To make it easy for advisors and their clients to work with Valur, we have created content and tools (like our online calculators) to help advisors and their clients understand the products we offer. In this article, we will walk through a case study of how we’ve worked with an advisor to help him and his clients (we’ll call them Isaiah and Janice), to illustrate exactly how the process unfolds from the first conversation on. We want you to know that with Valur, your clients are in good hands and we’ll be here to help every step of the way. Let’s dive into the example!

A quick reminder, our process consists of five simple stages (you can learn more about process here):

• Exploration and Qualification
• Ideation and Strategy
• Implementation and Execution
• Investment Optimization
• Administration and Filings

An Advisor Example

• Clients — Married couple, Isaiah and Janice, ages 55 and 51, respectively. They have a son, who is 20 years old. They currently live in California but anticipate moving to Florida in the near future.
• Situation — Isaiah and Janice have spent the past 15 years building an e-commerce consumer business, which they are now selling.
• The Windfall — They’re not 100% certain, but early indications suggest the business is worth ~$18 million.
• Financial Picture — They have most of their wealth tied up in their business, but they have some other assets, including a home that’s currently worth $1 million and approximately $2 million between their retirement and other investment accounts. Their current combined W2 income is $275,000 per year.
• Liquidity Planning and Goals — Isaiah and Janice want enough liquidity to take fantastic vacations, purchase a new home on the water in Florida, and set their son up for the future. Isaiah is also interested in making some strategic investments in a few businesses, whether that be a start-up or a local family-owned restaurant chain. Given that, they’ll plan on allocating up to $15 million toward tax-planning strategies and retain $3 million pre-tax in their own names.

Now that we’ve identified the client’s situation, why don’t we walk through each step?

Exploration and Qualification

What is the goal?

• We’ll want to understand as much as we can about Isaiah and Janice’s situation. You may already have all the answers prepared for us, or we may have to walk through the questions together. Regardless, we’ll get all the information we need for our system to provide the right solution.

Here are the sorts of questions we would want the clients to answer:

• What is your situation?
• Are you planning to sell appreciated assets?
• What is your annual ordinary income?
• Where do you live, are you married, and do you have children?
• How old are you? And how old are your spouse and, if you have any, your children?
• Do you have any plans for the proceeds from you liquidity event? (We’re not going to advise your client on how much they should put into a trust, but we ask the thought-provoking questions to get them to think it through for themselves.)

How involved will you, the advisor, be throughout the process? You’ll likely go down one of two paths:

• Ask all of these questions upfront and collect the information for us. This is the more common path.
• Either have the client interact with our technology platform or speak to a dedicated Valur trust strategy representative.

Ideation and Strategy

What is the goal?

• To take all of the inputs, lay out the potential solutions, and explain things along the way like: how much Isaiah and Janice can save and earn over time, what sort of liquidity will be available to them, and how the trust structures work.

What work does our technology do? Our technology makes finding and sharing the solutions easy. With the inputs provided, we can share the information you and the client need to make an informed decision. What does that entail? The client (and you) will receive a fully customized report that includes:

• the estimated return on investment
• liquidity at various periods of the trust’s life
• how much a charity will receive (if applicable)

Want to see an example of this report? Get in touch with our team to receive a custom report for your client scenario. In this case, the clients are a good fit for a charitable remainder unitrust. The report would include the following information:

• Isaiah and Janice could earn as much as $45 million more over their life and their son’s life. That’s 83% more than if they’d done no tax planning at all!
• They’d also have $4.3 million of liquidity available to them by year 5.
• The charity of their choosing, whether it be their own donor advised fund, private foundation or an outside charity may receive $32 million at the end of the trust’s term.

How does our team of trust strategists help?

• We’ll make ourselves available for as many calls as it takes, to explain the different options, how each structure works and what the financial implications will be.
• These conversations don’t always fly in a straight line. There will be questions, iterations, and sometimes nuances depending on what asset your client is planning for. We narrow down the topics and make sure the important details make it to your ears and theirs. Some common questions that arise are: “How does the structure of my company impact the viability of the trust solution?” and “Are there any risks if I contribute my company to a trust and then it ends up not selling?”

How involved will you be?

• As much as you want! Check our assumptions if you’d like, and advise your client on your perspective. You can even play gatekeeper, where we work directly through you and allow you to present the options as you see fit. Again, the choice is yours!

Implementation and Execution

What is the goal?

• At this stage you’ll have a firm idea of what you’re looking for and so will we. Like traditional lawyers and trust companies, we’ll implement your client’s desired strategy; we’ll do all necessary payout calculations, draft the trust, and formalize it (including notarization and federal registration, as applicable). We’ll also open any required custodial accounts and assist with asset transfers.

What does our technology do?

• ‍Produce the client’s trust — We’ve built a cutting-edge, one-of-a-kind platform that can take all of the information provided and produce a legally binding trust document. This process can take as little as two hours if needed. Speed wise, this is unmatched in the entire industry. Based on their situation and preferences, Isaiah and Janice are well suited for a Net Income Makeup Charitable Remainder Unitrust, which will allow them to defer their gains for as long as possible. Given their son’s age, they have four options to choose from for trust length: Term, Single Life, Two Life, and Two Life + 20. Since they have indicated that they want the longest trust length possible, they’ll go with the “Two Life + 20” option.
• Set up custodial accounts — The information provided throughout the process will be used to set up the required custodial accounts. Both Isaiah and Janice have indicated an interest in public equities, real estate, and private companies once their trust is funded. As a result, we’ll be opening two custodial accounts for them: Schwab (for public assets) and Kingdom Trust (for real estate and private stock).

How does our team of trust strategists help?

• Notarizing the trust — A member of our trust strategy team will join a dedicated call with you and a notary, to officially lock in the trust and allow you to begin using it. (Thankfully there’s technology to help with this, but we’ve found it’s incredibly valuable to have someone from our team there to help with the process. So a live agent from our team will join the client to notarize and finalize the trust.)
• Moving the assets — A member of our team will also help move assets into the trust. The process will vary depending on the type of asset and the client’s role in the company — for example, a founder may have an easier time getting approvals (if any are necessary) than an employee when transferring shares. In general, though, the asset-transfer process is very straightforward.

How involved will you be? Typically, the advisor chooses not to play a major role here. We’ll take care of all the heavy lifting, though we do work with advisors to choose the appropriate custodians if they prefer someone other than Schwab or Kingdom Trust. If you have ideas, we’re always happy to listen.

Investment Optimization

What is it?

• This is the process of choosing what assets the trust invests in. The client of course will always have their own preferences regarding risk tolerance, weighting, etc. Most trusts can invest in anything that an individual investor can invest in. Charitable remainder trusts have some investment restrictions, but those restrictions are unlikely to affect a typical investment portfolio.

How does Valur help?

• We work with with you, to make sure there’s a complete understanding of trust accounting principles and their implications for your chosen investment strategies. With concepts like trust-specific tax-loss harvesting and distribution targeting, we can help you increase your client’s returns by 30% or more over time.
• In the case of the Isaiah and Janice, they’ve indicated that they’re interested in some form of regular distribution annually with most of it deferred as much as possible. Given that, we’d communicate that some level of interest-paying debt security or dividend-paying security would be a good fit for their investment portfolio, with the majority being focused on long-term appreciation.

How involved will you be going forward?

• You will own your client’s investment strategy, of course — that’s outside of Valur’s purview. We’ll always opine on how certain investments can impact the trust, but of course the decision is ultimately yours.

Administration and Filings

What is the goal?

• To make sure that every aspect regarding administration of the client’s trust is taken care of 24/7. Each year the trust is required to file a federal tax return, and (depending on the state) potentially a state filing as well. We’ll also provide the required forms a client will need to file their own personal tax return. The most important goal is that it’s simple, seamless, and requires little to no time for the client each year.

How does Valur help?

• Accounting and Administration — We’ll keep track of all of the assets, transactions, expenses, and accounting requirements so that you know at any time how a trust is performing and when tax filings are due. This doesn’t change much per client — we’ll work just as hard for your clients as we do for the rest of our clients.
• Federal Tax Filings — We will complete and file the trust’s federal tax return every year. No need to spend your time worrying about these requirements, the most work you or the client will have to do is sign the document itself! Each charitable remainder trust gets the same federal tax filing known as the Form 5227.
• State Tax Filings — Our team will also file the state tax return every year. For California this form is known as the 541B.
• Personal Tax Filing Forms — Depending on the type of income the client receives from the trust, they’ll receive either a 1099 or a K-1 each year. We’ll provide you or the client with these documents to hand over to their CPA or to you for filing each year.

How involved will you be?

• Thankfully this is the easiest part of the process for advisors. There’s quite frankly nothing for you to do here. You can always check these documents if you feel so inclined, but you don’t have to do anything.

Next Steps

The charitable remainder unitrust has tremendous potential for Isaiah and Janice. The right strategy for your clients may be different. In any case, as an advisor, you should know that your clients are in good hands and we’re here to help them every step of the way.

About Valur

We’ve built a platform to give everyone access to the tax and wealth-building tools typically reserved for wealthy individuals with a team of accountants and lawyers. We make it simple and seamless for our customers to take advantage of these hard-to-access tax-advantaged structures. With Valur, you can build your wealth more efficiently at less than half the cost of competitors. 

From picking the best strategy to taking care of all the setup and ongoing overhead, we make things simple. The results are real: We have helped create more than $3 billion in additional wealth for our customers. If you would like to learn more, please feel free to explore our Learning Center. You can also see your potential tax savings with our online calculators or schedule a time to chat with us!

‍