a change from a previously passive to a more tactical style of management.
- Tax Planning: Due to the nature of some of the investments and choices that were made to consolidate the estate, taxes were a large concern for Bethany. Through careful tax planning and many hours of education, we were able to use a variety of alternative investments and tax strategies to defer and reduce her taxes in 2019 and many years to follow.
- Asset Protection Planning: With any estate, no matter the size, asset protection is vital. We reviewed existing coverage to determine if she was over or under insured. Long Term Care options, medical, liability, homeowners and auto and beneficiary designations were all addressed here and appropriate modifications made.
- Estate Planning: Bethany would say that her experience as the executor of Andrew’s estate was a nightmare. We worked with an estate attorney to conduct a full review of all legal documents, asset titles and successor trustees to ensure her children would not be bestowed with the same burden.
- Education and Empowerment: Through our Women’s Advisory Institute, we assisted Bethany with navigating her new and complex financial world, educating her on what her financial picture looked like after becoming a widow, as well as the nuances of the complex estate planning vehicles she inherited. Our in person and virtual educational events that Bethany attended made her feel safer, knowing that she wasn’t alone in this process and that her Beacon Pointe advisory team was her safety net she could depend on.
- To educate and fully understand the financial picture and the different types of trusts.
- To protect their legacy for their children and future generations.
- To provide a college education for all of the grandchildren.
- To provide an adequate amount of income for Bethany to maintain her modest lifestyle.
Beacon Pointe Action Items:
- Analyzed all existing investments to develop and customize an investment strategy that would optimize the growth and protection of their life’s savings.
- Coordinated with our attorney to compose a comprehensive estate overview with an abundance of educational material and illustrations.
- Coordinated with the family’s CPA to ensure we were maximizing new legislative changes and tax efficient strategies.
- Monthly distributions of earnings were set up to auto sweep to Bethany’s checking account for monthly expenses.
The most pivotal action item throughout this process was the time used to educate Bethany every step of the way. To bring clarity and understanding to a very complex situation gave her the peace of mind she needed and deserved.
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Important Disclaimer: Case studies presented are hypothetical scenarios and intended for illustrative purposes only. They do not represent an actual client or an actual client’s experience, but rather are meant to provide an example of the Beacon Pointe’s process and methodology. An individual’s experience may vary based on his or her circumstances. There can be no assurance that the Firm will be able to achieve similar results in comparable situations. No portion of this case study is to be interpreted as a testimonial or endorsement of the Firm’s investment advisory services, and it is not known whether the hypothetical clients referenced approve of the Firm or its services. The information contained herein should not be construed as personal investment advice.
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