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.

“Since I think this is best for clients, to me it’s always worth it,” she says. The firm charges a minimum planning fee so that if someone needs the planning but doesn’t have much in assets, the firm is still compensated for the planning work.

Plancorp has software that allows it to pull a daily feed on accounts outside its management. It plugs this information into its retirement plan analysis. “It’s very difficult to offer sound advice without knowing the entire picture,” says Gelsheimer.

Another step she and her colleagues have taken with this client, who is very charitably inclined, is to encourage her to do qualified charitable distributions (QCD) directly from her taxable IRA. Under current tax law, individuals can gift up to $100,000 directly to charity to satisfy their required minimum distribution (RMD) and not have to include that in their ordinary income.

“This is definitely the best way for anyone over 70½ to give to charity,” says Gelsheimer. It enables them to still get credit for giving to charity at a time when, because of the doubling of the standard deduction, taxpayers have become less inclined to itemize deductions, she says.

The client made a qualified charitable distribution of approximately $20,000 in 2018, which is a large portion of her RMD, says Gelsheimer. Qualified charitable distributions must be granted directly to charities, not to donor-advised funds. If someone owns multiple IRAs managed by multiple advisory firms, it’s important to coordinate so the total distributions taken comply with tax laws, she says.

Family Ties
Gelsheimer’s client had inherited a lot of her farmland from her parents, but they hadn’t done a great job relaying pertinent information. She has voiced concern to Gelsheimer that she doesn’t want her heirs to feel that way.

“We’ve encouraged her to start those conversations as early as possible so she’s not leaving her loved ones in a similar situation,” says Gelsheimer. Clients shouldn’t simply speculate about whether younger heirs want to retain family property, she adds.

In this case, Gelsheimer’s client has made it clear that she would be OK if her children and grandchildren decide to sell the farmland bequeathed to them.

Gelsheimer realizes clients may feel awkward discussing their net worth with their offspring. Some worry the children will fail to do something productive with their lives if they know how much they’re slated to inherit, she says. However, “we can take that off the table and not even talk about numbers,” she says.

Instead, family meetings can start with an estate plan diagram that shows the types of accounts owned and the people who would take over should something happen to Mom and Dad, she says. That way, everyone knows what tasks they’ll have to perform.

Getting organized has been a big focus with this Plancorp client. “One of our biggest value-adds has been putting together a comprehensive financial independence analysis, which includes all her income, assets in various locations and expenses,” says Gelsheimer.

This analysis shows the client’s cash flow and her probability of living a “successful” retirement, says Gelsheimer. She has built a plan based on a life span of 100 years (instead of the typical 95 years) because longevity runs in the client’s family.

Gelsheimer’s client is very frugal—still working outside the farm by choice and not out of necessity—and has more than enough money to be more generous with herself. She has recently started to take nice vacations with her grandchildren.

“I feel like she has more energy and spunk than I do and she’s a lot older than I am,” says Gelsheimer, 34.

Building Rapport
Despite their big age difference, Gelsheimer, who has been in the industry for 11 years, says she was able to easily and quickly build a rapport with the client. Initially, an older colleague also sat in on the meetings.

Gelsheimer says she and her client spend the first 15 to 20 minutes of meetings talking about life. She types notes into the system about anniversaries and trips the client mentions and brings them up during their subsequent conversations.

“Those little things show that I legitimately care about her as a person,” says Gelsheimer, who started out as a social work major and then realized, while taking a finance class, that she could use her love of math to help people.

Showing her client she cares is “more important than showing her that I put together a really cool spreadsheet,” says Gelsheimer. “The biggest thing with the business is relationships.”