November AAEPC Education Event - Collaborative Case Study Event
Come flex your estate planning muscles and have some fun on November 9th for the ever popular Collaborative Case Study event! We encourage you to sign up to participate, there’s still plenty of time.
What follows is the Fact Pattern to be discussed as well as the format for the event. We think this pattern will create an exciting and diverse conversation with our members and our “Clients.” Please take a read through and if you’ve got some ideas to share, we strongly encourage you to participate. There are no right or wrong answers, and we aren’t strictly “issue spotting”. This is about showcasing how our collective estate planning expertise can be brought to bear on complex and varied issues. We look forward to seeing you all in next week!
November 9, 2023
6:00 - 8:00 P.M.
Annapolis Waterfront Hotel
80 Compromise Street
Annapolis, MD 21401
About the Collaborative Case Study
Instead of the traditional “panel” of judges, we have an innovative approach. Two individuals will role-play as Husband and Wife (Henry and Wendy) with the goal to simulate a client meeting and engage in a conversation.
The Case Study will be divided into two parts:
Part 1: Estate and Financial Planning (Presented Below)
- Participants will present their suggestions.
- Teams will be "judged" based on the diversity of their suggestions and holistic approach, not necessarily the completeness of their answers.
Part 2: Subsequent Meeting (To be discussed during the event)
- Teams will receive a "Client Update" and have 5-7 minutes to respond.
- No facts will be provided in advance; this part focuses on adapting to the client's evolving situation.
- Teams are not tasked with providing the “best” answer but rather the best response to the client’s new situation.
About Henrey and Wendy
Henry and Wendy came in for an initial meeting three weeks ago. They’re back today to hear about their financial and estate planning options. Below are the meeting notes from their initial meeting and intake:
- Henry and Wendy, both 65 years old, have three adult sons, ages 40, 37, and 34. All three boys are married with children and successful in their respective careers.
- Henry is a serial entrepreneur and currently has a number of ventures ranging from passive investments to active management.
- Their primary income comes from a construction finance company that they own a 30% stake in. Business is good and the day-to-day operations are being overseen by their eldest son, Alex.
- Henry’s business partners are all older than him and their grumblings about selling the business are getting louder. Henry is interested in hearing how he might pass this interest along to his family, as it’s their largest asset at $10 million.
- Wendy was a stay-at-home mom and devotes most of her time out of the house to charitable work for the homeless.
- Wendy comes from money and, after learning her maiden name, it’s not a surprise. The family has national name recognition, but the money was made many generations ago. You learn that she is the discretionary income beneficiary on a couple trusts and the remainderman on a few more. She never asks for money from the trust.
- Wendy’s mother is still alive and, as Wendy explains it, after mom dies, there will be a significant sum of money coming to her outright. Wendy’s mother has been receiving in home care for several years but is otherwise doing well.
- Being a serial entrepreneur has left Henry with 5 SEP accounts totaling $3 million. The accounts are all in target date funds, which Henry likes for their low cost.
- They have $1 million outstanding on a line of credit on their Annapolis house, the proceeds of which went to purchase a house in Rehoboth Beach, DE. The beach house doesn’t get used much by their sons’ families as they hoped but they enjoy entertaining friends and having parties all summer long. They keep up with the interest payments but aren’t paying down the principal.
- They spend $20,000 a month, which doesn’t include the interest payment. The cash flow from the business is enough to keep up with their expenses. They aren’t overly concerned about their spending because they understand that they’ve saved “a lot” and that Wendy’s family’s wealth will be coming to her soon enough. Maintaining their lifestyle and standard of living is important to them both.
- As the meeting is finishing up, the Henry talks more about some of his passive investments. It turns out that 20 years ago, Henry invested $200,000 in a telecommunications company. After years of poor cash flow and unsteady financials, Henry recently learned that the company is attracting a lot of attention. It turns out, the company has for decades own a piece of the wireless spectrum that just so happens to be “the next 5G”. He’s heard that everyone from AT&T to Elon Musk wants to buy them out. It’s still speculative but there’s a reasonable chance he’s holding a “winning lottery ticket” worth nearly $50,000,000.
Henry and Wendy understand there’s a lot to tackle, so please present on three topics. There will be a subsequent meeting to discuss more items, but for now please provide one estate planning, one financial planning, and one risk management or business succession strategy.