FINAL CASE STUDY

Jack and Reese Holmes

For this case you will evaluate the Holmes familys financial situation and assist them in developing an estate plan. Using the chapters weve covered; you will devise a basic estate plan for them (the cases and checklist in chapter 14 will be very helpful).

The grading rubric for this 50 point assignment is as follows:

• 10 POINTS: Clearly identify the issues of concern within the case.
• 15 POINTS: Present a thorough understanding of possible solutions.
• 15 POINTS: Convey knowledge of documents clients will need, along with available alternatives.
• 10 POINTS: Correctly use the estate planning process (pages 535-537).

Information to be used in the case is as follows:

Jack (age 54) and Reese (52) Holmes are a married couple with two children, Mattie (24) and Rose (30). Rose has 2 kids, Macie and Wade (ages 2 and 4). Jack Holmes is an oral surgeon, and he co-owns a practice with another doctor. Reese is a homemaker. Both of them are heavily involved in working with their favorite charities, Austin Smiles and The Gideons International.

The Holmes have obtained substantial assets throughout their lives, approximately $12 million each. In addition to sound planning and saving, Jack and Reese have both inherited large sums from their parents. Over the years, they have divided their assets evenly into investment accounts, real estate holdings, and artwork. They have a ranch in their home state of Texas where they spend a lot of time with family and friends.

Jack offers a company-sponsored retirement plan through the practice, so he has a sizeable 401(k), as well as joint and individual brokerage and bank accounts.

Three weeks ago, an unannounced guest visited the Holmes. It seems that Jack was surprised to learn that he has a son he never knew about, who was born before he ever met Reese. While they are surprised at this revelation, the family wants to form a relationship with him.

The Holmes have approached you, their financial planner, to develop a comprehensive plan for them. They are interested in gifting strategies to both their family members and charity. They also want your advice about creating a trust, including which type of trust is most useful for their situation.

What do you suggest for the Holmes family?

1. What are the steps in the planning process they should follow?
2. Who should be on their financial planning team?
3. Given their situation, what estate planning documents do they need?
4. If they need a trust, what type(s) would you suggest? Why?
5. How would you suggest they implement the plan?
6. What gifting strategies would you suggest?
7. Please note if you make any additional assumptions about the family in order to complete the steps.