Case Study #1: Family Profile

• An affluent family of four with a daughter who is a senior in high school and son who is a junior in high school.
• The father works at the family’s small business; the mother works part-time at a local business.
• The family has educational funding needs of anywhere between $20,000 and $40,000 per year, not including college inflation.
• The family is also concerned about saving for retirement.

Planning: Compensation is paid to both the daughter and the son out of the family business to shift family income to a lower tax bracket. Income taxes are zeroed out for the both the daughter and son. Academic strategies are employed to make the daughter and son more competitive to the colleges to which they applied. Multiyear gifting strategies were applied to produce additional tax savings. A little-known fringe benefit program was put in place at the family business which allows both the daughter, and later the son, to receive higher education funds totally income tax free. A more efficient and cost-effective retirement plan that takes advantage of the new tax laws was installed at the family business to allow the parents to pay for college and still be able to save for retirement.

Results: The family qualifies for more than $40,000 in financial aid from the two colleges that the daughter and son attend. In addition, tax scholarships of more than $45,000 are created as a result of the financial and tax planning strategies implemented. This family is able to reduce their college expenses by over $85,000 dollars.* This money can be repositioned to save in the family’s retirement plan which, over fifteen years, can grow to add substantial assets towards the parent’s retirement.

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Case Study #2: Family Profile

• A family of three; the son is a senior in high school
• Father is a VP for a large national company; the mother does not work
• Father owns $300,000 of company stock purchased through an employee stock purchase plan
• Son owns $50,000 of highly appreciated stocks and mutual funds in a brokerage account
• Son is a very good student who’s looking to attend a prestigious private college, costing anywhere from $35,000 to more than $40,000 per year.

Planning: We created a multiyear plan utilizing gifting strategies and took advantage of the tax capacity of the child so we could sell the company stock completely tax-free and pay for college expenses with pre-tax dollars. We also used academic strategies that encouraged the colleges to compete for the student and offer tuition discounts. We showed them how to use low-cost educational loans so the family could leverage their money. We recommended specific cash flow strategies that will allow them to pay for college and still save for retirement and minimize their taxes.

Results: The family was offered multiple, generous financial aid packages from the son’s top school choices. The son chose a prestigious private school in the northeast with a price tag of more than $40,000 per year. He was offered more than $15,000 of financial aid per year and none of it was need-based. More importantly, $10,000 of the award is grant (free) money that does not need to be paid back. The son will be able to attend an elite private school for not much more than it would cost to attend a state school.

Our proprietary tax and financial strategies created over $35,000 in tax scholarships for the family over four years, effectively letting the IRS pay a big piece of their college expenses. We estimate that this family will conservatively save at least $75,000 over four years as a result of our planning.* In addition, we feel we are positioning the family to achieve superior long term returns with less risk on their retirement portfolio due to the asset allocation recommendations we have made and the additional cash flow we have created that can be added to their retirement savings plan.

Click here to find out what a college funding consultant can potentially do for your family.

* The above case studies are meant to serve as an illustration of possible outcomes of Fox College Funding late stage college funding planning. Individual results will vary according to your family’s individual situation. The strategies used in the above example are proprietary to Fox College Funding, LLC.