PERSONAL INFORMATON AND BACKGROUND Mark and Callie Collins have come to you for help regarding their...

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PERSONAL INFORMATON AND BACKGROUND Mark and Callie Collins have come to you for help regarding their current financial situation as well as guidance understanding what they need to do for their longer term goal of retirement. Mark (age 37) is currently a freelance art director having been recently laid off from the advertising and marketing firm he and Callie moved to California from North Carolina to work for. Callie (age 36), who works in the same industry, is a copywriter. She is the owner and sole employee of “Callie’s Calling Cards Inc.” (S Corp). They have two children of their own and a large extended family with many nieces and nephews that they are very close to. PRIMARY GOALS AND OBJECTIVES Mark initiated the contact with you around the primary question of whether he should continue with his work in a freelance capacity or consider aggressively seeking new employment with another advertising firm. Mark thinks he can generate an income of $175,000/yr own his own or for a firm, but recognizes that the health and retirement benefits he would likely receive from a company have value that he would have to replace himself. They would specifically like to know the financial pros and cons of each option along with an understanding of where they stand regarding their goal of retiring at 60. He and Callie have discussed working together as partners in “Callie’s Calling Cards”, but would like to know more about the financial implications of that decision. Callie’s business (CCC) is successful and thriving, however, despite working with an accountant since establishing her S Corp, she feels she may be under-utilizing the structure of her business for her and Mark’s benefit. She currently pays herself a modest salary of $ 50,000/yr and $ 10,000 annual distribution out of the average revenues of the business of $100,000/year. Because of this, the business has accumulated a much larger sum of cash than is needed for the business, which is not capital intensive. The only real business expenses beyond her wages are travel and entertainment, and periodic laptop and printer replacement that averaged together, generally don’t exceed 15% of revenues. Mark and Callie own a home in North Carolina which they renovated several years ago and currently rent out for just slightly more than their mortgage payment. They rent an apartment in the Bay Area of California which they love but would like to have some guidance on whether they should sell the home in North Carolina and consider

Robert · Accepted Answer

Introduction  (Framing) 
Estate planning is a planning to provide the assets  to  beneficiary after  death of estate owner.   
This planning can do for those who have property or assets starting from  low level income  
to high level income,  but  not limited only to  rich people.  Well planned estate would avoid 
conflict between beneficiaries.  Estate owner have the right to include any number of   
beneficiaries like mother, father, daughter, son, wife, step children, sisters, brothers, friends 
etc. according to her/his wish, no one have right to stop.  In further, estate owner must careful 
while  selecting the beneficiaries, because there are two types of beneficiaries known as  
primary and secondary or contingent.  Primary beneficiaries are important because  once 
estate  owner died primary beneficiaries having rights to claim the property at the same time  
the primary beneficiaries   died then contingent beneficiaries would claim the property.  From 
the Mark and Callie Collins case would observe more affectionate beneficiaries. 
Primary objectives pros and cons 
If Mark  working  on his own,  he has the ability to generate an income of $175,000/yr  on his 
own without work pressure. He would be  a boss, he can set the time to work, he can work 
more,   But  Mark has worrying about health and retirement benefits, which he needs to 
contribute the whole potion, instead of  employer contribution 
If he wish to  go for the  paid job,  then work pressure would be there and  he should 
dependant on others but monetary and health benefits can expect from the employers. 
Mark need  not to join as partner in Callie’s Calling Cards” because  Callie  getting  the 
salary   $50,000 only  per year,  if mark join he would get  low salary when compared to his 
previous salary and Callie salary would decrease. Mark finance gets worse.  
Both Mark and Callie  needs to work for 23 and 24 years  respectively more to retire,  so allot 
40% of  their salary towards their children  college education and  needs to allot 25 % for 
retirement and saving benefits. 
Mark and Callie  could sell their  old house located at North Carolina and buy the new house 
in California because they are paying  rent more than mortgage payment in California.
Objectives: 
Mark and Callie could get the estate tax reduction by the following ways mentioned below: 
1) Demand the request for couples exemption
2) Providing Tax free gifts 
3) Purchase Insurance 
4)Tax can reduce through  disclaimer trust: 
5) Move the assets  
Client specific  objectives:

PERSONAL INFORMATON AND BACKGROUND Mark and Callie Collins have come to you for help regarding their current financial situation as well as guidance understanding what they need to do for their longer...

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