Case Studies

Confidentiality and security of our client’s financial information is paramount at Quantum Leap Capital.  We’ve spoken with these folks to ask their permission to share this basic info in an effort to provide some insight on our process.

Steve and Ilse are joint owners of a web design and development company.  They came to us looking for help with long term business planning.  As it always does, our process began with an information gathering meeting.  After years in business together, their primary concerns had evolved from when they were going to be able to draw a salary to how they might direct resources in a manner that would protect each other and their families when one decides to leave the company, becomes too ill to work, or dies.  After analyzing their data, we presented them with three options to meet their objectives.

The first involved funding a company owned brokerage account.  Building a portfolio of highly liquid, low cost index funds would offer growth potential and the ability to leverage the assets using a margin loan, or as collateral for a traditional business loan if they needed access to capital.  The pros to this option would be high growth potential, liquidity, and very little out of pocket cost.  The primary detractor would be market risk.  If the timing of cycles in the financial markets were to work against them, there might not be enough equity to buy the other’s interest in a triggering event.

The second option would be to fund company owned no load variable annuities with death benefit guarantees.  This option would offer growth potential and tax deferral on earnings.  Additionally, it would include a contractual guarantee that at the death of one of the partners, each of whom would be an annuitant, there would be a cash benefit to fund the purchase of the deceased partner’s interest.  Market volatility could still be a problem in the other two triggering events however.

Lastly, they could fund company owned permanent Life insurance with disability premium waivers.  This strategy wouldn’t have the same growth potential as the other two but it would guarantee funding if death or disability of either owner occurred.  It would also provide tax efficient and stable accumulation which they could collateralize to buy the other’s interest at retirement as well.

We recommended they implement a combination of options one and three and they agreed.