Case Study – “Personal CFO”
The Challenge: Reece is married with two young children. He is part owner of a successful medical practice that consumes an enormous amount of his time. He wants to make sure that he is properly planning from a tax, investment and business standpoint but lacks the time and expertise to do so.
The Strategy – After multiple discovery meetings Reece decides to work with Tushingham Wealth Strategies and utilize their “Personal CFO” service. A complete review of his business, financial and tax filing history is conducted, and then a team of professionals is assembled to address all of Reece's personal and business planning needs.
- Reece, who was preparing his own tax returns, had failed to take a number of tax deductions over the past few years. With the help of a CPA he amends prior year returns and receives a refund of nearly $5,000.
- The company had no succession plan in place and Reece had no protection in the event of a disability. Tushingham Wealth Strategies helps establish a “transition” plan to protect Reece’s family in the event he is unable to work or needs to sell the business.
- The company had no retirement plan in place for Reece or the staff. Tushingham Wealth Strategies helps establish a 401(k) plan to help Reece shelter over $35,000 a year in income for retirement and satisfy an important employee need.
- Reece learns that refinancing his current mortgage can save his family over $50,000 in interest over the life of the loan. Tushingham Wealth Strategies helps coordinate a loan refinancing with a local loan officer.
The Results – Having a “Personal CFO” by his side has provided Reece with peace of mind and confidence in his business, financial and personal life. He receives monthly communication updates on plan implementation and any potential risks that might derail his objectives. If he were to become incapacitated in anyway his family would be provided with an income stream and the business would continue to operate normally.
Case Study – Your Best Strategy to Pay for College
The Challenge: Ryder and Kyla have two children, Kramer age 17 and Fletch age 14. Ryder is a human resources manager and Kyla owns a law firm. Both plan on retiring in the next five years however Kramer’s education costs are projected to be over $265,000. Ryder and Kyla want to help fund educations for their children but do not want to jeopardize their own retirement.
The Strategy – Ryder and Kyla contact Tushingham Wealth Strategies and inquire about their college planning services. After the first meeting they quickly learn that “true” college planning goes well beyond just opening a 529 account and encompasses areas such as college selection, tax aid and financial aid. They agree to establish a college plan for both Kramer and Tucker.
- Ryder and Kyla discover that Kramer would likely be eligible for a substantial amount of financial aid at an out of state private school. Based on Kramer’s academics the aid would most likely come in the form of a scholarship and allow them to afford the school with minimal student loans.
- Since Kramer works at Kyla’s business they discover how Kramer’s income would make him eligible to claim an education tax credit worth $2,500 a year. Initially Ryder and Kyla had disregarded the credit since they did not qualify for the credit on their own tax return.
- Initially Ryder had planned on paying for Kramer’s first year of college by selling appreciated stock in a brokerage account. He learns that this would actually decrease Kramer’s financial aid eligibility. Tushingham Wealth Strategies proposes a better option; establish a pension plan for Kyla’s law practice. Contributions not only aid in funding Ryder and Kyla’s retirement and reducing their taxes but also increase Kramer’s eligibility for financial aid.
- By going through the college planning process Ryder and Kyla can confidently begin preparing for Fletch’s education and their own retirement. They also learn that a number of college savings vehicles could help defray the cost of Fletch’s education.
The Results – Both Ryder and Kyla are comforted to realize that they can afford to send both children to college and protect their assets and income for their pending retirement. Not only will both children receive an education at top rated schools but they should also graduate with minimal student loan debt. This will better prepare their children so they can begin saving immediately after college for their own financial goals.
Scenarios presented are for illustration purposes, are not an actual client and may not be typical of all clients. Individual results will vary.