an irrevocable trust. The trust, which is valued at $1.6 million and is funded by a life insurance policy purchased through The Hartford, is for his daughters and will be made available upon his death. By combining his money-purchase plan and his profit-sharing pension plans, valued at $2 million and each costing $1,500 to administer, Okoebor saved Tucker $1,500 in administrative costs.
Okoebor explains, “We realized that he would be able to avoid some taxes and at the same time could create lasting wealth for his grandchildren.” Furthermore, he says, more African Americans “are gravitating toward the intergenerational style of investing so that they can provide for their families in the long-term. It preserves their legacy, avoids transfer taxes, and teaches their children how to do the same.”
CREATE EDUCATION ACCOUNTS
To realize his goal of multigenerational investing, Tucker established 529 accounts for his four grandchildren in November 2002. He contributes $10,000 per child. He can continue to contribute to these accounts annually and receive tax benefits, knowing that he is providing for their education.
FINALIZE A WILL
Since Tucker owns two homes, worth a total of $800,000, he needs a will that clearly spells out how he wants to disperse his noncash assets. And because he is remarrying, he intends to protect his current estate plan, which emphasizes passing wealth on to his children and grandchildren. With the help of his financial advisor and lawyer, he is preparing a prenuptial agreement and setting up a trust with generation-skipping provisions. The proper documents in place and his retirement income assured, he hopes to savor a life filled with fun, tranquility, and contentment.