Example Scenarios


It's our belief that great wealth advisory stems only from a well designed plan

Example Scenarios

1. Business Owner

Eric and Cindy are in their early 50’s, they own a brokerage firm with 3 locations in three different cities. When they came to us several years ago their business was growing and all of their efforts were used to maintain this thriving business. However since acquiring the business they had not spent much time reviewing their corporate structure or their personal financial situation.

Eric was listed as the sole shareholder even though Cindy worked in the business full time. This was not optimal for distributing income, and would pose problems during disposition or sale of the business. The Operating company held large amounts of cash well In excess of operating needs, creating a liability issue if the business was failing or sued. Other issues were that their children were now attending post secondary education and requiring funds, as well there were some complications with a partner at one of their locations.

 

Eric and Cindy’s accountant contacted us to put together options on restructuring, and integrating their corporate and personal “financial worlds”. Having worked with this accountant on other similar situations we were familiar with the network of professionals that would be required to implement our recommended plan. We put them in touch with Corporate Lawyer to assist in a possible reorganization.

 

After collaborative consultations between ourselves, the accountant, and the corporate lawyer we were able to implement changes that resulted in substantial annual tax savings, increased creditor protection, increased investment returns without an increase in risk, and lowered their management fees. Potentially the greatest benefit will not be realized until the business is sold and taxable gains will have been virtually eliminated.

2. Retirees

Stan and Patricia are clients of ours in their 60’s. They have been retired for a few years and recently came to us to consolidate and to solve some tax problems. Stan worked as a general manager for a car dealership for the past 20 years. Patricia was a VP at a large financial institution and has a decent pension.

Over their careers they have managed to accumulate a respectable nest egg as well as Patricia’s pension income. However they are concerned that they may not have enough funds to last their lifetime and leave some money to their heirs. Recently Patricia has had part of her OAS clawed back due to a high level of income from her Pension, CPP, OAS, RSP’s and investment income. Stan has had health issues in the past and they are worried about how this may impact their future financial situation.

We contacted Stan and Patricia’s accountant to determine their tax history and collaborate on several tax saving scenarios. Ultimately our goal was to reduce total taxable income and to shift as much income to Stan as needed. The best scenario saw Patricia recover all of her lost OAS income, lowered her marginal tax rate, and increased their after tax income while lowering income drawn from investments. Part of the above savings was used to implement a protection plan in the event either Stan or Patricia’s health fails.

Highlights:

• Holistic planning approach that works collaboratively with other professionals.
• Implemented changes that resulted in over $6,400 in annual tax savings.
• Reduced long term care risks
• Reduced management fees with consolidation of accounts.
• Established sufficient retirement income to last their lifetimes, and provide a legacy for their heirs.

 

3. Liquidity Events

Ten years ago Sophia found herself forced into making financial decisions on 3 million dollars that she did not have several weeks earlier. She already had a career, was a dedicated saver, and loved to travel. Retirement was still long on the horizon. After seeking advice from multiple advisors and institutions Sophia found herself feeling unsure and confused as to how best to proceed. Several months passed by and Sophia’s local banker realized that she needed a different approach and wealth advisors who could provide a holistic plan. We spent several months organizing a network of professionals to assist in implementing our plan for Sophia.

Sophia’s goals were simple but required comprehensive solutions. She wanted to dedicate a large amount of her time to traveling for charitable organizations. This will require a substantial cash flow for expenses and side trips. Sophia wants to ensure that she does not encroach on her capital and in addition requires funds to assist family and charities.

Through effective cash flow investment techniques, we produced sufficient income for Sophia with no annual tax bill over the last 10 years. Her capital has grown even though she has a lower risk tolerance. Annually she is able to provide assistance to her family and several Charities. We structured a estate plan with a Corporate executor to ensure her estate was distributed as per her wishes while minimizing potential conflicts.

Highlights:

• Holistic planning approach that works collaboratively with other professionals.
• Provided 140,000/yr of income with no tax.$40,000 of this was made available to family and charities.
• Established a estate plan that will be tax neutral on death.
• Created a sustainable, long term, conservative investment portfolio that will produce her needed income now and in retirement.