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DIVERSIFY ... AND PAY NO CAPITAL GAINS TAX SOURCE: RECER EXPERIENCE. In the furniture manufacturing region along the Virginia/North Carolina border, a recent retiree came in to discuss his personal estate plan. "I have been an executive with one of the furniture companies for my entire career," he said. "And, I have purchased stock in the company, usually at a discount, for 30 years." He went on, "When I was with the company, we were encouraged to keep the stock. Management didn't like for employees to sell stock. So, I kept mine, even though I knew that my portfolio was not very diversified." "The stock has greatly appreciated and it has been a good investment; it is worth a million dollars now. But, I feel I am too deeply invested in this one stock. I would like to diversify; but, if I sell, in order to diversify, I will pay a huge capital gains tax." He went on to explain that he and his wife had provided a million-dollar life insurance policy for the two daughters and that they felt free to benefit some of their charitable causes with the rest of their estate. I showed him how the Charitable Remainder Trust can sell and pay no capital gains tax. In fact, the CRT can buy and sell, over and over again, and pay no capital gains tax. So, it is an excellent means of diversification. Knowing that his portfolio would be much stronger if he diversified, he readily adopted the plan. |
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