WHO WE SERVE

BUSINESS OWNERS

Stephen and Beth founded their aerospace valve company in Nashville, TN 30 years ago. They were both engineers by background, and their lives have been consumed by building their successful and profitable business. Over the years they enjoyed occasional family vacations and wished they had more free time away from the operation of the business. They recently purchased a second home in Orlando FL, where they intend to eventually retire. They have two children, a 27-year-old daughter, and a 30-year-old son, and want to assure they are financially comfortable.

Stephen confided he was losing sleep over having so much of his wealth in the value of a private company. With neither child interested in working for the family business, Stephen and Beth decided it was time to sell the company to achieve liquidity and create a comfortable financial base for retirement. They were frequently approached by potential acquirers and decided it was time to retain a banker to assist in the sale of the company. They also needed to update their estate plan, as their company’s value was far higher than originally assumed in prior planning.

Stephen and Beth had been clients of BFM for more than a decade, and our managers traveled to Nashville frequently to review their financial plans and investment progress. With the recent important decision to sell the company, we suggested a meeting to include all their estate planning attorney and tax advisor.

How Boston Financial Management Helped:

In collaboration with both legal and tax advisors, we created a plan in advance of the sale of the company to assure they achieved their desire for liquidity and financial comfort. Addressing their complex goals and financial needs, the plan achieved the following:

• Cash Flow Projections. BFM provided a cash flow plan to illustrate retirement income, annual spending, and an investment strategy to meet goals. We ran several cash flow scenarios, each showing a different probability of financial success in a variety of market conditions. The plan also prioritized the sources of retirement income (IRA distributions, Social Security, investment income) for tax efficiency.
• Investment Management. With the sale of the company, Stephen and Beth had six investment accounts needing oversight. Two taxable revocable trusts; two trusts for their children; and two IRA rollovers funded by the previous firm’s 401K assets. For each account, we established separate goals and an appropriate asset allocation to diversified investments.
• Gifting to Children. We designed a plan to gift a portion of the company to the children in advance of the sale of the business. This provided a comfortable financial base for both children.
• Charitable Giving. Stephen and Beth will make a major gift to a Nashville hospital upon their death. We recommended the creation of a Charitable Remainder Trust with a portion of the private company stock. This created a large charitable tax deduction and a regular stream of income through their lifetimes.

Stephen and Beth successfully transacted the company to realize a substantial financial return for their years of entrepreneurship. They recently moved to Orlando and we advised them on the sensitive process of becoming a legal resident of Florida. We also offered to manage the investment portfolios of three executives from their company, and they are currently using BFM to advise them on their stock options in their new employer, the acquiring company.

Names and identifying details in this client story have been changed to protect client confidentiality. This client story does not contain any legal or tax advice. You should always consult with your attorney, accountant or other professional advisors before changing or implementing any tax, investment or estate planning strategy. 

Executives & Professionals

Linda and Todd were high earners looking for ways to give back to the community while continuing to build personal wealth. Linda was a partner in a Boston law firm specializing in environmental law, and Todd was a engineer at a rapidly growing enterprise software company.

They were both very charitably-inclined and made annual gifts of appreciated stock to The Boston Symphony and to their college and graduate school alma maters.

How Boston Financial Management Helped:

The first thing we did is review recent tax returns with Linda and her tax advisor. We reviewed their long term charitable goals including their intention to make major contributions to future capital campaigns at two universities.

We concluded that creating a Donor Advised Fund (“DAF”) funded by Netflix stock would be the best way to achieve their various goals. Establishing the DAF created a one-time major tax deduction for the value of the stock donated. And once the DAF was created, they could conveniently determine each year how much to donate to their favorite charitable 501-c3 organizations.

Creating the DAF enabled Linda and Todd to:

• Make major gifts to charities and achieve their goal of giving back to the community
• Reduce income taxes with the charitable deduction
• Decrease their investment risk of a concentrated position in one stock
• Avoid paying a capital gains tax on some of the appreciated Netflix stock

Boston Financial Management’s team assisted with all the administrative details in creating the DAF and transferring stock to fund it.  Each year we review the progress of the fund and determine whether donating additional stock is advisable.

Names and identifying details have been changed to protect client confidentiality. This client story does not contain any legal or tax advice. You should always consult with your attorney, accountant or other professional advisors before changing or implementing any tax, investment or estate planning strategy.