An octogenarian wanted our help in rebalancing a portfolio to maximize current after-tax income. The client had numerous long-term stock holdings with substantial taxable gains, yet the dividend income could be greatly increased by rebalancing to other strategies that were more tax-efficient and generated higher income.

Our initial step was an analysis of the holdings. We then sold those holdings with the least income and/or the most over-valuation. We offset those sales with realized losses on other names, so we had no taxable events. We then used those proceeds to invest in two tax-friendly strategies: one in a private debt Limited Partnership, and the other a fund of publicly traded Master Limited Partnerships. These investments reduced the risk of a stock-only portfolio and tripled the after-tax income.

After a year or so, we sold off a large holding in a high dividend paying stock to reduce that concentration, and the increase in income by investing the proceeds in the two new strategies covered the capital gains taxes in the first year. Subsequently, the after-tax income to our client significantly increased again. In 2020, accounting losses resulted in a tax rebate. The portfolio is more balanced, and the income is at a higher level.

A small non-profit received a very large bequest. We worked with the client to create an investment policy that allowed for consistent and significant granting for over a decade. Here are the steps we took:

• We hired an outside manager to manage specific portions of the portfolio, while we managed the remainder ourselves.
• We customized the holdings to align with the values of the organization.
• We added less-liquid investments to lower volatility and increase returns during the period.
• We further assisted the client in identifying professionals to assist in legal, audit, and other areas throughout the period.
• We helped the client to establish granting procedures and guidelines. The organization was able to grant out for over a decade, and transition the remainder to a trust structure that will carry on in perpetuity.