Client: Selling his commercial real-estate business for a combination of cash and public stock at the height of the market was a significant achievement in the life of this middle-aged client. Subsequent to the sale, however, the value of his public-equity ownership fell precipitously.
Solution: Evercore Wealth Management advisors spent a great deal of time with the client to analyze the growth potential of his assets with respect to his lifestyle and goals. The client had previously funded his annual expenses from his business earnings and, although he was interested in the long-term wealth transfer to his three adult children and to future generations, he was most concerned that he and his wife would be able to fund the next thirty or so years of their retirement.
To that end, Evercore Wealth Management set aside one pool of capital invested predominately in high-quality municipal and corporate bonds, with a lower relative proportion in equities and rental real estate.
Our advisors then reserved a second pool of capital that included the remaining cash proceeds plus stock in the publicly traded company that had acquired his business, with a plan to steadily diversify the stock as it rebounded off its historical lows and manage the assets for longer-term growth in the context of the client's overall portfolio and limited appetite for risk.
A third pool of capital was designated for wealth transfer planning. Prior to the sale of his business, the client had made a gift of part of the company's stock into a dynasty trust designed to benefit his heirs and to provide long-term family asset protection. Evercore Wealth Management advised the client to allocate this portfolio, which has a long-term appreciation objective, to equity and equity-like securities, as well as illiquid special situations.
As the stock was diversified and the client became increasingly confident that he and his wife would be able to continue financing their lifestyles, Evercore Wealth Management advised the client to tap a fourth and final pool of capital, based on appreciated low-basis stock, to fund a private family foundation.