Working with local business owners to create an individualized financial plan is a big part of what we do.
And that’s just one reason I love this story.
A few months ago, we had the privilege of working with a local business owner who had spent decades building a successful service-based company. He was the sole owner, deeply invested in the company’s operations and culture, and proud of what he had achieved.
But as the years passed, his priorities began to shift. He had recently adopted his grandchildren and was now their legal guardian. His desire was to spend more time focusing on raising them.
But the question was: how could he transition from a demanding business life to a more family-centered future without compromising his personal financial stability?
After numerous meetings, in-depth analysis, and lots of soul searching, he decided to sell his company.
Concerns Around the Sale
With a value of $8.5 million, the business owner faced several challenges as he approached the sale. His biggest concerns included:
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Tax Implications: As the sole owner, the sale would trigger a significant capital gains tax event. He worried about losing a large portion of his wealth to taxes, leaving less for his family.
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Income Planning: His monthly spending needs were $27,000 after taxes, and he needed a clear strategy to ensure his lifestyle was sustained post-sale.
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Social Security Integration: Having adopted his grandchildren, he qualified for Social Security family benefits, which provided an opportunity to maximize income streams but required careful planning.
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Payout Structure: He had to decide between taking a lump sum payment upfront or opting for a structured payout over five years. Both of these options came with their own implications for taxes, investments, and cash flow.
As you can imagine, the weight of these decisions was overwhelming. He wanted to ensure his family’s future was secure and didn’t want to make a mistake that could jeopardize the wealth he had worked so hard to build.
Crafting a Tailored Solution
My team at ProsperPlan and I stepped in to simplify and guide the process, ensuring his transition was smooth, strategic, and focused on his goals.
Here’s how we helped:
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Tax Mitigation Strategies:
We worked closely with his CPA to evaluate the tax implications of a lump sum versus a structured payout. Taking the lump sum would have resulted in a significant immediate tax liability, reducing his after-tax proceeds to around $5 million. By opting for the five-year payout, we spread the tax burden over multiple years, allowing him to remain in a lower tax bracket and preserve more of his wealth. Additionally, we explored opportunities for reinvestment, charitable strategies, and tax-advantaged accounts to optimize his long-term outcomes. -
Income and Investment Planning:
With $27,000 in monthly spending needs, we developed a diversified investment plan using the post-tax payouts. The portfolio was designed to generate sustainable income through a mix of fixed income, dividend-paying stocks, and annuities, ensuring predictable cash flow while preserving capital. We also created a liquidity buffer to cover unexpected expenses. -
Leveraging Social Security Benefits:
As the legal guardian of his grandchildren, the business owner qualified for family Social Security benefits at 180% of his primary amount. We integrated these benefits into his cash flow plan, providing a reliable supplemental income stream that reduced the pressure on his investments. This also allowed him to delay filing for his personal Social Security benefits, maximizing his future payouts. -
Comprehensive Advisory Coordination:
Selling a business involves a team of professionals, including CPAs, attorneys, and financial planners. We acted as the quarterback, ensuring all advisors worked together seamlessly to align the transaction and long-term planning. From finalizing sale agreements to developing tax-efficient strategies, we handled the complexity so the owner could focus on what mattered most: his family.
The Result
With a clear financial plan in place, the business owner transitioned from being deeply entrenched in the day-to-day demands of running a company to embracing his new role as a full-time grandfather. He had peace of mind knowing his financial future—and that of his grandchildren—was secure, allowing him to focus on what truly mattered.
Why Business Owners Are More Likely to Work with ProsperPlan Wealth
Business owners across Sacramento are partnering with ProsperPlan Wealth because of our proven ability to navigate the complexities of selling a business while securing their financial futures. Here’s why:
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Specialization in Exit Planning: We understand that selling a business is not just a transaction—it’s a life-changing event. Our expertise in tax strategies, cash flow planning, and investment management ensures business owners walk away with maximum value.
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Comprehensive and Collaborative Approach: We bring together a team of attorneys, CPAs, and other advisors to ensure every detail of the sale and post-sale plan is addressed. As your financial quarterback, we manage the moving parts, so you don’t have to.
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Tailored Solutions for Unique Needs: Whether you’re balancing family obligations, planning for retirement, or looking to preserve wealth for future generations, our customized strategies ensure your goals are prioritized.
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Deep Community Roots, Broad Expertise: As a Sacramento-based firm with partnerships like BlackRock and New Edge Advisors, we combine local insights with national resources to deliver exceptional value.
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Focus on Family and Legacy: Many business owners, like the one in this story, are not just selling a business—they’re shaping a legacy. Our family-focused approach ensures your wealth supports what matters most, from lifestyle needs to generational planning.
After more than a decade helping small business owners reach their financial and investment goals and plan for the future, we don’t just help you prepare to sell your business, we help you gain peace of mind as you transition into the next stage of your personal journey.
With two convenient offices (Gold River and Roseville) to serve you, whether you live in Granite Bay, Carmichael, Fair Oaks, Folsom, or anywhere in the Sacramento region, we make it our mission to learn what you want from your future, and then we work with you to build a plan that helps you achieve prosperity.
Please contact us if you have any questions, or if you’d like a complimentary consultation where you’ll receive actionable advice that helps to both clarify your overall financial situation and make progress toward achieving your goals.
