- Consolidate Investments
- Minimize tax consequences
- Increase income
- Spend time with Family
Paula lost her spouse to cancer two years ago. It has been a long road for her emotionally and she was never the one to deal with the finances in their household. Her husband had left her well cared for financially so she had some time to take care of her affairs without having to address her financial needs in the short term.
Paula's husband was a very successful businessman and had sold his business to a public company many years back and spent part of his time as an active trader in the markets. He had done a good job of building a portfolio that had performed well over the years. Paula and I met through an existing client and she wanted help in reviewing her portfolio and making sure it was still appropriate for the next phase of her life.
When Paula made her appointment, she seemed a little unsure about confronting potential decisions that were this important. She had never had to address these issues before and wasn't sure how all of this worked and how to even evaluate it. We suggested Paula video conference in her adult son to be a second set of ears and to be a sounding board after the meeting.
The meeting went as expected and we spent a good amount of time speaking to potential changes in her estate plan as well as some of her charitable interests. Cash flow was sufficient for the near future but her portfolio consisted of a large concentrated stock position in her husbands acquiring company in addition to dozens of stock positions that had very low tax basis. In stress testing her portfolio we were able to determine that she had sufficient wealth to maintain her lifestyle without taking unnecessary risks. Overall the risk appetite of her husband was far greater than Paula was willing to accept going forward.
Working with Paula's attorney and CPA we were able to craft a charitable remainder trust to tax efficiently transfer a large portion of her concentrated stock position. This transfer allowed us to better diversify her portfolio and helped increase her retirement income while additionally addressing her charitable intentions.
We have developed a 5 year plan to efficiently transition her remaining stock positions to a portfolio more aligned with her risk capacity and diversification needs. Paula is now focused on spending time with her family and pursuing her philanthropic interests.
*These are case studies and are for illustrative purposes only. Actual performance and results will vary. These case studies do not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial advisor should be consulted.
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