Financial Planning and Advice Stories
Saving for Retirement
A self-employed health care provider wanted to start saving for retirement. We discussed the use of solo 401-(k), SEP IRA, Roth IRA and taxable investment accounts to create a tax efficient retirement plan. A Healthcare Savings Account was also proposed. Together we opened a SEP IRA account online with automatic monthly investing.
Dealing with an Inheritance
A single father was changing careers to a commission-only job and would not have much income for the first few years. He inherited an IRA and a home from his deceased father. He wanted to make sure he was on the right path. We discussed selling the inherited home with little or no tax consequences rather than tapping the inherited IRA which would result in a tax burden. We reviewed an investment proposal from a major bank’s investment arm. Significant shortcomings of the plan were reviewed. We suggested further dialog with an estate planning attorney to clear up unresolved inheritance issues.
Restarting after Divorce
A recently-divorced client needed to buy the jointly-owned home and a rental property from her ex spouse. We discussed a saving strategy to accumulate a one-time payment to the ex who, very kindly, was willing to carry a mortgage for 10 years. We discussed that the rental property would come with a large future capital gain tax obligation which should be factored into the purchase price. Discussed tax-efficient strategy of a future sale of current residence and move into the rental property to take advantage of capital gain exclusions on home sales.
Maintain Medicaid benefits
A 60-year old requested advice on managing his investments so that he could stay retired and maintain his Medicaid eligibility. We raised funds on capital gains neutral basis. We got on the phone with Fidelity to fix missing “cost basis” information. He reduced the number of accounts from 9 held at two different investment firms down to four at a single firm. This allowed him to easily see overall asset allocation and for us to craft an investment strategy that addresses his income and risk management needs.
Selling a Business
A business owner grappled with managing a sudden and large windfall after selling her company. Our engagement evaluated proposals from other investment managers, her risk tolerance and options for her charitable intentions. We settled on a conservative investment strategy proposed by an investment advisor. She also established a Donor Advised Fund generously funded in the year of the business sale in order to reduce the tax burden of the business sale. The fund provided for many years of her charitable giving while the tax benefits were concentrated in the year of highest taxes from the business sale.
It's Complicated...
A self-employed professional was juggling numerous financial objectives – managing the significant proceeds from a home sale, buying a new home, retirement planning, divorce and child custody arrangements. We addressed these priorities and took action by establishing the needed accounts for short-term cash investing as well as SEP and Roth-IRA retirement accounts. Made recommendations for estate planning to be implemented with attorney. Arranged for the client and ex spouse to each get term life insurance to benefit each other for the care of their child up to the child’s age of 25.