Personal Investments • Reduce position & rebalance OR long put

Hi All -

I manage a trust for my adult kids. I have a long position in stock X with capital gains of 40%. However, I would like to reduce my exposure to stock X by half. (I know that many of you might think I should have no exposure to X--sell it all and go into indices. But that isn't going to happen.) Stock X is about 10% of my total position; my portfolio is otherwise carefully balanced. I have plenty of money to live on; the money in stock X is not pertinent to my life, but of course I want to maximize what my kids will get.

Capital gains taxes (federal and California) are of course the problem. An added wrinkle is that I have, statistically, 6-8 years life expectancy based on my medical condition. (Hopefully more!) If I hold the stocks until I die, then the cost basis of the stocks is reset for my kids, and they'd pay no capital gains taxes.

I have, I think, two options:

• Sell half my position in X and pay the long-term federal (15%) and California capital gains (9.3%) and rebalance

• Serially buy put options until I die to avoid capital gains taxes.

I am inclined to just sell, as the put option strike me as expensive of 6-8 years, but want to see if anyone more knowledgeable about me has any ideas.

Thanks!

Statistics: Posted by AdornoAdorna — Fri Jun 07, 2024 3:08 pm — Replies 0 — Views 38

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