California is the proud home of tech, and that means plenty of RSUs and stock options to manage. Tech employees with little investment experience can suddenly find themselves managing a significant amount of wealth. Max & Trisha found themselves in just this position. After years in Silicon Valley, they both have accumulated a significant amount of their previous employer’s stock via options & RSUs. This concentrated wealth subjected them to a significant amount of single stock risk and they were looking for guidance in how to handle both the tax and concentration problems with their financial situation.

In order to reduce their concentrated stock position and significant capital gains, we recommended a two-prong approach. The first strategy was to transfer a sizable amount of their company stock into an exchange fund. This immediately gave them diversification without having to sell their positions. The second tactic was around charitable planning since they are very charitably inclined and typically support various causes each year. We analyzed several different strategies and decided on a Donor Advised Fund (DAF), which is one of the simplest and most effective charitable vehicles. Contributing their appreciated stock to a DAF allows them to receive a full tax deduction, but they are not obligated to give the money to charity immediately. It can rather be invested in their DAF and be able to grow and make a larger impact in the future.

These fictional case studies represent unique individual situations and outcomes.  Examples are for illustrative purposes only and may not necessarily be replicated.

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