Client Success Stories
We develop, implement, refine and revise customized strategies for each and every client we serve. Are you ready to explore the benefits of your very own Chief Financial Officer?
Carol is a widow. Her husband, Dwight, had been the primary earner in the family before he passed away two years ago. They had made a great team and shared much of their life together. However, Dwight had always handled most of the investment decisions.
Dwight did a great job of dotting the i’s and crossing the t’s and when he passed away everything went just as Dwight had planned and Carol was able to work through the estate settlement process with little trouble.
Now, a couple years later, statements kept showing up at the house, bonds were being called, cash was building up, and so many of the newsletters and magazines that made perfect sense to Dwight seemed like jibberish to Carol. After receiving a referral from a good friend, Carol was introduced to the team at Buttonwood Financial Group.
We met at Carol’s house and spent several hours reviewing what turned out to be more than a two foot high stack of investment statements that had built up. What Carol needed was a good, old-fashioned spring cleaning and that was exactly where we started.
Once we boxed up the statements and got them back to the office we were able to implement Buttonwood Wealth Management Solutions (BWMS) software so all of Carol’s investments, bank accounts, CD’s, insurance and estate program were accessible in one location – at any time. There were over fifty-eight different investment accounts, which ranged from assets at brokerage firms to stocks held in dividend reinvestment directly with the companies.
In the weeks that followed we were able to establish two trust accounts and two IRA accounts for all the assets to transfer into. With assets consolidated, we were able to establish a regular withdrawal strategy to create a steady and consistent income for Carol.
Excess cash from called bonds was reinvested, the hassle from piles of statements was eliminated and Carol went from spending time daily trying to track her investments to finding time to travel and be with her grandchildren.
Leaving A Legacy
Leaving inheritances to her three nieces and nephews, as well as a non-profit that was close to her heart, seemed like a dream to Michelle. However, she had no idea how to orchestrate these separate but valuable wishes.
A Desire to Make a Difference
She sought out Buttonwood, told us her story, and we came back with a proposal. We asked Michelle, “What if you established your own private foundation?” She was very pleased with the idea because it truly matched her values and provided her with the ability to leave a legacy that would reach community as well as her family.
She decided to start the Foundation sooner rather than later so she could experience the impact of her efforts firsthand. Fortunately, we had built flexibility into the plan that allowed us to alter it just enough so Michelle could fulfill her dream. Now she spends most of her free-time reviewing grant applications while Buttonwood coordinates her tax, asset management and other financial day-to-day needs.
If you’re interested in leaving a lasting legacy, let us show you how philanthropy can be incorporated into your long-term financial plan.
More Cash From Retirement
My cash flow in retirement isn’t taking me as far as I thought it would. What are my options?
Paul & Betty needed cash flow in their retirement. Or so they thought. When Paul & Betty first came to Buttonwood, the need for cash flow was at center of the discussion. When the question arose, how much money they needed each year, the answer was $70,000. However, an interesting thing occurred, once the Buttonwood team reviewed the tax returns for Paul & Betty…
In the previous 3 years, they made at least $80,000 each year. It turned out Paul and Betty had a cash flow management issue. Paul & Betty had about 10 different accounts, located different brokerage firms. They also held a number of individual stocks and bonds, as well as CD’s at a variety of banks.
The Buttonwood team, after helping with some estate planning needs, established trust accounts, consolidated assets from the multiple accounts and individual holdings into these new trust accounts and began to send out a monthly check. The irony of the situation was that once assets were organized and consolidated cash flows were actually able to be increased and now Paul & Betty live comfortably on about $90,000 per year in income.
When interest and dividend checks came in for $100 here or $500 dollars there, the money was simply spent going unrealized. By simply consolidating assets and putting a system for tracking cash flows into place Paul & Betty were able to define their budget, determine expenses, and make their retirement dollars stretch much further than they had been able to do on their own.
Real Estate Investments Demand Too Much
George’s challenge was that his current rental homes were taking an enormous amount of his time. He used to enjoy painting and cleaning the different properties, but what used to be a pleasant escape had become a burden. It was no longer so easy to climb underneath the sink to fix a faucet, and the seemingly never-ending painting took away from his time on the golf course.
His goal was to simplify. He had enough assets to be financially comfortable for years if he could find away to create the cash flows that he needed without the work that went with the real estate he currently owned.
After reviewing some options to reduce the taxes he would incur when he sold his various properties, we put a program in place that would create liquidity over the next three years. We worked with 1031 opportunities to defer taxes, diversify part of his real estate portfolio, and create additional cash flows. We were also able to utilize proceeds from select sales of real estate and reinvest in a well diversified cash flow generating portfolio.
The low tax rates George had enjoyed due to the depreciation of the real estate were maintained by the appropriate use of both tax-free and taxable bonds in his account. A monthly check was deposited directly into his checking account, and the work that had become such a burden with the individual real estate properties was no more.
The 2008 Market Correction had hit their overall financial portfolio hard. While their investment accounts had gradually regained value, Lori expressed concern that if anything similar might happen again before or during their retirement, it could prove quite disruptive to their lifestyle. At the same time, Mike was concerned they hadn’t saved enough. So they decided to seek advice.
An Investment Strategy That Made Everyone Happy
They came to Buttonwood, wanting safety and growth over the next 10-years, which at first seemed conflicting. But their goal was clear for us: We needed to implement a combined cash-flow, tax, insurance and investment strategy that would have the flexibility to absorb market risk. Our answer: The Bucket ApproThe Bucket Approach
Bucket #1 contained safe Investments. This is the bucket that provided ongoing cash-flow in retirement. Subsequent buckets incrementally increased risk and housed growth investments focused on the creation of future income. This risk management strategy allowed us to control potential downside while maintaining the ability to grow assets over time.
Because Mike and Lori had a decade until retirement and their current cash flow was adequate, we de-emphasized the first bucket and allocated more of their investments to the other buckets. As they come closer to retirement, we will accelerate the first bucket by shifting some of their higher-risk investments into more conservative options.
To discuss more in depth our Bucket Approach, give us a call at: (816) 285-9000.
Selling A Business
For most of their lives Richard & Edith had focused on their company. Twenty years ago, Richard had started the small business and Edith joined in as the company grew. Eventually they had over 50 employees and all the responsibilities that went with running a business. The company was a great success However, when the offer came in from a friendly group to buy the company for several million dollars it was simply too good of an offer to pass up.
Spending some quality time having fun and living life outside of their business sounded appealing so they worked out the details and sold their business. They had millions in the bank – way over the insurance limit – and that was when it hit them. They were very good at running a business but they only had one chance to correctly invest their life savings, and they needed to do it soon.
After talking with friends, their accountant, and attorney they arrived at Buttonwood Financial Group with what seemed like a simple request: Income for life, please!
After several meetings with Richard & Edith to make sure we understood the full picture, we discovered that they had done a great job of planning but not implementing. Many legal documents including trusts were written but the trusts were never funded. Powers of Attorney were in place for healthcare but not financial decisions.
From there, we went to work. We coordinated updates to their estate planning documents, opened and funded trust accounts, and promptly consolidated assets from over 20 different bank and investment accounts into four appropriate trust accounts. By consolidating accounts, we greatly simplified tax preparation and thus reduced their annual tax bill by more than 50%.
To eliminate concerns about big tax draws as quarterly estimated taxes came due, we met with their CPA and established a “tax account”. Then we set in motion a funding process so that funds to pay upcoming tax bills were automatically deposited into the tax account.
Last but not least, we mapped out an income strategy that would allow for growth of Richard and Edith’s assets while at the same time providing them a monthly income. Their lives were simplified, and bills and income streams that once needed almost daily review were virtually eliminated.
So Many Decisions in Retirement
Pat was turning 60 and it was time to retire! Fishing trips, vacations to visit the kids, and doing some part time consulting were all finally going to become a reality. So Pat began to work on some cash flow calculations based upon the information provided to him from his previous employers.
One of the jobs that Pat held was with the State of Missouri so there was a pension plan. At another position he had earlier in life, Patrick had a 401(k) plan. Pat also had an IRA, CD’s and regular investments. As he began to look at the different cash flow alternatives, the options became more and more intimidating.
Should he take the annuity from the State and play it safe? Should he cash in the State plan and allow the money to grow as he didn’t need it right away? Should he take cash flow he needed today from his 401(k) or from the State retirement plan? How much would he need? What could he take out without causing big tax problems or depleting his assets??
This was when a friend of his directed him to contact The Buttonwood Team. Pat came to the Buttonwood offices with a big pile of paper and more than 100 questions he had written down on the yellow notebook tablet. We started with question one and statement one and worked our way through.
In the end, Pat implemented a variety of different strategies, taking advantage of the strengths of each one of the retirement plans and investment accounts that he had. Today Pat is enjoying the life he worked so hard to save for over the years and Buttonwood takes care of all the day to day issues surrounding Patrick’s financial life.