From the tax-aware to the tax-focused investment manager, it is clear that there is no one-size-fits-all solution to most investors’ circumstances. But after decluttering and tidying the tax tactics, the essential aspects that can add value quickly becomes clear.
Trust and Estate Planning
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Too often, taxes are only thought of once or twice a year, but the reality is that an effective tax plan is considered year-round and on a multi-year basis. Tim Steffen, Baird’s Director of Tax Planning, shares his insights on common tax planning misconceptions, when and why to consider tax planning, and how to respond to legislative changes to the tax code.
Compound growth over time—uneroded by taxes—is key to amassing substantial wealth, and that’s where dynasty trusts come in. It’s designed to minimize taxes over multiple generations. When done correctly, dynasty trusts can leave an enduring and significant financial legacy for generations to come.
The possibility of dramatic tax changes on lifetime gifts and after an individual’s death has increased with introduction of the For the 99.5 Percent Act and the Sensible Taxation and Equity Promotion Act in the U.S. While it remains early in the legislative process, the chances of significant changes are growing and the window for action is closing. For those individuals and families of wealth who said they would deal with these issues “later,” the time is now to do proactive tax and estate planning.
With the IRS increasing their funding and enforcement, upper income taxpayers should expect the IRS audit coverage to increase dramatically on them. It’s important to prepare for the tax changes that are coming—and coming quickly. Along with having a team of professionals on your side, there are steps you can take to protect yourself. Now is the time to review and perhaps recalibrate your risk tolerance for tax strategies.To learn more about the coming changes, listen to the podcast recording here with Waller’s Leigh Griffith.
Investors occasionally look to their municipal bond portfolio for loss-harvesting opportunities that reduce the impact of capital gains taxes on portfolio returns. Learn how an active tax-loss management strategy ensures year-round performance, maximizes tax alpha, and minimizes costs.
While no tax legislation has been drafted under the Biden administration, one thing we know for sure is that taxes will go up. Being aware of the proposals being discussed can help you prepare for what comes next, including what you should be considering for both income tax and estate tax planning this year.
Over the past decade, Tennessee has significantly elevated its position as a preeminent jurisdiction to situs a trust. With the latest enacted legislation in the state, that situs status is maintained. Some of the more significant enhancements of the legislation include the ability to designate applicable law, registration of a trust, and additional flexibility in decanting.
Investors may be familiar with the many different ways the sale of a stock can be taxed, but the complexity of the code means there are optimal and suboptimal ways of navigating it. Using the five basic tools for building a comprehensive tax-management strategy is key to delivering highly tax-efficient investment performance.
Investors have shown renewed interest in President Biden's twin infrastructure proposals—the American Jobs Plan and the American Families Plan—and what they will mean for their portfolios. With a focus on the tax changes that more directly affect equity investors, the road ahead should have fewer dangerous curves than some initially feared.