top of page
Search

4/6 Tax Case Study

We were happy to welcome Jasen Wallace back to campus last week as we had our first workshop with him in our revamped format! It was great to hear his perspective about how he would approach conversations with these hypothetical clients. Keep reading below for a recap and a copy of the case studies we looked at:



Wealth Management Industry

  • Financial advisor will have a more holistic role in future - financial health space

Case 1

  • Julia and Jorge are retiring soon and still need income

    • They should consider inflation

    • Do they still want to be landlords when retiring?

  • Home homeowners deduction

    • If you own home and lived in 2 out of 5 years, can take 250k deduction out of gains within certain threshold

  • Creative solution - let their children inherit

  • It’s okay to pay taxes, they shouldn’t let trying to avoid taxes affect their decision making too much

  • Cash out refinance - you have majority equity and get a new mortgage

    • Rationale is that you can take equity out of home and loans are tax free for now

  • Takeaway - couple’s question can be answered academically, but we should also ask what their purpose is - Why are they buying Galveston home? Why are they planning to have 3 homes walking into retirement?

Case 2

  • Standard deduction for married filed jointly:

    • 2022 - $25,900

    • 2023 - $27,700

  • Can ask further questions for info to see if more itemized deductions

    • If not, then should standardize

  • Underlying question: do you understand how your federal taxes work?

  • Tax types:

    • Sales, excise, capital gains, estate, federal/state income, payroll, property

  • Only itemize if greater than standard deduction

  • Two things that don’t have sales tax:

    • Can buy essentials, always sales tax free, and professional services

Case 3

  • Distributions to beneficiaries (death benefit) are tax free, similar to loans

  • Questions to ask Rowen and Emma - Any specific reason you are interested in life insurance? What research have you done on life insurance? Do you want to pass money on to your kids? Are you expecting to die soon? Do you have a house? When do you plan on retiring? Do you feel comfortable with where you are financially? How old are your children? Do you have anything saved for college?

  • Life insurance can be beneficial

  • Fundamental questions: What would you have wanted your income to accomplish during your lifetime if you were still here?

    • Replacing human capital, Pay mortgage payments, baby, college, etc.

  • Types of life insurance:

    • Term, whole life, universal life (variable and index) insurance

    • Would recommend term to most clients

  • Time value of money: dollar today is worth more than a dollar tomorrow

    • If you need $1.48 million in future, then discount to PV








 
 
 

Comments

bottom of page