By Adam Brooks, CFP®
With tax season wrapping up, high-net-worth families are navigating a challenging tax landscape, with evolving regulations and potential tax hikes on the horizon. However, by staying informed about the latest tax changes and implementing strategic wealth-planning methods, they can effectively manage these challenges and make the most of their wealth for future generations.
In this article, I delve into a range of tax-efficient strategies designed for affluent families. Topics include estate planning, tax-advantaged investment options, and charitable giving.
Estate Planning
Let’s start with an explanation of estate planning as a fundamental element of tax-efficient wealth transfer.
Essentially, estate planning is how you can distribute wealth to future generations while lowering tax obligations. By strategically structuring your estate, you can leverage a number of tax incentives, including charity deductions and annual gift tax exclusions. This strategy allows you to effectively transfer your assets, reduce potential estate taxes, and assure the continuation of your legacy.
As a professional wealth manager, I’ve found these estate-planning techniques to be consistently efficient:
- Charitable Planning: Make a lasting impression and simultaneously lower your taxable estate by utilizing charitable giving techniques.
- Family Limited Partnerships (FLPs): Use FLPs to mitigate gift and estate taxes and transfer assets to future generations while maintaining control.
- Gift Tax Exclusions: To transfer wealth to beneficiaries without paying gift tax right away, utilize the annual gift tax exclusions.
- Generational Skipping Transfer Tax: Understand the laws governing the transfer of wealth to grandchildren and beyond.
Tax-Advantaged Investment Accounts
Another key strategy for reducing your overall tax burden is investing in tax-advantaged accounts. These accounts are specialized savings vehicles that give you tax breaks in exchange for investing your money, allowing your money to grow faster and more efficiently.
Popular tax-advantaged accounts include the following:
- Health Savings Accounts (HSAs): Make tax-deductible contributions and tax-free withdrawals for approved medical costs.
- 529 Plans: Use 529 plans to save for educational costs while decreasing your tax bill.
- Individual Retirement Accounts (IRAs): Invest in traditional and Roth IRAs to save for retirement and reduce your taxable income.
- Municipal Bonds: Lower your federal income tax obligations by purchasing tax-exempt municipal bonds.
Tax-Efficient Charitable Giving
Lastly, tax-efficient charitable giving allows you to optimize your philanthropic impact while decreasing your tax burden. When you donate appreciated assets like stocks or real estate, you can avoid capital gains taxes and earn a charitable deduction for the full fair market value of the asset.
Common tax-advantaged charitable giving techniques include:
- Charitable Lead Trusts (CLTs): Give money to a good cause while retaining income for a specified period of time.
- Charitable Deductions: Lower your taxable income by donating cash, appreciated securities, or other assets to approved charities.
- Charitable Remainder Trusts (CRTs): Establish a trust that pays recipients income for a predetermined amount of time, with the remaining funds given to charity.
- Donor-Advised Funds (DAFs): Create a DAF to gain immediate tax savings while making charitable contributions over time.
Partner With a Professional Tax Advisor
The last suggestion I want to share is that while the 2025 tax-efficient strategies for affluent families discussed above can be a great way to mitigate your tax responsibilities, it’s extremely challenging to navigate the complexities on your own.
Partnering with a professional financial advisor can help to:
- Lessen your tax liability by suggesting tax-efficient strategies.
- Maintain tax law compliance by regularly adjusting your strategy.
- Learn new strategies suited to your unique financial circumstances.
We’re Ready to Assist
Affluent families face a distinct challenge as potential tax law changes loom in 2025. Proactively planning with a knowledgeable financial advisor can help you optimize tax efficiency, shield your wealth, and stay on track toward your long-term financial goals.
At ABLE Financial Group, we take a holistic, transparent approach to wealth management, aligning every financial decision with your bigger picture. To us, your wealth isn’t just numbers—it’s your legacy, your stability, and your future.
To learn more about our team and the ways we can help guide you, call 480.258.6104 or email [email protected] today.
About Adam
Adam Brooks is Managing Director at ABLE Financial Group, a financial services practice that focuses on transition planning and simplifying the complexities of their clients’ wealth. As a CERTIFIED FINANCIAL PLANNER® practitioner, Adam has been guiding individuals, businesses, and non-profit organizations toward their financial goals since 1993. Co-founding ABLE Financial Group in 2006, Adam oversees the practice, working with business owner clients, primarily focusing on succession planning and mergers and acquisitions (M&As).
Adam obtained degrees in finance and accounting from the University of Arizona and holds the CFP® certification. Adam was recognized as one of Barron’s Top 1,200 Financial Advisors in 2021 and 2022, and was named a 2022 Forbes Best-in-State Wealth Advisor. Outside of his work as a financial advisor, Adam has taught a variety of courses at surrounding community colleges, including Successful Money Management Seminars and Rich Dad’s Cash Flow courses. Adam also previously hosted a radio show called The Truth About Money.
When not serving his clients, Adam actively serves his community in a variety of leadership positions. In 2011, Adam and co-founder Lee began funding the ABLE Financial Group Philanthropic Fund at the Jewish Community Foundation, allowing them to support some of their favorite organizations and causes today and into the future. Adam lives in Scottsdale with his wife, Cindy, their three sons, Jordan, Dylan, and Cameron, and their two dogs, Nelson and Sunny. Adam is active in his children’s lives, an avid cyclist, and enjoys local hikes with his family. To learn more about Adam, connect with him on LinkedIn.
