Case Study 5

Preserving the Value of a Concentrated Stock Position

Bill, a 54-year-old corporate executive, and his wife, June, have amassed considerable wealth. But with two sons headed to college, a daughter on her way to law school and plans to buy a vacation home, they’re bracing for higher expenses in the next few years.

A large portion of the couple’s wealth is concentrated in Bill’s company’s stock, and he anticipates receiving additional equity options in the coming years. But as the financial markets experience volatility, Bill and June are increasingly concerned about wealth preservation—specifically, maintaining the value of their holdings and maximizing saving opportunities in the most tax-efficient manner possible. They’re also at an age when estate planning needs are growing in importance.

Private Wealth Management team specialists reviewed Bill and June’s financial picture and developed a strategic diversification1 plan to monitor their portfolio and help minimize volatility that included stop-loss orders.

A stop order to sell—always at a price below the current market price—is usually designed to protect a profit or to limit a loss on a security purchased at a higher price. (The risk of stop orders is that they may be triggered by temporary market movements, or that they may be executed at prices several points lower than the stop price because of market orders placed ahead of them.)

In addition to providing important financial benefits, SunTrust’s wealth preservation strategies gave Bill and June a measure of comfort in the midst of an uncertain economic environment.

Disclaimers

1Diversification does not ensure against loss.

SunTrust Bank and its affiliates and the directors, officers, employees and agents of SunTrust Bank and its affiliates (collectively, “SunTrust”) are not permitted to give legal or tax advice. While SunTrust can assist clients in the areas of estate and financial planning, only an attorney can draft legal documents, provide legal services and give legal advice. Clients of SunTrust should consult with their legal and tax advisors prior to entering into any financial transaction or estate plan. Because it cannot provide legal services or give legal advice, SunTrust’s services or advice relating to “estate planning” or “wealth transfer planning” are limited to (i) financial planning, multigenerational wealth planning, investment strategy, (ii) management of trust assets, investment management and trust administration, and (iii) working with the client’s legal and tax advisors in the implementation of an estate plan.

These materials are educational in nature. The implications and risks of a transaction may be different from individual to individual based upon past estate, gift and income tax strategies employed and each individual’s unique financial and familial circumstances and risk tolerances.

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