Managing an Inheritance
Client: Mariah, age 23
Job: Executive Assistant for music distribution company
Earnings: $35,000/year
Net Worth: $300,000
Children: None
Situation: Mariah’s mom passed away two years ago from cancer and left her an investment account worth $150,000. Additionally, Mariah’s mom left a house in upstate New York to Mariah worth $150,000 that is paid for free and clear. Mariah does not feel she is being listened to by her mom’s stockbroker who manages the account. The broker rarely returns Mariah’s calls and when he does, she feels he always cuts her off when she talks.
When I met Mariah she had just started her first full-time job after graduating from college. Mariah was frustrated by her inability to get her mom’s stockbrokers attention and confused by the legal papers and details surrounding the impending sale of her mom’s home. Mariah was being given advice from insurance people, numerous lawyers, home inspectors, family and friends, and was overwhelmed by all the choices and decisions to be made.
Since Mariah was a recent grad and had no prior investment or personal finance knowledge outside of her bank savings and checking account, we started at square one. First, we began educating Mariah about personal finance issues, everything from establishing an emergency fund to understanding her employer benefits to investment planning and estate settlement issues. Next, we discussed and she agreed to let us communicate and coordinate with her attorneys, insurance professionals and home inspectors. Mariah experienced an immediate sense of relief that we could act as her point person.
Mariah’s other objective was to transfer her inherited account away from her mom’s stockbroker. We reviewed her statement and noticed that she only had one large stock fund comprising the entire account. This fund was an under-achiever and she was paying high internal expenses for an investment that was not providing value. Additionally, she had an unrealized loss in the investment and we counseled her that she could use the loss on her tax return to offset her income and lower her tax liability.
While the account transfer process was underway we reviewed her goals, dreams, cash-flow needs, and tolerance for risk and agreed on an overall strategy. This solution would reduce her risk level, provide broad diversification, the potential for enhanced performance and lower expenses. Additionally, the investment account we suggested offered Mariah check-writing privileges to help supplement her salary.
Our work with Mariah began with concerns about an account and a home sale but took us down a path that ultimately enhanced her overall financial picture and self-confidence. Mariah has been so impressed with our availability, impeccable service, and attention to detail, that she has referred two friends to us. It is our pleasure assisting them.
*Names and some details have been changed to protect client confidentiality.
