Jim and Beth are looking forward to retirement. They are in their late 60s now and have run two separate and successful businesses for almost 40 years. Their son Adam has been working alongside them in their main business for 20 years. Adam has really contributed to the bottom line of this business and has put his own equity in as well. Jim and Beth’s daughter Tina has become a successful engineer in another city, so will not be involved in either business.
For Jim and Beth, there are three main concerns:
To achieve their goals, Jim and Beth face some important investment decisions. If they buy only safe investments with their retirement fund, with the curve, they could run out of money during their life and deplete Tina’s estate substantially. On the other hand, if they choose stocks and equity mutual funds, they could experience huge volatility and still not meet their income and estate planning goals. And then there is the issue of the taxes that will become due when ownership of the business is transferred to Adam: as much as 50% of the value of a business can be lost to tax when transferring ownership to a child.
By taking a slow, methodical approach to understanding Jim and Beth, their retirement goals and estate planning concerns, we were able to develop a solution that covered all the bases:
If you would like to learn more about this strategy, feel free to contact us.