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For many investors, a significant portion of their wealth can become tied to one, or a small number of, stock position(s). This may be the result of long-term investing, equity compensation, the sale of a business, or early investment in a high-performing company. While concentrated stock positions can generate substantial wealth, they also introduce heightened portfolio concentration risk and significant tax considerations.   From a portfolio management perspective, excessive concentration undermines diversification, one of the most reliable tools for managing risk. However, selling a large highly appreciated stock position outright can result in significant capital gains taxes and potentially expose the investor to the additional 3.8% Net Investment Income Tax (NIIT). These taxes can erode a meaningful portion of the wealth created in the stock positions.   The good news is that there are thoughtful strategies available to help investors reduce concentration risk while managing taxes efficiently. Understanding the Risks of Concentration Investors must first understand why concentrated positions warrant attention. When a large percentage of a portfolio is invested in one stock, performance becomes heavily dependent on the fortunes of that single company. Even highly profitable and well-established companies can face market downturns, regulatory challenges, industry disruption, management changes, and earnings volatility. While the stock may have performed exceptionally in the past, relying too heavily on it going forward can expose the investor to unnecessary risk. At the same time, many concentrated positions carry low cost bases due to years of appreciation. Selling these shares can generate sizable capital gains taxes, particularly for investors in higher tax brackets. This creates a natural hesitation to diversify.   The challenge is to balance risk reduction with tax efficiency. Six Strategies to Navigate Concentrated Stock Positions Gradual and Strategic Selling Over Time: One of the most straightforward approaches is to reduce the position gradually rather than all at once. By spreading sales over multiple years, investors can: Manage capital gains tax exposure Potentially remain in lower tax brackets Align stock sales with income fluctuations Take advantage of favorable market conditions   This systematic approach allows investors to steadily reduce concentration risk while maintaining flexibility. In some cases, selling during years of lower income, such as early retirement, can further enhance tax efficiency.   While this strategy does not eliminate taxes, it often results in a lower overall tax burden compared to a large one-time sale that can push the investor’s long-term capital gains tax bracket from 15% to 20%. Tax-Loss Harvesting: Tax-loss harvesting involves selling investments that have declined in value to realize capital losses. These losses can then be used to offset capital gains from selling appreciated stock. For example: Capital losses offset capital gains dollar-for-dollar Up to $3,000 of capital losses can be used to reduce taxable ordinary income each year Unused capital losses can be carried forward indefinitely   When coordinated carefully, tax-loss harvesting can significantly reduce the tax impact of diversifying a concentrated position. This strategy requires ongoing monitoring and a well-structured taxable portfolio, but can be a powerful tool when executed properly.   Gifting Shares as Part of Estate and Family Planning: Gifting appreciated stock to family members or irrevocable trusts can help: Reduce future estate taxes Shift tax implications of future appreciation to heirs Potentially take advantage of lower tax brackets   Annual gift tax exclusions and lifetime exemptions should be used strategically. Additionally, certain trust structures may provide further tax efficiency and asset protection.   It is important to note that heirs typically inherit the original cost basis of the shares, meaning capital gains taxes may still apply when they sell. Regardless, gifting can be an effective long-term wealth transfer strategy when coordinated with broader estate planning. For example, if you have adult children, this strategy can serve a double purpose of transferring wealth, creating more shared experiences with your children, plus potentially reducing estate taxes at the same time. Utilizing Exchange Funds for Tax-Deferred Diversification: Exchange funds are specialized investment vehicles that allow multiple investors to pool their concentrated stock positions in exchange for ownership in a diversified portfolio. Key benefits include: Immediate diversification No capital gains tax triggered at the time of the exchange (in most structures)   However, exchange funds typically come with high minimum investment requirements, long lock-up periods (often seven years or more), and limited liquidity.   After the lock-up period, investors receive a diversified basket of stocks. Exchange funds can be an effective solution for investors with very large positions who want diversification without immediate tax consequences.   Hedging Strategies Using Options: Sophisticated investors may use stock option strategies to manage downside risk while deferring a taxable sale of stock. One common technique is a “collar” strategy, which generally involves buying a protective put option to limit downside risk and simultaneously selling a call option to help offset the cost of the protective put.   This creates a range of potential outcomes where the stock is protected from major losses but may also have capped upside potential.   While collars can be effective risk management tools, they take stock option experience to execute and require careful structuring to avoid unintended tax or regulatory consequences. These strategies are typically implemented with the guidance of financial professionals experienced in derivatives and tax planning.   Donating Appreciated Shares to Charity or Donor-Advised Funds: For charitably inclined investors, donating appreciated stock is one of the most tax-efficient ways to reduce a concentrated position. When shares are donated directly to a qualified charity or Donor-Advised Fund (DAF): The investor avoids paying capital gains tax on the appreciation A charitable deduction is generally available for the full fair market value of the shares donated up to 30% of the investor’s Adjusted Gross Income, subject to additional limitations introduced by recent tax law The charity can sell the stock without tax consequences   Donor-advised funds offer additional flexibility by allowing investors to take an immediate tax deduction while distributing grants to charities over time. For many high-net-worth families, charitable giving becomes a core component of managing concentrated stock risk.   It is important to note that beginning in 2026, the tax deduction benefit of charitable contributions is capped at the 35% tax bracket. For taxpayers in the top tax bracket (37%), the value of their deduction will be roughly 35 cents per dollar donated instead of 37 cents. The Value of an Integrated Strategy In practice, the most effective approach often involves a combination of several strategies rather than relying on just one. For example, a RISE Investments advisor may recommend a combination like the following: Gradual selling over time Paired with tax-loss harvesting Alongside charitable donations And selective hedging for risk management   This coordinated approach allows investors to diversify thoughtfully while keeping taxes under control. However, every investor’s situation is unique. Factors such as income level, tax bracket, investment timeline, charitable goals, liquidity needs, and estate planning considerations all play a role in determining the optimal strategy. Conclusion Concentrated stock positions often represent success. Years of growth, smart decisions, or entrepreneurial achievement. However, allowing a single stock position to dominate a portfolio can expose investors to unnecessary risk that could result in derailment of their financial plan.   At the same time, acting too quickly without considering tax consequences can significantly reduce long-term wealth. With careful planning and the right guidance, it is possible to: Reduce concentration risk Improve portfolio diversification Preserve after-tax returns Align investments with long-term financial goals   In our opinion, proactive management of concentrated positions is one of the most important steps investors can take to protect and grow their wealth over time. A thoughtful, tax-aware strategy can help ensure that the success of yesterday does not become the risk of tomorrow. Disclosure RISE Investment Management, LLC ("RISE" or "RISE Investments") is an investment adviser registered under the Investment Advisers Act of 1940. Registration of an investment adviser does not imply any level of skill or training. This publication is solely for informational purposes and past performance is not indicative of future results. Any description of products, services, and performance results of RISE contained in this publication are not an offering or a solicitation of any kind. No advice may be rendered by RISE Investments unless a client service agreement is in place. Advisory services are only offered to clients or prospective clients where RISE Investments and its representatives are properly licensed or exempt from licensure. All of the information in this publication is believed to be accurate and correct as the date set forth. RISE does not have or accept responsibility or an obligation to update such information. Please note, this article is for education purposes and should not be treated as tax or legal advice. This article is not a substitute for legal or tax advice from your professional legal or tax advisor.

Purchasing your first home is a great time for young adults to begin estate planning. Avoiding probate should be a priority and can be achieved by proper estate planning techniques. When undergoing estate planning, make sure your mortgage and insurance information is up to date. What is Estate Planning? Estate planning is essential to young homeowners. It involves putting together a strategy to manage your financial situation, including your home, in an event of incapacitation or death.   Additionally, estate planning provides guidance into important topics such as healthcare decisions should something happen as well as guardianship to young children. Estate planning ensures asset protection, legacy, clarity, and care for your loved ones, including your children.   Starting estate planning when purchasing your first home is often appropriate as it tends to correspond with other major life events such as having a child or accumulating wealth.   Given your home is likely the single largest asset on your personal balance sheet, ensuring your home is handled according to your wishes is particularly important.     What is Probate and Why Should it be Avoided? Without proper estate planning, upon passing your family would be stuck with the burden of dealing with probate, which is a lengthy, public, and pricey process where a judge oversees the administration of your estate instead of your loved ones. For instance, without proper estate planning, your home may be inherited by relatives that you had no intention of having an ownership interest in the home creating family conflict for an illiquid asset. How Can Homeowners Avoid Probate? There are two common ways in which homeowners can avoid probate.   Revocable Living Trust A revocable trust is a document created to manage your assets, including your home, during your lifetime and distribute the remaining assets after your death as you desire. The trust can be changed during your lifetime as your circumstances change. A successor trustee is chosen and responsible for distributing the assets to the beneficiaries according to the rules of the trust agreement. A successor trustee will also make important decisions on your behalf should your incapacity occur.   Creating a revocable trust allows for bypassing probate and more control over assets to your loved ones, including your children. It is important to not only create the trust but to fund assets such as your home into the trust. This generally involves legally changing the property’s title from the owner’s name to the trust’s name.   Designate a Beneficiary Homeowners that do not have a revocable living trust may opt to designate a beneficiary in the event something should happen. Two common ways to designate a beneficiary include Joint Tenancy with Rights of Survival (JTWROS) and Transfer on Death (TOD) designations. What Happens to your Mortgage Should Something Happen? If there are two or more borrowers on a mortgage and a borrower passes away, the first thing you should do is reach out to the current mortgage servicer. You will have to let them know that a borrower has passed away. If the surviving borrower is able to make the mortgage payments on their own, there will not be any changes to the terms of the existing mortgage. Payments will still need to be made because if the mortgage stops getting paid, the servicer or bank could start foreclosure proceedings.   When you do call the mortgage servicer, they will ask for a certificate of death so make sure you have that handy. If you are unable to afford the mortgage on your own, you could also reach out to the servicer to see if there are any loan modification or refinancing options available to the remaining borrower(s).     Should I Update my Mortgage and Insurance after Estate Planning? After estate planning and closing on your home, you may want to look into mortgage protection insurance and life insurance. Both types of insurance offer financial protection in case you or a loved one passes away.   Mortgage Protection Insurance can help payoff the remaining balance of the mortgage if one of the borrowers passes away. Life Insurance can be used in a variety of ways, including choosing to payoff a mortgage in full in the event of someone passing away.     Conclusion Buying your first home is a major life milestone. It is important to carefully plan for the home in unlikely but possible scenarios such as death or incapacity. Being aware of what happens to your home and mortgage is valuable information to share with loved ones. Authors This article was written in collaboration by Thomas Van Spankeren and Mike Angus . Thomas Van Spankeren RISE Investments M: 708-860-4112 E: thomas@riseinvestmentsusa.com A: 134 N LaSalle Suite 1760, Chicago, IL 606 02 Mike Angus LeaderOne Financial Corporation NMLS #1398541 M: 708-912-9978 E: MikeAngus@leader1.com A: 1111W 22 nd  Street, Suite 620, Oak Brook, IL 60523 Disclosure RISE Investment Management, LLC ("RISE" or "RISE Investments") is an investment adviser registered under the Investment Advisers Act of 1940. Registration of an investment adviser does not imply any level of skill or training. This publication is solely for informational purposes and past performance is not indicative of future results. Any description of products, services, and performance results of RISE contained in this publication are not an offering or a solicitation of any kind. No advice may be rendered by RISE Investments unless a client service agreement is in place. Advisory services are only offered to clients or prospective clients where RISE Investments and its representatives are properly licensed or exempt from licensure. All of the information in this publication is believed to be accurate and correct as the date set forth. RISE does not have or accept responsibility or an obligation to update such information. Please note, this article is for education purposes and should not be treated as tax or legal advice. This article is not a substitute for legal or tax advice from your professional legal or tax advisor. LeaderOne Financial Corporation is licensed by the Arizona Department of Financial Institutions. Mortgage Banker License # - 0918657. The California Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act.  The North Carolina Commissioner of Banks Office. License #L-186257.  The Washington Department of Financial Institutions, License No. CL-12007. An Illinois Residential Mortgage Licensee, MB 6760699.         Corporate Headquarters: 7500 College Blvd Suite 1150; Overland Park, KS 66210, NMLS ID #12007 http://www.nmlsconsumeraccess.org .  Toll Free (800) 270-3416.  This advertisement does not constitute a loan approval or a loan commitment. Loan approval and/or loan commitment is subject to final underwriting review and approval.

If you hold employer stock inside a 401(k) or other qualified retirement plan, taxes can quietly become one of the largest drags on long-term wealth. Most retirement distributions are taxed at ordinary income tax rates, which are often higher than capital gains rates, regardless of how the assets inside the plan performed. The Net Unrealized Appreciation (NUA) strategy is one of the few exceptions to this rule. When applied correctly, this strategy can significantly reduce lifetime taxes. The unfortunate case is that it is also one of the most misunderstood and underutilized planning strategies available.  What Is Net Unrealized Appreciation? Net Unrealized Appreciation refers to the difference between the cost basis of employer stock held in a qualified retirement plan and its current market value. In simple terms, it is the built-in gain on company stock that has accumulated while held inside a retirement account, such as a 401(k).   For example, if you acquired company stock inside your 401(k) for $50,000 10 years ago and it is now worth $250,000, the net unrealized appreciation is $200,000. Under traditional retirement plan rules, that entire $250,000 would typically be taxed as ordinary income when distributed to you throughout retirement. The NUA strategy allows for the $200,000 net unrealized appreciation to instead be taxed at long-term capital gains rates.   Given the significant difference between ordinary income and capital gains tax rates for many investors, this distinction can result in substantial tax savings. How the NUA Strategy Works The NUA strategy involves a special type of distribution from a qualified retirement plan that holds employer stock. When executed properly, it allows the investor to:   Transfer employer stock “in-kind” from the retirement plan to a taxable brokerage account. Pay ordinary income tax only on the stock’s original cost basis at the time of the “in-kind” distribution. Defer taxation on the appreciation until the stock is sold, at which point the gain is generally taxed at long-term capital gains rates. The remaining assets in the retirement plan (such as bonds, mutual funds, or ETFs), are typically rolled into an IRA, preserving tax deferral but still subject to ordinary income taxes when distributed.   Using the earlier example, if the stock’s cost basis is $50,000, only that amount is taxed as ordinary income when the stock is distributed. The $200,000 of appreciation is not taxed immediately. Instead, it is taxed later when the stock is sold, usually at long-term capital gains rates, regardless of how long the stock is held after distribution.   Key Requirements to Qualify for Favorable NUA Tax Treatment The rules governing NUA are strict, and any missteps can permanently eliminate the tax benefit. Several conditions must be met:   The distribution must be a lump-sum distribution. A lump-sum distribution means that the entire balance of the qualified plan is distributed within a single tax year. Partial distributions generally do not qualify. The distribution must follow a triggering event. Triggering events include: Separation from service Reaching age 59½ Disability Death Employer stock must be distributed in-kind. This means the shares must be transferred directly into a taxable brokerage account. Selling the stock inside the qualified plan before distribution disqualifies it from NUA treatment. All other plan assets must be fully distributed. Typically, non-employer stock assets in the plan are rolled into an IRA as part of the same transaction. This maintains the tax-deferred treatment of the non-employer stock assets until they’re distributed in retirement years. Because these rules are unforgiving, professional guidance is not optional. It is essential.   The Tax Benefits of NUA The primary advantage of the NUA strategy is the potential conversion of high ordinary income taxation into more favorable capital gains taxation. For many high earners, Federal ordinary income tax rates can exceed 35%. Long-term capital gains rates, by contrast, are often 15% or 20% at the federal level depending on the investor’s income. The appreciation is not subject to required minimum distributions (RMDs) once held in a taxable account. If the stock continues to appreciate after distribution, post-distribution gains are taxed under normal capital gains rules. From a planning perspective, NUA can meaningfully improve after-tax outcomes, especially for investors with highly appreciated employer stock. This treatment is what makes the NUA strategy so compelling.   When NUA May Make Sense In practice, NUA often makes sense for long-tenured employees of publicly traded companies who accumulated company stock over many years at relatively low prices. That said, NUA is not an all-or-nothing decision. In some cases, only a portion of the employer stock may be distributed using NUA, while the rest is rolled into an IRA to maintain diversification and risk control. The NUA strategy is most compelling when certain factors, such as the following, are present: The employer stock has experienced significant appreciation. The cost basis of the stock is low relative to its market value. The investor expects to be in a higher tax bracket in retirement. The investor is planning to execute a Roth IRA conversion strategy in retirement. The investor plans to diversify the concentrated stock position over time. When NUA May Not Be Appropriate Despite its appeal, NUA is not universally beneficial. Situations where it may not make sense include: The stock has minimal appreciation. The investor expects to be in a much lower tax bracket in retirement. The stock represents an unacceptably large concentration risk. Liquidity needs or charitable goals favor other planning strategies.   It is also important to recognize that once the NUA election is effectively made, it generally cannot be undone. Poor execution can result in higher taxes than a standard IRA rollover. Why Professional Planning Matters The NUA strategy sits at the intersection of tax planning, retirement planning, and investment risk management. While the tax benefits can be substantial, they should never be evaluated in isolation.   Concentration risk, cash flow needs, Medicare premiums, and long-term estate planning objectives all matter. In our view, the best NUA decisions are those that integrate tax efficiency with disciplined diversification and a broader financial plan. Disclosure RISE Investment Management, LLC ("RISE" or "RISE Investments") is an investment adviser registered under the Investment Advisers Act of 1940. Registration of an investment adviser does not imply any level of skill or training. This publication is solely for informational purposes and past performance is not indicative of future results. Any description of products, services, and performance results of RISE contained in this publication are not an offering or a solicitation of any kind. No advice may be rendered by RISE Investments unless a client service agreement is in place. Advisory services are only offered to clients or prospective clients where RISE Investments and its representatives are properly licensed or exempt from licensure. All of the information in this publication is believed to be accurate and correct as the date set forth. RISE does not have or accept responsibility or an obligation to update such information. This article is for education purposes and should not be treated as tax or legal advice. This article is not a substitute for legal or tax advice from your professional legal or tax advisor.

As a fiduciary, we provide customized and tailored investment management solutions aligned with your specific goals and objectives, incorporating robust risk management techniques to safeguard your investments. Chartered Financial Analyst | Tax-Smart Solutions and Management | Rebalancing and Tax-Loss Harvesting | Globally Diversified Asset Allocations | Private Funds and Alternative Assets | Private Real Estate | Third-Party Separate Account Managers | Intelligent Implementation Optimize Your Investment Portfolio As fiduciary, RISE Investments puts your best interests and financial well-being are at the forefront of our strategy. We provide customized and tailored investment solutions aligned with your specific goals and objectives, incorporating robust risk management techniques to safeguard your investments. Get Started With a disciplined approach and a focus on fundamentals-based investing, we identify opportunities that not only meet your objectives but also enhance your overall financial health. Experience the competitive advantages of our dedicated service and expertise as we work together to achieve your financial aspirations. Tax-Smart Solutions and Management Rebalancing and Tax-Loss Harvesting Globally Diversified Asset Allocations Private Funds and Alternative Assets Real Estate Third-Party Separate Account Managers Intelligent Implementation 401(k) Plan Investment Advisory Our Core Investment Philosophy Our advisors are dedicated to making informed investment choices grounded in a few fundamental principles, providing a reliable path to financial success. Fiduciary Pledge Our fee structure is simple and transparent. As a fiduciary investment advisor, our client's best interests and goals are always put ahead of our own. Asset Allocation As a crucial element of investing, asset allocation results in balancing of risk and reward in a portfolio. A well-crafted asset allocation reduces the impact of volatility, enhances a portfolio's resilience, and allows investors to navigate various market conditions with greater confidence and stability. Unbiased Process Investment decisions should not be driven by emotion. We utilize an unbiased, emotion-free process to vet, due diligence, and select investments for our clients. We combine our team's CFA® charterholder acumen with our investment and financial markets expertise to deliver value and long-term results for our clients. Long-Term Perspective Our investment decisions are driven by a long-term, fundamentals-based outlook. We approach investing for our clients as if we are part owners of the businesses we invest in, not traders of companies' stocks. We strive to maximize investment returns based on the investment risk you can, or desire, to take. Generally, we view risk as permanent impairment of capital which is typically recognized as paying too high of a price for an investment versus the estimated intrinsic value. Tax and Cost Efficiency Investment fees, expenses and taxes are inevitable, yet they are a drag on investment performance. We seek to minimize all costs of investing but also believe there is incremental value in paying for the right active managers that add incremental value. We incorporate both active and passive strategies into our client portfolios. . Opportunistic Investing Markets can be inefficient, especially at extremes when emotions prevail among market participants. Market inefficiencies can commonly create pricing dislocations and attractive entry points in financially strong businesses that possess long-term competitive advantages. We may seek to take advantage of inefficiencies when they present themselves. Extensive Access to Unique Investments We aim to enhance portfolios by pursuing less correlated and non-traditional investment opportunities that we believe can deliver strong absolute returns across a full market cycle. We have access to a full suite of best-in-class private alternative fund managers and investment strategies, and we combine that with our team's extensive private markets expertise and experience to identify, fully vet, and select these investments on behalf of our clients. Private and alternative investments are typically available and most suitable for Accredited investors and high-net-worth families with investment time horizons of five years or longer. Strategy Enhance Returns Supplement Income Preserve Capital Diversify Risk Real Estate - Core Real Estate - Opportunistic Real Estate - Credit Private Credit Private Equity Natural Resources Tax and Advanced Planning Get In Touch

With nearly two decades of industry and financial markets experience, our team provides a unique blend of strategic wealth management insight, foresight, and practical expertise to help you achieve your financial and life goals. Chartered Financial Analyst. Meet Your Team With over two decades of industry and financial markets experience, our team provides a unique blend of strategic wealth management insight, foresight, and practical expertise to help you achieve your financial and life goals. Vince DeCrow Founder & Wealth Advisor vince@riseinvestmentsusa.com Thomas Van Spankeren, CFA®, CFP® Principal & Wealth Advisor thomas@riseinvestmentsusa.com Who We Serve Get In Touch

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