By Steve Griffin, CFP® and Kelly Goldstein, CFP®
Many business owners face the daunting task of transitioning their legacy. When one of our clients at Full Spectrum Financial Group asked us to help them create an effective succession plan for their business, we knew we could help. Our financial planning services are designed to remedy situations exactly like the one our client was experiencing.
This case study explores the procedures we used to devise a strategy that aligned with their objectives. Let’s take a closer look at the details of their situation and how we helped.
THE CLIENT
Tom and Susan Jackson have been clients at Full Spectrum Financial Group for three years. They own a thriving landscaping company they started 25 years ago.
Tom is still active in the company but has transferred much of the daily operation to their son, Mark. They also have two daughters, Maggie and Monica, who are not interested in participating in the business. All three kids are grown and out of the house.
Tom and Susan are active members of their local church as well as other Christian ministries. We originally met through shared church activities.
THE GOAL
Tom and Susan’s biggest goal was to transition the family business to Mark while simultaneously optimizing their own retirement finances.
They wanted to “gift” 60% of their landscaping company to Mark over the next few years as they continued to diminish their involvement in the business. They would eventually “gift” the remaining 40% of the business to Mark at some time in the future.
THE CHALLENGES AND HOW WE HELPED
To transform the Jacksons’ goals into actionable steps, we guided them through our comprehensive financial planning process.
To start, we explained what they could anticipate from the process, and we listened to their goals and concerns. During the next phases of the process, we examined all their financial, legal, and business documents and collaborated with their CPA and attorney.
These are the actions our firm took to design, deliver, and implement a plan that would help the Jacksons overcome their challenges and pursue their goals:
Business Transfer to Mark: To effectively transfer the business to Mark, we collaborated with the Jacksons’ CPA and attorney to develop a plan to transfer 20% of the business stock to Mark over the next three years.
Premature Death of Mark: To anticipate the event that Mark passes away before the business transfer is complete, we placed a $1M key person life insurance policy on Mark with Tom and Susan as beneficiaries. These funds could be used to buy his interest back from his wife, or alternatively could be used to indemnify the business for the loss of his contributions to the business.
Tax Liability: Because of the large amount of qualified assets they owned, the Jacksons’ kids were projected to have a tax liability of over $1M when those assets were inherited. With the goal of lowering their tax bill, we placed a $1.8M survivorship life insurance policy on Tom and Susan with the children as beneficiaries to cover the tax liability they would have on inherited retirement accounts.
Estate Equality: Since Tom and Susan were giving their largest and potentially fastest-growing asset to Mark, should the rest of their estate be divided among Maggie and Monica only to compensate for Mark’s oversized portion? To provide options for solving this issue, we assigned permanent life insurance policies to both Tom and Susan to give additional flexibility for equalizing their estate between the children.
THE OUTCOME
As a result of our comprehensive financial planning process, we were able to help the Jacksons pursue their goal of phasing out their involvement in their landscaping business, slowly transfer the business to their son, explore options for distributing the rest of their assets to their three children, and mitigate tax liabilities. Of course, this case study was provided for informational purposes only—it is not intended to convey individualized financial advice.
REACH OUT FOR PROFESSIONAL HELP
Most business owners are understandably more adept at running their company than they are at developing and implementing an effective succession plan.
That’s where professionals come in. At Full Spectrum Financial Group, our team has the knowledge and experience to address your financial needs from a variety of angles. We’re here to develop and implement a road map that guides you through even the most complex situations.
To schedule a meeting, call (941) 866-6570 or email steve@fullspectrumfinancialgroup.com or kelly@fullspectrumfinancialgroup.com.
ABOUT STEVE
Steve Griffin, CFP® is Principal and Founder at Full Spectrum Financial Group, a financial services firm based in Sarasota, Florida, offering innovative strategies to help clients develop a personalized plan that meets their needs for today and tomorrow. With over 20 years of financial planning experience, Steve creates custom, actionable solutions for his clients’ most complex challenges. From managing a family’s personal wealth to helping business owners focus on their big picture, he finds great fulfillment in empowering clients to make forward-focused decisions and feel more confident in their ability to reach their goals. Listening closely and taking an educated, unbiased approach, he’s able to bring organization and direction to clients’ financial lives.
Steve holds a degree in finance from the University of South Florida. Steve is held to some of the industry’s strictest standards of ethics and education as a CERTIFIED FINANCIAL PLANNER® (CFP®) professional. He’s actively involved in several prominent industry organizations, including National Association of Insurance and Financial Advisors (NAIFA), The Financial Planning Association, The Southwest Florida Estate Planning Council, and The Million Dollar Round Table (MDRT), which is the Premier Association of Financial Professionals and recognized globally as the standard of excellence for life insurance sales performance in the insurance and financial services industry.
Residing in Sarasota, Florida, Steve and his wife, Trish, enjoy the area’s great restaurants and world-class beaches. Outside of the office, Steve can be found golfing, watching sports, spending time with his daughters, and cheering on his grandkids at their events. With a great appreciation for the healing power of laughter, Steve enjoys watching funny movies or stand-up comedy. He also prioritizes his faith by volunteering at his church and reading Scripture daily. Connect with Steve on LinkedIn or via email at steve@fullspectrumfinancialgroup.com.
ABOUT KELLY
Kelly Goldstein, CFP® is a Financial Planner and Wealth Advisor at Full Spectrum Financial Group, a financial services firm based in Sarasota, Florida, offering innovative strategies to help clients develop a personalized plan that meets their needs for today and tomorrow. With a passion for building strategic, holistic plans, Kelly provides clients with clarity, simplifying even the most complex subjects. She enjoys getting to know clients on a personal level and seeing the impact small decisions can make on a client’s financial well-being and progress toward their long-term goals.
Kelly holds a bachelor’s degree from University of Central Florida and an MBA from Saint Leo University. Prior to becoming a financial advisor in 2017, she taught as an adjunct professor for business and marketing courses at Saint Leo University and worked as the office manager and para-planner for her father’s firm. In pursuit of her ongoing commitment to education and self-improvement, Kelly has earned her CERTIFIED FINANCIAL PLANNER® (CFP®) designation, and is currently enrolled to earn her Chartered Financial Consultant® designation.
In her free time, Kelly and her husband, Joe, enjoy golfing, traveling, spending time at the beach, and attending Tampa Bay Lightning hockey games. She is also involved in several industry and community organizations, including the Million Dollar Round Table (MDRT), the Lakewood Ranch Business Association (LWRBA), the Sarasota Chamber of Commerce, and the Sarasota-Manatee Human Resource Association. Connect with Kelly on LinkedIn or via email at kelly@fullspectrumfinancialgroup.com.
Steve Griffin and Kelly Goldstein are Financial Advisers offering Investment Advisory Services through Eagle Strategies LLC a Registered Investment Adviser and Registered Reps offering securities through NYLIFE Securities LLC FINRA/SIPC, a Licensed Insurance Agency. They are licensed to sell insurance through New York Life Insurance Company and may be licensed with various other independent unaffiliated insurance companies not in all jurisdictions.
Neither Full Spectrum Financial Group, nor NYL, nor its agents, provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professionals before making any decisions. Full Spectrum Financial Group is not owned or operated by NYLIC or its affiliates.