Some client relationships begin with a single decision made decades earlier. For one couple, it was a modest number of Microsoft shares, bought years ago by a family member and never sold. Stock splits and a two-decade bull run turned that modest position into a significant, highly concentrated holding with deep embedded capital gains. By the time the couple came to Consilio, the question was no longer whether to hold the stock. It was how to make it work for three generations instead of one.
Rather than treat the concentrated position as a single problem to solve, we built a multi-strategy approach around it. A conservative covered call program generates income from the shares without requiring him to sell, while the rest of their wealth is managed in a diversified portfolio using direct indexing to stay tax-efficient. Along the way, we also found a substantial capital loss carryforward sitting mostly unused from options trading years earlier, and put it to work offsetting gains strategically generated.
When the husband retired, we built a distribution plan that pulled from the right account at the right time: an inherited IRA on a 10-year payout window, covered call proceeds, and eventually required minimum distributions, each with a different tax character. We also stress-tested the portfolio against a real market shock. When a geopolitical conflict rattled markets, the couple's bond allocation held steady, just as it was designed to, giving them confidence to stay the course.
Underneath the tax strategy was a simpler goal: this couple wants their children to inherit not just assets, but a head start. Holding the Microsoft shares for the long term means a future step-up in cost basis, so decades of gains never become a tax bill their children have to pay. We've also begun bringing the next generation into the relationship directly, opening accounts for the children so they can start learning the financial lessons of prior generations earlier and more deliberately in their lives, well before any inheritance is on the table.
We built a multi-strategy approach: a conservative covered call program for income, plus a diversified, direct-indexed portfolio for the rest of their wealth.
We put a decade-old capital loss carryforward back to work, offsetting gains instead of trickling out at the annual limit.
We built a distribution strategy that draws from inherited accounts, option premiums, and future RMDs.
We began building the relationship with the next generation, so the family's financial life outlasts any one plan.
Today, the couple is settled into retirement, with their income, taxes, and portfolio working quietly in the background. The Microsoft position that started with one family member's decision decades ago is still intact, still generating income, and now positioned to become the foundation of the next generation's financial life.
DISCLOSURES:
The scenarios described are illustrative and reflect composite situations based on actual client experiences, with identifying details and figures changed. They are provided for informational purposes only, are not representative of the experience of all clients, are not a guarantee of future results, and individual results will vary based on each client's specific circumstances.
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
Consilio Wealth Advisors, LLC ("CWA") is an investment adviser registered with the U.S. Securities and Exchange Commission ("SEC"). Registration does not imply any particular level of skill or training. CWA provides investment advisory services to clients nationally and notice-files in those states where notice filing is required. CWA renders individualized responses to persons in a particular state only after complying with all applicable regulatory requirements, or pursuant to an applicable exemption or exclusion.
