What is the name of your state? Washington State (for the LLC)
A few years ago, my parents in Washington State set up an LLC trust so that my brothers, sisters and me could inherit from our parents with a lot less probate and taxes. (My father passed away about two years ago.) It included mostly stocks and bonds that had been purchased decades ago and had grown a lot in value.
All went well until this past year went a new broker took over the account (which is with a major well-known brokerage). One day, he called my aging mother and persuaded her to change the investments in the LLC and a few other accounts she had into mutual funds. She wasn't even aware that this included the LLC, and though he was just talking about one of the other smaller accounts.
Anyway, he sold her ENTIRE portfolio and used the money to buy mutual funds, assuring her this was a better and safer investment. While that may be so for someone just starting out, what he did cost us about $100,000 in taxes!! -- all of it due last month. Though it was subjected to the IRS 15% capital gains tax, I now live in California which has no special rate for capital gains and had to pay an ADDITIONAL 9.3% (the top personal rate) on almost all of my LLC share.
Our LLC works by having our parents' share decrease a little each year, while ours goes up. It's my understanding that when both our parents are deceased, the value of the investments for tax purposes still in our parent's name will revert to the day of my mother's death (not when originally purchased decades ago). If so, our broker completely undid our LLC's tax strategy, and cost us a fortune.
This broker no longer works for the brokerage, and has left the company (though we still know where he is). In fairness, it was his job to buy and sell a very small percentage of whatever was underperforming in the LLC each year, but what he did seems WAY over the top to me. It took our accountant (unrelated to the broker's firm) quite a while to figure out all the capital gains. I think our broker should have had this done BEFORE he sold everything.
Is this malpractice, and should I be consulting with an attorney?
A few years ago, my parents in Washington State set up an LLC trust so that my brothers, sisters and me could inherit from our parents with a lot less probate and taxes. (My father passed away about two years ago.) It included mostly stocks and bonds that had been purchased decades ago and had grown a lot in value.
All went well until this past year went a new broker took over the account (which is with a major well-known brokerage). One day, he called my aging mother and persuaded her to change the investments in the LLC and a few other accounts she had into mutual funds. She wasn't even aware that this included the LLC, and though he was just talking about one of the other smaller accounts.
Anyway, he sold her ENTIRE portfolio and used the money to buy mutual funds, assuring her this was a better and safer investment. While that may be so for someone just starting out, what he did cost us about $100,000 in taxes!! -- all of it due last month. Though it was subjected to the IRS 15% capital gains tax, I now live in California which has no special rate for capital gains and had to pay an ADDITIONAL 9.3% (the top personal rate) on almost all of my LLC share.
Our LLC works by having our parents' share decrease a little each year, while ours goes up. It's my understanding that when both our parents are deceased, the value of the investments for tax purposes still in our parent's name will revert to the day of my mother's death (not when originally purchased decades ago). If so, our broker completely undid our LLC's tax strategy, and cost us a fortune.
This broker no longer works for the brokerage, and has left the company (though we still know where he is). In fairness, it was his job to buy and sell a very small percentage of whatever was underperforming in the LLC each year, but what he did seems WAY over the top to me. It took our accountant (unrelated to the broker's firm) quite a while to figure out all the capital gains. I think our broker should have had this done BEFORE he sold everything.
Is this malpractice, and should I be consulting with an attorney?
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