From Lump Sum to Lifelong Income:
Your Post-Exit Investment and Tax Strategy
You successfully navigated the emotional and complex process of selling your business.
You closed the deal.
The capital is secured.
Congrats! You’ve reached the ultimate financial milestone.
However, the nature of your financial challenge has fundamentally changed.
For years, your focus was on increasing your business’s EBITDA and overall valuation.
Now, the challenge shifts from generating revenue for your business to generating a sustainable, long-term paycheck for your life.
You’ve transitioned from an entrepreneur generating operating cash flow to a wealth manager focused on investment income, principal preservation, and tax efficiency.
Many founders assume the lump sum is enough. The reality is that preserving principal, fighting inflation, and managing taxes over 20–40 years requires a completely different, custom-built strategy than managing business growth.
At Portus Wealth Advisors, we specialize in helping successful founders make this exact shift.
We turn your single, concentrated liquidity event into a diversified, long-term income engine that funds your planned “Second Act” lifestyle, ensuring your peace of mind is secured for decades to come.
I. Defining Your New Financial Mandate: Solving the Income Equation
The moment your business sale closes, your financial mandate shifts entirely. You are no longer focused on increasing EBITDA; your singular focus is generating a sustainable, reliable paycheck for your future life.
This process is fundamentally different for successful business owners. The scale of your liquidity event demands a bespoke, sophisticated strategy that begins not with asset allocation, but with income.
From Business Cash Flow to After-Tax Income
The first step we take at Portus Wealth Advisors is to redefine your financial needs. We don’t just calculate your expenses; we determine the required level of after-tax income needed to maintain your desired “Second Act” lifestyle. This crucial step anchors the entire investment strategy, ensuring the portfolio is designed to deliver a specific, protected cash flow number.
The Portus Three-Bucket System
We replace the standard time-horizon bucket strategy (often used by general investors) with a system segmented by purpose and risk tolerance, reflecting the scale of HNW capital:
- The Income Bucket: Designed for high reliability, it focuses solely on delivering the defined annual cash flow.
- The Growth and Liquidity Bucket: Designed to maintain purchasing power and manage inflation over time using public equities and highly liquid assets.
- The Legacy Bucket: Capital set aside specifically for wealth transfer (children, philanthropy) with a multi-generational time horizon, often held in irrevocable trust structures.
II. Strategic Portfolio Construction: The Income-First Approach
The scale of your liquidity event gives you access to asset classes that are often closed off to traditional investors. We leverage this advantage to build an income stream designed for efficiency and stability.
Building the Income Engine with Sophisticated Assets
The Income Bucket is solved first, using a blended approach that prioritizes stability over short-term market fluctuation:
- Private Credit: Offers higher yields and downside protection through senior-secured, floating-rate debt instruments, providing a strong source of stable, contractual income.
- Structured Notes (Income-Based): Custom-designed financial instruments that can offer enhanced yield or targeted exposure, sometimes structuring the payment to be taxed as capital gains rather than ordinary income.
- Municipal Bonds (Munis): Crucial for tax efficiency, as the interest income is often exempt from federal—and sometimes state and local—taxes, maximizing the after-tax cash flow you receive.
- Corporate Bonds and Cash: Used for general fixed income exposure and short-term liquidity needs.
The Portus Difference: Reversed Asset Location
Most business owners prioritize investing into the operating business and its supporting assets (real estate, equipment), meaning they often have a high liquid net worth but a smaller proportion of capital in traditional retirement accounts (IRA/401k). This flips the standard tax playbook:
- Traditional Advice (General Investor)
- Tax-Inefficient Assets (high-turnover, taxable bonds) go into IRAs.
- Portus Strategy (Business Owner Focus)
- Brokerage Accounts become the income engine, holding bonds and structured notes needed for current, reliable cash flow.
Optimizing Tax-Advantaged Assets: Roth IRAs are reserved for the most aggressive growth strategies, allowing maximum long-term compounding to occur tax-free. Traditional IRAs are often treated as intermediate-term assets since RMDs don’t apply immediately.
Advanced Tax Efficiency: Marrying Income and Loss
We seek to create income that is taxed efficiently, aiming for lower long-term capital gains rates (15% to 23%) rather than the higher ordinary income rates (up to 37%).
- Capital Gains Income Strategy: We strategically allocate to structured notes and other instruments designed to generate payments classified as long-term capital gains.
- The Tax-Offset Engine: We then pair these capital-gains-generating assets with an actively managed Tax-Loss Harvesting strategy. We work with specialized managers who continuously realize losses in liquid equity portfolios (like an S&P 500-light strategy) to create a pool of tax losses that can be used to **offset** the capital gains generated by the income notes. This marrying of income generation and loss harvesting significantly enhances your effective after-tax return.
Total Portfolio Oversight: The Three Dimensions of Risk
Beyond the classic stock-vs.-bond pie chart, we evaluate the entire portfolio against three critical constraints to ensure stability and alignment with your goals:
- Public vs. Private
- Liquid vs. Illiquid
- Time Horizon (matching asset to the Income, Growth, or Legacy bucket)
This strategy ensures that market volatility (impacting Bucket 3) doesn’t force you to sell assets at a loss to fund current expenses, which are secured in Buckets 1 and 2.
Investment Income Sources
Your new paycheck is a blend of sources.
We focus on blending traditional tools like corporate bond laddering and high-quality dividend equities with alternative sources such as private credit and real estate investment trusts (REITs) to achieve a resilient, diversified income stream.
III. Post-Sale Tax Management for Income Sustainability
The Critical Role of Tax Location and Withdrawal Strategy
Tax efficiency is no longer an annual filing consideration; it’s a foundational component of your investment strategy.
A well-designed plan can save you tens or hundreds of thousands of dollars over the next two decades.
Taxable vs. Tax-Advantaged Accounts
The concept of Tax Location dictates where you hold different types of investments:
- Tax-Inefficient Assets: Investments that generate high current taxable income (e.g., high-turnover funds, certain taxable bonds) should be placed inside tax-deferred (IRA, 401k) or tax-free (Roth) accounts.
- Tax-Efficient Assets: Investments that generate qualified dividends or are expected to realize long-term capital gains (e.g., low-turnover funds) are best held in taxable brokerage accounts, where they benefit from lower capital gains rates.
The Withdrawal Sequence
The order in which you draw down your accounts annually dictates your tax bill.
A proper sequence avoids unnecessarily high-income spikes, keeping you in lower tax brackets:
Taxable Accounts →
Tax-Deferred Accounts →
Tax-Free (Roth) Accounts
Strategic withdrawals help manage your Adjusted Gross Income (AGI), which is critical for avoiding higher Medicare (IRMAA) surcharges and the Net Investment Income Tax (NIIT).
Strategic Tax-Loss Harvesting
After a major liquidity event, strategic tax-loss harvesting in your non-retirement accounts can be used to offset capital gains created by the sale, preserving more of your principal for the long term.
IV. Avoiding The Post-Sale Pitfalls
Guardrails for Preserving Your Wealth
Life after a sale is new territory, and we help our clients avoid common pitfalls that can undermine their financial success:
- Pitfall 1: Recreating the Business Risk: Pouring all proceeds into a single, illiquid venture (e.g., a high-stakes startup or concentrated real estate investment)
- Solution 1: Treat new ventures as a defined, small percentage of your Growth bucket, ensuring the failure of a single investment does not compromise your overall financial plan.
- Pitfall 2: Emotional Investing: Making market timing decisions based on fear, media headlines, or impulse.
- Solution 2: Implement objective spending guardrails and stick to a long-term strategic asset allocation plan that is reviewed—but not impulsively altered—on a schedule.
- Pitfall 3: Not Updating Your Estate Plan: Your net worth has drastically changed.
- Solution 3: Your wills, trusts, and beneficiary designations need to be updated immediately to reflect the new asset base and ensure tax-efficient wealth transfer.
Your Integrated Plan for Peace of Mind
The transition from business owner to wealth manager is one of the biggest life changes you’ll face. Your goal is no longer a high EBITDA, but a sustainable, tax-efficient, and stress-free income stream.
The Portus Advantage is integration.
We don’t just help you invest the proceeds; we integrate the investment strategy with a comprehensive tax plan and estate review, ensuring your wealth serves your life, not the other way around.
You built a successful company.
Now we’ll help you build a successful “Second Act” paycheck.
Contact Portus Wealth Advisors today to design your post-sale blueprint and secure your long-term peace of mind.
(704) 936-0084
