Husband and Wife Establish a
Charitable Remainder Unitrust
Lois is 66 years young with an approximate personal net worth of $50,000,000.
Clark is 71 years young, and has a personal net worth of $7,000,000.
In 1998, the husband and wife established a Charitable Remainder Unitrust
(CRUT); Clark is both the trustee and primary income beneficiary. The purpose of
creating the irrevocable trust was to provide a future income stream for Clark –
thus allowing him to obtain financial independence as beneficiary – for Lois as
successor beneficiary, and for the charitable remainder beneficiary.
Challenge: Trust was in Jeopardy
It was Clark’s original intent to keep the
trust in operation throughout his lifetime.
However, in today’s uncertain economic
environment, annual appraisals of trust
non-producing cash assets revealed
potential risk and unfunded liabilities
which directly impacted the trust’s ability
to produce income and growth to satisfy
the required seven percent distribution.
The $5,000,000 corpus is currently influ-
Limited Carrier Options in
enced by sound, but ‘at risk’ real estate
assets; approximate exposure is thirty
percent. Twenty percent of trust assets
are cash, and will remain so. The remaining
$2,000,000 non-producing cash would
typically have been placed in bonds,
but that option provided meager returns
with high potential for loss. The trust was
in jeopardy of depleting the $5,000,000
corpus, prompting Clark to quickly begin
his quest to seek alternatives in which
to invest the CRUT’s $2,000,000 non-
producing cash assets.
Enhanced Giving Charitable
Clark called his trusted Financial Representative and good friend ‘Al’ of twenty-plus years. Clark made it very clear to Al
that he needed solutions. Furthermore,
ALL solutions should consider his main
objective – avoidance of additional risk,
with at least a seven percent return.
Clark and Al would soon discover not every carrier participates in the enhanced
giving charitable market.
Alternative Insurance Policies to
Meet Desired Objectives
Al introduced me to Clark in January 2014,
and I was eager to accept the challenge.
For eight months, I became an architect –
designing alternative insurance policies
to help meet the desired objectives. I
offered Clark prudent and reasonable options, replacing his financial risk, enhancing the sophisticated use of insurance
contracts inside the CRUT by applying
wealth replacement concepts, maximizing overall value with secured rates and
guaranteed benefits as well as fixed,
secured monthly benefits. In return, I
creatively, legitimately, and ethically
enhanced the sanctioned use of assets
inside the CRUT.
Counsel Provides Guidance
Clark’s personal counsel provided approval of the structure for all plans including payor, ownership, and beneficiary
designations. In addition, the governing
rules of the trust permitted Clark, as
trustee, to invest in the plans as they
were prudent and reasonable investments that did not jeopardize the tax-exempt status of the CRUT.
Special Planning Needed for
High Net Worth Clients
As professionals, we successfully serve
high net worth personal, community and
business clients by continually employing creative ideas that enhance our skills
and knowledge. You and your clients need
to be aware of and benefit from these
enhanced planning concepts.
To respect the identity of Mr. and Mrs. Client,
I will refer to them as ‘Lois’ and ‘Clark’.
JOHN M. DRISCOLL, PRESIDENT
JOHN DRISCOLL & COMPANY, INC.
5080 N. 40th Street, Suite 400, Phoenix, AZ 85018
(602) 957-7155, John_Driscoll@JDriscollCo.com
A High-Net Worth Client and a
Complicated Estate Plan
Teresa R. Stallard-Haebig
The Guardian Life Insurance Company of America
Teresa Stallard-Haebig is a Financial Representative of The Guardian Life Insurance Company of America (Guardian), New York, NY. CA insurance license #1633623. Guardian, its subsidiaries, agents, and
employees do not give tax, legal, or accounting advice. Consult your tax, legal or accounting professional regarding your individual situation. Teresa R. Stallard-Haebig| (520) 909-9091| firstname.lastname@example.org
File #2014–13053 Exp. 10/16.