Nick's Story
The Facts:
Nick had just turned 34 years old when his mom passed away from cancer. He was devastated by the loss. He was the recipient of a $2.4 million-dollar outright inheritance from his mother’s estate and became the sole beneficiary of a trust holding another $1.5 million. Although the last thing he wanted to do was think about money, he knew eventually he had important planning decisions to make. When Nick was ready to address what this inheritance and trust could mean for his family and future, he came in to talk with Peak.
He is now married with a 1-year-old daughter, living in Superior, CO. Nick was contemplating a career change prior to his mother’s passing, but thought it would be selfish to pursue with his daughter being so young and his wife already owning and running a business that was relentlessly growing. He would like to discover if now is a good time to revisit the pursuit of his dream job. Both he and his wife are saddled with significant debt, including student loan debt and his wife’s business loan. They live in an apartment paying significant rent, and he would love to buy a home for his family. Now might be the opportunity. Should they finance the house purchase with more debt, or pay cash outright?
Nick feels like the stock market is an enigma, and heard it was recently at an all-time high. But even if he enters at the peak, doesn’t it always go up? He has a retirement account with some funds he chose without direction, and his wife would like to open one now that her business is cash flowing well. He doesn’t want the potential tax consequences of having a brokerage account. So where should the money go? How much should he have in cash? If he wants to save for his daughter’s future college expenses, should he invest slowly over time or put a lump sum amount in now?
He also is the beneficiary of a trust, but has no idea how it works, what it could be used for, or whether he can (and should) request distributions. He doesn’t know how this money affects his wealth or legacy planning going forward and needs understanding and guidance.
The Problem:
Although receiving an inheritance from his mother was a generous and potentially life-changing event, critically important decisions need to be made so Nick can become a good steward of the gift. With so many seemingly “right” answers haunting him, Nick needs to prioritize planning prospects with fully evaluated solutions so he can feel confident he is maximizing this opportunity in ways that would honor his mother’s legacy.
The Solution:
Peak Asset Management utilizes a comprehensive approach to inheritance planning to help Nick understand what his best options are with this windfall. We show him how the inheritance interacts with both his balance sheet, cash flow and future plans, building models and scenarios for the various objectives Nick has earmarked as important to his family: college planning, buying a home, paying off debt, and having a cash cushion if Nick decides to pursue a new career. Our reports provide thorough analysis and include tradeoffs for the choices he has before him so he can make prudent decisions with confidence.
Investing in the stock market without a detailed plan can be a fool’s errand. Understanding risk tolerance, how money should be deployed, and for what purpose, is critical. With his goals in mind, Peak puts together a portfolio of investments tailored to Nick, so he can be assured the inheritance is being invested with prudent intent.
Peak reviews the trust and conveys to Nick the document’s functionality, how distributions work, and whether tax ramifications exist through either the investments owned by the trust or the distributions received by Nick. This will be valuable for Nick in drafting his own estate planning documents so his legacy plan will take all interests associated with his wealth into consideration.
Assisting Nick with a coordinated plan of action that balances tradeoffs related to decisions he will have is Peak’s task. Educating, modeling and vetting choices will bring numbers into focus, so decisions aren’t made in haste, but instead with purpose.
Our focus is to organize your financial affairs so decisions make sense in the context of a comprehensive financial plan. Peak Asset Management is passionate about helping clients achieve their goals – partner with us today and allow us to further your wealth building dreams.
DISCLOSURE
Investment Advisory Services are being offered through Peak Asset Management, LLC, a Registered Investment Adviser. Any content included in this presentation developed from third party resources is believed to be accurate information. The opinions and recommendations expressed, and financial planning material provided, are for general information purposes, and they should never be considered a solicitation for the purchase or sale of any security. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk.
This financial planning presentation is intended to facilitate a discussion concerning estate, business and financial planning goals, objectives and needs, and to provide you with general information regarding your planning options. Peak Asset Management (Peak) cannot provide legal, accounting or tax advice and any statements made by a partner, officer, advisor, employee or agent of Peak, including any legal and/or tax information, is not intended to be nor should it be interpreted as legal or tax advice, or an opinion. Such services must be provided by your outside attorney and/or CPA or tax professional. Please consult with these outside professionals accordingly.
