Enhance your tax planning conversations with Charles Schwab Bank

During tax season, when clients may worry about the possibility of an unexpected tax bill or have a known large tax obligation, they may be looking to you for solutions. Clients likely have several options ranging from paying with their savings, liquidating assets in their portfolio or borrowing. Each have costs and benefits to consider.

Using cash may be a simple way to address the tax bill, but that may impact future plans or other needs the funds were previously earmarked for. Selling invested assets to cover a tax liability is often accompanied by other considerations such as incurring possible future taxes from that sale, losing value of the underlying assets by selling in a down market or the opportunity cost of missing potential gains in the market. Loans come with interest expense and likely need to be quickly established and flexible in terms.

Consider a Pledged Asset Line^® (PAL) to meet liquidity needs during tax season

A PAL is a non-purpose, securities-based line of credit that allows your clients to leverage the value of eligible assets in their investment portfolio as collateral for a secured line of credit. When using a PAL, keep in mind that available credit will adjust based on the real-time value of eligible pledged brokerage assets.

A Pledged Asset Line can be beneficial to your clients for a variety of reasons.

• Cost: There is no origination fee. No maintenance fee. No annual fees. No prepayment penalties. No early closure fee. No wire or check fees. In the case of late payments, clients may be assessed a $25 fee.
• Flexibility: The line can be accessed multiple ways including wire transfers, checks and online transfers.
• Control: Clients can determine when they borrow, how much they borrow, and how they repay the debt.

In addition to helping with tax liabilities, there are many other ways clients may be able to use a PAL.

• Student loan financing
• Residential construction, bridge financing or rental property loans
• Business start-up or buy out loan
• Commercial real estate
• Marine and aviation financing
• Fine art financing
• Livestock and land purchase
• Estate loan
• Other Large Purchases or liquidity events

Whether their needs are anticipated months in advance or arise suddenly, a PAL may be an appealing choice as it offers the opportunity to address your client's liquidity needs, strengthen relationships and help retain assets under management.

Visit the Introduction to the Pledged Asset Line (Demand) in the Service Guide to learn more.