The Business Owner

Situation

Paul: 47 year old Business Owner
Mary: 45 year old Homemaker
Children: 2 (16 & 19)
Annual Income: $600,000
Investable Assets (Joint Account): $700,000
401(k): $550,000
Business Value: $13,000,000
Annual Savings: $60,000 to an individual account
and $17,500 to Paul’s 401(k)
Wills & Powers of Attorney:
Executed 10 years ago
Life Insurance: $2M Term on Paul and $500,000
Term on Mary
Disability Insurance: Paul is covered through his
company

 

iThrive Life Planning Process™

Vision: Sell the business in 10 years and retire; finish
paying for childrens’ education; have enough money to
live a comfortable lifestyle but also have enough to care
for their special needs son (their greatest concern).

Awareness: We collected all of Paul & Mary’s data and
found they were above the confidence zone with a 95%
probability of achieving their Vision if they continue their
current path.

Plan: In a live planning session we made adjustments to
optimize their confidence score to 86%. In doing so they
were able to reduce investment risk and spend more
money each year.

Implement: Thrive Implemented their plan every step
of the way.

Monitor: Thrive continues to annually confirm their
Vision, test their plan, and hold them accountable so
they stay on path.

 

Results

Business: Selling a business is a very difficult thing to do.
Rarely do we see a business sold on the owners terms or
for the right price. It’s very important to plan years in advance.
Thrive worked with Paul & Mary to create a team
of advisors (accountant, lawyer, and business growth coach)
to properly plan for the future sale of their business. This
process created efficiencies that increased annual revenue
by 40%, rejuvenated their drive for the business, and their
personal income jumped over $1M/year.

Investments: Paul had a difficult time resisting the
urge to continue pumping money into the business. Mary
on the other hand was uncomfortable with the risk and
welcomed the idea of diversification. Paul and Mary now
have a Joint Account worth $2.7 M (both from focusing
on building up their investment account and creating a diversified
growth oriented investment portfolio). Thrive
also took over management of Paul’s company 401(k)
plan and increased his contributions to $95k/year by
adding a profit sharing feature and including Mary as an
employee for the clerical work she performs.



Insurance: Modified their entire portfolio to properly
fund a succession plan and care for their special needs
child (which involved establishing a realistic price for their
desired standard of care).

Estate Planning: Introduced an attorney that specializes
in estate planning for families with special needs children.
Created an Irrevocable Trust to care for Paul and
Mary’s special needs child. Paul and Mary had a taxable
estate. We valued their company and shifted non-voting
stock to a trust for the benefit of Mary and their children.
In doing so they no longer have a federal estate tax issue.
An ideal succession plan for the business was also implemented.

Taxes: Saved $1.5M in potential estate taxes and
$67k/year in income taxes by increasing their 401(k) contributions
and actively managing taxes in their investment
portfolio.

The above is a hypothetical case study and not based on actual individual client results.

The results achieved in our simulations do not guarantee future investment results. It is possible that the markets will perform better or worse than shown in the case study; that the actual results of an investor who invests in the manner these case studies suggest will be better or worse than the projections; and that an investor may lose money by investing in the manner the case studies suggest. The case studies assume the reinvestment of dividends and do not include transaction costs for purchases and sales of equities and bonds or mutual funds and ETFs.  We assume no deduction for advisory fees, and that assets are allocated in the manner the projections suggest until the hypothetical client reaches age 95.  The final results also address such factors such as annual spending, annual savings, timing and cost of goals.  Although the information contained herein has been obtained from sources believed to be reliable, its accuracy and completeness cannot be guaranteed. While the case study results reflect rigorous application of the investment strategy selected, hypothetical results have certain limitations and should not be considered indicative of future results or results for any individual investor. In particular, they do not reflect actual trading in an account, so there is no guarantee that an actual account would have achieved these results shown. 

Thrive Wealth Management, LLC’s (Thrive) web site does not represent an offer of or a solicitation for advisory services in any state/jurisdiction of the United States or any country where the firm is not registered, notice filed, or exempt.  Thrive provides advice and makes recommendations based on the specific needs and circumstances of each client.  Clients should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Thrive is not a broker dealer and does not offer tax or legal advice. Please consult your tax adviser or legal counsel for assistance with your specific needs.

Thrive Wealth Management, LLC works as your personal financial advisor or financial planner, offering you a wide range of services such as investment management, retirement planning, insurances, succesion, retirement, tax, small business and many more. We proudly serve clients from King of Prussia and Valley Forge PA, as well as the surrounding communities.

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