Comprehensive approaches

Scenario 2: Making the Most of a Retirement Buyout


Challenges: 
When an executive receives a multi-million dollar cash buyout and early retirement upon the sale of a company, he and his family would have to make a lot of complex financial decisions. This scenario would be even more challenging if the husband was on his second marriage, with two adult children by his former spouse. Among the many challenges:

  1. Due to the sale of the company and significant tax consequences all in one year, the couple would be concerned with taxes and how to minimize them.
  2. They would want to be assured that they had ample assets to live out their retirement years while supporting their desired lifestyle.
  3. Assuming they were philanthropically inclined, they may want to be able to gift annually (within a budget) to various causes.
  4. Assuming the husband was on his second marriage, he would reasonably be concerned about the distribution of assets should he predecease his spouse, and the ultimate distribution of their estate after his wife’s passing.

Our Solution: 
Depending on the proximity of the sale of the business to year-end, we would immediately focus our attention on the potential tax liability of the transaction. We would work closely with their tax advisor and other professionals to understand the tax implications and potential solutions to best mitigate the burden. We would consider timely gifts to a charity near and dear to our clients. Such a gift would address all or a portion of the couples philanthropic desires while helping to offset a portion of their tax liability.

Next we would critically analyze the couple’s overall financial base and cash flows, using our financial planning/road-mapping process. Armed with a big-picture view of their finances and an understanding of their risk tolerance, we would model different scenarios to determine a suitable strategy for managing their investment portfolios. Our investment strategy would address their aversion to risk, their lifestyle needs and their philanthropic goals.

We would of course work closely with our clients’ trusted advisors wherever prudent. In this scenario, we would work with an independent, trusted Estate Planning Attorney to facilitate a supporting legal structure (trusts & wills) to protect the wife from money going to the husband’s children should he predecease her. We would also create a distribution schedule within their trust to map out the distribution of their estate to their beneficiaries in accordance with their wishes. Based on our assumptions, this would include a sizable charitable gift to an important charity/foundation that we could administer on their behalf.

The Lesson:

An unexpected financial windfall can radically re-prioritize things in life. People need trustworthy, comprehensive guidance to ensure implementation of well-designed plan that matches their wishes and needs. People want to be assured that they can enjoy their retirement years without compromising their lifestyle. They also want to have sound legal guidance followed by an estate plan that matches their desires. Our goal has been and continues to be to provide our clients with peace of mind in both investment strategy and management.  We also strive to stay finely attuned to changes in our clients’ lives, which may in turn affect their respective estate plans.  Working with Banta Asset Management and outside professionals ensures that as your needs and desires change, a strong team is in place to make sure your plans meet your changing needs.

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** Some services are provided by outside service providers. Please see important information regarding outside professionals we refer.

Disclaimer: These scenarios are intended only as hypothetical illustrations of the types of services that may be provided through Banta Asset Management, LP.  While elements of the scenarios here are drawn from actual client experiences, all Banta clients are managed based on individual circumstances. These scenarios are meant to illustrate our holistic approach to individual circumstances rather than specific experiences a Banta client can expect. Consequently, you should not assume that your experience would be the same, no matter how similar your circumstances are to these scenarios. Adverse market conditions and other contributing factors would impact accounts and would likely cause these hypothetical scenarios to be altered accordingly.

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