Case Studies




Untimely Loss of Spouse

Unbiased Guidance During a Life Changing Event

Problem: Surviving Spouse Facing Time Sensitive Financial Decisions

  • Uncertain who to trust
  • Facing critical investment choices
  • Early withdrawal penalties on IRA’s
  • Spending in excess of bond portfolio income
  • Preferring not to re-enter work force

Solution: Implemented a Plan to Maintain Current Lifestyle


Woman thinks about husbands deathClients Want Advisors Who Listen Not “SELL”

Mrs. Kelly, the mother of two teenage children, had recently lost her husband to cancer. Living in New York City, there was no shortage of financial professionals to interview for advice. She began the process by setting up meetings with her insurance agent and a recommended financial planner. They both took a similar approach to “pitching” their hopeful new client; proclaim the benefits of high cost proprietary products, promise “guaranteed” income for life and focus on the current “dangerous financial environment”.

Feeling uncertain about the intentions of the insurance agent and financial planner, Mrs. Kelly, under the recommendation of her accountant, met with us for a second opinion. Beginning with our initial meeting we were able to immediately put Mrs. Kelly at ease. Instead of pushing products, we took the time to listen and learn about her unique circumstances. Our client focus approach won her confidence and her business.

Each Client is Unique and Should Be Treated as Such

Mrs. Kelly had retired from nursing years earlier to stay at home and raise their two young girls. Her husband was a highly compensated Wall Street executive who managed to accumulate a modest retirement account, including some restricted stock, but all together, after setting aside monies for private school, and buying their apartment for cash, they had accumulated little in their savings account.

At only 47 years old, Mrs. Kelly was 12 years away from being able to withdraw funds-penalty free-from her IRA account and her husband’s inherited IRA account. In addition, much of her husband’s restricted stock was “underwater” and/or undervalued. Our challenge was to devise a tax-efficient, well diversified investment strategy that would allow Mrs. Kelly to maintain her current lifestyle and secure a comfortable lifestyle going forward.

Proper Planning is Critical

The good news was that the Kelly’s estate planning was up to date and properly implemented. An irrevocable life insurance trust (ILIT) had been created and funded with a $3.0 million policy naming the wife as trustee and income beneficiary. This trust would allow insurance proceeds to escape estate tax and create a steady stream of income for Mrs. Kelly. Based on current law, the insurance proceeds held in trust for the spouse, upon her passing, would also be excluded from her estate, creating further tax savings for her children.

We completed a detailed analysis of Mrs. Kelly’s current and inflation adjusted future spending requirements. Our analysis concluded cash flow needs to be in excess of what any high quality fixed income portfolio could generate from the life insurance proceeds.

It’s OK to be Different, Just be Smart

Investors are commonly advised to keep “safe”, liquid investments (i.e. bonds) in their personal account and “risky” long-term oriented investments (i.e. stocks) in their retirement account. Depending on an investor’s age, income needs, current tax structure and market opportunities this conventional wisdom can prove to be anything but prudent advice.

After learning about Mrs. Kelly’s unique circumstances we were able to create an intelligent and customized portfolio solution. Her portfolios now included a blend of high quality, dividend-paying stocks and short to intermediate term bonds. The objectives of these customized portfolios were to ensure Mrs. Kelly received sufficient income, capital appreciation, inflation protection, tax sensitivity and diversification.

We routinely meet with Mrs. Kelly to review her lifestyle needs and portfolio results. She can now focus her time and energy on the children and does not have to worry about day-to-day fluctuations in the market.


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Please note that the case study above was selected to demonstrate the type of analysis that we would traditionally perform for our clients. The selection was not based on any portfolio performance criteria. Additionally the client is not endorsing our services and may or may not have a positive experience with our firm. Due to various factors, including changing market conditions and/or applicable laws, the presented material(s) may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in the presented material(s) serves as the receipt of, or as a substitute for, personalized investment advice from PWM. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.