Suddenly Single

Case Study: Sally

Sally, a 68 year old divorced mother of 2 adult children and 1 grandchild, reluctantly came into our office one day for a meeting. Her son-in law had persuaded her that even though she had a stock broker at a large firm, she should come in and listen to what we had to say.

Concerns

  • For the past 20 years, Sally had run a small business which she founded and grew to be quite successful. However, two years ago when she sold the business to an internal successor, she was overwhelmed by the process and the jargon (asset sale vs. stock sale, installment note, etc.)

  • Two years later, Sally finds herself in a position where the buyer is now threatening to default on his payments to her, which would mean she would get the company back.

  • Sally retired for a reason and has no interest in taking back the company and working 60 hours a week like she did for so many years.

  • Sally is also concerned about her portfolio. While she was working, she was saving into this account each year and so it tended to grow even in down or flat markets. Now, she is retired and is starting to withdraw from this account. She is concerned about how much risk she is taking.

Solutions

  • We sat down with Sally and Bob (the person who bought her business) and reviewed all of the documents that the two of them signed upon the time of the sale.

  • We learned through this process that Bob had no interest in defaulting on his installment note to Sally; he was simply in a cash crunch because he wasn’t able to deduct payments to her from the corporation’s taxes the way he thought he could.

  • We worked with Sally & Bob, their CPA and their attorney, and we restructured the terms of their original sale. This helped improve Bob’s cash flows and will result in a higher payment to Sally over time. Now, Sally isn’t worried about Bob defaulting and her having to go back to work.

  • We reviewed Sally’s portfolio and determined that her risk level was too high. We moved her from an aggressive portfolio to a balanced portfolio.

  • We reviewed Sally’s estate documents and beneficiary designations and determined that they did not match her goals. We worked with her and her estate planning attorney to amend her revocable trust to reflect her wishes.

Sally is now able to enjoy her retirement and spend time traveling and relaxing, not worrying about her finances.

Interested in learning more?

Or, want to talk to a team member now?

Give us a call at (925) 927-1900