Client Case Studies: How We Add Value

Profile

Dr. Chan, an early-stage internal medicine doctor, and his wife sought guidance to navigate their rapidly growing savings. They aspired to buy a home and start a family within the next five years. They recognized the importance of optimizing their tax strategies to secure their long-term financial well-being.

Issue

They had a number of questions:
- When should they consider incorporating?
- What repayment strategy should they adopt for their student loans?
- How does investing align with loan repayment and homeownership goals?
- Where and how should they allocate their earnings for tax efficiency?
- Do they need insurance at this stage?
Solution

These were important questions and here is what we did for them:
- Incorporation Analysis: through a cost-benefit analysis, we evaluated the potential tax savings against the administrative costs associated with incorporating. Our analysis showed that, based on their expected lifestyle expenses and financial needs, they would not only enjoy immediate savings in taxes payable of $39,800 in the year of incorporate, but also reduce taxes payable about $274,600 in the next five years.
- Tax Optimization Strategies: our tax consulting team educated Dr. Chan the pros and cons of taking a salary or taking a dividend, and provided guidance on optimal compensation structure. helped formulate a strategic approach for Dr. Chan to draw down a salary in a tax-efficient way from the corporation. Through adding a mix of dividends, they were able to save another $5,000 in tax liability. We also educated them on the favorable tax treatment of investments within their corporation, enhancing their long-term wealth accumulation.
- Debt Management and Investment Strategy: We built a portfolio which aligned their investments with their financial ambitions of paying off personal debt, buying a home, and planning for a family. We provided guidance on optimizing their loan repayment strategy to balance debt reduction with wealth accumulation, resulting in nearly $500,000 in additional wealth at retirement.
We equipped Dr. Chan and his wife with a tailored financial roadmap aligned with their aspirations. They both consult with our team regularly to provide updates and receive advice.
Profile

Dr. Kumar, a cardiologist in the mid-stage of her career, currently billing over $800,000 annually. As her income grows, so does the retained earnings of her medical professional corporation. She wants to find a better way to manage the surplus funds efficiently amidst complex tax considerations.

Issue

With taxable income surpassing $500,000 annually within her corporation, Dr. Kumar loses certain tax benefits (like the small business deduction) and wants guidance on optimizing her financial strategy. She has questions concerning tax-saving strategies, retirement planning, and prudent investment avenues.

Solution

To build Dr. Kumar’s financial roadmap, we did the following:
- Understanding Tax Implications: We educated Dr. Kumar on the tax implications of crossing $500,000 in corporate net income and losing the small business deduction. This empowered her to make informed decisions to maximize tax efficiency.
- Set up a holding company: we educated Dr. Kumar on the benefits and costs of a holding company and collaborated with her lawyer and accountant to set up a holding company. Excess retained earnings inside her medical professional corporation were transferred to her new holding company without immediate tax consequences. The risks of small business deduction being reduced by passive income were also mitigated.
- Strategic Portfolio: Leveraging Dr. Kumar’s robust net worth and risk tolerance, we introduced strategic opportunities for private equity investments. These diversified her portfolio, providing access to uncorrelated and potentially enhanced returns.
- Estate planning: our insurance specialist offered insurance solutions for long-term tax-exempt savings within her holding company. Her needs to provide for herself and her family in the event of a premature death or permanent disability were also addressed.
We equipped Dr. Kumar with a robust financial strategy tailored to her aspirations and financial goals. With optimized tax efficiency, fortified asset protection, and strategic investment opportunities, Dr. Patel can navigate her career trajectory with confidence, secure in the knowledge that her financial future is in capable hands.
Profile

Dr. and Dr. James, a late-stage career doctor and her physician husband, who have amassed a substantial net worth exceeding $20 million. They wanted to transfer their assets to their children, but are having trouble navigating complex tax implications and estate planning considerations.

Issue

The James recognized that simply passing on their wealth to their children without proper planning is not a viable option due to significant tax liabilities and potential probate fees. They were looking for an advisory team capable of understanding the complexities of their estate planning and quantifying the impact of potential solutions.

Solution

In addressing their estate planning needs, we took several approaches to ensure tax efficiency:
- Comprehensive Financial Planning: Our first step involved creating a comprehensive financial, providing insights into their net worth, cash flow projections, and estimated tax liabilities over the coming years. This was a foundation for informed decision-making and strategic planning.
- Tax-Efficient Strategies: We identified and implemented several tax-efficient strategies. This included restructuring their assets to minimize tax exposure and probate fees upon death, updating beneficiary designations on life insurance policies to enhance estate liquidity and reduce probate fees, and timing charitable donations to coincide with taxable events for maximum tax benefits.
- Cost Savings: we also identified opportunities to optimize trust executor and trustee fees, resulting in substantial cost savings. We were able to save our clients approximately $137,200 in legal expenses, enhancing the overall efficiency of their estate planning strategy.
Through this process, we empowered the family to safeguard their wealth, minimize tax liabilities, and establish a solid foundation for transferring their assets to their children.