Maximize Your Wealth with Expert Tax Planning; Learn How it Works

Tax planning for high net worth individuals, or really anyone for that matter, it's not reserved for the super wealthy. In this video I'm going to share some valuable insights and strategies to help you optimize your tax planning. Now, if you're a high net worth person, or maybe you expect an inheritance that moves you into the category of high net worth, stay tuned.

Thank you to another edition of We're Talking Money. I'm Phil Clark, wealth advisor and founder of OmniStar Financial Group. Now, you might be wondering if your net worth qualifies you for this video, so before we get started, let's agree on what constitutes a high net worth individual or family.

Now, the standard high net worth scale includes people with liquid assets ranging from, say, a million dollars to five million dollars. Now, you're considered a very high net worth individual if you have liquid assets between 5 million and 30 million. Most people don't have that kind of money, but if that's where you fall on the scale, congratulations. And the ultra high net worth individual is any individual or family that tops 30 million. You're getting into more of that super elite class at that level.

Wherever you are, I believe you'll get some good information, solid tips, things that you can use from today's video. Oh, and by the way, I hope you'll consider subscribing to our channel. Helps us and it helps you, because we're bringing relevant information every week. Now let's jump in.

Tax planning is never one size fits all. In fact, when you have high net worth, tax planning, it becomes essential. The goal is minimizing your tax liabilities and maximizing your wealth. By implementing effective strategies, you can legally, and that is the key, legally reduce your tax burden, and that translates to better or greater net worth. What it also means is you're keeping more of your hard-earned money.

First, understanding everything about the tax code, that would be nearly impossible for anyone. Don't get me wrong, many experienced professionals, CPAs and the like, they bring a lot of value. My point, however, is our tax code is complicated and very few individuals know it from front to back. In fact, I would argue that no one knows it from front to back, even those that wrote it.

So you want to work with a qualified financial advisor or tax professional who specializes in tax planning for high earners or high net worth individuals or families. Be sure they have enough people on their team to get the job done. They can assess your financial situation and create a customized plan that aligns with your goals and objectives.

Next, optimizing your investment portfolio. Now, that is referring to picking or selecting tax efficient investments. That's just one method to maximize your after-tax returns, but you may also want to choose the right types of accounts to hold your investments. Diversifying your assets certainly can help minimize the exposure to tax at the highest level.

Asset location is another way to minimize taxes, and that comes with dividing your assets among taxable and non-taxable accounts. So you put investments that are not tax efficient in accounts where you can defer the taxes, and you hold tax efficient investments in taxable accounts. Those tax efficient accounts, that would include things like IRAs, 401ks, anything that's considered pre-tax on the contribution. They generally would have tax deferral or tax preferred treatment. Everything else is non-qualified, and that means you're going to be paying taxes as you go.

So strategically allocating your investments, you can take advantage of tax efficient investment vehicles such as tax exempt bonds and, again, those qualified retirement accounts. Now, taxable accounts, just so you know, should hold tax efficient assets like mutual funds. It could be index ETFs, it could be tax-exempt bonds, individual stocks. All of those would be suitable for those types of accounts.

Non-taxable accounts, on the other hand, they should hold less tax efficient assets, things like actively managed funds, taxable bonds, anything that is taxed. You don't really worry about it if it's in a non or in a qualified program, because remember, all of those taxes are deferred and you don't pay tax on anything until you make distributions.

Next is estate planning. This is another critical aspect of tax planning for the high net worth individual or family. By establishing a comprehensive estate plan, so we're not talking about a simple will here, we're talking a bit more complex, so something that's more comprehensive, you can use those tools to minimize estate tax and ensure a smoother transfer of wealth to future generations. So you might consider things like trusts or charitable donations, gifting strategies. All of those can protect your assets and potentially reduce those tax liabilities.

Now, this is just a scratching of the surface when it comes to estate planning. Keep in mind, good advisors, astute advisors, and estate planning attorneys, they have a plethora of tools and techniques. If your goal is building wealth, transferring that wealth, or creating generational wealth, we've got you covered, but it's going to take some of these more complicated strategies, and for that you're going to need professionals that get it.

Now, if you fall into the super high net worth category, tax attorneys, it can be worth their weight. And I don't always say that about attorneys, but tax attorneys can be very beneficial as it relates to your planning. They are adept at tax efficient structures, things like family limited partnerships or even offshore entities. And used properly, these tools and techniques, they are game changers regardless of your wealth, whether it be high net worth, ultra high net worth, anywhere along the spectrum. These folks can really bring value.

Lastly, you want to stay informed about changes to tax laws and regulations. You want to make sure that your team of advisors has the experience to construct some of these winning strategies that I speak of, and that means that they are keeping up with the ever-changing world of tax law, new codes, things that affect you that you may not know about. You certainly want to be sure that your advisors are keeping up with the changing times.

Remember, tax planning is an ongoing process. It is not a one and done. Your financial situation and your goals, they evolve over time, so it's essential to regularly review and update your tax plan accordingly.

Thanks for watching today. I hope this video has inspired you to take a look at your tax situation and maybe your tax team. Get a second opinion if you suspect any weaknesses or lost opportunity. We hear this often from new clients, and sometimes it's a matter of just getting reacquainted with their current tax professional. Other times it means getting someone new on the team.

Now, if you enjoyed this video, please subscribe to our channel and hit that like button for more insightful content. We're bringing it every week, and we know that it's going to make a difference. Remember, if you want to reduce or even eliminate the stress of taxes, it usually starts with effective tax planning. I'll see you next time on We Are Talking Money.

Thanks for joining us on We're Talking Money. Be sure to visit us at omnistarfinancial.com, where you can learn more about how we provide value to our clients. So subscribe to the show and our newsletters, and drop us a line with topic suggestions for upcoming shows. If you enjoyed the show, we would appreciate you passing it on to a friend and providing a rating on iTunes.

This podcast is a publication of OmniStar Financial Group. The content is developed from sources believed to be reliable and accurate with all information. The information in this material is not intended as tax or legal advice and may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. 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 or service provided by OmniStar. All expressions of opinion reflect that of the authors and are subject to change. Any distribution, use, or copying of this podcast other than the intended recipients is prohibited.