- May 1, 2024
- Posted by: legaleseblogger
- Category: Related News
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### Current Situation and Decision Making
Hello all – I’m a 34 (M) in Texas who is married with one kid who is 6 months old. I am part owner in a construction company that has experienced significant growth and success in the past 5 years. This week we were approached by a venture capitalist firm that would like to purchase the company. The other partners are older and want to sell.
To keep things short I’ll say that my portion of the sale of the company would probably net me around 4M pre tax. Obviously this is a good thing but I’m having a very hard time seeing what my future looks like after my 1-2 year contract to stay on board after the sale looks like.
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### Current Financial Situation and Future Planning
Current financial situation:
– Salary: 250k (counting company perks, less potential profit distributions)
– Investments: 300k between 401k, IRA, brokerage account
– Liquid assets: 90k in HYSA, 30k cash
– Debt: mortgage balance is 350k @ 3% rate, house is valued at 550k. No other debt as we paid it all off over the past couple of years.
– Other: 529 plan for my daughter I’m contributing $350 monthly into. 2M in life insurance. Wife has a stagnant 401k with about 40k in it.
If we strike a deal, my wife would like to eventually move back to her home city (more family, friends & job opportunities for us both.) my wife is a SAHM currently and would like to do so until we have a 2nd kid and they are in school. She is an RN and has good earning potential once she returns to the workforce.
Ultimately I’m just needing guidance on what to do with the money. I know I can probably find a job that will pay in the low-mid 6 figures after we relocate. Part of me wants to figure out a way to maybe invest this money and supplement income by pulling out some dividends, but keep reinvesting the rest of it. Being debt-free would be awesome too. I also want to mitigate tax liability and secure our future and ability to retire. Would it be possible to retire in my 50s based on my current trajectory?
### Seeking Professional Advice
Considering the complexity of your financial situation and the potential windfall from the sale of the company, it is advisable to seek professional financial advice. A financial planner can help you develop a comprehensive financial plan that aligns with your goals, mitigates tax liabilities, and secures your future retirement. Additionally, consulting with a tax advisor can help you navigate the tax implications of the sale and ensure you make informed decisions.
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****** just grabbed a
Sounds more like private equity than venture capital. The latter focuses mostly on startups but I could be wrong.
You’re looking at likely 15% long term capital gains + 3.8% surcharge above $250k AGI.
Max out your 401k this year. Every dollar in will reduce your taxable income.
Stick whatever is left in a HYSA until you have a game plan. I think the important part is not to significantly upsize your lifestyle.
Then lump some into the 529 and build a brokerage account for yourself.
Complete a financial plan. You can plug in variables like expected income and expenses post-sale and help you find the right buffer. Stress testing lower expected income and higher expected expenses, you’ll know how much can be invested safely without running the risk of forced selling.
Worth noting if it’s an installment sale, the capital gains liability could be spread over multiple years.
If that’s the case, it’s not too late to look at using excess income and proceeds into a direct indexing strategy to help offset ongoing cap gains.