Maximizing Wealth and Reducing Liability: A Financial Planning Blueprint

In this ongoing series, we profile Simon Quick clients to reveal financial and estate planning challenges faced by wealthy families and how we help them meet these challenges.

All names and identifying details have been changed, but the case studies reflect real-life families and situations.

Understanding Wealth Beyond Dollar Signs

When you think of wealth, what comes to mind?

For most, dollar figures and accumulated assets are the innate thought. Except wealth is far more complex than that. It’s a multidisciplinary umbrella term that not only includes investments but also taxes, liabilities, charitable giving, insurance policies, estate plans, and so on.

And no two wealth situations are the same — which reinforces the complexity and makes it harder to untangle without a holistic, multi-pronged solution.

To help you envision a financial planning strategy that will set you and your family on a path to achieving your immediate and future goals, we’ll outline various wealth challenges faced by Ted Jackson, an anonymous Simon Quick client who experienced a major liquidity event.

While Ted’s situation is unique to him, you may see similarities in your own life and want to replicate some of the actions we took to reduce Ted’s exposure and protect his wealth.

Meet Ted Jackson

Ted Jackson is a 51-year-old divorced father of three children, all of whom are under the age of 18. He shares custody of them with his ex-wife. Ted lives in New York City and has a second home in Rhode Island.

His ambition and “roll up your sleeves” attitude helped him build and operate an engineering firm for decades. A year before he engaged with us, he sold half of his ownership in the firm to an international logistics company for $30 million. Now, his net worth is approaching $100 million.

The Challenge

When we met Ted, much of his net worth was tied up in his engineering firm, and the rest was held in a brokerage account. Ted’s previous investment broker didn’t offer financial planning services, and our team suspected that he could benefit from a more holistic wealth management process, as long as we took the time to understand his current strategies,
needs, and wants.

Our team took a closer look at Ted’s current financial picture and identified the following key blind spots — that is, areas where we could optimize his portfolio in a way
that sets up his family for success:

• Tax efficient investing
• Insurance policy review
• Trust and estate planning
• Next generation education

Even with his sizable net worth, Ted’s situation is pretty common. We’ve found that many people are unintentionally leaving money on the table using outdated and ineffective wealth management strategies.

The plan he thought was working for him was actually holding him—and his family—back.

Fortunately, it’s never too late to make adjustments and build out a personalized investment portfolio that puts you in a better position. Using Ted’s situation as a real-world example, let’s take a closer look at how you might construct a success blueprint for your financial health that addresses all facets of your wealth.

Financial Planning: The Foundation

Financial planning evaluates and organizes all aspects of your wealth. When viewed holistically, it provides a framework for decision-making, accounting for your:

• Long-term goals
• Investments
• Cash flow
• Tax status
• Estate needs
• Liability exposure
• Charitable giving

About a third of Americans have a documented financial plan, and those who have one feel more in control of their finances.¹

The only problem is that most financial plans are rigid, one-size-fits-all “solutions” that are ill equipped to adapt as life inevitably changes, such as a change in income, selling a business, or supporting a grandchild’s private school or college tuition.

Like Ted, you should have a plan that evolves with you and protects you from unknowns.

Organizing Ted Jackson’s Finances for Tax Efficiency

When applied properly, financial planning can maximize deductions and help you keep more of your hard-earned money. Plus, the money you save in taxes can continue compounding or be reallocated toward other investments and help advance your goals.

Our top concern was Ted’s tax liability, which was quite large given the partial sale of his company. To shelter a portion of the sale proceeds from taxes, we recommended a $5 million opportunity zone investment.

Because of how opportunity zone investments are structured, investors can reduce their tax liability on gains by:³

1. Deferring tax on existing capital gains until 2026
2. Paying no taxes on any capital gains produced through investments held for at least 10 years

For Ted, our proposed investment strategy allowed him to defer the tax he owed on his $5 million opportunity zone investment until 2026. And because he invested in 2021, and held it for five years, the taxable gain will be reduced by 10% — meaning he’ll only pay taxes on $4.5 million in 2026.

Additionally, any capital appreciation on his qualified opportunity zone investment is tax-free for 10 years. After that, he can sell the investment’s capital gains tax-free.

Insurance Liability Review

Insurance gaps put you at risk should an accident happen on your property, and without proper coverage, you could be held responsible if a liability claim is filed against you.

In a recent survey of high-net-worth individuals, 25% of respondents said theft and accidents had a “high” or “very high” impact on their wealth. Nearly a third were impacted by cybercrime.⁴

It’s important to reassess your liability coverage annually to ensure it is sufficient based on your financial situation, lifestyle, and related risks. Certain activities and lifestyles could make you more vulnerable to being sued. You might consider more comprehensive insurance coverage if you:

• Are a landlord or rent out a property you own
• Own boats, watercraft, or recreational vehicles
• Have a dog or teenage driver
• Travel frequently outside the U.S.
• Are a public figure
• Have significant savings and assets

High-net-worth households may need more than standard homeowners and auto insurance policies to cover personal liability as well as income and assets. This is where umbrella insurance comes in because it can help protect what you own.

Protecting Ted Jackson’s Net Worth

In reviewing Ted’s existing property and casualty coverage, we found his current policies did not provide the coverage and level of service recommended for someone of his net worth.

The Problem: Even though his net worth is $100 million, his umbrella coverage was less than $5 million. This did little to protect him should someone file a lawsuit against him—especially if the complainant learned his net worth. If Ted were to lose a lawsuit, he could be on the hook to pay anything over that $5 million limit.

The Solution: To help protect Ted, we increased his coverage and connected him with an insurance carrier that caters to HNW individuals. We consolidated his policies with one provider, helping Ted reduce his risk without greatly increasing his costs.

Trust and Estate Planning

Ideally, your money and properties should benefit your heirs, not Uncle Sam.

The estate tax rate for an individual can reach up to 40% on the federal level for assets over $13.99 million, not including any state taxes you’re on the hook for.⁵ In other words, your passing can trigger a hefty tax bill for your beneficiaries on a gift you intended to help support them.

Strategies for Wealth Transfer

Whatever the value of your estate, you can transfer wealth without a burdensome tax liability by:

• Creating an irrevocable trust
• Participating in annual gifting
• Creating a family limited partnership
• Forming a generation-skipping transfer trust
• Educating your heirs on the plan

Unfortunately, high-net-worth individuals are more exposed to excessive taxation. Trust funds and charitable gifting can be invaluable tools for preserving your assets, reducing liability, and empowering your heirs.

Shielding Ted Jackson’s Estate

After running projections based on Ted’s net worth, spending habits, and future income expectations, we determined that he has amassed more money than he will likely spend in his lifetime. This meant Ted could start moving assets out of his estate to minimize his estate tax liability without impacting his lifestyle.

Quick Win: We proposed “decanting” or re-registering his New York trust in South Dakota, which doesn’t have a state tax. In doing so, Ted saved the trust more than 10% in state and local taxes each year.

Long-Term Strategy: We also determined that Ted was a good candidate for private placement life insurance (PPLI), and we worked with him to establish a policy.

Utilizing PPLI helped Ted grow his assets tax-free, protect them, and reduce wealth transfer taxes for his beneficiaries, while still providing options for withdrawing funds from the policy.

Heir Education: Preparing the Next Generation

Less than half of U.S. adults are financially literate, and they are the least confident in their ability to comprehend financial risk.⁶ This means that ongoing education—financial and otherwise—is an essential part of preserving wealth across generations.

Fortunately, more universities and colleges are starting to offer personal finance courses to teach students how to manage their money.⁷ This is good news if you hope to have meaningful conversations with your children about what they’ll face or inherit.

Think ahead.

By prioritizing financial education for your children and leveraging some tax-advantaged saving strategies, you can help ensure they have all the tools they need to succeed long after you’re gone.

Equipping the Next Generation

With three children approaching college age, we showed Ted the benefits of establishing 529 plans for each of his kids.

Ted was also unsure how to talk to his children about the wealth they would someday inherit. We worked with Ted to establish a plan and timeline for communicating his wealth philosophy to them.

We made our team members available to act as financial mentors, educating Ted’s children on personal finance subjects to set them up for success later in life.

Unlock the Power of Financial Planning

Holistic wealth management is ongoing, and it requires periodic refinement to create the best financial outcomes for you and your family. While not every plan will look like the one we designed for Ted Jackson, our team is committed to using all the tools in our toolbox to build flexible plans you feel confident in.

If you’d like to learn more about our financial planning and investment advisory services, let’s have an open conversation on your terms.

Sources:
1. 1 Charles Schwab, “2024 Schwab Modern Wealth Survey Shows Increasing Financial Confidence From Generation to Generation and Younger Americans Investing at an Earlier Age”
2. Opportunity Now, “Map of Opportunity Zones”
3. IRS.gov, “Estate tax”
4. Hub International, “2025 Outlook. Ever-evolving risk requires proactive strategies to protect affluent families”
5. IRS.gov, “Estate tax”
6.TIAA Institute and Global Financial Literacy Excellence Center (GFLEC), “Financial Literacy and Retirement Fluency: New insights for improving financial well-being”
7. The New York Times, “Now on the College Course Menu: Personal Finance”

Disclaimer
Please Note: Limitations: The above is a hypothetical scenario-not involving an actual Simon Quick Advisors, LLC client. It illustrates the hypothetical experience of a fictitious client based on a scenario that an actual client might experience. The scenario is designed to help illustrate how Simon Quick might provide services to similarly situated clients.Keeping in mind that no two clients, situations, or experiences are exactly alike, the above should not be construed as an endorsement of Simon Quick by any of its past or current clients, nor any assurance that Simon Quick may be able to help any client achieve the same satisfactory results. To the contrary, there can be no assurance that a client or prospective client will experience a certain level of results or satisfaction if Simon Quick is engaged, or continues to be engaged, to provide investment advisory services. A copy of our current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at www.simonquickadvisors.com.

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