The Challenge:

We first met this client after the sudden passing of her spouse due to a medical event/auto accident. While she and her spouse had both participated in major financial decisions, the surviving spouse had to navigate some major decisions at a difficult time without the counsel of her husband. At a time of mourning and loss, the surviving spouse needed to gather a lot of information and make important decisions while attempting to establish a new financial decision-making process.

The Analysis:

We reviewed the cash flow needs of the surviving spouse and evaluated Social Security and pension income sources. We quantified life insurance proceeds and best available options for survivor, and reviewed all assets to evaluate risk/reward trade-off of various assets and make recommendations. We looked at the income tax implications of liquidating various assets and to take advantage of any tax benefits available. We evaluated estate planning needs in light of survivor’s needs, current and anticipated future asset valuations, and a changing estate planning environment. We determined if minimizing estate taxation would have any adverse impacts on the survivor’s current and future lifestyle.

The Recommendation:

We worked with the survivor to create a new financial decision-making process and took the time to develop incremental self-confidence around independent financial decisions. The incremental income from the husband’s pension and Social Security helped to mitigate ongoing cash flow requirements and created some estate planning opportunities for the next generation. We took advantage of income tax rules to provide the opportunity to take tax-free gains in the future while maintaining some exposure to former employer’s stock.