Late-Stage Wealth Planning: How Times Change

​Life’s wealth planning stages of beginning, accumulating, supplementing, and then transitioning can seem overwhelming when you are realizing you should have been planning more intentionally all along later in life.

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Late-stage wealth transitioning or transfer is something that many clients have a challenge with because of what they may not have considered along the way.  Many find it difficult to change their “perspective” from saving and accumulating to spending and giving. 

​There is a fear of running out of money.  They may wonder how others will use the money and whether it will be used wisely.  They may have perceptions without having conversations, leading to assumptions that are being made about what may happen versus what they would like to see happen.

Recently several of our clients have been thinking more about Long Term Care Expenses, as well as cash flow and income fluctuation amidst this economy. There seems to be overall too much general worry about money in what they have and will have.   

Calming those nerves is what we try to help our clients experience.  Here are a couple of examples.

CASE BRIEF: ​Gifting Without Worry

A client in her later 70’s was used to giving money to her kids and grandchildren.  Much of this gifting was being done without regard to the incoming cash flow this client had available.  When she made requests for cash gifts to them, some of her portfolio needed to be liquidated to cover these gifts.  She would then have additional taxes and the cycle would start up again.  Over a little more than two years, we shifted assets to produce more income, worked through the sale of real estate not generating adequate returns (partially because of her kindness to tenants) and have looked at other products like annuities that can produce a fixed-base-line income regardless of market performance.  The combination of planning, budgeting, cash flow comparisons, and taking the next necessary steps allows this client to patiently moving forward with the peace of mind to know she doesn’t have to worry about the market, tax impact, or doing something she loves — gifting to her heirs.

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CASE BRIEF: ​Assets with No Returns

 ​A client had a ton of real estate that was not income producing and was feeling the pinch of also having personal cash flow issues.  These issues were arising from lack of portfolio returns geared to meeting some of their lifestyle requirements, not properly looking ahead in projecting cashflow needs, and the not considering the care one of the spouses needed.  They were frustrated, worried, and frankly not thinking all that clearly because of the stress of the situation.  After we identified assets, we discussed what they had and didn’t need, and what they wanted to hold on to. We then helped them formulate a plan of action.  First, we focused them on what real estate needed to be sold, which real estate could produce income, and which real estate was worth reinvesting in. Concern about “getting the highest price” was something that had been holding them back from selling real estate that wasn’t really serving their needs.  Staying so locked in on a number they had in their head, they missed opportunities to sell earlier.  Knowing the number they needed to sell at net of taxes helped them look more realistically at the transaction.  They could stay in place with the assets they chose to keep and get the needed care and help for the spouse.  

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When planning for life’s later stages, our goal is to help clients avoid or reduce worry.  Planning for many of our clients at this stage of life takes on different characteristics because their priorities, needs and goals are changing.  Evolving their plan to shift for current and future needs builds confidence with predictability that fosters a peace of mind they are unable to find alone.  

Working with the right team makes the difference. Planned right, later in life is a time to fully enjoy all that one has worked hard for and earned. 

Empowering generations,

Matt

Matthew Hudack, CLU, ChFC