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"They like that Foster & Motley continually coordinates the flow of information between all of their advisors: accountant, insurance agent and attorney. This saves them time and provides them with peace of mind that their finances will remain on track over the long term."

John and Kathy

John and Kathy - Financial Planning & Investment Management Case Study

They just sold their business, now what?

John’s & Kathy’s Background

John and Kathy just sold their industrial products business. John’s father started the company in 1955 and grew it into a solid local business before he retired in 1980. John started working in the business during his summers in high school and college. After college, John worked full-time with his father until his father’s retirement. Kathy worked part-time in the business as she juggled work and raising their two kids, Ben and Kate. Together John and Kathy grew the business into one of the premier businesses in their industry. They were approached by a much larger company that offered to buy their business. They felt the time was right to let someone else run the business and agreed to a deal. They are a little nervous and very excited about developing a life outside their business. They are looking forward to spending more time with their adult children, traveling and getting more deeply involved with some of their favorite local charities.

How Did Foster & Motley Help?

We began by listening; listening to their vision for retirement, their attitude towards money and investing and their legacy goals.

Once we understood John and Kathy better, we worked to prepare a one-page summary of their financial life, a net worth statement, a 5 year projection of their cash flow and a detailed income tax projection. We also projected their financial future using our sophisticated retirement planning software. Once we understood the bigger picture, we worked closely with their accountant and attorney to understand the intricacies of their business sale and their subsequent 3 year consulting contracts.

By gaining an understanding of their goals and an understanding of their situation we were able to accomplish the following:

  • We developed a plan to receive their deferred compensation payment from the company over a 5 year period. Spreading their income over several years reduced their cumulative income taxes.
  • We made sure their sale agreement had a provision that allowed them to maintain their health insurance and utilize other benefits for the period they were providing consulting to the company.
  • We help them determine the amount that they could safely withdraw from their portfolio each year and still meet their longer term financial goals.
  • We determined an amount they could afford to spend on a property in Colorado. When they did find a property they wanted to purchase, we coordinated the transfer of funds to make sure their closing went smoothly.
  • We worked with their accountant and attorney to set up a charitable foundation in the year of the sale of the business. The foundation will allow them to assist the organizations they care about while providing a significant tax savings.
  • We worked with them and their attorney to set up a new estate plan. This estate plan accomplished their legacy goals and included trusts for the benefit of their children and future grandchildren. The estate plan was designed to minimize estate taxation and remain flexible enough to adapt to changing estate tax environments.
  • We developed a diversified investment plan for their personal assets as well as those assets placed in trust and those assets in the family foundation. The investment plan for their personal assets was conservatively invested and designed to produce dividend and interest income they need to meet their ongoing living expenses. The investment plans for the children’s’ trusts and family foundation were focused on longer term growth.

John and Kathy utilize our Wealth Management service. They like having a dedicated financial planner and portfolio manager to integrate all the components of their financial lives. They appreciate the Foster & Motley team’s attention to detail especially in the areas of income tax minimization, estate planning and generating enough cash flow from their portfolio to support their living expenses. They like that Foster & Motley continually coordinates the flow of information between all of their advisors: accountant, insurance agent and attorney. This saves them time and provides them with peace of mind that their finances will remain on track over the long term.

The Case Study is hypothetical in nature, for illustrative purposes only, and should not be considered investment advice. The information is intended to illustrate services available at Foster and Motley, Inc, and is not intended as a testimonial or endorsement of Foster & Motley, Inc. as an investment advisor. The Case Study does not necessarily represent the experiences of other clients, does not reflect actual investment results, nor is a guarantee of future results. The investment strategies discussed are not appropriate for every investor and take into consideration a client’s investment objectives and financial needs. Clients should review with their Foster & Motley, Inc. Financial Advisor the terms, conditions and risks involved with specific services and products.