Top 10 Actions Executives Can Take to Protect Their Personal Finances in the Wake of COVID-19
, CFP®, Partner, Private Clients PracticeBen Shively
, Partner, Wealth Management Services
After helping guide their companies through a month of dramatic change while also focusing on employees’ health and transition to work from home, many executives are now evaluating their personal financial approach. Times of major market disruption—like we’re currently experiencing—present both challenges and opportunities.
Steps to Take Now
Here are the top items executives can consider as they look to protect their personal finances in the current economic environment.
- Execute planned stock-option exercise and hold strategies while spreads between market price and strike price are reduced.
- Complete planned gifts of stock or assets to family members, trusts, or other beneficiaries to lessen the use of the lifetime gift exemption. For any planned gifts of private company stock, use updated valuations to help reduce gift tax exposure.
- Harvest losses to offset any previous or anticipated 2020 capital gains.
- Complete nondeductible IRA contributions and subsequent Roth conversions.
- Convert IRA assets to Roth at depressed equity valuations if appropriate for your long-term tax strategy.
- Take advantage of ordinary loss deduction treatment for Internal Revenue Code (IRC) Section 1244 stock, also known as qualified small business stock.
- Sell or reposition depressed real estate holdings at low valuation levels without the challenges of IRC Section 1031 exchange limitations.
- Rebalance investment portfolios with public securities and mutual fund holdings to be in a position to benefit from a market rebound.
- Review holdings, credit quality, and positioning of fixed income portfolio.
- Verify that estate documents and advanced medical directives are updated and reflect present wishes. Save updated copies and send to selected executors and trustees.
For most executives, ensuring their companies, employees, and families are healthy and effectively weathering the storm has been the best use of their time and energy in these first few weeks of the COVID-19 disruption. Because there’s no certainty on how long the pandemic will last, in this next phase, executives can benefit from incorporating the strategies outlined above so their hard work can have a higher long-term impact on personal finances.
We’re Here to Help
For more information about how to protect your personal finances during a market disruption, contact your Moss Adams professional.