Inheritance Drives Wife to Seek Sound Advice

Dave and Margo’s finances had become increasingly complex. Both in their late 40s, they had two young daughters to raise and educate as well as their own careers to consider. When a major life event, the death of Dave’s father, left them an inherited property, they realized they needed some sound advice. Dave, who had risen to Senior Vice President of Product Management for a Boston-based tech firm, was also aware that his options at the firm would vest in the coming year and that he had to make a decision whether to sell or to keep them. Dave and Margo needed advice from an expert who could help them make these new assets work in an overall financial life plan. And they wanted to clearly understand how they would pay for that advice and ongoing investment management.

Dave and Margo made an appointment with Peggy, a professional associated with a local registered investment advisory firm, with whom Margo served on a community arts council. At their first meeting, Peggy listened intently as they discussed their financial questions and concerns. How would the new property affect their tax strategy? Would the custodial accounts they’d opened in the children’s names be adequate to meet future college tuitions? What approach would make the most of Dave’s options over the long term? Peggy asked questions of her own, too, finding out that one of Margo’s goals was to leave her consulting job in a few years and become a teacher.

Dave and Margo felt they’d found in Peggy someone who could help them do more, who understood their complex questions and who would be available when they needed her. They were glad to hear her firm was registered with the SEC. She told them that their fee would be fully disclosed on statements, so they would always understand exactly what they were paying.

Over the following week, Peggy worked up a customized plan for the couple and gave them a copy. First, she advised Dave on how to handle the stock he would get from exercising his options. Since the family’s finances were heavily concentrated in the technology industry, Peggy reviewed their fund holdings and recommended a diversification plan. She also explained how their assets would be safeguarded at an institutional custodian, a company engaged by Peggy’s firm to custody stocks, mutual funds and other assets for their clients.

She outlined specifics for renting the inherited house, letting them know how tax laws could allow them to deduct a portion of the upkeep, depreciation and insurance costs. Dave was relieved to know that by holding on to the house, they didn’t have to worry about the huge tax implications of the cost basis between what his parents had paid to buy it and what it would fetch today. For the children’s college savings, Peggy suggested they immediately open college savings accounts for their daughters, pointing out the potential tax advantage these would give them.

As they worked together, Dave and Margo felt confident in Peggy’s ability to continue to guide them through future complex decisions and help them achieve their life goals.