Wealth strategies for successful families

A major priority of successful families is preserving their wealth, not only for maintaining today’s lifestyle, but for the future of their children and grandchildren as well. It’s why we put a tremendous emphasis on the multigenerational transfer of assets, but also on passing along the principles of careful money management to the family heirs.

Of course, wealth preservation is only part of the value we provide as part of our comprehensive wealth management plan. Mitigating taxes is another financial concern of successful families, and another important area we address in collaboration with our clients’ tax and legal advisors. Prudent tax planning can play a large role in the amount of wealth our clients will be able to someday transfer to their heirs.

Another area we address is risk management – protecting families’ wealth against catastrophic loss, potential creditors, litigants, children’s spouses and potential ex-spouses, and identity thieves. We strive to mitigate risks through prudent business processes and insurance planning, employment agreements and buy-sell agreements, as well as restructuring assets and considering legal forms of ownership such as trusts and limited liability entities.

We also know that our clients often have a strong interest in charitable giving. We help them create a family mission statement to outline their giving goals, identify the philanthropic causes they believe in, and clarify each family member’s role to keep everyone engaged and truly create your giving legacy. Charitable giving options include private family foundations, charitable trusts, charitable gift annuities, pooled-income funds and donor-advised funds.

Wealth preservation, wealth enhancement, wealth transfer, wealth protection and charitable giving: These are the key concerns of successful families, and the core capabilities of the Decker Global Wealth Group.

THE “WHAT IF”?

What if a couple in their early 50s came to us with a net worth of more than $20 million, two teenage children, and a well-diversified investment account containing dividend-paying stocks generating $650,000? (Many holdings were low-basis stock gifted years earlier.) What if the couple wanted to leave a legacy for their two sons, wanted the freedom to reach into the principal if necessary, and wanted to mitigate future taxes?

OUR STRATEGY

We would explain the full scope of the tax impact at their passing. We would also explain that with well-guided portfolio management, it was possible to grow the account.

We would collaborate with their attorney to establish an irrevocable life insurance trust (ILIT) with their two sons named as beneficiaries. The ILIT would be the owner of a $20 million survivorship life insurance policy. Low basis, low dividend-paying stocks would be gifted to the trust, then sold and repositioned to raise the $2.8 million in cash necessary to gift to the ILIT. The $2.8 million single premium would then be used to buy a $20 million policy that guaranteed the death benefit to the age of 121. No additional premiums would be necessary.

This hypothetical example is for illustrative purposes and is not representative of any actual experience. Individual results will vary. This is not a recommendation and you should consult with your financial advisor for advice based on your personal situation, financial goals and objectives. Dividends are not guaranteed and will fluctuate. Diversification does not guarantee a profit nor protect against loss. Raymond James does not offer tax or legal advice. Please consult the appropriate professional before making any decision that may affect your tax or legal situation.