Author: Caroline Wetzel

20 Apr Tomato Plants and Trusts

A few years ago, some friends asked my family to take care of their tomato plants while they went on vacation. While they were away we could eat ripened tomatoes, and when they returned my husband and I could keep one of the plants. This agreement is a very simplified example of how some trusts work. The following is an introduction to trusts and how clients use them, as well as an explanation for the tomato plants and trusts analogy from my perspective as a Private Wealth Advisor.

Introduction to Trusts: A Financial Planner’s View
As a Certified Financial PlannerTM, I describe trusts as assets with instructions. Typically, trusts are fiduciary arrangements involving three parties:

1. Grantor: individual who contributes assets to the trust.
2. Trustee: legal owner of the trust; person responsible for managing the assets.
3. Beneficiary: person who gains access to, or benefits from, the trust’s assets.

In the tomato plant example, my friends were the grantors and my husband and I were the trustees, responsible for caring for the plants. While our friends traveled, my husband and I were the beneficiaries of the plants because we ate the tasty grape tomatoes. When our friends returned, my husband and I continued to be beneficiaries of the tomato plant that we were given, and my neighbors resumed being beneficiaries of the plants that they reclaimed.

Trust and estate attorneys generally set up trusts for clients seeking certain benefits, including:

• Minimizing taxes: grantors seeking to reduce income or estate taxes.
• Controlling wealth: grantors control when and to whom assets from the trust are distributed.
• Retaining privacy: in the event of death, trust assets may pass to the beneficiary outside of probate.
• Protecting legacy: carefully structured trusts may help protect the assets from beneficiaries’ creditors or from beneficiaries themselves.

There are many types of trusts; some spouses set up trusts to provide benefits when one partner predeceases the other. Other grantors set up Irrevocable Life Insurance Trusts (ILITs) to be beneficiaries of life insurance policy proceeds. Charitably inclined grantors may set up Charitable Lead Trusts, Charitable Remainder Trusts, or Grantor Retained Annuity Trusts. Whether a trust makes sense for you depends on your unique needs and situation.

Trusts Equal Goals and Control
Daily, clients and I talk about what is important to them and how they can use their finances to experience peace of mind over time, as life inevitably changes. We discuss the estate plans they have in place, the titling on their various financial accounts, and how they expect the assets they have worked so hard to build over the course of their lives will be transferred in the future.

When different life circumstances prompt clients to ask about trusts, I like to ask two questions to guide our conversation:

• What goal are you trying to achieve?
• How much control do you want to retain around the assets you put into the trust?

What Goal Are You Trying to Achieve?
Clients owning large estates seeking to minimize taxes often set up trusts. Today, each person has an estate and gift tax exemption of $11.58 million ($23.16 million for married couples). While current law decreases these levels by half in 2025, the Biden Administration has indicated that it would like to reduce these exemptions further and increase the rates at which estates are taxed. Other clients of mine who do not have children have set up living trusts to facilitate the transfer of their real estate and non-retirement investment accounts to their beneficiaries outside of probate upon their death. They want the transfer of their assets to bypass the courts and be completed privately.

How Much Control Do You Want to Retain?
A major distinction across the different types of trusts is whether they continue to be controlled by the grantor after the trusts are established. For instance, a revocable trust, known as a living trust, is flexible and stays in the control of the grantor throughout their lifetime. While a revocable trust may help avoid probate in the transfer of assets, it is usually treated like any other asset the grantor owns during their life and is subject to estate tax upon their passing. In contrast, an irrevocable trust moves out of control of the grantor. Once executed, the assets in the irrevocable trust are out of the grantor’s estate, with the grantor having no ability to change any terms of the trust, including the ability to dissolve it.

Now back to the tomato plants where we started. The tomato plants that my neighbors resumed ownership of were like revocable trusts. And the tomato plant that my husband and I were given is like an irrevocable trust. If you aspire to experience peace of mind, optimize your financial health, and make sense of your financial planning choices today and over time in digestible ways like this, I am right here.

Caroline Wetzel is one of Natural Nutmeg’s 10Best Winners for Business/Life Coach. Caroline is a Certified Financial PlannerTM (CFP®) and Vice President, Private Wealth Advisor with Procyon Private Wealth Partners, LLC. Procyon Private Wealth Partners, LLC and Procyon Institutional Partners, LLC (collectively “Procyon Partners”) are registered investment advisors with the U.S. Securities and Exchange Commission (“SEC”). This article is provided for informational purposes only and for the intended recipient[s] only. This article may also include opinions and forward-looking statements which may not come to pass. Information is at a point in time and subject to change. Procyon Partners does not provide tax or legal advice.

07 Apr Ingredients and Equities: Know What’s Inside to Optimize Your Financial Health

“To optimize your financial health, you don’t need to have a command of every detail of the stock market. However, you should understand generally what you own and why, and how the positions you own work together.”

Do you check out the ingredients in your foods to make sure they meet your body’s unique needs? Whether it’s “nut free,” “gluten free,” or “organic,” many of us understand that what we put into our bodies impacts our physical health. In the same way, what we put into our investment portfolio affects our financial health.

Recently, Sheila and Brian* accepted my offer for a complimentary, thirty-minute financial consultation. As health enthusiasts, the prospective clients said they liked my approach of “peace of mind through financial self-care” and were curious to learn more. Like many initial healthcare consultations, Sheila and Brian answered a few preliminary questions about how they were doing before our videoconference. They also shared their financial statements with me so that I could review them and formulate an independent perspective on their financial vitals for our meeting. While the details of their financial health are confidential and specific to them, our conversation around key ingredients to preparing a nourishing and sustainable investment portfolio are relevant to many investors.

Understand Your Risks
Awareness of the ingredients in our food enables us to make informed choices around what we eat. If we want to optimize our physical health, we may choose to minimize eating certain items, or even avoid them entirely. For example, sometimes dairy causes me stomach discomfort. While I don’t know the exact chemical reason I experience the reaction, I understand generally how much of it I can handle. As a result, I am very intentional about how much I eat of it and when. The same approach is applicable to your investment portfolio. To optimize your financial health, you don’t need to have a command of every detail of the stock market. However, you should understand generally what you own and why, and how the positions you own work together.

While Sheila and Brian knew they had a few million dollars invested in stock and different funds, they weren’t aware of the risks they carried in their portfolio. Most of their holdings were growth-oriented and Americas-based. We discussed both the opportunities and tradeoffs associated with their existing strategy. As a result, they better understood why their portfolio behaved in certain ways as market conditions fluctuated, and therefore expressed interest in changing some of their existing holdings.

More Is Not Necessarily Better
Adding more ingredients to a recipe does not always make the dish better. Sometimes it can ruin the flavor of the food or sabotage the nutritional benefits. The same is true when it comes to equities in your investment portfolio. When an investor has conviction about certain positions, it may make strategic sense to own a bit more of a particular sector, firm, or fund. However, a key ingredient to investing over time is being careful to avoid having “too much” of a good thing—even a good equities position—at any time.

Sheila and Brian had multiple retirement accounts and several additional investment accounts. Within each account they held many equities positions; across the different accounts, they held many of the same positions. Sheila and Brian expressed surprise when I shared this observation with them; they thought separate, complementary strategies existed across their accounts. They valued my professional, independent opinions that the strategies were more similar than different, and that their aggregated positions set them up for concentration risk—too much exposure to one market sector and, in their case, a small handful of companies. Sheila and Brian wanted to adjust some of their holdings to minimize this risk. They liked my recommendation to establish an overall portfolio investment strategy and maintain distinct, integrated, and coordinated investment approaches within and across their various accounts.

Variety Is the Spice of Life
How many different types of soup have you eaten in your life? What makes one soup different from another? It’s what is inside—from chicken noodle to miso to lentil to New England clam chowder. There are limitless ingredients to consider when it comes to crafting this favorite treat.

The same is true when it comes to which equities you select for your investment portfolio. From geographically based funds to stock in various sizes to thematic solutions, you have an abundance of choices to prepare your unique combination of investments. And just like a soup, your investment portfolio mix that is satisfying one day because it met your particular financial goals might not be as appetizing another day, because your life and/or your awareness around what is important to you has changed.

During our consultation, Sheila and Brian said that they wanted to invest more in line with their values. They talked about social justice, environmental issues, and women in leadership. However, none of their existing investment positions clearly linked to these priorities. We discussed how we could tax-efficiently change some of their positions and enhance their portfolio with new holdings that aligned more closely to what was important to them.

Just as you take great care selecting what ingredients you put into your body, consider trusting my fiduciary team and me to understand what is important to you and carefully selecting the right financial ingredients for your investment portfolio, today and over time, to optimize your financial health.

* Sheila and Brian are pseudonyms. The prospective clients’ names have been changed and some details generalized for this article.

Caroline Wetzel is one of Natural Nutmeg’s 10Best Winners for Business/Life Coach. Caroline is a Certified Financial PlannerTM (CFP®) and Vice President, Private Wealth Advisor with Procyon Private Wealth Partners, LLC. Procyon Private Wealth Partners, LLC and Procyon Institutional Partners, LLC (collectively “Procyon Partners”) are registered investment advisors with the U.S. Securities and Exchange Commission (“SEC”). This article is provided for informational purposes only and for the intended recipient[s] only. This article may also include opinions and forward-looking statements which may not come to pass. Information is at a point in time and subject to change. Procyon Partners does not provide tax or legal advice.