Preserve, Grow, and Give: Year-End Wealth Planning

Year-end planning can help you to make deliberate, strategic moves that preserve your wealth, optimize your tax exposure, and create a lasting legacy. Whether you are preserving wealth for the future, growing your investments, or giving with intention, now is the time to align your strategies for lasting success.

This article explores key strategies for portfolio rebalancing, tax optimization, charitable giving, and legacy planning—all designed to help you finish the year strong and preserve, grow, and give with purpose.

1. Align Your Investments with Your Future: Year-End Portfolio Review and Rebalancing

Here are some key steps to help you preserve wealth, manage risk, and set the stage for future growth in the new year and beyond:

• Rebalance Your Portfolio: Review your investments and make adjustments to bring your portfolio back in line with your target allocations. This can help lock in gains, harvest tax losses, and prevent exposure to unnecessary risk.
• Assess Concentrated Positions: Consider diversifying to reduce risk and enhance long-term growth potential.
• Review Private Investments and Alternatives: Assess private equity, real estate investments, and opportunity zones for performance, liquidity timing, and potential tax benefits.

2. Tax Strategy & Optimization: Year-End Moves to Minimize Liabilities and Maximize Savings

Consider these tax-saving strategies to help preserve your wealth and grow it in a tax-efficient way,

• Timing Deductions and Income: Depending on your projected tax bracket, accelerating deductions or deferring income into the next year might make sense for you and help you keep more of what you earn.
• Tax-Loss Harvesting: If you have taxable investments with unrealized losses, selling them can offset gains realized elsewhere in your portfolio. This strategy, known as tax-loss harvesting, can help reduce taxable income for the year and manage the Net Investment Income Tax (NIIT).
• Review Business Income Structures: If you own a business, consider assessing your income structure. Whether it’s pass-through income, dividends, or capital gains, evaluate whether structural adjustments could reduce your overall tax burden. This can also be an excellent opportunity to evaluate business entity types for tax efficiency.
• Manage State-Specific Issues: If you’re planning a move or dual residency, now’s the time to evaluate the tax implications of your new location, taking into account the SALT (State and Local Tax) deduction caps.
• Evaluate Roth Conversions: Converting traditional retirement assets to a Roth IRA can allow your investments to grow tax-free and remove the burden of required minimum distributions (RMDs) later on. This can be a key strategy to help grow your wealth while minimizing future tax burdens.
• Plan for Potential Legislative Changes: With potential changes in tax laws expected after 2026, it’s critical to plan ahead. Work closely with your CPA to stay ahead of any shifts that could affect your strategy.

3. Giving with Purpose: Charitable Strategies That Align with Your Values and Tax Goals

Use these charitable giving strategies to preserve your wealth, grow your impact, and ensure your legacy is built on purpose:

• Utilize Donor-Advised Funds (DAFs): Donating appreciated assets to a DAF lets you avoid capital gains tax and claim an immediate charitable deduction, while giving you flexibility to recommend grants over time.
• Make Qualified Charitable Distributions (QCDs): If you’re over age 70½, you can donate up to $100,000 directly from your IRA to charity, effectively reducing your taxable income. QCDs can be an excellent strategy for satisfying your RMD requirements while giving to charity.
• Fund Charitable Remainder Trusts (CRTs) or Charitable Lead Trusts (CLTs): CRTs and CLTs offer flexible giving options that could align with your long-term charitable goals, reduce estate tax exposure, and provide income benefits. These trusts allow you to give with purpose while benefiting from tax advantages.
• Donate Appreciated Securities: By donating appreciated assets such as stocks, you can avoid capital gains taxes and take a larger charitable deduction.
• Review Your Philanthropic Mission: Use the year-end as an opportunity to revisit your giving strategy. Ensure your charitable efforts align with your personal values and long-term legacy goals.

4. Building Your Legacy: Wealth Transfer, Family Governance, and Estate Planning

These practices and strategies can help minimize estate tax liabilities, protect and preserve your wealth, and create stability for future generations.

• Review Estate Plan Documents: Ensure that your will, trusts, powers of attorney, and healthcare directives are current.
• Use Gift Tax Exclusions and Exemptions: Take advantage of the IRS annual gift exclusion ($17,000 per recipient in 2023) and consider using a portion of your lifetime exemption before year-end.
• Fund 529 Plans or Other Education Vehicles: Contributing to a 529 college savings plan or similar educational fund can reduce the taxable value of your estate while supporting future education costs for your heirs.
• Consider Intrafamily Loans or GRATs: Strategies like intrafamily loans or Grantor Retained Annuity Trusts (GRATs) can enable you to efficiently transfer wealth while minimizing estate and gift taxes.
• Hold Family Governance Meetings: Engage your heirs in discussions about wealth stewardship and share your financial values. Family governance meetings can help align your family with your long-term financial vision.
• Educate the Next Generation: Help younger family members understand the importance of financial responsibility, investing, and long-term wealth management.

5. Team Coordination: Aligning Your CPA, Estate Attorney, and Financial Professional for Long-Term Success

Effective planning often depends on how well your tax professional, estate attorney, and financial advisor are aligned. Use year-end as an opportunity to review your entire balance sheet—trust assets, business interests, and illiquid investments—and confirm that everything is working together in support of your long-term goals.

• Review Your Balance Sheet Holistically: Take a comprehensive look at your assets, including trusts, business interests, and illiquid investments. This comprehensive review ensures all pieces of your financial plan work together to preserve and grow your wealth.
• Confirm Titling and Beneficiary Designations: Double-check the titling of your accounts and ensure beneficiary designations are current across all accounts, trusts, and insurance policies.

Make Smart Moves In Your Year-End Planning

By proactively preserving wealth, optimizing tax exposure, and giving with intention, you can help ensure your financial strategies align with your personal values and long-term goals. These strategies, implemented with foresight and care, can help you build a lasting legacy for the next generation and beyond.

^{This material was developed and prepared by a third party for use by your Registered Representative. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. The content is developed from sources believed to be providing accurate information.}

^{Rebalancing may be a taxable event. Before you take any specific action be sure to consult with your tax professional.}

^{Cetera exclusively provides investment products and services through its representatives. Although Cetera does not provide tax or legal advice, or supervise tax, accounting or legal services, Cetera representatives may offer these services through their independent outside business. This information is not intended as tax or legal advice.}

^{A diversified portfolio does not assure a profit or protect against loss in a declining market.}

^{Converting from a traditional IRA to a Roth IRA is a taxable event.}

^{Generally, a donor advised fund is a separately identified fund or account that is maintained and operated by a section 501(c)(3) organization, which is called a sponsoring organization. Each account is composed of contributions made by individual donors. Once the donor makes the contribution, the organization has legal control over it. However, the donor, or the donor's representative, retains advisory privileges with respect to the distribution of funds and the investment of assets in the account. Donors take a tax deduction for all contributions at the time they are made, even though the money may not be dispersed to a charity until much later.}

^{Investors should consider the investment objectives, risks, charges and expenses associated with municipal fund securities before investing. This information is found in the issuer's official statement and should be read carefully before investing.}

^{Investors should also consider whether the investor’s or beneficiary’s home state offers any state tax or other benefits available only from that state’s 529 Plan. Any state-based benefit should be one of many appropriately weighted factors in making an investment decision. The investor should consult their financial or tax advisor before investment in any state's 529 Plan.}