Keeping More of Your Money: Tax-Efficient Wealth Management

In September, the House Ways and Means Committee released a proposed bill of 881 pages that stands to make many changes to income, estate and gift taxes. With so much sweeping reform in the works, it’s more important than ever to align your tax strategy with your wealth strategy.

While accumulating wealth and working with a financial advisor on a solid financial plan is key to achieving your life goals, it’s just as important to focus on how much money you keep after taxes. The Schwab Center for Financial Research recently performed a study that examined the long-term impact of taxes and other expenses on investment returns and concluded that while “investment selection and asset allocation are two of the most important factors, minimizing tax and other expenses” is also a key component to maximizing your returns.[i]

The Key to Tax-Efficiency: Integrating Your Team of Experts

Partnering with a financial advisor means mapping out a journey that incorporates both short and long-term goals. From buying a home (or a second home), planning for education funding, starting or selling a business, saving for retirement, philanthropic aspirations, or looking ahead at legacy planning, every investor has a unique timeline for hitting the milestones that matter most to them. Along the way, their advisor helps them identify adjustments that can be made to ensure their timeline aligns with their wealth. Investors also work with tax professionals to ensure they are taking advantage of any tax opportunities available. In essence, these are two closely woven relationships that often only intersect during tax season.

Rather than working independently with these professionals, there are many benefits to opening the lines of communication beyond document sharing at tax time. Aside from the current tax changes at play that impacts many investors, some benefits of a collaborative advisor-CPA partnership include:

  • Personal Life Changes. Often, in the midst of unexpected life changes (a death, a divorce, an illness, a sudden change in financial situation), we are less focused on finances and more focused on our emotional health. A partnership with an advisor and a tax professional means you are supported through any situation and your financial plan is quickly adjusted accordingly
  • Career Adjustments. We’ve worked with clients who have experienced sudden wealth from IPO activities or who have executed a succession plan to sell a business. In both instances, taxation can leave a sizeable mark on returns without proper planning.
  • Retirement Planning. Anyone on a fixed income, no matter their assets, understands? the impact of taxes. Making adjustments along the way in advance of retirement is where an advisor and CPA can excel together to benefit the client.

Sharing information across parties offers investors the most comprehensive financial support from experts in their field.

Understanding Changing Tax Laws – And How Not to Get Overwhelmed

The current proposed tax changes (to income tax, social security and estate and gift tax) can be overwhelming for anyone to research; our advisors have worked closely with tax professionals on the potential impacts to investors, strategizing how to best approach financial plans that maximize tax opportunities. We highly recommend that you integrate your wealth and tax planning strategy in any situation, and especially if any of the following applies to you:

  • Your adjusted gross income is equal to or exceeds $400,000 as an individual or $450,000 as a married couple filing a joint return
  • You make annual gifts to one or more people, or you are the recipient of annual gifts
  • Your estate is valued at $3.5M or more in assets
  • You stand to inherit assets in the future
  • You have or plan to have grantor trusts

It’s particularly important to work with your advisor and tax professional together on itemized deductions, as this has gotten more complex in recent years. Those with workplace IRAs and retirement accounts also stand to benefit from an integrated wealth and tax strategy.

Estate and Gifting Tax Changes: Protecting Intergenerational Wealth Transfer

In a recent blog, we discuss tax planning techniques to reduce your exposure to estate tax. As quickly as these laws are changing[ii], making sure your accountant and your wealth advisor are on the same page can help ensure that your wealth is preserved for future generations.  The key is in education – staying informed on the latest proposed tax changes means making solid decisions that benefit your family today and tomorrow.

For example, the current unified gift and estate tax exemption amount is $11.7M per person. If your estate holds a higher value, the estate tax rate goes to 40%. In the proposed changes, this current exemption would sunset in 2022 and would revert back to 2010’s base, which would be closer to the range of $6M per person (this factors in inflation).

Evolving Your Approach to Annual Tax Planning

Many people associate April with tax season, but the reality is there are many times throughout the year to consider your taxes and your investments. One example is the end of the year regarding IRAs.

Your advisor and your CPA working together means expanded expertise on the flow of money and how to best retain your assets against taxation. Evolving our mindset to bring together these professionals on a more regular basis can only benefit you and offer enhanced opportunities to feel informed, educated, and confident about your financial future.


Let’s get started. If you’re ready to consider a more integrated approach to managing your wealth and experience the difference it makes in your short- and long-term financial planning, contact BerganKDV today. We also encourage you to attend an upcoming webinar in which our team dives into year-end tax planning considerations for your individual wealth management needs. Check it out here.


Diversification and asset allocation do not ensure a profit or guarantee against loss.

The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

The views expressed are those of BerganKDV Wealth Management. They are subject to change at any time. These views do not necessarily reflect the opinions of any other firm. Investment advisory services and fee-based planning offered through BerganKDV Wealth Management, an SEC Registered Investment Advisor.




CATEGORIES: Tax & Audit | Wealth Management
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