As a child, gynocologist Dr. Carey Tucker admired his father’s approach to money management and investing. “My father was a laborer all his life, and he never finished high school, but he left my brother, my sister, and me $150,000 when he died,” he says. “I want to leave money to my children and grandchildren, but not as a lump sum.”
His father’s gift helped him to graduate from Howard University and Temple University School of Medicine. It also instilled in him the importance of a multigenerational approach to investing. Now 60, Tucker is continuing his father’s approach with his own family. Tucker, who is divorced, has two daughters — one of whom is a physician — and four grandchildren. His goal is to provide his offspring with the same boost his father gave him.
Tucker has always invested his money. In fact, he worked with three financial advisors before his portfolio lost $1 million when the technology bubble burst in the late 1990s. That’s when he knew he needed to act. “I was dissatisfied with the way my account was going, but I was afraid to change,” he recalls. “My portfolio was piecemeal, with a stockbroker handling the investments and two lawyers handling other aspects.”
Fortuitously, in 2001, while attending the National Medical Association Convention in Nashville, Tennessee, Tucker heard Smith Barney Vice President Anssy Okoebor deliver a speech on investment planning. He ultimately set up a meeting with Okoebor to establish a plan for his retirement. “I wanted to do estate planning, and when I talked to Anssy, he wasn’t pushy,” he says. They discussed setting up a trust for his children and took a second look at his insurance coverage. The results were immediate. “He’s managed my investments to the point where I’m not losing any money.”
To follow in the footsteps of his father by implementing DOFE principle No. 10: to ensure that my wealth is passed on to future generations, Tucker took the following steps:
PREVENT LOSS OF PRINCIPLE
Since one of the keys to passing on wealth is preventing the loss of your principle investment, Okoebor worked with Tucker to create an investment policy statement that provided a guideline of how the portfolio would combine stocks, bonds, and other fixed-income vehicles to minimize losses. The original portfolio asset allocation of 60% equity and 40% fixed-income investments was changed to 40% equity, 30% fixed income, and 30% cash. The equity portion of the portfolio included a mix of value stocks, large caps, and dividend-paying stocks to produce income and limit risk. Add in the yield from the U.S. Treasury bonds that dominate his fixed-income investments and the overall portfolio, which is valued at $2.7 million, was up 9.3% from October 2001 through April 2003.
With his retirement income more secure and his portfolio performing to his liking, Tucker, who recently retired because of arthritis, is preparing for his second marriage.
ESTABLISH A TRUST
To reduce estate tax and provide appropriate shelter for his retirement assets, such as his Roth IRA and pension plan, Tucker established