Cindy is in her early 70s and has recently lost her husband. She is retired, her children are grown, and her grandchildren are approaching college age. Her husband was the decision-maker in their finances and self-managed their investments. She has $10 million in investments, her home, and two large commercial properties that she is now responsible for.

Her Concerns

Despite her best efforts, Cindy feels overwhelmed and struggles to manage the assets she now possesses.  Though she knows she needs to take action, she is hesitant for fear of making a mistake or being taken advantage of. Cindy’s children are very supportive of her and are willing to participate in financial conversations.  

Cindy’s top concerns/priorities are:

• Downsizing to a smaller home, but she is unsure how to do it in a smart way and avoid a large tax bill;

• Ensuring her assets are properly set up to pass her legacy on to her children and grandchildren;

• Right-sizing the investment portfolio as it may be invested too aggressively.  Cindy’s husband was an active investor who liked to make big bets on the market.

The Solution

Refresh Investments reviewed her financial situation holistically to understand how her portfolio exposures and her real estate assets could work together.  They observed large embedded gains and concentration risks in the investment account.  Additionally, they noticed the assets were not managed tax efficiently.  Refresh Investments implemented a strategy that increased diversification, reduced concentrations, and filled in the “holes'' in her portfolio.  Because of Cindy’s real estate holdings, they minimized the real estate exposure in her investment strategy to manage overall risk.

Outside of her investment portfolio, Refresh Investments worked with Cindy’s attorney to review her current estate plan.  They focused on tax planning strategies and how to pass wealth to her children in a tax-efficient manner.  In addition, Refresh Investments determined the tax strategies Cindy should take in the current year, since she will file as married for one more year before switching to a single status. Since the majority of Cindy’s assets are earmarked for future generations, Refresh Investments rebalanced her portfolio and aligned it to a growth allocation with a longer term time horizon. 

Finally, Refresh Investments created a variety of different planning scenarios utilizing a 1031 exchange strategy to help Cindy sell one of her properties and buy another building. Cindy’s children were also included in the conversations per Cindy’s wishes.

Note: The above case study is hypothetical and does not involve an actual Refresh Investments client. No portion of the content should be construed by a client or prospective client as a guarantee that he/she will experience the same or certain level of results or satisfaction if Refresh Investments is engaged to provide investment advisory services.