Stewarding Significant Wealth: Navigating Complex Financial Decisions

At a certain point, the financial conversation shifts.

For most people, the early stages of building wealth are focused on accumulation. Growing a business, investing consistently, and creating a sense of security. But when wealth reaches a level of real significance, the questions change. It becomes less about whether you have enough and more about what you do with it, how you protect it, and whether it continues to reflect what actually matters to you.

That is the work of stewardship. And it looks very different from standard financial planning.

The complexity is real

Ultra-high-net-worth families face a different set of decisions than most financial plans are built to address. A portfolio may span public investments, real estate, private companies, philanthropic structures, and multigenerational planning. Each layer adds another decision point. Taxes matter more. The structure of asset holdings matters more. Family dynamics matter more.

And here is something that surprises many people: the margin for costly mistakes does not shrink just because there is more money on paper. In some ways, it grows. Complex wealth requires more coordination, more intentionality, and a plan that is built around your specific situation, not a template.

Tax planning is not an afterthought

For families managing significant wealth, tax planning is often where the most valuable work happens. Not because every decision should be made to save taxes, but because the tax consequences of major decisions deserve to be considered before they are made, not after.

The most effective planning weaves together investment strategy, estate considerations, charitable giving, and liquidity needs. When those pieces are coordinated, families can be much more deliberate about timing, ownership structures, and how different assets fit into the larger picture.

Beyond a traditional portfolio

Many families at this level begin exploring opportunities outside of a standard investment portfolio. Real estate, private companies, alternative investments, and family-office-style structures can all offer meaningful diversification and long-term potential. But they also entail greater complexity, more due diligence, and a need for clarity about how each piece fits the overall plan.

The question worth asking is not just “What is the return on this?” It’s “How does this serve the life and legacy we are building?”

Using wealth well, right now

One of the most common patterns we see is this: families who have worked hard to build significant wealth end up waiting too long to use that wealth intentionally. There is always a reason to hold off. Another milestone to hit. Another uncertainty to resolve first.

But wealth is most powerful when it is engaged with intention now. That might mean funding the experiences that matter most to your family. Supporting causes that align with your values. Helping the next generation understand both the opportunity and the responsibility that comes with what they will inherit. Sometimes it simply means giving yourself permission to live fully into the life your planning has made possible.

Good stewardship is not about being cautious to the point of paralysis. It is about making decisions that are values-aligned, tax-aware, and built to last, while also actually living.

The real work

At the highest levels of wealth, financial planning is not primarily about performance. It is about making sure the decisions you make today reflect who you are and what you want your wealth to do.

That requires a plan that accounts for complexity, a team that understands the landscape, and the clarity to know what you are building toward. Not just financially, but in life.

Wealth creates opportunity, but it also creates responsibility. If your financial picture has grown more complex and your planning has not kept pace, it may be time to revisit whether your strategy truly reflects the life you’re building. Reach out to our team to start the conversation.

The top 8 financial items to review before the end of the year

As the year draws to a close, many people feel an instinct to wrap things up. It’s a natural moment to pause, take inventory, and make sure nothing important is left undone.

In financial planning, year-end reviews aren’t about scrambling or chasing last-minute tactics. Done well, they’re about clarity – confirming that your financial decisions still align with the life you’re building.

Here are the most important areas worth revisiting before the calendar turns.

  1. Taxes: Reducing Regret, Not Just the Bill

    Year-end tax planning isn’t about perfection – it’s about intention. This is the time to review realized gains and losses, assess whether tax-loss harvesting makes sense, and confirm that income timing aligns with your broader strategy. For many families, charitable giving also plays a role here – not as a tax trick, but as a thoughtful extension of their values.

  2. Required Minimum Distributions (RMDs)

    For retirees and those nearing retirement, RMDs deserve careful attention. Confirming distributions are made on time, in the correct amount, and from the appropriate accounts is critical. It’s also worth reviewing how RMDs integrate with your overall cash-flow plan. This is ideally done in the first half of the year, but if you haven’t gotten to it yet, do not delay. The penalty for missing your RMD is significant!

  3. Charitable Giving with Purpose

    Year-end giving often happens quickly. A pause can make it more meaningful. Review how and where you give, and whether you’re giving still reflects what matters most to you. Going back to your RMD’s, if you are over 70.5, you can consider using a Qualified Charitable Distribution (QCD) from your IRA to fund those giving goals!

  4. Portfolio Alignment and Risk Exposure

    Markets have a way of feeling louder in December. Year-end is a natural time to rebalance, reassess concentration, and confirm that your portfolio still supports your long-term plan. Have you set aside enough funds in safe cash and short-term bonds to match several years’ worth of coming expenses? If you’re not sure, we should talk.

  5. Estate Planning and Beneficiary Reviews

    Time with family has a way of surfacing important questions. Review beneficiary designations, trustee and executor choices, and guardianship decisions if applicable. Your beneficiary designations on retirement accounts, insurance policies, etc. are legal agreements between you and the financial institution. This means that what ever is on file will trump what is stated in your will, so make sure they line up!

  6. Retirement Readiness Beyond the Numbers

    For those approaching retirement, year-end reflection often brings deeper questions. Financial readiness and emotional readiness don’t always arrive at the same time. Both deserve attention. I’ve seen the emotional transition into retirement impact clients much more significantly than the financial transition. Make sure you have spent time preparing yourself for both.  If you are only focused on what you are retiring away from and haven’t spent any time thinking about what you want to retire towards, then you’re not ready.

  7. Simplification and Organization

    Many people enter a new year craving less complexity. Consolidating accounts and reducing unnecessary financial clutter can create a surprising sense of relief. Everyone has a financial ‘junk drawer’, where things accumulate over the years, but have no rhyme or reason or coordination. Spend time emptying out the junk drawer to assess what you have and then be intentional about what you keep and what you get rid of.  Does it serve you anymore? 

  8. Family Support and Legacy Planning

    Supporting adult children or aging parents requires balance. These decisions are rarely about math alone – they’re about boundaries and stewardship. I have noticed that there is no magic formula or one-size-fits-all approach. Every family dynamic is different and requires a thoughtful, intentional approach to what is best for everyone.

Closing the Year Well

A thoughtful year-end review isn’t about checking boxes. It’s about asking:
Does our financial plan still serve the life we want to live?  If it doesn’t or you’re not sure, give us a call….we’re here to help.

Changes to charitable giving from OBBBA

Obviously, there were many changes to the tax code with the implementation of the One Big Beautiful Bill Act (OBBBA) earlier this summer.  No matter what your level of wealth, but especially for the ultra-high-net-worth, if you are charitably minded, you should pay attention to these changes to take full advantage of the tax code under the new bill.  Here’s what’s about to shift in charitable giving when OBBBA kicks in for the 2026 tax year, and how thoughtful donors can adapt to keep generosity impactful and tax-smart.

OBBBA was signed into law in July 2025 and includes several provisions that directly touch charitable deductions starting January 1, 2026. In short, the law changes who benefits, how much is deductible, and when timing really matters.1

What’s changing in 2026
  1. A new universal charitable deduction for non-itemizers:
    For the first time since the temporary CARES-era rules, non-itemizers will get a modest above-the-line deduction: up to $1,000 for single filers and $2,000 for married filing jointly for cash gifts to qualified charities. This creates a floor of benefit even if you don’t itemize.2
  2. A 35% cap on the tax benefit for top-bracket donors:
    This one gets wonky really quick…If you’re in the 37% marginal bracket, the value of your itemized charitable deduction will be capped at 35% beginning in 2026. Practically, a $100,000 gift produces a $35,000 income reduction instead of $37,000 under current rules. High earners should revisit multi-year giving plans with this cap in mind.3
  3. A new charitable deduction floor for individuals:
    Beginning in 2026, itemizing individuals can only deduct charitable gifts to the extent total annual giving exceeds 0.5% of their contribution base (generally AGI). Amounts below that floor aren’t deductible. The first 0.5% is basically throw-away contributions…no tax savings.  There are carryforward interactions and some relief for pre-2026 carryovers.4
  4. SALT cap dynamics can change the math of itemizing:
    OBBBA raises the state and local tax (SALT) deduction cap to $40,000 for 2025 and then increases it slightly each year through 2029 before snapping back to $10,000 in 2030. That higher cap in 2025 can push more households into itemizing for that year, which affects whether you should bunch charitable gifts into 2025 or stage them differently across 2026 and beyond.5
Strategy moves to consider now
  1. Bunch 2025 giving, then smooth 2026+:
    If you planned significant gifts in the next 12-24 months and you’re a high earner, consider accelerating into 2025 to avoid the 35% cap and the 0.5% floor that begin in 2026. Using a donor-advised fund lets you make the large, potentially pre-2026 contribution for tax purposes while pacing grants to charities over several years. This can also pair well with 2025’s higher SALT cap to maximize itemizing in one year.6
  2. For non-itemizers, plan to use the new universal deduction annually:
    Households that typically take the standard deduction should plan to give at least $1,000 ($2,000 MFJ) in cash each year to capture the new above-the-line benefit starting in 2026. Keep good receipts and ensure gifts go to qualified organizations. If your giving is sporadic, consider consolidating into a single calendar year to clear any administrative thresholds and simplify tracking.7
  3. Re-optimize appreciated asset gifting:
    Gifting highly appreciated securities still avoids capital gains tax and can be combined with a DAF to streamline execution. But because 2026 introduces a 0.5% floor for itemizers, coordinate the size and timing of appreciated stock gifts so that your total giving clears the floor and captures the full intended deduction. Large, fewer-and-farther-between gifts may be more efficient than many small ones post-2026.8
  4. Lean on QCDs for IRA owners age 70½+:
    QCDs remain a standout tool because they reduce taxable income directly rather than relying on itemized deductions, which helps regardless of floors or caps. If you’re charitably inclined and subject to RMDs, map out a multi-year QCD plan to satisfy some or all of your RMD while supporting charities.9
  5. Mind carryforwards and pre-2026 gifts:
    If you already have charitable deduction carryforwards, note that amounts carried into post-2025 years from gifts made before January 1, 2026 are not subject to the new 0.5% floor when used. Work with your advisor to prioritize using those carryforwards efficiently alongside any new giving.10
Bottom line

Generosity still works. What’s changing under OBBBA is the path to getting full tax value from your gifts. For 2025, ultra-high-net-worth families may benefit from front-loading into a DAF and harvesting appreciated positions before the new cap and floor arrive. For 2026 and beyond, standard-deduction households can finally claim a modest benefit each year, and retirees can keep leaning on QCDs to simplify taxes and amplify impact. The best plan is coordinated: tax bracket, SALT position, portfolio gains, and charitable goals aligned on a multi-year calendar.

5 Key Provisions in the New Tax Bill That High Net Worth Families Need to Know

Congress just passed one of the most sweeping tax overhauls we’ve seen in years. It’s already being described as a “once in a generation” shift – both in scope and impact. While most headlines focus on broad middle class relief, the truth is that high net worth families and top earners will feel some of the most significant ripple effects. Changes to deductions, new savings vehicles, and shifting rules around charitable giving will require a fresh look at how you structure income, investments, and legacy planning.

With so much noise around the bill, I want to cut through the clutter and highlight the five provisions that matter most. More importantly, I’ll share what they could mean for your planning over the next several years.

  1. Expanded SALT Deduction (State & Local Taxes)

One of the most talked about changes is the overhaul of the SALT deduction. The federal cap on state and local tax deductions jumps from $10,000 to $40,000, though it phases out for households with income above $500,000 and reverts to $10,000 around 2030.

Why it matters: For those living in high tax states or holding significant real estate, this offers meaningful relief – especially if you itemize. It’s a chance to reclaim more of your property and state income tax payments, though timing will be critical given the phase out rules.

  1. New Deductions for Overtime and Tips

For 2025 through 2028, the law introduces a deduction for tips and overtime income income: up to $25,000 for tips and $12,500 for overtime. These deductions are available up to $150,000 AGI for individuals and $300,000 for joint filers.

Why it matters: If you own hospitality or service businesses – or employ tipped labor – this could reduce taxable income significantly. While the impact lessens for higher earners due to phaseouts, the deduction could still shape compensation strategies for your workforce.

  1. “Trump Accounts” for Children (A New Tax Advantaged Savings Vehicle)

Children born between 2025 and 2029 will automatically receive a $1,000 government contribution into a new tax advantaged savings account, with parents able to contribute up to $5,000 annually. Growth is tax deferred, and funds can be used for college, training, or first home purchases.

Why it matters: While modest in size, these accounts add a fresh layer to multi generation planning. High net worth families can leverage them as part of broader tuition or estate planning strategies, especially in states with their own gift or estate taxes.

     4. Charitable Giving Deduction Changes

Two major shifts affect charitable planning:

1. Above the line charitable deduction: Non-itemizers can now deduct up to $1,000 ($2,000 for joint filers) for donations.

2. Limits on high-income deductions: For top earners, charitable deductions now max out at 35% rather than 37%, and total deductions reduce slightly by 0.5% of AGI.

Why it matters: For families with significant giving goals, the tax impact of large donations shrinks slightly. It may be time to revisit giving vehicles – like donor advised funds or charitable trusts – to preserve tax efficiency while meeting philanthropic goals. You might also want to consider pulling in future donations to 2025 as the changes don’t go into effect until January 1, 2026.

    5. Re-Emergence of Itemized Deduction Phase-Out

The bill revives a version of the old “Pease limitation.” For taxpayers in the top bracket, each dollar of itemized deduction now yields a 35% benefit rather than 37%.

Why it matters: This subtle reduction affects deductions for mortgage interest, high property taxes, and charitable gifts. For ultra-high-net-worth households, this reinforces the value of pre-tax strategies – like maximizing retirement contributions and structuring investment income – rather than relying solely on itemized deductions.

Planning Opportunities

• Itemizing vs. Standard Deduction: The new SALT cap and higher standard deduction (rising to $31,500 for joint filers in 2025) change the math. We’ll analyze whether itemizing still makes sense or if bundling deductions into specific years creates better results.

• Employer Strategies: For business owners with tipped or overtime-heavy staff, timing and structuring pay to maximize deductions could save meaningful taxes – just watch the phase-out thresholds.

• Charitable Planning: Consider front-loading gifts in 2025 into donor-advised funds or split-interest trusts to optimize deductions under the new limits.

• Next Generation Funding: New children’s accounts can be incorporated into college and estate strategies, even if the dollar amounts are small relative to your broader plan.

Caveats and Watch Outs

• Phase-Outs: Many benefits diminish quickly as income rises – so expect targeted rather than sweeping savings at higher brackets.

• Expiration Dates: Several provisions sunset in 2028. Planning should factor in the potential for future reversals.

• Implementation Lag: Expect IRS guidance and payroll system updates over the next year. There may be temporary confusion around how new deductions are claimed.

Bottom Line

This tax bill reshapes how deductions and savings vehicles work – particularly for high income and high net worth households. While some provisions offer new opportunities (like the SALT increase or children’s accounts), others trim back existing benefits (like charitable and itemized deductions).

The real key is personalized planning: aligning your giving, investing, and income timing with these new rules to maximize after-tax results. Over the next few months, we’ll be reviewing client strategies and looking for ways to capture opportunities while minimizing surprises.

If you’d like to walk through what this means for your 2025 plan – or explore strategies before year end – let’s talk. These changes are too significant to navigate on autopilot.

Traveling on Purpose: Turning Luxury Vacations into Meaningful Milestones

For many families, vacations are about rest and recreation – time to unwind, see the world, and enjoy hard-earned success. But for those with significant resources, there’s an opportunity to take travel beyond luxury and create something far more lasting: purposeful travel.

Purposeful travel blends the comfort and adventure you expect with intentional goals – strengthening family bonds, serving communities in ways that leave a legacy, or cultivating personal growth through quiet reflection. These trips become milestones, remembered not just for where you went, but for how they shaped your family’s story.

Here are three purposeful approaches that resonate especially well for families who want their travel to matter as much as their investments:

  1. Multi-Generational Adventures that Forge Family Connection

When a family spans multiple generations, gathering everyone under one roof – or even in one country – can be rare. A purposeful family trip creates an intentional space to connect across ages, combining luxury comfort with shared challenges or experiences.

Think of chartering a private expedition yacht in Alaska where grandparents and grandchildren alike participate in guided wildlife research. Or a curated trek through Patagonia, complete with private guides and lodges, where each family member contributes – whether it’s navigating a trail or preparing a shared meal one evening.

The goal isn’t just to “go somewhere” but to actively create shared experiences that knit generations together and build the family narrative. These trips often spark traditions that become part of the family’s legacy.

How to get started:

• Engage a travel advisor who specializes in high-end, family-oriented experiences to ensure logistical ease and privacy.

• Choose a cause or skill that resonates with your family values – conservation, cultural preservation, or even an artistic pursuit.

• Plan structured reflection time, like nightly fireside conversations or a shared family journal to capture insights along the way.

  1. Personal Retreats for Renewed Perspective

Wealth often comes with significant complexity…it’s the often-overlooked paradox of ‘more.’ The pressures of leadership, decision-making, and public life can be relentless. Purpose-driven solo retreats – or even couples retreats – offer rare opportunities to disconnect from constant demands and recalibrate priorities.

Picture a guided silent retreat in the Swiss Alps with world-class amenities, or a secluded desert lodge designed for deep meditation and personal reset. These environments strip away distractions and offer clarity, allowing you to return not just refreshed, but re-centered on what matters most.

How to get started:

• Consider retreat centers that balance privacy with top-tier wellness programming – places that honor both comfort and introspection.

• Recommendations from friends that have gone before are helpful!

• Build a loose itinerary: include guided mindfulness sessions, private hikes, or curated reading lists to deepen the experience.

• Plan for post-retreat integration: a few days of quiet transition before re-engaging fully with work and family life. This is always important so we don’t blow right back into life as usual.

  1. Philanthropic Travel with Measurable Impact

For many affluent families, travel is also a chance to align lifestyle with legacy. Philanthropic adventures – sometimes called “impact travel” – allow you to explore remarkable destinations while supporting initiatives that matter to your family.

Imagine funding and participating in a reef restoration project in the Maldives, or helping construct sustainable water systems in a remote African village – while your family experiences the local culture and learns firsthand about the challenges and solutions. These trips can instill gratitude and broaden perspective for younger generations, while also tangibly advancing causes you care about.

How to get started:

• Partner with established philanthropic travel organizations to ensure projects are ethical, sustainable, and genuinely needed.

• Define your family’s core values (education, conservation, community) and seek projects that align with them.

• Combine service with adventure – balance meaningful work with opportunities to explore and celebrate the destination.

Why This Matters for Families of Means

There is no question that I am bent towards looking at vacation as an escape. I do not think that there is anything inherently wrong with viewing time away from daily life in this light. Sometimes, it is exactly what is needed for recharging.

However, the broader point here is that there is another angle that can be considered. Purposeful travel reframes vacations from “escape” to “investment” – not in dollars, but in relationships, perspective, and legacy. It creates shared experiences that deepen connection, foster gratitude, and remind everyone what your resources are really for: living a meaningful life, not just an affluent one.

These trips also help younger generations see wealth differently – not as entitlement, but as responsibility and opportunity. They become part of the family culture, shaping how future decisions about giving, living, and investing are made.

Next time you plan a trip, ask: What could this mean for our family beyond rest and luxury? The answer might turn your next vacation into one of the defining chapters of your family’s story.

Episode 24: Stories Rather Than Regrets with Pete Ripmaster


Welcome back to the On Adventure podcast! In today’s episode, we have an inspiring and candid conversation with Pete Ripmaster. Pete, now a seasoned ultra-endurance athlete, shares his journey from the highs and lows of his athletic pursuits to his personal battles and triumphs. In fact, it all started with a Couch-to-Marathon run, and he kept going from there!  We delve into his history, including the incredible feat of winning the 1,000-mile Iditarod Trail Invitational on foot (in February!), his adventures in Alaska, and the lessons learned from pushing beyond the limits. Pete’s story is a testament to resilience, passion, and the relentless pursuit of one’s dreams.

Pete’s philosophy of “stories rather than regrets” is evident in his approach to ultra-running. Whether he’s tackling organized races or his unique “homemade 100’s,” Pete’s willingness to suffer and push through mental and physical barriers is key to his success. His adventures showcase the power of perseverance and the rewards of stepping outside your comfort zone.

Join us as we explore:

  • Pete’s early life and the pivotal moments that shaped his path
  • The transition from the couch to a marathoner to an ultra-endurance runner
  • The mental and physical challenges of running the Iditarod Trail Invitational
  • Pete’s “homemade 100’s” and what drives him to create his own ultra-endurance challenges
  • Insights into the world of ultra-running and the community around it
  • Pete’s future aspirations and what drives him to keep pushing forward

This episode is packed with raw and heartfelt reflections that will leave you inspired to tackle your own adventures. Don’t miss out on this incredible journey with Pete Ripmaster!

Episode Highlights:

[00:00] Introduction to Pete Ripmaster and the essence of today’s episode

[02:28] Pete’s background and his self-identity as a runner, husband, and father

[10:00] Reflections on Pete’s childhood and the significant impact of his family

[18:00] The pivotal moment and the transition from a wild lifestyle to purposeful living

[24:05] Pete’s first impromptu marathon and the beginning of his running journey

[32:00] The decision to run 50 marathons in 50 states and raise funds for breast cancer research

[38:00] Delving into ultra-running: from 50K to 1,000 miles

[46:00] The challenges and triumphs of the Iditarod Trail Invitational

[53:00] Pete’s “homemade 100’s” and his drive to create unique endurance challenges

[57:00] The mental game in ultra-endurance sports and pushing through limits

[01:03:00] What’s next for Pete after ultra-running

Links & Resources:

Thank you for tuning into this episode with Pete Ripmaster! If you enjoyed our conversation, please rate, follow, share, and review the podcast. Your support helps us bring more inspiring stories to light. Keep pursuing your great adventures, and we’ll catch you in the next episode!

Check out this episode!

Giving While Living

If charity is part of your legacy plan, the best time to start giving back could be right now. Spending on other people is one of the most rewarding ways we can use our money. And seeing your generosity in action might give you some ideas on how to improve your legacy planning for your beneficiaries.

Here are three ways you can kickstart your legacy plan and take a more active role in your long-term charitable goals.

Solve a local problem.

The issues in the world are so great right now that many smaller concerns can slip through the cracks. Somewhere in your community right now there is a park in disrepair, a vital organization or program that’s hurting for funds, or a group of people whose needs aren’t being met. You could coordinate with other concerned citizens and local leaders on an action plan or start your own charitable organization that’s focused on filling that void. If your initial efforts fall short, or if solving one problem reveals more issues, you can recalibrate your plans — and your giving strategy — in the service of more permanent solutions. Being a force for positive change in your community might even inspire similar acts of charity and kindness among your neighbors.

Donate your time.

Charities depend on passionate people almost as much as they depend on donations. Whatever your professional background may be, it’s likely that there’s a cause that can benefit from your skills and knowledge during a few weekly volunteer shifts. If you’re also donating to a place where you volunteer, you’ll gain a “behind-the-scenes” perspective on how your money is being spent, and perhaps on ways that the organization could be using its resources more effectively. And if you’re still working full time, volunteering can also be a great glide path during your transition into retirement. As your career begins winding down, you can use your charitable goals to create a new retirement schedule that will keep you active and engaged.

Empower your loved ones.

Depending on the laws in your place of residence and what your giving goals look like, there are many options for distributing your wealth to your heirs. You might consider outright gifts, such as helping with the downpayment on a house or car. If grandchildren are on the way, you might open savings or investment accounts in their names. If you’re considering leaving behind a sizable amount of money to an adult relative, gift them a smaller amount and see how responsibly they manage their “pre-inheritance.” Perhaps your generosity will open up opportunities for you to pass on some of your wisdom around gaining, managing, and growing wealth. Or, you might decide that rather than leaving money to loved ones directly, a family trust might be a more efficient way to preserve your wishes.

You could also establish a family charitable organization and start involving your heirs in its management. Have a family conversation about the causes that are nearest to your heart and how you can use your family’s resources to make a lasting impact. More than just leaving money to your loved ones, you’ll also be leaving them with a real sense of purpose and a deeper understanding of what was really important to you.

Charitable giving of any kind will raise some important financial planning issues, starting with the tax ramifications for you, your estate, and your beneficiaries. Establishing trusts or family charities will require even more complex planning. We can help you clarify your charitable goals so that we can work together on the best strategies for preserving your legacy.

Preparing Your Adult Children for Inherited Wealth

When it comes to inheritance, it is vital that a parent transfer wisdom before they ever consider transferring wealth.  Most children learn the ins and outs of responsible wealth-building from their parents. And most of this through watching.  But as kids grow, simple conversations about saving and spending often branch out into investing, compounding, and broader comprehensive planning. But no matter how many good financial habits your children have learned by adulthood, they could still be unprepared for their role in your legacy plan.

Talking to your adult children about inheriting your wealth might be awkward at first. But if you work through this six-part framework, you’ll all feel better about your wishes and your kids’ responsibilities.

  1. Review your estate plan.

While you’re still around to change it, your estate plan is never set in stone. Every year, sit down with your financial advisor and attorney to make sure you’re still happy with your beneficiaries, your health care directives, and the allocation of your assets. You’re under no obligation to share every aspect of your finances and health with your children. But the more you tell them about your legacy plan now, the easier it will be for them to care for you and settle your affairs when the time comes.

  1. Consider the impact on your heirs.

Money impacts different people very differently. Inheriting a portion of your legacy could be life-changing for one of your children. Another might not experience much of a change at all. Encourage your children to put together their own team of financial, tax, and legal professionals who will help them make the best use of their inheritance with the least amount of hassle. If you currently work with our firm, we are always happy to meet with your kids at any point.  When we work with a family, we consider all generations a client of our firm.

  1. Promote responsible behavior.

Keep in mind that money is a poor tool to fix problems…it is, however, incredibly efficient at exposing problems that were already there. You may feel like you have no choice but to leave some of your wealth to an adult child who doesn’t have the best financial habits. However, it is possible to establish guardrails, such as a family trust that releases money under certain conditions that you establish in your legacy plan.

Even the most responsible children might not be capable of managing a company, real estate, or an art collection. Talk to your children about how their abilities and goals fit with how you want more complicated assets to be managed.

 
  1. Consider transferring some of your wealth during your lifetime.

Transferring money to the next generation could have a couple of different benefits.  First, when you give funds to your kids during your lifetime, you get the enjoyment of seeing them actually benefit from the gift.  Second, it can be used as a teaching tool.  Learning how to make wise decisions with a smaller amount will prepare your kids for handling a much larger amount in the future.  Better to make mistakes and learn when there are fewer ‘zeros’ involved.

  1. Set realistic expectations.

Your children likely have ideas about your wealth and expectations for what they will inherit. Have an honest conversation that will help them recalibrate those expectations properly. You don’t want your kids to plan for a life of luxury that you won’t be leaving to them. But if they’re set to inherit more than they realize, you also don’t want them planning for a too-frugal future lacking certain experiences and comforts.

  1. Shore up your plan.

By now you have identified some strengths and weaknesses in both your legacy plan and your children’s financial skills. Use this information to plan for improvements. Talk to your financial team about vehicles that can protect certain assets and encourage responsible stewardship. Assign a professional executor who will oversee your estate. Work with your children on a plan to develop the knowledge and skills they’ll need to manage more complicated assets. Identify potential mentors whom you can trust to guide your children after you’re gone.

  1. Clarify your intentions.

Sometimes the assets in an estate plan get in the way of the real purpose of the estate plan. You aren’t just passing on stuff, you’re passing on values, experiences, and the means to do more with money than just have more money.

Tell your children what you hope they’ll do with your legacy, not just to make their own lives better but to make life better for their own families, friends, and communities. If you’ve made choices in your legacy plan that might be difficult for your kids to accept, explain your reasoning and your intentions. If you can’t reach a place of agreement, at least try to reach a place of understanding and mutual respect.

And if you need help facilitating these conversations, consider bringing your children into our office for a family meeting. We’re always happy to help families prepare for legacy events that preserve and respect what matters most.

4 Financial Best Practices for Year-End 2023

Scan the financial headlines these days, and you’ll see plenty of potential action items vying for your year-end attention. Some may be particular to 2023. Others are timeless traditions. If your wealth were a garden, which actions would actually deserve your attention? Here are our four favorite items worth tending to as 2024 approaches … plus a thoughtful reflection on how to make the most of the remaining year.  

 

1.     Feed Your Cash Reserves

With basic savings accounts currently offering 5%+ annual interest rates, your fallow cash is finally able to earn a nice little bit while it sits. Sweet! Two thoughts here:

Mind Where You’ve Stashed Your Cash: If your spending money is still sitting in low- or no-interest accounts, consider taking advantage of the attractive rates available in basic money market accounts, or similar savings vehicles such as short-term CDs, or U.S. Series I Saving Bonds (“I Bonds”). Your cash savings typically includes money you intend to spend within the next year or so, as well as your emergency, “rainy day” reserves. (Note: I Bonds require you to hold them for at least a year.)

Put Your Cash in Context: While current rates across many savings accounts are appealing, don’t let this distract you from your greater investment goals. Even at today’s higher rates, your cash reserves are eventually expected to lose their spending power in the face of inflation. Today’s rates don’t eliminate this issue … remember, inflation is also on the high side, so that 5% isn’t as amazing as it may seem. Once you’ve got your cash stashed in those high-interest savings accounts, we believe you’re better off allocating your remaining assets into your investment portfolio—and leaving the dollars there for pursuing your long game.  

 

2.     Prune Your Portfolio

While we don’t advocate using your investment reserves to chase money market rates, there are still plenty of other actions you can take to maintain a tidy portfolio mix. For this, it’s prudent to perform an annual review of how your proverbial garden is growing. Year-end is as good a milestone as any for this activity. For example, you can:

Rebalance: In 2023, relatively strong year-to-date stock returns may warrant rebalancing back to plan, especially if you can do so within your tax-sheltered accounts.

Relocate: With your annual earnings coming into focus, you may wish to shift some of your investments from taxable to tax-sheltered accounts, such as traditional or Roth IRAs, HSAs, and 529 College Savings Plans. For many of these, you have until next April 15, 2024 to make your 2023 contributions. But you don’t have to wait if the assets are available today, and it otherwise makes tax-wise sense.

Revise: As you rebalance, relocate, or add new holdings according to plan, you may also be able to take advantage of the latest science-based ETF solutions.  We’re not necessarily suggesting major overhauls, especially where embedded taxable gains may negate the benefits of a new offering. But as you’re reallocating or adding new assets anyway, it’s worth noting there may be new, potentially improved resources available.

Redirect: Year-end can also be a great time to redirect excess wealth toward personal or charitable giving. Whether directly or through a Donor Advised Fund, you can donate highly appreciated investments out of your taxable accounts and into worthy causes. You stand to reduce current and future taxes, and your recipients get to put the assets to work right away. This can be a slam dunk strategy to avoid an embedded capital gain and get a tax deduction for the full value going to the charity of your choice.  If you have appreciated assets, considering gifting these and holding on to your cash.

 

3.     Train Those Taxes

Speaking of taxes, there are always plenty of ways to manage your current and lifetime tax burdens—especially as your financial numbers and various tax-related deadlines come into focus toward year-end. For example:

RMDs and QCDs: Retirees and IRA inheritors should continue making any obligatory Required Minimum Distributions (RMDs) out of their IRAs and similar tax-sheltered accounts. With the 2022 Secure Act 2.0, the penalty for missing an RMD will no longer exceed 25% of any underpayment, rather than the former 50%. But even 25% is a painful penalty if you miss the December 31 deadline. If you’re charitably inclined, you may prefer to make a year-end Qualified Charitable Distribution (QCD), to offset or potentially eliminate your RMD burden.

Harvesting Losses … and Gains: Depending on market conditions and your own portfolio, there may still be opportunities to perform some tax-loss harvesting in 2023, to offset current or future taxable gains from your account. As long as long-term capital gains rates remain in the relatively low range of 0%–20%, tax-gain harvesting might be of interest as well. Work with your tax-planning team to determine what makes sense for you.

Keeping an Eye on the 2025 Sunset: Nobody can predict what the future holds. But if Congress does not act, a number of tax-friendly 2017 Tax Cuts and Jobs Act provisions are set to sunset on December 31, 2025. If they do, we might experience higher ordinary income and capital gains tax rates after that. Let’s be clear: A lot could change before then, so we’re not necessarily suggesting you shape all your plans around this one potential future. However, if it’s in your overall best interests to engage in various taxable transactions anyway, 2023 may be a relatively tax-friendly year in which to complete them. Examples include doing a Roth conversion, harvesting long-term capital gains, taking extra retirement plan withdrawals, exercising taxable stock options, gifting to loved ones, and more.

 

4.     Weed Out Your To-Do List

I love this one…it is at the top of my improvement goals.  Doing less instead of staying busy with more.  This year, we’re intentionally keeping our list of year-end financial best practices on the short side. Not for lack of ideas, mind you; there are plenty more we could cover.

But consider these words of wisdom from Atomic Habits author James Clear:

“Instead of asking yourself, ‘What should I do first?’ Try asking, ‘What should I neglect first?’ Trim, edit, cull. Make space for better performance.”

— JamesClear.com

 

Let’s combine Clear’s tip with sentiments from a Farnam Street piece, “How to Think Better.” Here, a Stanford University study has suggested that multitasking may not only make it harder for us to do our best thinking, it may impair our efforts. 

“The best way to improve your ability to think is to spend large chunks of time thinking. … Good decision-makers understand a simple truth: you can’t make good decisions without good thinking, and good thinking requires time.”

— Farnam Street

 

In short, how do you really want to spend the rest of your year? Instead of trying to tackle everything at once, why not pick your favorite, most applicable best practice out of our short list of favorites? Take the time to think it through. Maybe save the rest for some other time.

Home is where the __________ is. 1.) Heart or 2.) Hassle?

June 17, 2019

Matt Miner

Over the weekend I received a thoughtful note from a client about renting versus owning.

Our client asked what we thought about the possibility of renting throughout one’s entire life, and taking the money that would be used for a large house down payment (in this case, a 100% down payment) and investing it as we recommend. I wanted to share my reply below:

 

Dear N_________,

It’s always great to hear from you!

First, there’s nothing wrong with renting for the rest of your life as long as this is part of your plan, and you do it eyes-wide open. Like anything, it is just a whole lot better if it’s intentional. This is how you’re approaching it, so well done!

In your mail you mention that owning a home means you have to pay taxes on it and maintain it for the rest of your life. This is true, but renting just means you pay someone else to do this for you.

You are correct that you could probably invest the money you’re putting into this house and get enough return to continue renting throughout your life. We can model this with some assumptions if you’d like.

Whether renting forever is scary just depends on your planning. We can share with you that according to Tom Stanley, (author of The Millionaire Next Door and other data-driven books about the wealthy), 95 – 97% of wealthy people choose to own their own home with these type of ratios:

1.) 10% – 25% of their net worth tied up in the house

2.) A mortgage balance between Zero-times and Three-times annual income (not more)

For a family earning $120,000 per year, with a net worth of $350,000 that WANTED to own, these could be reasonable numbers:

  • $360,000 purchase price
  • $72,000 down (< 25% of total net-worth tied up in the house)
  • $288,000 mortgage balance (< 3X annual income)
  • All-in monthly / annual payment of $2300 / $27,600

The family in this case should have enough money to build wealth. Even though the bank may be happy to approve their application (!) a $500,000 house is too expensive for this family. As our friend Tom Stanley says, asking the bank how much you should borrow is like asking a fox to count the chickens in your henhouse.  On the other hand, a $275,000 house will allow them to become wealthier faster, or to support other goals along the way, such as travel, children’s education, or giving.

For a family in retirement with a net worth of $1.7M, having a paid-for $360,000 house would be totally reasonable; this is less than 25% of their total net worth.  For this retired family, a $700,000 house is too much. The home will make it difficult for their other assets to support their lifestyle.

On the positive side, when you own a home, what you get is some protection from long-term inflation for part of your housing budget, and you get a portion of your portfolio returning a very predictable amount once you own it in cash: You save the principal and interest portion of your mortgage payment.

As you can see from the ratios above, we don’t recommend putting 100% or even 50% of your net worth into a house.  On the other hand, copying what wealthy people do in terms of habits and ratios is usually a good idea too!

Conceptually, when you rent, this is what you pay:

Rental Price

  1. Landlord’s Cost of Capital on the home itself
  2. PLUS Landlord’s Profit
  3. PLUS Landlord’s Real Estate Taxes & Insurance
  4. PLUS Landlord’s Maintenance and Repair Costs
  5. MINUS Tax Benefits that may accrue to the Landlord (deductibility of repair expense, interest expense & depreciation, possibly at a higher tax rate than your own)

When you own, this is what you pay:

Home Ownership Price

  1. Your cost of capital on the home itself
  2. PLUS Your Real Estate Taxes & Insurance
  3. PLUS Your Maintenance and Repair Costs
  4. MINUS Tax Benefits that may accrue to you (for middle-income tax payers, the TCJA has made this less likely given a much higher standard deduction)

Just looking at that formula lets you know that for an equivalent house, all else equal, by owning you will save the Landlord’s Profit component MINUS any tax benefits that may be greater for the Landlord than they are for you (you may or may not be able to deduct your interest and real estate taxes each year, and you cannot deduct repairs or depreciation as an owner-occupant).

Rather than reinvent the wheel with a bunch of calculations, please check out this excellent article, and then let me know if you want to go deeper on any of this. In a lot of ways, it all comes down to preference and then putting the right plan in place for you.

 https://affordanything.com/is-renting-better-than-buying-should-i-rent-or-buy/

We wish you all the best!

Matt