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Passing Along Your Assets

By Portage County Business Council

By LouAnn Schulfer, AWMA®, AIF®
Accredited Wealth Management AdvisorSM
Accredited Investment Fiduciary®

It’s a great feeling as a parent to have helped your children, achieved financial success, and have assets to pass along to the ones you love.  The timing of how you pass the assets on can matter a great deal.

Several years ago, I had a client who had a sizeable piece of shoreland that was gifted to him by his father.  The land had been in the family for a few decades.  Since the father had gifted the land while he was still alive, the original cost basis was transferred to the son.  The son wanted to sell some of the land and was shocked when he learned of the capital gains taxes he would be subject to.  Capital gains are assessed when an asset appreciates:  the difference between the cost basis (what the land was purchased for) and sale price is subject to capital gains taxation.  Had his father left the land to his son in a will or trust, the son would have received a “step up” in basis, meaning the new basis is the value of the land on the date of death.  Had the son sold the land shortly thereafter, with a step-up in basis, he would not have the capital gains issue.  We strategized on the timing of the sale of the land:  he could pay less in capital gains taxes if he sold the land in a tax year when he had low income.

I had another client whose father gifted a stock and mutual fund portfolio to her a few months before he had passed away.  The stocks and mutual funds were purchased decades ago and had gone up in value quite nicely.  Same story as above:  had her father transferred the assets at his death with her as beneficiary, she would have received a step up in basis, could have liquidated the account shortly thereafter and she would have not had a capital gains issue.  We transferred the stocks and mutual funds and began a tax-harvesting strategy to ultimately mitigate some or all of the capital gains.

Both stories are great examples of successful and generous parents.  Had they timed the gifting differently, the capital gains implications could have been greatly reduced and simplified.  But both are also great examples of how in many cases, planning isn’t over until it’s over, as we were able to take things one step further to improve their situations.

LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Wealth Management and can be reached at (715) 343-9600 or

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
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