A married 66 year-old with three children owned a $25 million oil and gas company and was looking to get top dollar when he sold sometime within the next 5-10 years. The company was structured as a C Corporation, and he didn’t realize there was a high likelihood of paying double tax on the sale. He also had no idea how much money he would need after-tax to maintain his current lifestyle for the rest of his and his wife’s lives.
- Determine how much money would be needed from the sale for him and his family to live comfortably for the rest of their lives while continuing to give significant amounts to charity each year.
- Maximize the gain on the sale while minimizing income taxes.
- Determine how to invest the proceeds from the sale in a manner that allowed him and his wife to sleep well at night while still achieving their goals.
- Protect all assets left to his children and grandchildren from creditors and a potential divorce.
- Use financial modeling to determine how much after-tax money would be necessary for them to accomplish their life goals with a portfolio allocation they are comfortable with.
- Consider converting the C corporation to an S corporation or other entity.
- Gift a portion of the stock to a Foundation or other charitable entity, giving them a current income tax deduction and reducing the overall capital gains tax on the shares when sold.
- Establish estate documents that will allow both him and his wife to take advantage of the estate tax exemptions available while creating a trust (or trusts) for their children and grandchildren that could be outside their taxable estates and protected from creditors and divorcing spouses.
- Work closely with their attorney and accountant to ensure everything is properly coordinated.