A retired Fortune 500 corporate executive wanted to diversify his concentrated equity positions, preserve and grow the purchasing power of his assets, and develop a family wealth transfer plan. He and his family sought to accomplish five goals:
Gresham worked closely with the family to develop two foundational documents – an Investment Policy Statement and a Wealth Transfer Policy Statement. These documents helped them agree upon appropriate goals and establish success factors. We then designed an asset allocation to reflect the family’s moderately aggressive investment attitude and developed a multi-year concentrated stock risk-reduction and liquidation strategy, making appropriate recommendations regarding deferred compensation and non-qualified pensions.
A customized wealth transfer policy was designed to preserve financial security for the first generation while providing support and education to the second generation. To create a safety net for the children and provide for the grandchildren’s education, we designed an estate plan to retain bequests to both generations in lifetime trusts, with flexible distribution provisions that contained annual spending caps. We also implemented a lifetime gifting strategy that included annual exclusion gifts, direct payment of the grandchildren’s education costs, a generation-skipping trust and a family foundation for the family’s charitable gifts.
To address family education objectives, we established an annual family meeting to discuss family estate plans and review key investment themes and manager performance. In addition, we met 3-4 times per year with the retired executive and his spouse to review goals, performance and ongoing implementation decisions. And to provide everyone a full and shared understanding of their circumstances, we held individual meetings with the family’s children to review spending plans, create annual budgets and discuss family trust investments.