Editor's Note: This article is part of the Financial Advisor series "How I Solved It." Advisors describe a client with a problem and what they did to help.

It’s great when that light bulb goes off and people realize they shouldn’t be putting their whole net worth in the same basket. But they may still be sitting in the  dark if they’ve accumulated many baskets and don’t have anyone helping them understand the many moving parts.

A widow now in her mid-70s was in this situation when she first met several years ago with Plancorp, a St. Louis-based RIA firm that manages $4.2 billion of assets. Another client of the firm whom she knew personally had referred her because he thought she could benefit from additional assistance shortly after her husband died. The bulk of her $15 million in net worth was split between farmland and liquid investments parked with multiple advisors at multiple firms.

The client thought spreading her assets among different advisors was reducing her risk, but the advisors were focused on buying and selling, and no one was helping her do comprehensive planning. She was headed toward what could have become a fiscal train wreck.

“When we showed her how we could look at the entire picture and do full financial planning—review estate documents, insurance, tax planning, etc.—as opposed to just investing her assets, it sold her,” says Sara Gelsheimer, a CFP and senior wealth manager at Plancorp. They also explained to her the benefits of having a well-diversified portfolio.

One of the first steps Gelsheimer and her colleagues advised the client to take was to file a Form 706 estate tax return for her deceased husband in order to elect portability for his unused exclusion, which was $5.25 million at the time of his death. By combining her estate tax exclusion ($11.58 million in 2020) and the exclusion captured from her husband, the client’s estate would pass tax-free to her heirs should she die before the estate tax exemption sunsets in 2025.

Fortunately, the client sought assistance when she did because Form 706 must be filed within nine months of the decedent’s death. If necessary, a six-month extension can be filed. Without her husband’s exclusion, the client’s assets above the $11.58 million threshold would be taxed at a rate of 40%.

Gelsheimer also realized that her client hadn’t taken a step-up in basis for a joint account she owned with her late husband that is managed by another firm.

Let’s assume, says Gelsheimer, that the couple invested $1.3 million in various stocks and their account was worth $2 million when the husband died. Half the shares of each of their stocks get a step-up in basis to the market value at the time of his death. That would bring her client’s cost basis to $1,650,000 instead of $1,300,000. If the client sells all the assets, she’ll realize $350,000 in long-term capital gains instead of $700,000. That translates into tax savings of $52,500 at a capital gains rate of 15%, notes Gelsheimer.

Generally, most clients initially bring all their assets to Plancorp. But sometimes, as in this case, “it’s best to get the client onboarded and try to get additional assets over time as you continue to build rapport,” says Gelsheimer. Plancorp includes accounts managed by other firms in a client’s financial plans even if they’re not paid a management fee on these assets.

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