Frank and Yvette have two primary investments: $6 million in stock from one Fortune 500 company, and a $10 million ranch in Montana.
While this might seem enough to erase any doubt about financial confidence, the couple is concerned about the impact of taxes, and wondered when it would be “wise” to retire.
They also wanted to make sure their three adult children (in their mid-to-late twenties) understand the principles of money management and financial responsibility, so their inheritance could last through their lifetime.
An analysis would show that a possible strategy would be to consider selling 50% of the company stock in order to plan for retirement needs. The funds could then be reinvested in a diversified portfolio with the objective to provide a steady income.
We would also discuss with Frank and Yvette tax strategies that may be useful for them with regard to selling a portion of the stock using a stepped up basis. This strategy may help with diversifying their holdings with little or no capital gains tax.
Dodds would discuss with Frank and Yvette contacting a CPA to discuss establishing an LLC to potentially help with the ranch and gifting shares to their children up to their $5 million exemption. We would also teach their children about sound money management strategies, and construct long-term portfolios with small accounts for each child.
Frank and Yvette could have less risky, liquid assets for their current and future needs. They know they could stop working tomorrow, and still have a comfortable retirement.* Add in that their children understand the basics of smart investment strategies from conversations with the entire Dodds team, and Frank and Yvette could feel more confident about the future.