As we usher in another year, Sherwood Financial Partners is excited to offer a new service called Living Legacy Planning. Over the past year, we've added a lot of new faces and accompanying skillsets to our team. A big part of that is a response to something we've been hearing more of our clients talk about, which is feeling comfortable spending more of their retirement money making memories today instead of waiting to leave a purely financial inheritance in the future.
In 2021, Matthew and I spent a lot of time asking ourselves how to help our clients feel more comfortable spending money to create a living legacy instead of just an inheritance. We had noticed that the advice our clients were receiving from their different professionals was disconnected on multiple occasions because not everyone was talking to each other. After much thought and discussion, we realized that we needed to offer tax and estate planning expertise to help unify your financial picture.
As such, we have begun offering what we're calling Living Legacy Planning. This new service enables us to bring all of your individual financial needs - investments, tax planning, and estate planning - together to provide a plan for you to enjoy your money today with those you love most while ensuring your security tomorrow. In unifying all of these disparate pieces, we are ultimately hoping to help you and your families define your financial legacies. By viewing your financial picture in its entirety, we're in a much better position to help you explore what is possible with your money.
For many of you who have gone through our planning process, you know that our number one priority is helping you answer that age-old question: Do I have enough? But what happens when there is more than enough? It's becoming an increasingly common question that we are seeing with more and more clients. We've done the financial plan and shown that they have more than enough to provide for their retirement needs. What then happens next? What do they want to do with the excess?
To answer this question, we found ourselves returning to what we believe is a core aspect of financial planning, asking: what do you value? To us, this is the crux of living legacy planning – uniting your financial situation with your values to define not only the kind of legacy you want to leave behind but, even more importantly, the legacy you want to experience right now.
To help illustrate, allow me to share a story about what living legacy planning looks like. We recently built a financial plan for a family that showed they were on pace for a successful retirement. They had saved well, were in no danger of running out of money, and wanted to know what else was possible – so, we asked them what was important to them.
Through a series of conversations, we determined there were four main goals this family had that aligned with their values: they wanted to travel together during retirement, they wanted to provide for their grandkids' education, they wanted to continue a habit of generosity through charitable giving, and they wanted to spend time skiing and exploring other aspects of the great outdoors with their loved ones.
Having defined their goals, we began turning their goals into a tangible reality. The first few goals were straightforward. We added an annual travel budget to their financial plan to confirm that they had saved enough to support that additional spending. We then added budgets for educational contributions and ensured that their grandkids had 529 plans opened to make the most of their contributions. Turning to their charitable goals, we created a tax-advantaged giving strategy that helped them maximize their philanthropic donations and save on taxes, all while mitigating some of the capital gains built up in their taxable accounts.
Finally, we turned to the goal of teaching their grandkids to ski and spending more time with their loved ones out on the slopes. It was clear that spending time together doing an activity they loved was a big priority for this family. They approached us with the idea of purchasing a condo near one of their favorite local ski resorts. This was their dream, but they weren't sure if it was possible. If it was, how much could they afford? And how should they liquidate their investments to fund what they would need without paying too much in taxes? Together with the help of our expanded team, we began a detailed analysis of this goal. We first established a budget for them and made sure that the additional costs of owning a second property would be feasible given their assets and income. We then turned to the task of accessing the funds necessary for a down payment. Our on-staff CPA helped us build a tax analysis based on an estimate of their future income to see how we could best access their tax-deferred assets without bumping them into a higher tax bracket. Along the way, we explored future tax strategies that would potentially make sense down the road, including potential Roth Conversions to enhance their tax savings.
We then turned to their estate plan. Our on-staff attorney did a deep dive on their existing estate planning documents before presenting them with a review of their current estate plan and pointing out some areas that needed updating. As part of this estate review step, we considered how best their new ski condo would need to be titled and made sure that the logistics of their inheritance matched their end-of-life goals.
At the end of last year, the family was able to sign on the dotted line for the ski condo of their dreams and are excited to take their grandkids skiing when it has been completed next fall. As Sherwood clients, we will continue to partner with them as they finalize the closing process and as they enjoy their retirement in the coming years. We're excited to watch them realize their goals and look forward to hearing some of the stories they'll no doubt have to share in the years to come as they actively live out their living legacy.
As we step into 2022, we invite you to learn more about our Living Legacy Planning process. Schedule an introductory call with our team when you are ready to stop worrying about the "what ifs" and want to get started creating your own living legacy. We'd be happy to sit down with you and hear more about your goals and help you build out a plan for living out your dreams today!