AXIUS - Case Study 2: Retired, Concerned About Estate Taxes

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Case Study 2: Retired, Concerned About Estate Taxes

Background

Frank and Joan have been married for 70 years and have been retired for 15 years. Both Frank and Joan have pensions from their previous employer. Their main source of income comes from the sale proceeds from Frank’s business which he sold at retirement. They have one small survivorship life insurance policy. Frank and Joan also inherited a significant amount from their parents 30 years ago and are concerned about potential estate taxes. They wish to pass as much of their estate to their children and grandchildren as possible. They also wish to preserve their estate and need help determining what allocation is most appropriate for them and their needs.

Our Recommendations

An estate tax projection would be prepared for Frank and Joan. A review of their existing estate planning documents and titling of their assets would also be prepared. While working with their estate planning attorney, Frank and Joan should update their existing estate planning documents to include provisions for their children and grandchildren as well as satisfying their charitable needs. We would help Frank and Joan determine their risk tolerance and reallocate their accounts in accordance.

Case Study 1: Married, New Baby, Late 20’s

Background

Tim and Sara recently had a child. Sara has decided to work part-time and Tim has recently started a new job. Sara wondered if her working part-time would fit with their cash flow and Tim was unsure what to do with his old 401(k) plan. Both Tim and Sara were concerned about life insurance coverage and wanted help determining if they had enough coverage. They also wanted to discuss education savings for their child.

Our Recommendations

A cash flow analysis would allow Tim and Sara to review their budget and determine a monthly savings amount. A college cost review would also help determine how much will need to be saved monthly to fund their child’s education. A portion of the monthly savings amount could be put into a new investment account and the remaining portion would be used to fund a new 529 College Savings plan for their child. A Rollover IRA should be created to consolidate Tim’s old 401(k) plan and allow for greater investment options. A Survivor’s Needs Analysis is recommended to determine if Tim and Sara have sufficient life insurance coverage. Both Tim and Sara should increase their life insurance coverage to fully fund their child’s education needs in the event of premature death.