Retiring Corporate Executive: Streamlining Significant Wealth
Challenge: Five years from retirement, a corporate executive and his wife realize their financial lives are more fragmented than they desire. Between a seven-figure income, large concentrated equity position in the husband’s company, homes in two states, portfolios at several investment firms and a slew of other professional advisors, the couple wants to organize their wealth with united, coordinated guidance. Both husband and wife were concerned with the volatility of the stock market and want to look at investments beyond the scope of stocks.
The Canal Capital Solution: To begin we analyze the husband and wife’s entire financial picture from tax liabilities to legacy goals. Our financial planning process uncovers a number of ways for our clients to save money and accomplish goals by streamlining their wealth. As a result, they are able to:
- Determine the optimal retirement date and pension option by fully understanding the company’s benefit package and by modeling various retirement scenarios.
- Eliminate multiple insurance policies, freeing up significant cash flow. We will use about 1/3 of the cash flow savings to create an irrevocable trust that will go to the children tax free upon death.
- Reduce current income taxes by taking advantage of the following:
- The company’s deferred compensation plan (which also offers a match)
- Virginia Tax Credits
- Charitable Deductions by gifting appreciated stock to their favorite charity
- Develop an Investment Policy Statement (IPS). This plan incorporates a variety of new investment strategies, including Real Estate and Debt Investments with low correlations to stocks and bonds.*
- Establish a systematic selling plan for company stock, by setting up a 10b-51 plan with the company’s general counsel.
- Create and maximize Roth IRAs for the couple’s children in their early 20s, who are in a very low tax bracket.
- Enjoy confidence knowing their plan is up to date and monitored regularly.
*Full Disclosure: We are fee only and eschew liquid alternatives offered by mutual funds and high commissioned alternatives offered by brokers. We prefer direct investments similar to those utilized by large institutions.