Time is of the Essence: The Art of Short-Term Planning for Long-Term Success

By: Randy Fox

Firm Name: InKnowVision

Contact: Randy@inknowvision.com    

Location: Naperville, IL

Industry: Tax Consulting 

Quick Read

Alma Flanders is 96 years old, has five grown children and several grown grandchildren, and is in excellent health. Her net worth of $12M allows her to spend freely without concern of fund depletion, but the biggest problem is that she has done little or no estate planning. In addition, her age disqualifies her from life insurance simply because insurance companies will not cover anyone over the age of 90.  

Challenge

In this case, time was our biggest challenge because of the age of the client. Most of our strategies produce results based on time.  Here we needed a different approach that would still deliver a favorable outcome.

Design

Working alongside Ms. Flanders' attorney, we were able to provide several options that benefited the family even though the client herself was not eligible for many of the programs we would normally use. Because of our collaborative efforts we were not only able to deliver a win-win solution; we also delivered peace of mind to everyone involved.           

Because of the shortage of time, we were faced with the challenge and opportunity of creative planning. Instead of the usual strategies which produce the best results over time, we utilized the Family Wealth Goal Achiever in order to illustrate four potential solutions, each with distinct benefits. These included:

1.      Charitable Lead Annuity Trust (CLAT)

2.      Grantor Retained Annuity Trust (GRAT); and

3.      Two different Family Limited Partnership (FLP) strategies:

a.  One with a sale to a Grantor Deemed Owner Trust (GDOT) and

b.  One with a sale to a GDOT along with a Testamentary Charitable Lead Annuity Trust (TCLAT)

While these choices may seem confusing and overwhelming for a 96-year-old, her children are heavily involved in her planning and were able to help her understand the differences between the strategies. To aid in the selection process, we created a simple Power Point presentation that allowed the family to compare various aspects of the strategies, weighing the advantages and disadvantages of each approach.

The client's attorney came to us with an open mind and was able to help create the team that enabled the family to envision the opportunities and results. While the attorney had tremendous knowledge in the area of estate planning, he appreciated the collaborative team and the ideas we generated together to help this client and her children maintain and protect the family wealth.

Results  

With the new plan in place, we were able to increase the amount to the heirs by $2.9M and reduce taxes to $15K. More importantly, we were able to provide the family with choices they didn't previously have.  

Lessons Learned

·         Creative planning is the key to success when time is short

·         Innovation rests on the ability to create and test ideas

·         Innovation is the key to wealth creation and preservation for your clients -- and for yourself

Randy Fox, CFO, InKnowVision, LLC
www.InKnowVision.com
randy@inknowvision.com
LinkedIn: Randy Fox

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