Golden Pond Wealth ManagementWhen Golden Pond Wealth Management’s founder and managing director Brian Bernatchez sits down with new clients, he starts by asking how they intend to use their money to live their life and accomplish their goals. For those who have been fortunate and disciplined enough to be categorized as high net worth (investment assets of more than $1 million) or very high net worth (investment assets of $5 million to $30 million), he often recommends a simple spending and giving strategy. “We advise clients to find a healthy balance between personal spending and sharing with family members and charities,” Bernatchez says. “The goal is for both to be a source of enjoyment and satisfaction.”
One guideline, called the 3/1/1 strategy, can be a good fit for retired clients with significant investments, whose pension and Social Security cover basic needs. This strategy frames annual portfolio withdrawals as a percentage of its total value. The first, a 3% annual withdrawal, is used to enhance the client’s lifestyle through travel, hobbies, major purchases, and home improvements. The second withdrawal, 1% annually, can be used to support the client’s family through vacations, gifts to children and grandchildren, and contributions to 529 college savings plans. The final 1% is for charitable giving.
Many retirees hold a portion of their investment portfolio in an IRA, which requires an annual required minimum distribution beginning at age 73. By making qualified charitable distributions directly from an IRA, clients can meet their required distribution through the final 1% of the 3/1/1 strategy. “A QCD is the most tax-efficient way for a client to support their favorite charities as the gifted amount is not included in their taxable income,” Bernatchez says. The amount is also not subject to itemized deduction limitations.
In planning for investment portfolio distribution after a client’s death, the team at Golden Pond will sometimes recommend the 60/20/20 strategy. In this model, 60% of the total portfolio value is passed to the client’s children, 20% is passed to grand- and great-grandchildren, and the remaining 20% is for charity. By listing a client’s favorite charities as beneficiaries of their IRA, those assets will pass directly with no income tax liability. If a client prefers, they can create a donor-advised fund as the IRA beneficiary and designate family members to serve as grantors who recommend future donations. “The best assets to give to charity are those that would be taxed if received by family members,” Bernatchez says.
Accumulating significant wealth requires discipline, stewardship, and hard work. The team at Golden Pond prides itself on its ability to help clients use a simple investment strategy with tactical shifts during times of extreme market stress and corrections to help a portfolio grow. “Distributing wealth, even for high-net-worth individuals, can be overwhelming unless a simple strategy is embraced,” Bernatchez says. “In our experience, the portfolio becomes an engine that can provide the long-term returns necessary for clients to realize their financial dreams while lending a helping hand to family and community.”
To start a conversation with the Golden Pond team, give them a call at 207-873-2200. 129 Silver St., Waterville.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. No strategy ensures success or protects against loss. This is a hypothetical example not representative of any specific situation. Results will vary.