Our practice is solution-oriented and client-centered. Here are just a few of the ways we have helped our clients:
(All names and identifying details have been changed or omitted to protect client confidentiality.)
Passing It On -- Intergenerational Wealth Planning
• Guillermo came to us after receiving a substantial inheritance when his father passed away. The inheritance was scattered across multiple investments, including interest in a large residential apartment building his family owned in a major East Coast city. It was also unusually heavy in federal and municipal bonds. We recommended that Guillermo balance his portfolio by shedding some of the bonds and reallocating his portfolio to one that matched his risk tolerance and age. We helped him calculate that because of the significant rental income he was receiving from his share in the apartment building, Guillermo could afford to reduce his earned income from his work as a free-lance consultant to spend more time with his son. Guillermo was also able to move into the family home on the peninsula and receive a step-up in cost basis. Guillermo liked our strategy, and because he was a knowledgeable and savvy investor, he probably could have carried it out himself. He chose to have us do it all for him, however, as he realized the complexity of the multiple transactions would take him much more time than it would take us. We choreographed the logistical headache of re-titling assets, obtaining signature guarantees, completing account transfer paperwork and reconciling cost-basis information.
• Vola’s mother, Valerie, had been a Hanke & Co. client for many years. Valerie had saved much more than she ever told Vola about, and left Vola more than a million dollars when she died. Vola had had nothing more complicated than a basic checking account at that point, and had no idea how to handle her inheritance. Because of our relationship with her mother, Vola came to us for advice. We met her ‘where she was.’ We taught her some basics, explained the various options available to her and referred her to independent resources where she could learn more about financial planning on her own so that she didn’t feel she had to blindly trust us. We put her at ease and she has become another of our satisfied clients.
• Elizabeth was another long-term client who was quite sophisticated in financial affairs. By her mid-80s, she had amassed holdings of about three million dollars. She sought our help in designing an estate plan that would leave most of her assets to her children, who did not know how much she had accumulated. She had a particular estate plan challenge: how to structure it to prevent, or at least discourage, her children from blowing through it all at once. We helped Elizabeth clarify and spell out her intentions. In doing so, we helped make the transfer of information to her estate planning attorney an efficient process, greatly reducing her legal fees. At her passing, the wealth Elizabeth had amassed over her lifetime was passed down to her children as she intended: Her gift was used to cover their housing and health expenses as well as higher education for her grandchildren. Elizabeth’s children are our now our clients and we work closely with them to insure their mother’s legacy continues on to serve future generations.
Knowing Tax Laws Helps Clients Maximize Charitable Giving
• Tom inherited a sizable estate from his late partner Mark. After moving to Palm Springs, Tom began volunteering with a local non-profit. He liked the organization’s work,became more involved and wanted to contribute financially to support its programs. He asked us to sell some of the stock in the portfolio he’d inherited so that he could donate the proceeds. But the stock had appreciated significantly since Mark’s death. In Tom’s tax bracket, he would have had to pay nearly $10,000 in capital gains taxes to liquidate the amount he wanted to give.
We advised Tom to donate the stock itself, rather than sell the stock and donate the resulting cash. Avoiding the capital gains tax meant he could afford to donate more stock – greatly increasing the value and impact of his donation -- and because of its non-profit status, the organization didn’t have to pay any tax to receive the stock nor to sell it to finance its programs.
Seeing how painless and tax-efficient this process was, Tom has since used this strategy many times to donate to other worthy causes he believes in. Saving so much in taxes has enabled Tom to make more of an impact with the resources that he and Mark built during their time together.
• Joan was in a similar situation. She wanted to make a donation to her alma mater, and had quite a portfolio of stocks from many different companies. She knew about preventing a capital gains tax hit by donating the stock itself rather than selling it to donate the cash proceeds, but wasn’t sure which stocks to sell. We identified the most suitable stocks, contacted the college to arrange the donation, and filed all the paperwork for her from start to finish.
Because we are a small firm, we are able and happy to take the time to provide full service to Tom, Joan and all of our clients. We’re especially happy to help clients donate to worthy causes in a tax-efficient manner, because we believe that benefitting the greater community is among money’s most noble uses.