As with any good case study, this is an amalgamation based on real client scenarios.  Alterations and simplifications are used to protect both the identity and privacy of the individuals. 

Client
Sarah and Sam Jones 
Ages 44 and 47, Married, filing federal taxes jointly
Business owners, both work.

Concerns
2 children getting ready for college
Unsure about retirement

Situation
Do not make enough to pay for college outright, but make to much to get need based financial aid.
Possibly paying too much in taxes.

Objective
Coordinate and optimize their entire financial life.
Design a clear financial path to college for both of their kids.

Challenges

  • An accountant we collaborate with, introduced us to the Jones family.  Sam was upset with his accountant about the amount of taxes he had to pay, but it was not the accountant’s fault.  The Jones’s investment broker and insurance agent had both given bad advice, without doing the proper forward-looking due-diligence to the tax consequences.
  • They were saving money for college in low interest saving accounts.
  • There was significant taxable income from the business. 

What we did

  • College Funding Plan & College Pre-Approval™
    First we figured out how much was enough for college, and retirement. This included helping them build and refine their college list, and finding the right financial, academic, and social fit for each child. 
  • Small Business & Employee Benefits Planning
    A business and tax planning assessment showed many missed opportunities for tax planning, and 
  • We carried out a lifetime cash flow together with an analysis of their investments and their tax position. Were paying tax at 40%.
  • We also scheduled regular reviews to update the cash flow model monitor the tax efficiency and the performance of their investment portfolios, including making maximum use of their Capital Gains Tax allowance and making full use of their ISA allowances.

The results

  • We were also able to make use of some valuable Inheritance Tax measures to ensure that their children would get to keep more of their parents’ estate. We also identified replacement savings accounts to achieve higher rates of interest.
  • As a result of our advice Robert and Kate now pay a lot less Income Tax, generate income tax efficiently and will have reduced their exposure to Inheritance Tax.