Friday, April 11, 2025
By Jeff Velastegui
One of the more unfortunate oversights we come across when reviewing a new client’s prior financial situation is the lack of attention to tax planning. Much is and will be written about sophisticated investment strategies, or maximizing income in retirement, but neglecting the tax aspect of preserving your wealth means more of your hard-earned wealth may end up benefiting the IRS rather than you or your loved ones.
Whether you fall in the highest tax brackets or own a modest business, you want to minimize what the tax man takes from you. Here are some of the lesser-known tax strategies we often recommend to our clients. As always, each should be reviewed with a tax advisor as to how it may benefit your own tax situation.
Start With Tax Planning Throughout the Year
Many taxpayers only think about their tax situation toward year-end and into the first few months of the following year, during “tax season.” By then, it’s often too late and you’ll have paid the IRS too much all over again.
Instead, consider these ideas:
- Coordinate business and personal tax planning: If you own a sole proprietor, LLC, or S Corp business, how you control tax liability in your business will show up on your own tax return. Work with your tax professional to evaluate both sides of the tax spectrum.
- Consider tax effects of extra income: As an executive or high-income professional, investor, or retiree, extra income from brokerage accounts, venture capital or real estate investments or bonuses, could have profound effects on your overall tax situation. Planning ahead for these effects allows you time to mitigate the impact with other strategies.
- Make charitable giving a year-round endeavor: For those inclined toward philanthropy, look for ways to implement regular donations throughout the year. Your intended charities will likely appreciate more regular cash flow and you’re more likely to fulfill your intentions.
- Consider tax effects and benefit programs when establishing business structures: If you’re starting a new business venture, be sure to consult your team (tax, legal, and financial advisors) as to which structure optimizes your tax savings (LLC, S Corp, etc.) and effective benefit programs that include tax-friendly features.
- Maximize personal deductions and income-deductible retirement plan contributions: Organize deductible expense records and adjust your withholding to maximize allowable deductions throughout the year, especially if you itemize.
Craft Tax-Efficient Investment Programs
Even superior returns in your portfolio can be diminished significantly by taxes. To keep more of what your portfolio earns for you, we offer these tips:
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- Choose tax-efficient and low-cost investment holdings: Costs matter. Review your fund holdings regularly to assess whether lower management fees and fund turnover can be found with other similar options, such as low-cost index funds.
- Proper asset location to maximize tax benefits: Organize your overall diversification among accounts with different tax treatment. Income holdings may be best in tax-sheltered accounts and municipal holdings in taxable accounts, as examples.
- Minimize trading activities to lower short-term gains taxes and transaction fees: Studies have shown that excessive trading is unlikely to improve your long-term investment returns. Gains from short-term holdings (under one year) are taxed at ordinary income rates; for high-income investors, this can crush net after-tax returns.
Tax-Proof Your Retirement
Retirement planning is far more than just claiming your Social Security income benefit and withdrawing what you need from investment accounts. Here are some area worth reviewing to save on taxes in the retirement years:
- While working, maximize deductible contributions and company-match or profit-sharing during the year with regular, planned contributions of each category.
- Be aware of special opportunities, such as the current additional catch-up contributions for those 60-63 years old.
- Optimize claiming Social Security income benefits and coordinate with other income or investment account withdrawals.
- Be aware of earnings limitations if you claim before your full retirement age (FRA).
- Implement a tax-efficient withdrawal strategy for IRA and qualified retirement accounts. Coordinate with withdrawals from taxable accounts and Roth IRAs.
- Consider tax-offset charitable giving strategies for RMD withdrawals.
- Consider retirement residency in low- or no-income tax states.
Disinherit the IRS With Tax-Efficient Estate Planning
Don’t make the IRS your unintended beneficiary by neglecting proper estate planning. Financial history is filled with stories of estate tax blunders that could have been avoided with proper planning.
Here are some strategies we discuss with our clients:
- Utilize advanced “estate-freeze” techniques to limit tax exposure on business value.
- Consider advanced charitable-giving strategies, such as qualified distributions, gifting of appreciated assets, and donor-advised funds.
- Implement trust techniques to avoid probate and full use of annual gift exclusions and lifetime gift exemptions.
- Utilize advanced life insurance techniques for legacy planning.
- Consider Roth conversions of tax-deferred IRAs.
Looking Ahead: Your Next Steps
True wealth is measured not just in dollars but by what you keep and the impact you leave behind. Whether it’s establishing your business legacy, minimizing taxes, or fostering a sense of purpose among future generations, The Legacy Group’s estate and legacy planning strategies provide a clear path forward.
First Step (Do this now!)
Download our free e-guide: Top 10 Tax Planning Strategies
Next Step
Contact us for a complimentary discussion on how The Legacy Group can help you fulfill your unique vision of the future for you, your loved ones, and the causes you value.
As a fee-based fiduciary firm, we’re here to guide you with only your best interests in mind—no sales targets, no product-driven recommendations. Our focus is on preserving not just your wealth, but also the values and vision that make up your unique legacy.
With the 2026 changes approaching, now is the perfect time to get your estate plan ready for success and review your trust planning. Reach out to us to schedule a consultation and take that first important step toward supporting your legacy for future generations.
To schedule your trust planning review, call (516) 682-3383 or email jvelastegui@legacygroupny.com.
Any discussion of taxes is for general information purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax, or accounting advice. Clients should confer with their qualified legal, tax, and accounting advisors as appropriate. Estate Planning services are provided working in conjunction with your Estate Planning Attorney, Tax Attorney and/or CPA. Consult them for specific advice on legal and tax matters.
Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC. The Legacy Group is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliated companies. [1393 Veterans Memorial Hwy, Suite 307S, Hauppauge, NY 11788 (516) 682-3383]. CRN202804-8461240
