Matt, aged 55, has successfully run a bathroom renovation business through a family trust for the past twenty years. Employing a team of 12, his business achieves an annual turnover of $1.8 million. Together, they have created a complex financial structure that includes a family trust, an investment company, and two investment properties, which have served them well.
The Dilemma
Matt and Cyndee are at a crossroads. Matt plans to exit his business within the next two years and is eager to maximise his financial returns from the sale. Darren, his right-hand man, is interested in taking over the business. At the same time, Cyndee plans to reduce her working hours but will continue her passion for horse training and instructing.
Their financial situation is multifaceted: they wish to qualify for the small business capital gains tax (CGT) concessions to ensure a tax-effective business sale. Additionally, they need to manage their income before reaching age 60, align their investments across various accounts, and adjust their insurance policies to reduce unnecessary premiums.
What We Did
To help Matt and Cyndee achieve their financial goals, we started by collaborating closely with their accountant, who has extensive experience in small business CGT concessions. This coordination was essential to ensure they met all eligibility criteria, setting the stage for a tax-effective business sale. Additionally, we worked with Darren’s accountant to establish the right structures for a seamless business transfer.
To manage Matt and Cyndee’s income before they turn 60, we used our framework to assess the gap between their income and expenses. We retained an amount in the family trust and drew down dividends from the investment company to fund their lifestyle for the next five years. Additionally, some of the business proceeds were allocated to make their investment properties cash flow-positive, and we coordinated with a trusted mortgage broker to ensure competitive rates.
Aligning their investments was another critical step. We ensured that their investments in the SMSF, family trust, and investment company were in line with their risk profile, diversifying across various asset classes accordingly. We also reviewed and adjusted their life insurance policies to ensure they had essential coverage, including trauma and income protection.
Finally, we updated their estate plan to reflect changes in their business assets and incorporated testamentary trust provisions. This update ensured that their children would receive their inheritance in a tax-efficient and protected manner, providing Matt and Cyndee with peace of mind regarding their legacy.
Happy Outcomes
Thanks to the comprehensive solutions provided by Moiler Wealth, Matt and Cyndee now have a clear and actionable plan for their financial future. They are confident in their ability to sell the business in a tax-efficient manner, significantly enhancing their retirement comfort.
By effectively managing their income and aligning their investments, they maintain their lifestyle without financial strain. Their adjusted insurance policies and updated estate plan provide peace of mind, knowing their legacy is protected. Matt and Cyndee are well on their way to achieving their goals, with a clear path forward.
For pre-retirees in need of financial advice and planning, please contact Adam Moiler, Moiler Wealth on +61 8 9328 5044 or email advice@moiler.com.au.
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Disclaimer: The advice provided here is general in nature only as, in preparing it we did not take account of your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should consider the relevant Product Disclosure Statement before making any decision relating to a financial product
Ian Moiler Pty Ltd (Moiler Wealth) is an authorised representative of Count Financial Limited ABN 19 001 974 625 holder of Australian financial services licence number 227232 (“Count”). Count is owned by Count Limited ABN 111 26 990 832 of GPO Box 1453, Sydney NSW 2001. Count Limited is listed on the Australian Stock Exchange.
