For their legacy, Whitney created a charitable remainder unitrust that gives the couple an immediate tax break, pays them during their lifetimes and gives the remainder to charity at their deaths. The advisor then invested in municipal bond funds, commercial real estate partnerships and diversified equity mutual funds to give them an income of $1.3 million a year. They have two teenage children and have already set aside money for their college educations.
The couple wanted some of the money they were diversifying to go into real estate but they did not want to manage property themselves. They invested in limited partnerships with a manager for the property and now receive regular rental payments.
They also put some of the money into municipal bond funds that are not subject to federal tax on the dividends and in some cases not subject to state taxes, depending on the state where the bonds originate.
Whitney also used some closed end funds, which some investors avoid because they are not traded daily. The couple did not object to losing the liquidity on some of their investments in order to receive higher dividends as income is their primary focus going forward.
The couple told Whitney during one of their initial meetings that they had a goal of having a house on a nearby lake and they wanted to spend about $1 million on it. “They have now paid cash for the land and have now hired a contractor to build their dream home,” he said.
Joshua Whitney is a registered representative, with securities offered through Avantax Investment Services, member FINRA,SIPC, and insurance services offered through an Avantax affiliated insurance agency.
Advantage Accounting and Tax is not a registered broker/dealer or registered investment advisory firm. Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment losses, Advantage Accounting said.