Case 2 The Wealthy Business Owner Assume Tax Year 2021

Janet and Peter are business owners of a local company. The company is set up as an S corporation and they each own 50% of the stock. The company is not traded but has an estimated value of $20 million. They have accumulated significant assets as follows:

Primary residence with equity value of $3.0 million owned as tenants by the entirety

Vacation home with equity value of $1.2 (which they sometimes rent out) owned in Peters name

Regular brokerage account in joint names worth $8 million

Collectibles such as art work worth $90,000

Two expensive Teslas each worth $95,000

They have one son, Sam, who is age 26. Janet and Peter are each age 64.

Peter is a lousy driver; he has a record of speeding tickets. Both Janet and Peter work in the business. Sam still lives at home and uses vehicles owned by his parents.

Questions:

1. They own 2 autos each with standard liability coverage of 100/300. But they dont have any additional liability coverage. What do you recommend?
2. Should the company continue to be an S corp? Would some other type of entity make more sense? And should the vacation home remain in Peters name?
3. Janet and Peter have an expensive lifestyle. They want to retire in 5 years and are thinking about cash flow in retirement. Based on current lifestyle they will need cash flow of $1.4 million in retirement. Assume this cash flow is after-tax and that the business will be sold and will net after tax $15 million which will be invested. Is $1.4 million reasonable? Why or why not?
4. For estate planning assume a total net worth is $35 million (this includes personal property not listed above in the facts). They have a basic Will, Durable Power of Attorney, and Health Care Proxy. What advanced strategies should they consider? They have no life insurance.
5. Anything else you can suggest relative to the brokerage account? Should it be in joint names?
6. Any way they can protect against long term care expenses?