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How pivotal moments in three women’s lives have influenced their approach to wealth planning.
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She also wants to ensure her nonprofit can be financially sustained into the future and has set aside some money for other philanthropic causes.
To achieve their goals, she and her husband set up a trust for their sons with milestones and parameters under which they will receive money. Ibrahim-Leathers says she’s also looking to set up an endowment fund to keep her nonprofit going, hopefully decades beyond her departure. “I think that will be my parting gift to the organization,” she says.
When balancing philanthropic pursuits with long-term wealth planning, many affluent couples and individuals turn to donor-advised funds or charitable trusts, says Will Lucius, chief trust officer at Raymond James. A donor-advised fund can be used to set aside money or highly appreciated assets in a charitable giving account and receive an upfront tax deduction, while making decisions about which nonprofits will receive the funds in future years.
Charitable remainder and charitable lead trusts are other common strategies for making gifts in a potentially tax-advantaged way. A charitable remainder trust provides a fixed income for a set period of time, with any remaining balance going to a designated nonprofit. A lead trust does the opposite: The nonprofit receives payments over a set period, with remaining funds passed along to heirs designated in the trust.
Endowments can also be used to ensure money is set aside for a nonprofit while reducing the taxable value of your estate. “These can be great tools for ultra high-net-worth individuals when they have one particular charity that the donor wants to make a major, long-term contribution to, and ensure it’s sustained for a long time,” Lucius says.
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Since Graham’s death, Schindler has consolidated their shared assets in an investment portfolio. At 54, she’s thinking ahead to her retirement and setting aside money to support a favorite cause: animal-focused nonprofits. “We have multiple cats and have done some fostering for a rescue group,” she says. “So I’d like to get more involved with that.”
Soon, Schindler plans to begin making annual gifts to her kids through a trust she and Graham set up before his death. She’d like to be able to assist her children with their college education and eventually help enable them to become homeowners. “It’s crucial for both women and men to be involved in family financial matters and know how everything is set up, because you never know what could happen someday,” she says.
Nancy Leizman, financial adviser and founder of Leizman Wealth Planning of Raymond James, says while it can be emotionally difficult to plan around a terminally ill spouse’s death, doing so can alleviate some of the stress and financial planning decisions left to the surviving spouse. “For instance, low-cost basis assets owned in taxable accounts can be retitled to the single name of the spouse with the terminal illness, thereby ensuring those assets will receive the full ‘step up’ in basis at the time of a spouse’s death,” she says.
Lucius says it’s critical for couples with a terminally ill spouse to meet with their adviser and attorney early, so they can take the appropriate planning steps.
“It’s important to have that plan in place, so you can ensure your loved one’s comfort and care in their later days rather than having to worry about a raft of decisions and documents,” he says.
My grandfather was very wealthy—and my grandmother was as well—so it was particularly painful to become impoverished overnight.
Everybody’s experiences and goals are different, and sometimes life throws us unexpected curveballs that affect how we plan for the future. As high-net-worth families and individuals look to transfer wealth to the next generation and build a legacy, they must often navigate complex and multidimensional issues—from supporting an adult child with a disability to funding philanthropic goals.
So how do those watershed moments—anticipated or otherwise—affect how we plan for the future? To find out, we spoke with three affluent women in their 50s, each with a pivotal, life-changing experience that has impacted the way they view their own approach to wealth and legacy planning.
As a corporate marketing executive in the early 2000s, Wendy Karlin-Pace enjoyed traveling frequently for work. But her life was forever changed when, in 2010, her daughter Emily suffered her first epileptic seizure at age 10. The episodes kept recurring every four weeks.
The epilepsy that her now-adult daughter lives with is debilitating. With Emily’s care top of mind, in 2015, Karlin-Pace decided to start a business that allows her to work from her home outside Atlanta. “Traveling for work wasn’t a possibility anymore,” she says. “I needed something where I could be here full time.”
She founded Pace Setting Media, a social media and content marketing company. While the business has given her the flexibility she’s needed, it’s also helped her build a stronger financial safety net than she originally envisioned. “Gradually, I started to gain more customers and clients, and I now have a team of four people working for me,” she says.
Karlin-Pace and her husband have built up retirement savings for themselves, but they’re equally focused on the possibility of needing to financially support Emily well into the future, from paying for housing and medication to hiring professional caregivers.
Supporting a Child With Special Needs
Recently, the couple started working with an adviser to plan for their financial goals. Karlin-Pace says they’ve discussed opening a special-needs trust that would allow Emily's expenses to be paid for without negatively impacting her eligibility for government disability benefits.
The couple also has philanthropic goals, such as donating to literacy-related causes. However, their biggest planning concern is making sure Emily will be financially supported. “Our highest priority is always Emily and how she’s going to live going forward,” Karlin-Pace says. “We’re still very much in the learning process.”
A special-needs trust can be a powerful tool when a minor or adult child with a disability will need to be financially supported well into the future, Lucius says. Funds from the trust can be used for a wide variety of expenses incurred by the beneficiary, including housing payments, transportation, medication, therapy and even vacations.
“This kind of trust is designed to create continuity of care and make sure the beneficiary will be cared for even after the grantor passes away,” he says.
Assigning a corporate trustee to oversee a special-needs trust can also help prevent a sibling from feeling obligated to provide care. Not only will naming a sibling as sole trustee create a potential emotional burden, but they often require their own attorneys and financial advisers to help guide decision-making, Lucius says. A corporate trustee, on the other hand, can follow the trust’s instructions and make decisions objectively.
Securing Family After Losing a Spouse
In 2002, Bonnie Schindler’s husband Graham, then 32, began experiencing headaches. After a trip to the doctor and an MRI, he was diagnosed with a rare form of brain cancer. “We were in disbelief,” Schindler says. Doctors surgically removed the tumor and thought they had cured him of cancer—but it came back again in 2005. This time, they used radiation therapy, and Graham remained cancer-free for several years—with radiologists saying they thought he’d beaten it for good.
Not long after, the Schindlers adopted two children, Rowan and Ellery, and made strides in their careers. Graham worked for an investment bank, while Bonnie ran an HR consulting firm she’d founded with two other women, giving her the flexibility to care for their children, and Graham, when needed.
But five years later, Graham’s cancer returned. After a long road of treatment, he died in the summer of 2018. “Our kids were in middle school, which is pretty much the worst time for something like that to happen,” she says.
Thanks to years of saving and setting aside money in 529 plans for their kids’ college educations, the Schindlers were financially prepared to weather the storm. Not long after, the HR consulting firm Bonnie co-founded merged with another, larger firm, resulting in a career milestone as she became a principal.
It’s crucial for both women and men to be involved in family financial matters and know how everything is set up, because you never know what could happen someday.
The Best Laid Plans
All three stories underscore the value of making financial and estate plans early in adulthood and continually updating them at key milestones throughout one’s life.
“Ultimately, financial planning and estate planning go hand in hand,” Lucius says. “They’re deeply intertwined. If you have some type of life event that catches you off guard, all the decisions you made in one area could completely erode based on a lack of planning in the other. That’s why holistic planning—looking at both your financial plans and your estate plans in lockstep—is incredibly important.”
Wendy Karlin-Pace
Our highest priority is always Emily and how she’s going to live going forward. We’re still very much in the learning process.
Bonnie Schindler
Heather Ibrahim-Leathers saw up close how decisions around wealth can change your life at a moment’s notice—and not always for the better. Her grandmother, Eugine Awadalia, became a widow in her mid-30s while raising four young children in Egypt. Following local customs, all of the couple’s money was passed to Eugine’s brothers-in-law.
The disinheritance sent Eugine and her children into poverty. “My grandfather was very wealthy—and my grandmother was as well—so it was particularly painful to become impoverished overnight,” Ibrahim-Leathers says. “She eventually had to make the very difficult decision of determining which child she could afford to educate.”
In 2008, after her grandmother’s death, Ibrahim-Leathers was inspired to create the Global Fund for Widows, a nonprofit that has helped more than 100,000 widows and their dependents living in poverty worldwide. It provides seed funding for microbusinesses and teaches financial management skills, along with other strategies to help women build and maintain wealth. “They can send their children to school or improve their kids’ health by taking them to the doctor,” she says.
Ibrahim-Leathers and her husband, a founding partner at an investment firm, live in New York City, where they’ve raised two teenage sons. As she looks toward the future and begins to plan her own legacy, she’s put herself in a position to provide financial support for her sons and future grandchildren—but not so much that it disincentivizes hard work. “A little bit of help is good,” Ibrahim-Leathers says. “But I feel strongly that they have to have the grit and ambition to achieve their own goals.”
Learning From a Widow’s Experience
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Please be aware that there may be substantial fees, charges and costs associated with establishing a charitable remainder trust.
Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to a Donor-Advised Fund for federal and state tax purposes.
Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
Raymond James Trust, N.A. is a subsidiary of Raymond James Financial, Inc. Raymond James & Associates, Inc. and Raymond James Financial Services, Inc. are affiliated with Raymond James Trust.
Given the complexity and longevity of administering a special needs trust, it’s important to consider the best-qualified person or a corporate trust company to serve as trustee.
As with other investments, there are generally fees and expenses associated with participation in a 529 plan.
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation.
Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Converting a traditional IRA or 401(k) into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.
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