Financial Advisors, Economists, Tax Specialists
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Case Studies
This is how we add value to our clients
Before Us
Clients had the typical setup of a solo profit sharing 401k plan. They were only able to save $65,895 in tax, although the business owners were able to get 76.6% of the net tax benefit, meaning they pocketed $50,475 a year that would have otherwise gone to the IRS. Not bad but we knew they could do much better.
After Us
We used a "combined" plan using elements of a profit sharing and a pension plan that vastly increased the tax savings from $65,895 to $822,951 a year, 94.2% of which all went to the business owners themselves. This means the business owners pocketed $775,219 a year that otherwise would have gone to the IRS!
Before Us
Both husband and wife had very high incomes and were investing funds in a variety of qualified and non qualified accounts. No estate planning had been done beyond a will. We pointed out that they were not taking advantage of other wealth building avenues and were putting themselves and especially their kids at risk of a massive estate tax bill at death since we made a reasonable estimation that their estate could be upwards of 100 million at death. Whilst we don't know what the estate tax will look like at death at that time, there is a high probability they will have to pay a large amount to the IRS. Currently, heirs have 9 months to pay the estate tax bill. Without proper preparation family dynasties can implode because of the estate tax itself since heirs have to fire sale the assets in order to come up with the cash to pay the tax in that short time frame.
After Us
Without fundamentally changing their investment strategies or spending habits, we simply made sure a bank funded a large properly structured life insurance policy on their behalf, that exists outside of their estate and can thus help them avoid taxable estate limits or pay any estate tax bill that comes due, since life insurance pays out very quickly at death. This means that the risk of their children having to liquidate investments to pay any future estate tax is mitigated. On top of that, it can provide a very appealing tax free income in retirement. In the final analysis, we have left them with a projected 54.31% increase in post tax retirement income, and ensured that their heirs receive around 60% more than otherwise. A good bang for buck considering we just made a few relatively easy tweaks to their financial plan.