Where should we live? That has stumped Californians Pamela Parkinson, 69, and Tom Josa, 67, as they prepare to wed. She, a divorced psychologist, and he, a widowed physician, now retired, both own houses that are the lion’s share of their respective wealth. As is, however, neither home feels right for living together. Their other concerns: If one of them dies, they want to guarantee that the other can remain where they’ll be living. Selling either residence could result in a huge tax bill on the capital gains. And Tom has two adult children he wants to provide for after his death. “We want to be sure that we don’t do anything stupid,” Pamela wrote.
Some financial matters can be handled by a single practitioner. This one required a kitchen sink of expertise. I turned to Rapid City, South Dakota, financial planner and therapist Rick Kahler; Irvine, California–based estate planner Scott Harshman; and Long Beach, California, accountant Donita Joseph. From their ideas, a plan emerged.
1. Weigh wishes before taxes.
“If there weren’t a tax issue, what would you really want to do?” Harshman asks. “Don’t do something just for tax reasons.” (That’s good advice in almost any situation.) “Don’t lose sight of your number one goal,” he notes. Pamela said they’d either jointly buy a place in their neighborhood or renovate Tom’s home; her house felt too small for them to share, and if they sold a home, it would be hers. If that’s the case …
2. Go house shopping.
The couple toured the few homes for sale in their town but found them wanting. So, I asked how they’d renovate Tom’s house to make it work for them. On their wish list: office space for each of them, and a music room. “We don’t want to downsize,” Tom said. “We want something that we both feel really good about.”