Name:
Tony & Gina
Age:
44 and 41
Primary Goal:
Develop a plan to equitably contribute (but not fully cover the cost) of schooling for their four children (Sam -16, Bella – 14, Lauren – 11 & Chris – 8)
Tony is a successful entrepreneur. He is part owner of a gym & has numerous rental properties that create passive income. Gina is a stay-at-home mom who keeps plenty busy with 4 active kids who are involved in sports & extracurricular activities, while also conducting much of the work for the rental properties.
Tony & Gina are active investors and are always looking for opportunities to invest, but also value the opportunity for their children to pursue their passions and dreams – which vary significantly from child to child.
They have set money aside for each of their children’s education, but are not sure how much to save and if each child will decide college is the best route for them.
The Challenge
Tony makes a good living, but with four children who are well-rounded in many different aspects, both Tony & Gina want to make sure that they are equitably splitting their savings to pay for schooling for their children. Sam, their oldest, has an opportunity for an athletic scholarship that could cover most, if not all, of his education. While college appears to be in the future for all four children, Tony & Gina want to make sure they are not establishing a “cookie-cutter” plan for all four kids.
They had several other questions:
- If Sam receives a full scholarship, what should Tony & Gina do with his college savings account?
- Since there will be overlap with the kids in college at the same time, what is the best way to pay for schooling for each child?
- How do they equitably split their savings if their children choose schools with vastly different costs?
- Is there a specific way they should structure the business, and is there any tax planning available to help cover the schooling?
- Tony and Gina are both financially savvy, but are unsure how to help cover some of the inevitable fairness questions that each child will encounter.
The Approach
Based on each child’s intended desire and the differing needs of each child, Tony & Gina knew their plan would continue to evolve as their goals and their kids goals change. By establishing a rapport and initial discussions with the advisor, they recognized that they can work with their advisor to discuss the different goals for their children, as well as their own retirement and long term goals.
The Result
After several meetings and ongoing discussions with their team of advisors, the solutions adopted by Tony & Gina helped them in many ways:
- Tony and Gina came up with an initial plan and ways in which they can equitably split their savings for their children, regardless of which path each child goes down.
- Tony and Gina have a contingency plan in place to avoid paying any tax penalties for their college savings accounts should one of their children decide that higher education is not in their future.
- Tony and Gina have an advisor who works with their lawyer and CPA to coordinate a plan that makes sense, and maximizes efficiency while minimizing tax liability.
- Tony and Gina can plan for the inevitable overlap of having multiple kids in college at the same time and not seeing a disruption in cash flow or a delay to their retirement goals.
By establishing a plan and encountering the unknown head on before the kids are in school, Tony and Gina can focus their attention on their family, their business, and enjoying some much needed down time! They understand that while college planning and the costs associated with it over four children is a fluid situation, they can rest easy knowing they are prepared for whatever change may come.
Tony and Gina are ready for changes both within and outside of their control, and have the confidence to plan ahead for all four children.