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I've been a lazy, mostly "know-nothing" investor in Berkshire since the late 1990s. I ran a small business for about 28 years, and basically invested all the earnings of that business into Berkshire when I had the cash to do so. I retired around 2009, and my wife and I have been living off that Berkshire investment since. Our portfolio is currently 85/15 Berkshire/t-bills.

I thought I was well prepared mentally for the CEO transition, but my stress levels have gone up considerably since CM passed and now that WB has basically retired. So I *THINK* I'm interested in de-risking a bit and selling maybe half the Berkshire position, but I don't have a good plan on how to do that, or if I should. I will also admit the current US political environment is causing me much stress and has thrown me out of my comfort zone.

My first thought was to just sell around $600k per year to keep cap gains under 15%, but because of the position size that will take many years and could introduce more risk/stress/worry.

So I'm kind of crowd-sourcing for some ideas. I figure I have these options, but want to hear about more options that I'm not thinking about:

1. Do my multiple year 600k sale plan, which could take advantage of share price gains if new management does well, but will be a long drawn out process that will cause me more worry and stress. I will then try to invest the proceeds over time into some "easier for my wife to manage" index.

2. Do a big, one time divestment of Berkshire, which will trigger massive cap gains taxes and a large increase in income and taxes from interest on the new cash. Then I will have to worry about how to deploy that large chunk of cash. I would like to index it, but I want to time that correctly. I hate this plan as I write this. 😬

3. Just let it ride and do nothing, and hope for the best. Selling off small chunks as we need the cash or when the share price is richly valued (like I have been doing), and take advantage of the step up basis to my wife when I expire, and then to our kids when she passes. This seems like the easiest process and better tax-wise, but we would retain our very large "one stock" risk. Am I overthinking our large one stock risk? I was always pretty sanguine about this when CM and WB were running things, but now I'm not so sure.

Details:

We currently have about 10-11 years in cash and t-bills that we use for living expenses.

We spend around 2% of our portfolio annually.

We are US based and have a very low cost basis in Berkshire.

We live in a low cost state tax-wise, with no state income taxes but high property taxes.

We have two working age kids with good jobs, and would like to pass some on to them at some point.

Wife is not interested in investing and has deferred to me for all these years, and I'm a bit embarrassed I don't have a better plan set up for her. She is in better health than me and will almost assuredly outlive me. This is one of the big reasons why I think I should de-risk, because if Berkshire blows up, or becomes the next GE or whatever, I will have done her a massive disservice.

many good options.
not #2, and not mkt cap indexes.

i suggest foreign funds by a good active manager.
but then again, one of my favorite conservative largecap GARP multi-asset managers says he only sees ~10% opportunities in foreign assets.

as a very early retiree, my only paranoia is personal healthcare expenses, as i see the topline totals for my parents who are on near-perfect state retirement healthcare plans.
the gop has destroyed many institutions , and sub-billionaire healthcare is certainly one of them.

Anything that triggers a big tax on Berkshire shares is probably a lousy idea.

I've moved almost everything I can without triggering taxes into Berkshire/cash from indexes over the past few months. Everything "trapped" in indexes would trigger at least a 20-30% immediate value loss. I think I'd rather hold those positions (and run the risk of being worse off if the market drops 40%+ in the near-term than pay a huge tax bill).

If it were my pile, I would either sit on my hands or do the planned sales with the intent to purchase something else offering general equity exposure. I think you'll find that alternatives are either Berkshire-like (e.g., long-term value funds) or offer index pricing risk given today's prices (e.g., S&P @ 30x PE). When I go through this dilemma daily, I end up consistently sitting on my hands and lamenting my trapped VOO shares.

Anyway, so in summary, do nothing or sell a little, but 10 years of dry powder already feels excessive so you're probably best off doing nothing.

We are in a similar situation, but our Berkshire stake is around 40% and cash around 5%. I am following the option 3 you outlined above.

I am not worried about BRK doing an Enron or even a GE, so option 2 is a non-starter, as I have no wish to invite Uncle Sam transfer to share in our fortune. It is possible that BRK will underperform the broad market indexes, barring a significant recession or stock market crash.

My own dilemma is what to with our other large positions in Apple, Microsoft and Costco, whose cost bases are less than 10% of current market value. I see much higher probability that they could blow up than BRK. I have the lived recent experiences with Intel and Pfizer.

Since you have 10 years of living expenses in cash, you have already provided a large safety net for your wife. As for the future management of your estate, could you not bring your kids up to speed on how to handle the investments? They would anyway need to learn to do that when they inherit eventually.

Just let it ride and do nothing, and hope for the best. Selling off small chunks as we need the cash...

This still sounds pretty good.

Other random thoughts:

There are only two reasons I can think of that you might want to do a bit extra - you are concerned about the one stock risk, which is not without merit, and the unmentioned issue of longevity risk. You don't know how long you'll live, so (like anyone else retired and living from their portfolio) you have no idea how much to spend. Looked at another way, you can't predict what fraction of your money you get to enjoy versus your heirs. No matter what your goal is on that front, you might want to narrow that down to a tighter target range? You might live to 110, or you might croak tomorrow.

So you might want to think about selling a bit *more* than what you need, and buying a small annuity. This would raise the floor of your no-work periodic income for life. If not now, then at some point. You could even do this every few years, collect a few annuities from a few firms. Just a thought. Annuities are a horrible deal in terms of IRR, but (a) they solve a problem that isn't easily solved any other way, and (b) they make a whole lot more sense the older you get, when long term rate of internal return is not very important.

Personally I think that your current cash pile (10-11 years of living expenses) is probably considerably more than what's needed, so in your shoes I'd use a lot of that for something. (if you're youngish, just stop selling shares for a few years, and if you're oldish, use a lot of that cash to fund a chunk of annuity).

Don't buy one or more deferred annuities. Let the money stay invested till the last minute, whether stock or TIPS, and then buy an immediate annuity. Besides giving a much better internal rate of return, if you die before that target date the money is in the hands of your estate, not the insurance company.

Without a doubt your large cash pile insulates you well from a lot of "tail risk" outcomes. If that is a large part of its purpose, you can mitigate one more risk by putting some of it into WIP, an ETF containing nothing but a broad basket of ex-US inflation protected government bonds. The risk this protects you against is a big fall in the US dollar. I have no idea of that is a material risk, but if it's a risk that can be so easily mitigated it's worth considering. This doesn't give great returns, but it's modestly positive in real terms and more to the point should protect long term purchasing power better than any other "one click" security I know of. I own some, even though it is heavily tax disadvantaged for me being outside the US.

Jim

Forgot to put our ages. Wife and I are in our early 60s. We are both in decent shape, but my health seems to be fading a bit lately, both physically and mentally.

Very sorry to hear about the possible health issues. Before making any type of major decisions, especially financial ones, I think you owe it both to yourself and your family to have a complete physical done. It is not uncommon that a minor correctable issue can cause a number of problems to the point where one can almost be convinced that they are in failing health. My suggestion would be to make an appointment at one of the Mayo Clinic locations and then take a vacation to either Phoenix, Rochester, or Jacksonville.

@carsdude,

Sorry to hear about your health issues and wish you all the best in getting treatment for them.

If you are worried about single stock/ management transition (more important than Warren->Greg is Ajit->new guy transition IMO), then option 1 is best. The federal cap gains taxes have been as low as ever have been in my life time, and you say that you live in a zero tax state. Moreover, I think the tax rates rate likely to go up in the future.

You could keep the proceeds in ST T-bills and slowly diversify over a period of time into a broader market index. The S&P is clearly overvalued IMO at these levels, so an equal weighted index like RSP may make more sense.

Jim: WIP, an ETF containing nothing but a broad basket of ex-US inflation protected government bonds. The risk this protects you against is a big fall in the US dollar. ... This doesn't give great returns, but it's modestly positive in real terms and more to the point should protect long term purchasing power better than any other "one click" security I know of.

Could you elaborate on this a bit? At your suggestion, following some checking of my own, I moved half of my cash stash from SWVXX to WIP in early January out of concern for a falling dollar. WIP has served well as a cash equivalent since then, delivering a 9.3% CAGR with monthly dividends reinvested. However its long-term performance appears to have been somewhat meager and quite volatile. I'm wondering whether I'm not seeing something that you're aware of.

Tom

My first thought was to just sell around $600k per year to keep cap gains under 15%, but because of the position size that will take many years and could introduce more risk/stress/worry.

More like 18.8% if you include the NIIT that will be due on much of the $600k of LTCG.

Do a big, one time divestment of Berkshire, which will trigger massive cap gains taxes and a large increase in income and taxes from interest on the new cash.

This is probably the worst choice of all. Especially if you already "older" (let's say >60). Not only will you owe a ton of capital gains tax right now, but all that cash when invested in T-bills will throw off so much interest each year that will be taxed at your highest marginal ordinary income rate. In fact, after taxes and inflation, your net yield will be negative most of the time (because taxes are applied on nominal, while inflation eats away the whole amount).

We have two working age kids with good jobs, and would like to pass some on to them at some point.

That point should be now. For a few reasons. One, because they can make better use of the money now than in 20+ years when they are already fully established financially. You should be giving each kid (and their spouse), and your wife should be giving each kid (and their spouse) $19k a year. And the best way to do it is to give them appreciated shares of Berkshire. And two, if they decide to sell it, then they may still be in the 0% long-term capital gains tax bracket. Now THAT is tax efficiency. And three, once there are grandchildren, you can fund various savings plans for them as well, for example, the new child savings accounts ($1k up front plus $5k a year or something like that), or 529 plans to help fund their college expenses.

collect a few annuities from a few firms.

This is kind of saying - "trust those other insurance companies rather than continuing to trust Berkshire" 😂

However its long-term performance appears to have been somewhat meager and quite volatile. I'm wondering whether I'm not seeing something that you're aware of.

It's a very complicated thing to understand from the chart.

First, of course, is currency movements. A lot of people measure things in US dollars, but in fact the US dollar is one of the currencies that goes up and down the most. Since everything inside WIP is outside the US, the price (measured in US dollars) goes down when the US dollar goes up, and vice versa. This is an illusion...the global general purpose purchasing power is staying flat.

Second, of course it has been a pretty high coupon security lately. So be sure you're looking at a total return graph (the default at stockcharts.com, for example), not just price return.

Next, inflation protected bonds can be quite hard to understand. You might be guaranteed a given real total return in a given currency, but it's maddeningly difficult to figure out how much of that might show up as coupons and how much as capital at the end. Thus, the returns of WIP have the same issue: the mix of capital and coupon returns varies over time, mainly based on whether inflation is rising or falling in various countries. So for example WIP has had extremely high coupons in the last few years, but they are falling fast, but the capital value return has been rising. It only makes sense if you look at the sum of the two.

Lastly, global bond yields were really low a while back. Negative in many cases. So, any bond fund that bought medium or longer term paper at that time has had a one time (or perhaps cyclical) loss as the current market value of those bonds falls in the face of newly issued paper at higher yields. We've seen rates go up over the last few years, so this has been a drag. I think this process is largely over, though it might have a bit more to run.

Overall, the expected real return is actually positive, even though a chart of the price doesn't really give a great impression at first. That why, for example, the regulatory number now shows the current yield-to-worst (weighted average across the holdings) is now 4.38%.

All that being said, it's not a way to make a lot of money. You might get only inflation+1%/year, say, which is about what it has returned in currency-neutral returns lately. (I think it should in theory be more going forward, but as mentioned it's really hard to figure out!) In any case, the real total return isn't going to be high. But it is apparently an outstanding way to protect purchasing power in the face of possibly very large moves in some currencies or very high inflation rates in parts (or all) of the world. Given the level of protection on offer from those threats, the fact that it offers the prospect of any positive real yield at all and a relatively stable price is a bonus: people put up with a lot less from gold holdings purchased with the same goals in mind.

The main risk is that it's a US domiciled wrapper on non-US bonds. It still has exposure to any ructions in the US regulatory regime or financial system meltdowns. And (for people like me) a huge US tax on the coupons, despite their underlying source being all non-US source government bonds free of withholding tax. It would be better to a slate of the underlying bonds directly, but that is spectacularly difficult to do yourself. (I even asked a wealth management bank if they could do it, and ... haven't heard back. These aren't the sorts of folks to turn down an opportunity to make a buck)

Jim

This is kind of saying - "trust those other insurance companies rather than continuing to trust Berkshire"

Well, yeah, but the thing to remember is that a stock is a VERY different asset class from an annuity. If I recall correctly, Berkshire doesn't offer annuities any more, so that simply isn't an option.

So one's best bet for a large annuity would be to have a few more modest annuities from a few very highly rated insurers. Preferably ones who aren't investing their float in their own stocks, since I figure that is a blow-up just waiting to happen. Like the Enron employee pension fund, invested in Enron stock.

Jim

Hey cardude, do you have a car that you love? Or several?

I hope you can focus on your health and get things checked out and fixed up.

Many years of $600,000 withdrawals, 10-11 years in cash (only being 15% of your portfolio), 2% spend all make it sound like you are doing very well and have a lot of safety built in. Berkshire also has nearly 40% of its market cap in cash. Does any other company have that? I also trust their accounting to be more conservative than most.

I'd look into some stress management practices because it appears that you are in very good financial shape.

You could consider combining your #3 and #1. Maybe sell 6% of your Berkshire each year, spend the 2% that you need to live on and put the other 4% into SPY or a split of SPY and more t-bills. If you do this from 62-70 before you take SocSec you will have transferred ~32% over ~8 years to SPY greatly reducing your 1 stock risk (eventually). SocSec should further reduce your risk.

If you can't get over the worry, maybe increase year 1 and 2 to get 10-20% transferred sooner. At 10% per year you could have 20% moved by January 4, 2027 but I don't think Berkshire is going to implode THAT fast so I would probably take a slower approach with the markets looking like they do at the moment.

Good luck.

I'd look into some stress management practices because it appears that you are in very good financial shape.

Yeah, I think you're right. My current medical issues are keeping me from doing what I normally do to manage stress, so I'm sitting around too much reading/worrying about things mostly out of my control. I'm a serious worrier by nature, and if I don't keep that under control it starts to get to me. Thanks for the reminder.

First, of course, is currency movements. A lot of people measure things in US dollars, but in fact the US dollar is one of the currencies that goes up and down the most. Since everything inside WIP is outside the US, the price (measured in US dollars) goes down when the US dollar goes up, and vice versa. This is an illusion...the global general purpose purchasing power is staying flat.

I've been trying to understand the consternation about the US dollar. Looking at the long-term chart (60+ years of DXY), it looks pretty stable. Seems like it averages about 100, the vast majority of time it trades +/-10% from 100, it periodically trades +/-20% from 100, and VERY rarely (once in 60 years) trades +/-30% from 100. In fact it appears remarkably stable considering the passage of history.

This is the chart I am looking at - https://www.tradingview.com/symbols/TVC-DXY/?timef...

I've been trying to understand the consternation about the US dollar. Looking at the long-term chart (60+ years of DXY), it looks pretty stable. Seems like it averages about 100, the vast majority of time it trades +/-10% from 100, it periodically trades +/-20% from 100, and VERY rarely (once in 60 years) trades +/-30% from 100. In fact it appears remarkably stable considering the passage of history.

Those are actually pretty big moves. e..g, 120 to 72 2002-2008 means that a $100 bill in a drawer lost 40% of its general purpose purchasing power relative to the other currencies in the world, all of which presumably also had some inflation. For example, the standard deviation of the Canadian dollar versus the euro is about half the variation of USD/EUR or USD/CAD.

This doesn't say anything at all about whether the US dollar will rise or fall next. It's just an observation that the US dollar is one of the world's major currencies that sometimes wanders around more than others, so it's kind of funny when people forget there is a dollar illusion. It's common to see a headline like "gold soaring!" when all that happened was the US dollar fell that week, or "Sterling sliding!" when all that happened was the US dollar rose. The worst is the "financial journalism" trope that the price of oil tends to rise when the dollar falls. Well, yes, in the same sense that the length of something measured in inches is smaller than the number representing its length in centimetres.

These aren't just theoretical effects. I switched my [huge] mortgage to be in dollars while it was high, and switched it back to euros when the dollar was low, reducing the balance owed by half with two trades. (not that I'm so perfect...I did a whole bunch more similar changes in the subsequent few years that amounted to very little net gain)

Jim

“I'm sitting around too much reading/worrying about things mostly out of my control. I'm a serious worrier by nature, and if I don't keep that under control it starts to get to me.”

First, best wishes on your health. Second, it sounds like you could ignore your finances for the rest of your hopefully very long life and die rich. Third, given two above, stop worrying. I’m a big worrier too, and when the world goes to pot, as it currently seems to be doing, I worry about the end of it all. Then I remember that our worst case scenario is our wealth going to zero. In what world is Berkshire going to zero? Capitalism, or the world itself, would have to end. Capitalism ending might be good for all of us in the long run. The world ending … not so much.


Even if we have a market crash or hyperinflation, or both, Berkshire will still be transporting goods across the country, generating essential power, servicing the backbone of industry, providing essential goods, and insuring it all. And since it has no debt it will be among the few companies standing in the wake of the manifestation of our worst economic fears.

Bottom line is that baring the end of the world, you’ll be fine. I agree with others that you should be giving it (in the form of stock transfers) to your kids and to your favorite charities now, and spend it on what brings you and your wife joy. You are among the very lucky few.

PhoolishPhilip,

Thanks for that perspective. I have no peers to discuss this with, so I sit here in my bubble and lose sight at times on how good I have it.

I have never had a financial advisor because I enjoyed the process when I was in the accumulation phase. I'm definitely worse at the post retirement spending phase.

I've been trying to understand the consternation about the US dollar. Looking at the long-term chart (60+ years of DXY), it looks pretty stable

At no point before 2025 did the Former US have an insane fascist dictator, a supine Congress, and a cabal determined to destroy everything that gave the country a unique, privileged position in the world post-WW II, while handing over control of the future (energy, in particular) to competitors, and abandoning every alliance in favor of "deals" that enrich the dictator and feed his ego.

Maybe it can continue to be successful by threatening and bombing anyone the dictator doesn't like (and who can't punch back). But by far the most likely outcome is a country that impoverishes itself, destroys its future, and finds itself at odds with the countries that *can* punch back. North Korea, writ very large, if not Cambodia.

The USD is not going to come off well. Even a magical return to democracy would leave the rest of the world knowing the country can no longer be trusted to abide by the terms of any treaty or trade relationship or "deal" it makes.

Those are actually pretty big moves. e..g, 120 to 72 2002-2008 means that a $100 bill in a drawer lost 40% of its general purpose purchasing power relative to the other currencies in the world, all of which presumably also had some inflation.

Wow, so you're saying that from 2008 until today, the purchasing power of the dollar is up relative to the other currencies of the world by about 40% (72 to ~100)? That's a pretty strong move, isn't it?

For example, the standard deviation of the Canadian dollar versus the euro is about half the variation of USD/EUR or USD/CAD.

Well, the laws of arithmetic make this almost inevitable. That's because the US$ is [still] the big reserve currency, and thus when it rises, it tens to rise against almost all other currencies, and when it tens to drop, it drops against almost all the other currencies. So if the US$ is rising against the EUR and is rising against the CAD, the laws of arithmetic will show that the CAD versus the EUR must have less volatility (variation).

These aren't just theoretical effects. I switched my [huge] mortgage to be in dollars while it was high, and switched it back to euros when the dollar was low, reducing the balance owed by half with two trades. (not that I'm so perfect...I did a whole bunch more similar changes in the subsequent few years that amounted to very little net gain)

If you can trade currencies successfully, you can definitely make all sorts of advantageous moves. Many years ago I knew a guy that worked for a national bank and traded currencies for them. By the end of his career there, he was trading portfolios of multiple 100s of millions of US$ equivalents. It's a crazy business though, he traded for small fractions most of the time, but made a bunch of money for the central bank each year. And they paid him a pittance relative to his gains.

At no point before 2025 did the Former US have an insane fascist dictator, a supine Congress, and a cabal determined to destroy everything that gave the country a unique, privileged position in the world post-WW II, while handing over control of the future (energy, in particular) to competitors, and abandoning every alliance in favor of "deals" that enrich the dictator and feed his ego.

You should keep your crazy talk over on the board with the other libtards! Cardude has just said his health is poor and you go getting him all worked up with your nutbag propaganda. He probably believes you!

Wow, so you're saying that from 2008 until today, the purchasing power of the dollar is up relative to the other currencies of the world by about 40% (72 to ~100)? That's a pretty strong move, isn't it?

Absolutely. Big moves like that aren't that rare in forex, and they often happen faster--that's a very long term move. I think in this particular stretch, it has been driven to a large extent by portfolio flows from the rest of the world into US equities.

If you can trade currencies successfully, you can definitely make all sorts of advantageous moves.

Definitely. But the "if" in that sentence is doing a lot of work! FX is almost the closest thing to a true random number in the finance world. A trade with, say, 55-60% chance of success probably needs to start from strong and too-longstanding overvaluation on one side, momentum starting to move in the direction of sanity, and a short term catalyst like interest rate differentials moving in your direction. I gave up doing any FX beyond what I need for the actual things I do in a few countries.

Stock prices (some stocks) are much easier to predict, by comparison. Berkshire was somewhat more richly valued than usual 1-2 years ago, so it seemed reasonable to anticipate a good chance of 1-2 years of below average returns, followed by a few articles along the lines of "Buffett has lost his touch".

Jim

Gentlemen, please, there are other boards for this. It simply *doesn't matter* whether what you or anyone else says here about US politics is true or not.

Jim

Jim: It's a very complicated thing to understand from the chart.

Thanks for your informative explanation of all that complexity, Jim.

I'm hopeful that the current extraordinary threat to the relative value of the US dollar rapidly shrinks after the passing of the present administration. More than likely our country will be left with a long-term loss of global respect owing to having invoked the ongoing disaster (albeit by less than half the popular vote, incredibly described by one self-aggrandizing voter as a 'LANDSLIDE!!!'. Apologies...couldn't resist.)

In any event, we'll just have to wait and see, and act accordingly. For now I'm sticking with a bit of WIP.

Tom

At no point before 2025 did the Former US have an insane fascist dictator...

You know how you can tell that we have a Nazi fascist dictator running the country?
Because of all the bodies lying in ditches with a bullet in the back of their head.




while handing over control of the future (energy, in particular) to competitors,

Worst handing over the energy to competitors EVER.

"HOUSTON, June 11 (Reuters) - The United States has become the world's largest oil exporter, upending a decades-old order long dominated by Saudi Arabia and Russia, a shift that tightens American companies' grip on energy markets "

...dictator...

Kids, please. Take it outside. Not here.

It does not matter to the people at this board if that is or isn't a valid description of any politician. It *does* matter if board members call each other names. Please don't do either thing here : )

Jim

You know how you can tell that we have a Nazi fascist dictator running the country?
Because of all the bodies lying in ditches with a bullet in the back of their head.

They rounded them up and put them in warehouses for a few years before shooting them in the head.

HOUSTON, June 11 (Reuters) - The United States has become the world's largest oil exporter

Interesting to me was that there is no mention of how the US became the biggest exporter. If it was due to increased production and lower consumption, I am sure that it would have been mentioned.

Could it be due to selling off the strategic oil reserve in the US and supply constraints on Saudi Arabia due to the Straits of Hormuz???

Not much to celebrate!

Aussi

Interesting to me was that there is no mention of how the US became the biggest exporter.

You are expecting the Main Stream Media to go into any accurate depth in a story?
When they can just write an eye-catching headline?

I can't believe I'm 30 posts into this thread and no one has recommended a Section 351 exchange to Cardude! Cardude, a Section 351 exchange is just like a real estate 1031 exchange, except it's for highly appreciated stock(s).

You tender some portion of your BRK shares into the 351, and get issued a like dollar value of 351 ETF shares. Taxes are deferred, just like a real estate 1031 exchange. There are lots of them around; you would want to do a little research to find one that has a decent mix of stocks that you could live with, thus diversifying away from BRK. Some of them open up for funding, and then close to new investors. But if you start searching around, I'm sure you'll find a bunch of them. I know Meb Faber and Cambria has sent me advertisements for theirs. I've gotten other solicitations too.

There may be limits on how much you could transfer to any one 351 fund, but you could likely transfer to multiple 351 ETFs.

Tails

I looked at this option.

The below killed it for me and I suspect many here who are concentrated in Berkshire and other long term holdings:

Diversification Limits (The "25/50" Rule)The IRS requires that your contributed portfolio be diversified prior to the exchange. The contribution must pass two tests on an investor-by-investor basis:The 25% Limit: No single security or issuer can represent more than 25% of your total contributed portfolio value.The 50% Limit: The top five (or fewer) largest holdings combined cannot constitute more than 50% of the contributed portfolio.Note: If you hold individual stocks, this generally requires a minimum of at least 11 individual holdings.

one other consideration on trying to do multiple 351 exchanges:


Risks with Sequential SeedingExecuting multiple exchanges to steadily get rid of a concentrated position is possible but risky, and is known as "sequential seeding". For example:An investor contributes just enough of a concentrated holding to a 351 exchange to pass the diversification tests.They then use the remainder of that concentrated holding alongside the newly seeded ETF to perform another 351 exchange, and so on.The IRS may look closely at this to make sure you aren't running afoul of the "substance over form" doctrine. If the IRS enforcement decides the sequence was structured purely to execute an end-around on the diversification rules, they could collapse the separate steps and treat them as one large, taxable event. To mitigate this risk, you must ensure you have valid economic reasons and strictly follow the spirit of the laws"

That point should be now. For a few reasons. One, because they can make better use of the money now than in 20+ years when they are already fully established financially. You should be giving each kid (and their spouse), and your wife should be giving each kid (and their spouse) $19k a year.

Actually you can give them up to $15,000,000 (lifetime gift limit) right now tax free (twice that if from both you and your wife) and file an IRS Form 709. I think, but don't know, that the gift can be in the form of a transfer of Berkshire shares to them.

Smufty

"I think, but don't know, that the gift can be in the form of a transfer of Berkshire shares to them."

It can

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