Reflect 3

Reflect-3 Advisory Planning

Core Workflow

1. Read the staged prompt.txt, request memo, and answer_template.json. Extract the client id, horizon year, required top-level keys, allowed enum values, date format, rounding rules, and any ordering constraints.
2. Query only the advisory API records needed for the requested analysis:
   • Client profile: /api/clients/<client_id>
   • Source facts: /api/source-documents?client_id=<client_id>
   • Retirement account/RMD work: /api/retirement-accounts?client_id=<client_id>, /api/rmd-factors, /api/policies/tax
   • ILIT/life insurance work: /api/life-insurance?client_id=<client_id>, /api/policies/tax
   • GRAT/CRAT work: /api/trust-candidates?client_id=<client_id>, /api/policies/tax
3. Resolve sources before doing math. Prefer the current signed profile for household facts, filing status, age, income, marginal tax rate, beneficiary count, liquid assets, and client goals when it is complete. Use custodian/account exports for retirement balances, returns, RMD start ages, and conversion-year recommendations. Use structured life-insurance records for policy economics, mapped to the closest allowed source enum. Use trust-candidate records for transfer economics, with attorney memo as the closest allowed asset-source enum when no structured enum exists. Treat stale CRM notes as fallback only.
4. Compute with unrounded intermediate values and round USD outputs to cents at the end. Return JSON numbers, not strings. Return only the JSON object.

Roth Conversion and RMD

Use the signed profile plus custodian retirement account. Let:

• annual_room = max(0, conversion_bracket_targets[filing_status] - annual_non_ira_income)
• conversion_years = recommended_conversion_years
• conversion_years_positive = conversion_years when annual_room > 0, otherwise 0
• first_rmd_year = planning_year + max(0, rmd_start_age - current_age)

Simulate baseline and conversion cases year by year, inclusive through the horizon. The ordering matters:

for each year:
  if conversion case and year is inside the conversion schedule:
    conversion = min(annual_room, traditional_balance)
    traditional_balance -= conversion
    roth_balance += conversion
    conversion_tax += conversion * marginal_tax_rate

  if age_for_year >= rmd_start_age:
    rmd = traditional_balance / rmd_factor[age_for_year]
    traditional_balance -= rmd
    rmd_tax += rmd * marginal_tax_rate

  traditional_balance *= (1 + expected_return)
  roth_balance *= (1 + expected_return)

Baseline uses the same RMD-then-growth loop without conversions. Include any starting Roth balance in both scenarios. rmd_tax_savings_through_horizon = baseline_rmd_tax - conversion_rmd_tax; do not net conversion taxes against RMD-tax savings.

Qualitative labels:

• Use STAGED_ROTH_CONVERSION when there is bracket room and liquidity to pay conversion tax.
• Use SUITABLE when bracket room is positive and liquidity is adequate, even if RMDs start soon.
• Use RMD_NEAR_TERM when the first RMD year is the planning year or next year; otherwise use TAX_BRACKET_MANAGEMENT unless liquidity is the real constraint.
• Use MIXED_TAXABLE_AND_TAX_FREE when both projected traditional and Roth balances remain material.

ILIT and Crummey Funding

Use the signed profile beneficiary count and current-year annual gift exclusion:

annual_exclusion_capacity = annual_gift_exclusion[current_year] * beneficiary_count
premium_gap = max(0, annual_premium - annual_exclusion_capacity)
notices_required = beneficiary_count

Do not double exclusion capacity for a married household unless the staged records explicitly say gift-splitting is part of the plan.

Crummey administration dates:

• contribution_date: planned contribution date from the policy record.
• notice_due_date: five business days after contribution.
• withdrawal_window_end: 30 calendar days after the notice due date.
• earliest_premium_payment_date: the next calendar day after the withdrawal window ends.
• dedicated_bank_account_required: true.

Risk and action mapping:

• New ILIT-owned policy with no premium gap: FUND_WITH_CRUMMEY_NOTICES, SUITABLE_WITH_ADMINISTRATION, LOW_IF_FORMALITIES_MET.
• Premium gap only: use lifetime exemption for the shortfall and flag EXCLUSION_SHORTFALL.
• Existing policy transfer only: disclose/handle the three-year lookback and flag THREE_YEAR_LOOKBACK.
• Existing transfer plus premium gap: combine both risks.

Estate impact:

• projected_outside_estate_if_implemented is the death benefit expected outside the estate if implemented.
• When a liquidity-support field is requested, use min(death_benefit, estate_tax_exposure).
• Map structured policy records to the closest allowed policy-source enum, usually CUSTODIAN_EXPORT when the template has no life-insurance-specific source enum.

Estate Liquidity

Use current tax policy constants:

taxable_estate = max(0, estate_value - estate_tax_exemption[current_year])
estate_tax_exposure = taxable_estate * estate_tax_rate
liquidity_gap_before_planning = max(0, estate_tax_exposure - liquid_assets)

For combined action plans:

• Prefer COMBINE_ILIT_AND_GRAT when a low-risk ILIT and family-transfer trust strategy both fit.
• Use ILIT_FIRST_THEN_GRAT for new ILIT funding plus a GRAT transfer.
• Add ATTORNEY_DRAFT_REVIEW for attorney-coordination action plans.
• Add ILIT_CRUMMEY_NOTICE_CYCLE when funding an ILIT.
• Add GRAT_FOR_APPRECIATING_SHARES or CRAT_FOR_CHARITABLE_REMAINDER according to the trust recommendation.
• Add LIFETIME_EXEMPTION_ALLOCATION only when a premium shortfall, transfer lookback, or exemption allocation is part of the recommended action.
• Sort action_set alphabetically exactly as requested by the template.

GRAT and CRAT

Use the trust-candidate economics and current tax policy. Prefer GRAT when the controlling current goal source shows high family-transfer priority and low or moderate philanthropic intent. Prefer CRAT only when the controlling current source clearly prioritizes philanthropy. Do not let an older CRM philanthropy note override a complete current signed profile.

GRAT projection:

balance = asset_value
annual_annuity = asset_value * grat_annuity_rate
for each GRAT term year:
  balance = balance * (1 + expected_growth_rate) - annual_annuity
projected_remainder_to_heirs = max(0, balance)
estimated_estate_tax_reduction = projected_remainder_to_heirs * estate_tax_rate

CRAT projection:

term = min(crat_term_years, max_crat_term_years)
balance = asset_value
annual_payout = asset_value * crat_payout_rate
for each CRAT term year:
  balance = balance * (1 + expected_growth_rate) - annual_payout
projected_charitable_remainder = max(0, balance)
estimated_income_tax_deduction = asset_value * charitable_deduction_rate

Set mortality_inclusion_risk to TERM_SURVIVAL_REQUIRED for GRATs. Use SECONDARY_CHARITABLE_TOOL when GRAT is preferred, and SECONDARY_FAMILY_TRANSFER_TOOL when CRAT is preferred.

Common Pitfalls

• Do not use stale CRM facts when a signed profile supplies the same field.
• Do not omit starting Roth balances from Roth/RMD legacy projections.
• Do not take RMDs after growth; take RMDs before the annual growth step.
• Do not subtract conversion tax from RMD-tax savings.
• Do not report gross estate as taxable_estate; use estate value above the current exemption.
• Do not add unsorted or extra action-set enums.
• Do not include prose outside the final JSON object.