How a Wealth Advisor Elevates Tax Planning for High-Net-Worth Families

How a Wealth Advisor Elevates Tax Planning for High-Net-Worth Families

March 19, 2024

“I don't know what they want from me
It's like the more money we come across
The more problems we see”

 – Mo Money Mo Problems, The Notorious B.I.G

I can’t confirm this, but I’m convinced Biggie’s hit 1997 song was about taxes.

Married couples filing jointly in 2024 will pay 37% in Federal income taxes for every dollar of earned income at the top bracket ($731,200+). Residents of the Golden State could expect another 13.3% in state income taxes “Going Back to Cali”.

That’s a total of “Fitty Cent” (sorry, I’ll stop) in taxes for every dollar earned at the highest brackets!

In those top Federal income tax brackets, you will also be in the maximum Federal capital gains tax rate of 20%, plus another 3.8% in Net Investment Income Tax (aka the “Obamacare tax”). California doesn’t have a separate tax rate for capital gains so these will hit the state income tax brackets. That could be a total of 37 cents for every dollar of realized capital gains. Nice, eh?

It’s no wonder that in the intricate financial landscape of high-net-worth families, tax planning is a pivotal component of wealth management. Unlike the annual task of tax return preparation, strategic tax planning is a year-round endeavor that requires an understanding of the tax code, investment strategies, and personal financial goals.

Collaboration between a wealth advisor and a Certified Public Accountant (CPA) is essential. This partnership is not merely about minimizing the tax bill for the current year; it's a strategic alliance focused on optimizing tax efficiency over a client's entire lifetime, always within the legal framework. The goal is to ensure clients pay their fair share, but not tip the IRS!

The Role of a Wealth Advisor in Tax Planning

Strategic Guidance: A wealth advisor provides strategic guidance on reducing tax liability through various legal avenues. This includes timing income recognition, harvesting tax losses, maximizing qualified retirement plans, and structuring investments in a tax-efficient manner.

Holistic View: Tax planning is not an isolated activity; it's integrated with investment management, estate planning, and philanthropic goals. A wealth advisor ensures that all financial activities are aligned with the client's overall tax strategy.

Adaptive Planning: Life is unpredictable, and tax laws are ever-changing. A wealth advisor and CPA proactively adapt tax strategies to reflect new laws and life transitions, ensuring that clients remain on the most favorable tax path.

Customized Solutions: Every high-net-worth individual has unique financial circumstances. A wealth advisor tailors tax planning strategies to fit the client's specific needs, goals, and risk tolerance.

Benefits of Engaging a Wealth Advisor

Long-Term Wealth Building: Effective tax planning can contribute significantly to long-term wealth accumulation by minimizing the tax drain from investment earnings and income over time.

Efficient Asset Allocation: Advisors can recommend asset allocation strategies that consider the tax implications of different investment types, thereby enhancing after-tax returns.

Estate and Gift Tax Planning: Wealth advisors can collaborate with a client’s estate planning attorney to structure plans to minimize estate and gift taxes, ensuring that the client's legacy is preserved for future generations.

Efficient Withdrawal Strategies: Advisors assist in planning for retirement income and major life purchases in a tax-efficient manner, and they consider the impact of taxes on distributions taken to meet those objectives.

Improved Financial Decision-Making: With a wealth advisor’s expertise, you can make more informed financial decisions that consider both current and future tax implications.

Bottom Line

A great wealth advisor will request and thoroughly review your tax returns each year to ensure your wealth strategy is integrated and aligned with your tax strategy.

Tax planning is a critical element of proactive wealth management for high-net-worth families. This type of ongoing advice goes beyond mere investment planning. It provides strategic, proactive, and personalized guidance that can significantly impact a family's financial legacy.

Mo money may always mean Mo (tax) problems. But a coordinated strategy between your wealth advisor and tax advisor can keep your share of taxes to just what you legally owe and not a penny more.

Happy planning,



For more information on how we can assist with your wealth planning, you can schedule a 30 minute introductory call here. Our team of experts is dedicated to providing tailored solutions that align with your financial objectives and tax planning goals.