An Investment Solution

It is not always bad to pay taxes. It usually means you made money.

Part of legacy planning is to be able to pass as much of your hard-earned money to the next generation as possible without sending it all to Uncle Sam.  

Aaron and his brother have a problem. Their mother is in her eighties, and her health is slowly failing. Her expenses have risen to the point where her income and insurance can no longer cover them. Her net worth is over $5 million, however her investment portfolio is concentrated in only two low-dividend-paying stocks she inherited many years ago. The capital gain on the sale of the stock would be horrific if she were to sell it to cover expenses, as her cost basis is under $300,000. 

Originally, Aaron and his brother’s plan was for the mother to hold the stock until she passed away and then sell the stock at a stepped-up cost basis, recognizing no capital gains tax. Now, they have to suppress feelings of concern about being able to do what they want with their inheritance while their mother lingers on. They feel guilty about it but also frustrated that they cannot sell the stock and diversify it into higher income-producing investments to cover expenses with less risk of deteriorating their inheritance.

How ProCore Advisors can help

Here are some of the ways we guide you in making critical decisions and taking control of your finances:

• Provide tax saving solutions.
• Work with option contracts that could provide additional income or protection from holding concentrated stock.
• Explore gifting solution or trust solutions that may allow you to diversify your investments today.