Recently, I heard a story about a family that unexpectedly came into significant wealth. Nearing retirement, they were living a good life— owned their home , 401ks and savings accounts—but did not live extravagantly, and never anticipated doing so. However, much of that “good life” was replaced by a troubled and unsatisfying retirement as a result of too much money. They did not properly anticipate how substantial changes in their family dynamic and finances could negatively impact their retirement. It is important to consider every potential benefit/drawback when encountering life transitions. This particular family was inheriting real estate, stocks and cash. They chose to sell the stocks in favor of a more conservative portfolio, without consulting with a professional. However, upon a deeper review it was discovered that the cost basis did not get a step-up at the date of death (DOD), because the inheritor’s father had gifted those assets to an Irrevocable Trust, making them ineligible for a DOD step-up. They were unaware of this and assumed what they read online about “DOD step-ups” applied, making the sale the right choice. This misunderstanding caused a substantial tax liability which far exceeded any downturn in the stock’s value that year as a result of market volatility. This family also had trouble inheriting rental real estate property. As inexperienced landlords, they did not take the proper steps to protect their assets. While they initially enjoyed the monthly rental income, they were ignorant of the responsibilities that came with it and when an issue arose and impacted their neighbors, lawyers got involved and served as an immediate drain on their resources and time. If you’ve recently come into wealth or anticipate doing so, don’t go at it alone. Work with capable professionals like lawyers, CPAs, and CERTIFIED FINANCIAL PLANNER™ to be sure you avoid any potential pitfalls. The time and resources you invest in discussing your situation with a professional can help you avoid a crisis like these.

Keith Barberis, Financial Advisor of Raymond James Financial Services, is located at 7550 Wisconsin Ave Suite 420, Bethesda, MD 20814. Steward Partners Global Advisory LLC and Barberis Wealth Management at Steward Partners maintain a separate professional business relationship with, and our registered professionals offer securities through, Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Steward Partners Investment Advisory LLC. He can be contacted at 240.800.3447 or at keith.barberis@stewardpartners.com. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements. Views expressed are those of Keith Barberis and not necessarily those of Raymond James or RJFS, and are subject to change without notice. Information contained herein was received from sources believed to be reliable, but accuracy is not guaranteed. Past performance is not indicative of future results. There is no assurance these trends will continue or that forecasts mentioned will occur. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. The examples throughout this material are for illustrative purposes only. Actual investor results will vary. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. Ad Approval #2552932