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Unlocking Illiquid Wealth to Fund a High-Net-Worth Client’s Future

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How EisnerAmper’s family office services turned a high-net-worth client’s illiquid art into liquidity, with little to no net tax on the sale.

Client

The client is a high-net-worth individual and heir to a multigenerational family fortune. Most of that wealth sits in illiquid holdings accumulated and inherited over decades, including fine art, collectibles, and other objects of significant value, along with real estate holdings in two countries. What makes the engagement distinctive is not only the size of the estate but the way it is governed. The client’s financial and personal affairs are overseen by a court-appointed guardian, who works closely with outside legal counsel and a personal assistant responsible for the details of the client’s daily life.

That structure means every significant financial decision moves through a small circle of trusted advisors rather than the client alone. EisnerAmper joined that circle roughly four years ago, stepping in as the family office and tax team. From the start, the engagement called for close coordination, careful documentation, and a steady trusted-advisor relationship with everyone responsible for the client’s wellbeing and financial stewardship.

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Challenge

A widening gap between income and expenses

The client faces a significant income-to-expense gap: modest Social Security payments and small royalties bring in far less than the several million dollars a year required for round-the-clock personal care, professional fees, and other fixed costs. Without a deliberate plan, that shortfall would only widen over time.

Wealth locked in low-basis stocks and illiquid assets

The client did hold a liquid investment portfolio, and for a time selling securities covered living expenses. But that portfolio was finite, and the securities carried a very low-cost basis, so each sale triggered a sizable capital gain and a corresponding tax bill. Continuing to sell down the portfolio would mean losing a meaningful share of every dollar raised to taxes, all while depleting the one asset the client had that could easily be converted to cash.

Most of the remaining wealth was concentrated in art, collectibles, and similar holdings. Those assets were valuable, but they were also deeply personal. Many pieces had been in the family for generations or inherited from close relatives, so parting with them was as much an emotional decision as a financial one.

A hard year-end deadline

Layered on top of everything else was timing. To make the numbers work from a tax standpoint, transactions needed to close within the same tax year. That created significant pressure to identify assets, obtain appraisals, find qualified buyers, and complete the sales before year-end.

Throughout, the team stays clear about the boundaries of its role. EisnerAmper is not the client’s attorney and does not make decisions on the client’s behalf. Instead, the team frames the options, explains the tax and cash-flow consequences of each, and lets the guardian and counsel make the call.

Approach

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Building the family office foundation

Before any planning could happen, the team had to establish a complete picture of the client’s financial life. That work included taking in a full inventory of assets, reviewing existing documents, obtaining authorizations, and setting up new banking arrangements so bills could be paid on the client’s behalf. EisnerAmper took over the tax work at the same time, which meant a single team understood both the day-to-day cash flow and the long-term tax position.

Coordinating a complex circle of advisors

Because a court-appointed guardian oversees the client’s affairs, decisions require alignment among the guardian, outside legal counsel, the client’s personal assistant, and EisnerAmper’s family office and tax professionals. The EisnerAmper team works continuously with all of them, bringing recommendations to the group, answering questions, and helping everyone reach a shared understanding before anyone acts.

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A tax-efficient path to liquidity

The team looked at the client’s full net worth and concluded that the art and collectibles offered the most sensible source of cash. The team set a target of raising enough cash to cover roughly two years of living expenses, an amount large enough to provide real breathing room while limiting how much the client had to part with.

From there, two ideas shaped the strategy. First, the sales had to respect the client’s attachment to individual pieces. The advisory circle, not EisnerAmper, worked through the collection and decided which items carried enough dollar value but little enough sentimental value to let go. Because the guardian and counsel already had relationships with galleries and collectors, they were well positioned to find buyers and manage the sales themselves.

Second, the team engineered the transactions to soften the tax impact. One piece had appreciated dramatically and would generate a large gain on sale. Rather than absorb the full tax on that gain, the team paired it with sales of other pieces that had lost value, so the losses were able to offset the gain almost entirely.

The team also had to weigh how the client’s activity would be characterized for tax purposes. There is an important distinction between a collector who holds assets for the long term and a dealer who buys and sells for profit, and the two are taxed differently. Because the client had accumulated most of the collection over many years or inherited it, the team worked with the advisory circle to establish the appropriate tax position based on the facts.

The Results

The planning gave the client the liquidity needed to keep living comfortably, without forcing a painful choice between cash and taxes.

Beyond the numbers, the engagement gave the client and the advisory circle confidence that a difficult financial situation was being managed with care and in the client’s financial best interests. What could have become a series of hurried, tax-heavy sales instead became a calm, repeatable process the client can rely on.

Roughly two years of living expenses raised through a planned sale of art and collectibles, reducing the need to keep drawing down the client’s limited liquid portfolio

A near-complete offset of a large capital gain by pairing it with losses on other pieces, so the sale generated little to no net taxable gain

Transactions were completed within a single tax year, meeting the deadline that made the offset strategy possible

A defensible tax position for the client’s collecting activity that reflected the facts of how the collection was built

Sentimentally important assets preserved, because the advisory circle chose which pieces to sell rather than liquidating indiscriminately

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How EisnerAmper Can Help

EisnerAmper can serve as your outsourced family office or augment your existing team, coordinating across your other advisors, to turn a complicated financial picture into a clear plan. Learn more by reaching out through our contact form.