Case Study

Personal Wealth Planning and a Family Business

We were introduced by an existing client to a couple in their mid-60’s who felt they needed more guidance and discipline when it came to their investment strategy.  The uniqueness of their situation was that their personal income statement and balance sheet were tied to the family business that they had owned and operated for more than 50 years.

Goals

  • Establish a comprehensive personal financial plan
  • Assess current risk management plan and enhance as needed
  • Update their current estate plan

Known Issues

  • The family business was extremely capital intensive
  • Little to no tax planning was taking place at the business or the personal level

Unknown Issues

  • We learned the clients had carried over a substantial loss on business books
  • The tax situation was about to become more dire due to start of required minimum distributions from their large retirement accounts
  • An outdated estate plan was further linking the families personal well-being with the business

Consultation Process

The Team at FBB uncovered many gaps in their plan including investment, tax, estate, retirement income and protection planning.  Once we identified these gaps we offered to bring in other professionals with whom we work to begin to assemble the building blocks of a solid plan.   It became clear, given the complexities of their business and personal tax situations that the team needed to be expanded to include a knowledgeable CPA and an Estate Planning Attorney with a specialization in working with small businesses

Alternatives/Solution

  • Through joint meetings with the clients, the accountant, and FBB we were able to uncover several areas that could quickly reduce the bleeding. 
  • The clients were able to reduce their payroll taxes, refinance business debt, create a capital and an operating budget, and ultimately begin to plan for the future. 
  • We also determined that they could utilize their business loss to aide us in converting their IRA’s to Roth IRA’s, thus allowing them to realize a current tax benefit from a large portion of the loss that they had previously been carrying forward while also eliminating the future need to take required minimum distributions from their retirement accounts, thereby reducing their future tax burden. 
  • To ensure the protection of the business assets and real estate we worked with the client through a revision of their estate plan.  This process involved coordinating the efforts of their attorney, accountant, and FBB to provide a solid Estate and Protection plan that was tax efficient and would hopefully allow the business to continue for the next generation.