Wisdom in Wealth

Strategies, Stories, and Lessons Learned Over the Course of 25 Years Helping Families Plan Their Financial Lives

Innovation in Change

By Bill Beynon | August 14, 2020
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"The true sign of intelligence is not knowledge but imagination." - Albert Einstein

Obstacles are in front of us in many ways.  We can choose to halt progress or innovate and overcome obstacles.  Inevitably, we all face obstacles in our day to day lives that we cannot avoid. We are given a choice when faced with obstacles, to halt progress or to find an innovative way to overcome them.

As I watched the most recent SpaceX / NASA launch sending US Astronauts to the International Space Station, I saw the results of innovation and big thinking overcoming major obstacles.  Not many would have visualized a private company working with government agencies, effectively taking over our space travel and rocket programs that had been historically funded and run by our government.  

Elon Musk had a vision and the determination to overcome an obstacle.  Not only did he find a way to make it happen, but he and his team had revolutionized new methods and standards that many would have never thought possible.  Imagine sitting in a room at SpaceX more than five years ago and hearing the big idea of a partnership with NASA. That in and of itself was a huge stretch at the time.  

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Now imagine your company founder and leader had a vision that SpaceX would be able to launch rockets into space and save millions, if not billions, of dollars by landing the booster rockets back on earth and reusing them for future launches.  It, not only, had never been done - but I am not so sure the idea had ever even been contemplated.  In order to make the deal work in a new world of reduced government budget, and the restraint of capital in a private company, SpaceX had to think big.  True to form, Elon Musk threw fuel to the fire by setting a goal to not only land the booster rocket on earth, but to land it on a floating platform in the sea.  In the end, big ideas resulted in big innovation.  

We have many obstacles in front of us in estate planning today. In my recent piece, “Looking for Opportunity in Change”, I highlighted the potential changes to the tax code as well as the challenges that could emerge if these changes come to fruition.  

In the last 25 years, I have seen lots of changes to tax code and laws governing estate planning.  Many were positive, but some certainly made it more difficult to effectively plan.  As a self-proclaimed tax nerd, I find change to be exciting.  Facing the obstacles and finding new and innovative ways to help our clients successfully reach their goals always gives me energy.  

Collaboration is key to successful innovation.  I have been lucky to have worked with many estate planning focused attorneys during my career.  I enjoy the sharing of ideas and collaboration.  We regularly share ideas with each other in order to evaluate and gain perspective on how innovative ideas provide positive results for families.  

I know you are probably thinking that launching a rocket and landing it on a ship in the ocean is a far stretch from a creative new estate planning idea.  I completely agree, but I am going with it anyway.  So, I hope you will indulge me.  

There’s no good idea that cannot be improved on. - Michael Eisner

Since 1998, I have collaborated with a wonderful estate planning attorney in Naples, Florida named George Wilson.  George and his partners focus their practice solely in the area of Trusts and Estates.  We have worked together on hundreds of plans. We have also collaborated with other lawyers around the US to structure plans for their clients.  If you happen to know George, I guess we can begin to refer to him as the Elon Musk of estate planning. Ha.  

All joking aside, over the last month, George and his team have been working on a new version of an irrevocable trust that could change the way we look at gift and trust planning.  

Recently, George shared his new idea in an Estate Tax Alert.  Below is an excerpt from the alert:

“For our clients who are married, each spouse should create and fund (via gift) a Spousal Access Trust with a special power of appointment (“SPAT”).  This cross gifting removes these assets from a couple’s taxable estate but still permit each spouse direct or indirect access and use of the gifted funds for their lifetime.  Our intent is to make these gifts to the trusts now with the ingenious right to cancel the gift strategy should the estate tax laws not be revised by the spring of next year.  Please view the [below] diagram to better understand the nature of cross gifting to a SPAT.”


CLICK TO ENLARGE IMAGE

Special Power of Appointment Trusts Diagram


I am already using SPAT planning with families looking to lock in their Unified Credit this year. It is an innovative idea that fits so well in today’s planning environment.  So often the permanency and lack of flexibility with large gifts, is the obstacle to executing on a plan. In my opinion, the SPAT successfully overcomes the obstacles and frees families to act with confidence, potentially saving millions of dollars in estate taxes.

As we look forward to the upcoming election season and contemplate potential changes to the tax code, we will continue to collaborate and seek innovative ideas to help families achieve their planning goals.  

If you would like to learn more about the SPAT or simply have your plan reviewed, feel free to email us at info@cwafgi.com.

 


Picture Source: SpaceX, First stage landing on droneship

 
CWA Asset Management Group, LLC is an SEC-registered investment adviser, doing business as Capital Wealth Advisors and as blueharbor wealth advisors.  Fundamental Global Investors, LLC is a SEC-registered investment adviser that is affiliated with CWA Asset Management Group, LLC. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and unless otherwise stated, are not guaranteed. Nothing herein should be interpreted as investment advice. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Specific companies or securities described in this report are meant to be illustrative of investment style. Such case studies are not meant to be, and may not be, representative of any portfolio or holdings of CWA Asset Management Group, LLC, or Fundamental Global Investors, LLC.

Please note that past performance is not indicative of future results.
 
This material is solely for informational purposes and is intended only for the named recipient. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be relied on in making an investment or other decision.
William Beynon
President & CEO

Author of Wisdom in Wealth.

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