Year-end often brings renewed attention to tax decisions. It can also provide a valuable opportunity to consider how those decisions fit within a family’s broader goals, future needs, and legacy priorities.
“The goal is to align financial decisions with a family’s long-term priorities,” said Bob Petix, private wealth strategist at Wealth & Investment Management, Wells Fargo Clearing Services, LLC. “Families may benefit from making planning an ongoing process, working with their advisors throughout the year, and preparing for important life events.”
Financial decisions rarely exist in isolation. “Reviewing taxes, investments, charitable giving, retirement, and family goals together may help families identify opportunities that could be missed when each area is considered separately,” Petix said.
For example, charitable giving decisions may affect both taxes and retirement planning. Considering these areas as part of a coordinated plan may offer families greater flexibility and open unexpected opportunities.
Reducing current taxes may be one objective, but financial decisions should also support a family’s longer-term plans. A choice that lowers taxes today may not always produce the most favorable results over time.
Depending on their circumstances, families may want to review investment gains and losses, rebalance their portfolios, or consider how to manage a large holding in one stock. Rather than trying to anticipate future tax laws, families can focus on maintaining flexibility and evaluating the strategies available today.
Families often devote considerable attention to investments and taxes but may spend less time discussing how wealth will pass to future generations. That conversation extends beyond wills and trusts to include gifting plans, beneficiary designations, and charitable goals. Petix also stressed that preparing family members to receive and manage wealth can be just as important as determining how that wealth will be transferred.
The holiday season may provide a natural opportunity for families to discuss shared values, legacy goals, and the responsibilities that accompany wealth.
A business sale, inheritance, retirement, family change, or large holding in one stock may create a need for timely planning. Addressing these events early may give families more choices and greater flexibility.
The appropriate approach will depend on the family’s particular circumstances and the nature of the event. Waiting until after a significant change occurs may leave fewer strategies available to consider.
Waiting too long can limit planning options. Some decisions require coordination among advisors and family members and may be difficult to complete in the final weeks of the year, Petix said.
Starting the planning process early allows families to evaluate their choices, consult with their advisors, and make thoughtful decisions without unnecessary time pressure.
Don’t have an advisor?
Wells Fargo & Company and its affiliates do not provide tax or legal advice. This communication cannot be relied upon to avoid tax penalties. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your tax return is filed.
Wealth & Investment Management (WIM) offers financial products and services through bank and brokerage affiliates of Wells Fargo & Company. Bank products and services are available through Wells Fargo Bank, N.A. Wells Fargo Trust is a part of WIM and offers services through Wells Fargo Bank, N.A. and Wells Fargo Delaware Trust Company, N.A.
