The Challenge
The family has three young children with husband employed full time and owning several real estate assets with one other partner. Clients concerns and goals were saving/paying for college expenses for three children; saving for retirement; paying down debt on real estate holdings, determining appropriate time to sell his shares of company stock; utilizing and planning for future increased cash flow from real estate assets; the purchase of a new house better suited for the family’s needs. Current investment allocation was over weight in employer company stock. Personal insurance coverage was inadequate. Risks existed within the business partnership to both partners’ families.
The Approach
In this scenario, Matson Financial Advisors, Inc. provided a written snapshot of the client’s current situation identifying potential shortfalls in achieving the long-term goals of saving enough to support retirement, paying down commercial mortgage debt and pay for college. With ongoing review of the plan, we would identify a savings need as well as offer guidance for timing of the sale of employer shares of stock. By reviewing insurance needs, options would be provided to overcome any deficiencies in both personal and business coverage. By reviewing cash flow from real estate assets, we could project anticipated income over time and provide a plan for investment of potential income.
- Created a written summary and recommendations of action steps to help meet goals.
- Establish 529 college savings accounts for each child with automatic monthly contributions.
- Establish a new joint investment account to build non-qualified assets.
- Purchase a 20-year term life insurance policy to cover education costs until children are out of college.
- Utilize the sale of client’s company stock to provide funding for purchase of a new, larger home.
- Establish a buy/sell operating agreement funded through the purchase of term insurance providing protection for both families.