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Case Study

How a Vesting Event Revealed Flaws in an Executive’s Estate Plan


Preserving shared values

Mark and Liz are successful technology executives living in Austin, Texas. Mark founded and built his analytics company from the ground up, sold the business in 2016 and is now managing a portfolio of technology solutions across artificial intelligence, robotics and security. Liz has held leadership positions across several well-known technology companies and now leads the North American operations for a cloud solutions provider.

Mark and Liz care very much about their impact on the world and the community in which they live, and they have sought to impart these values on their two adult daughters — both in how they live and through regular conversations.

Smiling male business owner using digital tablet with female colleague in coffee shop.A house is reflected on the surface of a lake in New England during the fall season.

Redefining moment

This year, Liz’s restricted stock vested, requiring her to address concentrated equity risk. This compensation milestone — along with the couple’s wealth increase and growing family — led Mark and Liz to recognize the need to revisit the estate plan they had set up early in their busy careers.

The eldest daughter, Julie, and her husband, Tim, have two sons from Tim’s prior marriage. Even though she is not their biological mother, Julie thinks of the sons as her own, and in turn, Mark and Liz are very involved in their lives.

The youngest daughter, Beth, is in her final year of graduate school, and has been working on a business plan for a start-up social platform focused on connecting women entrepreneurs with investors.

A boat and dock on a peaceful, still lake in the early morning hours.

Charting the way forward

We worked with Mark and Liz to update their plans to align with their values.

We ensured their trust supported their objectives to pursue sustainable investing — we included language to ensure not only that their trustees could invest in ESG funds, but that future beneficiaries would have the flexibility to invest sustainably.

Their current trust — like most traditional trusts — only supported a minimum standard of living for their daughters. Given their own success and belief in entrepreneurial ventures, they updated their trust to allow for the future funding of their daughter’s business ventures, should they meet the criteria Mark and Liz defined.

To address Liz’s concentration risk and to transfer wealth to Liz and Mark’s daughters without incurring gift tax, we helped the couple establish a Grantor Retained Annuity Trust (GRAT) to be funded by Liz’s high growth potential stock, and added language to address retention of the concentration during the GRAT term and waive the trustee’s duty to diversity the trust’s assets.

Caucasian women talking in modern kitchen.Woman harvesting cherries on a sunny day with a wicker basket.

It was important to both Mark and Liz that their grandchildren and future generations be supported, regardless of whether they were biological relatives. We updated the trust to ensure the individuals they considered “family” would be supported by trust distributions.

Mark strongly believes in the long-term prospect of his business as a global company, and would like his beneficiaries to continue to hold shares in trust as a legacy holding. We helped him craft a Statement of Wealth Intent that reflected this priority, and included a provision in the trust that would ensure retention of these special assets despite the standard requirement for trustees to diversify under the prudent investor rule.

When the children were younger, the family relished many summers at their vacation home. Their trust was updated with a provision to allow for retention of non-income producing lifestyle assets to ensure the property would remain in the family for generations to come.

After working with us to refine and improve their estate plan, Mark and Liz feel confident that the wealth they have accumulated will continue to support their values. They find comfort knowing their family will not only be protected — but empowered — to charter their own success.

Learn About Our Modern Trust Provisions

Learn About Our Modern Trust Provisions

Our collection of will and trust provisions offer a path forward for grantors to fulfill their vision while meeting the needs of future generations.

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Successful wealth management requires coordinated advice that evolves with your life and circumstances. Together, we can develop a plan for your best future.