Rick Eckhardt is a senior vice president with Bank of
America in San Antonio. He is the fiduciary executive for the Southwest
Private Bank, which provides estate planning, credit and investment
services in Texas, Oklahoma, New Mexico, Nevada and Arizona
often do we wonder what our estate will be assessed in taxes?
not often enough.
all, who wants to spend much time thinking about proverbial “death and
taxes”? With the recent phenomenal growth of investment markets, many
investors are discovering that they really do have a great deal to look
forward to and that usually includes the taxing authorities that will
benefit from their estates.
the experienced investor who has survived the depression era has
legitimate concern for his or her ability to meet unanticipated needs and still pass wealth on to future
generations. At least the estate tax is predictable. Growth in
individual wealth has demanded that many of our clients who previously
accepted a modest estate tax burden look for other solutions.
of our favorite stories involves a retired military widower whose assets
over the past decade appreciated to quite unexpected levels. His “buy
and hold” investment philosophy paid well but left a portfolio of
highly appreciated assets with little room for diversification. He just
watched as the estate tax liability grew exponentially.
the estate tax rate exceeded 50 percent, the situation passed the limits of tolerance. The first
topic explored was how charitable giving could enhance the lives of
our discussions, the permanence of a family foundation began to show
appeal. In this case the primary consideration was to provide income to
family members with unique financial needs. The final decision was to
establish a family foundation that would not become effective until the
death of the patriarch.
plan established Charitable Remainder Unitrusts to benefit children and
at some future time, grandchildren, utilizing the client’s
generation-skipping tax exemption. Eventually a family foundation will
receive the assets from the remaining estate of our client. The total
transfer and estate tax burden was reduced to 21 percent with immediate
benefits to the children. This is an impressive reduction that could
have been further enhanced with income tax savings had the foundation
become effective during the widower’s lifetime.
income tax savings also could have been realized had the client named a
charitable organization such as the Health Science Center as the
remaining beneficiary of the Unitrusts. By giving a gift—which can be
non-restrictive or earmarked for a specific research, education or
health care program—to the Health Science Center, an individual can
realize immediate income tax savings. This truly is a beneficial
relationship for all involved.