Nick and Caroline are 44 and 39 years old respectively. They have two sons, Jason, age 15 and Daniel, age 11. Nick’s mother, a widow in her mid 70s, recently passed away. Nick’s father had died 12 years ago and left his mother well off. Nick never imagined just how well off she was; Nick and his older sister will split an estate worth eight million dollars, after paying large federal and state estate tax bills. Without a doubt, this changes everything for Nick and Caroline.
Challenge:
- What should Nick do with the money he receives?
- How should Nick structure his affairs regarding taxes on his and Caroline’s estate?
- What does this mean for the family’s future?
Financial Issues:
- How should they invest their share of the inheritance?
- Can Nick and Caroline afford to leave their jobs and retire now?
- Can they live on this money for the rest of their lives?
- How do they ensure their children have money for college and won’t spend it on something else?
Lifestyle Issues:
- Nick has a good job as a plant manager for an electronics company. He likes his job, but always wanted to write a novel. Should he just leave the job and pursue his dream?
- Caroline makes good money as a real estate agent, even in the recent downturn. She enjoys her work and doesn’t want to retire. She thinks they should buy a bigger home and invest in rental property or a vacation home.
- Jason is more of an athlete than a scholar. He’s not enthusiastic about college even though his parents want him to go. Daniel is much more academic and wants to go to an Ivy League school if accepted. How do their parents plan for Jason and Daniel’s future?
WrapManager is available to assist in discussing options and helping to build a portfolio based on the individual needs of the client. We can work with them to create an Envision plan and evaluate their cash flow needs against their available assets under both the preferred and acceptable scenarios. We can then run a projection of the probability that their money will reach their goals under each scenario to help them better understand their situation and options.
This case study represents hypothetical situations as examples only. Accordingly, no client or prospective client should assume that solutions presented (or any component thereof) serve as the receipt of, or a substitute for, personalized advice from WrapManager, or any other investment professional. Not every client of WrapManager chooses to participate in all of the steps available and each individual client situation is different.