Real Client Results: $850,000 Savings via Estate Planning with Joseph Adelizzi.

OK, I have decided to post some results that we have recently obtained for clients who have retained us to set up their estate plans to give people the idea of the impact proper planning can have on a family’s legacy.

We recently finished a plan for a family who had a $4.6 million dollar estate and the way it was structured, it would have triggered about $230,000 in probate fees and an additional $25,000(+/-) in extraordinary fees because there were real estate holdings.  We structured their estate plan to totally avoid the roughly $250,000, reducing those fees to zero.  A savings of about $250,000 that would go to the heirs instead of lawyers and the government.

Then we looked at their income taxes.  With their current plan they were drawing about $4000 per month in Social Security benefits.  Their lifestyle was such that they currently lived on about $12,000 per month, which meant they would have to draw $8,000 per month from their other assets.  

When they drew out the $8,000 per month it was going to cause their Social Security to become taxable and was going to trigger about $2,700 per month in taxes due, a little over $32,000 per year.

We repositioned some of their money which will result in an untaxable income stream starting at $54,000 per year and increasing about $1,000 per year as an inflation hedge.  This will keep them under the threshold for their Social Security so that it remains untaxable as well.  Now, they will only have to draw about $3500 per month to meet their lifestyle goal.  With the current $25,000 deduction for a married couple, their taxable income will only be $17,000, which triggers about $1,700 in total tax instead of $32,000, for a savings of $30,300 per year.  That amounts to a $606,000 tax savings over a 20-year period if taxes do not go up!

So, what’s the bottom line?  This week we saved a family about $250,000 in probate fees and potentially $600,000 in taxes.  That’s about $850,000 back in their pocket instead of the government’s.  Which is easier for you?  Do nothing and cost your family a lot of money or take the time to learn if any of this can benefit you and your family?