2018 Year-End Planning Letter

Each year, we send a letter to clients to help guide our year-end planning discussions with them and to offer ideas for them to consider with their other advisors. Our goal in year-end discussions is to ensure that client plans are updated as needed, based on changing external conditions as well as the client’s circumstances, so that we stay on track to deliver the long-term outcomes that each client seeks.

This year, two substantive factors—the 2017 tax overhaul and rising interest rates—will be important considerations in our year-end planning work.

The QSBS Tax Exemption: A Valuable Benefit for Startup Founders and Builders

The Qualified Small Business Stock (QSBS) tax exemption may allow you to avoid 100% of the capital gains taxes incurred when you sell a stake in a startup or small business. Here we discuss how you can apply this exemption and what you need to do to qualify.

If you own a stake (or plan to invest) in a startup or small business, you need to know about an important tax planning tool available to you. If you qualify, you may be able to avoid federal taxes on any and all capital gains you realize when you exit.

529 Plans And The New Tax Code

You Can Now Use 529s for K-12 Costs—But Should You?

The cost of college is growing at an astronomical rate, and Section 529 plans have long helped individuals and families grow assets earmarked for education in a tax-efficient manner.

The 2018 tax overhaul expanded the reach of 529 plans beyond college. As of this year, Federal law lets you distribute up to $10,000 each year from your 529 plan to fund primary (K-12) education tuition. But should you? Here are a few wrinkles to consider.

The Other 95%

The traditional goal for a nonprofit’s investment portfolio was to earn a 5% return or so that could be used to fund the nonprofit’s programs. Today, we help nonprofits make an impact with the other 95% of their portfolio.

2017 Year-End Planning Letter

Since last year’s U.S. presidential election, we have grappled with the lack of clarity regarding the details of new tax legislation. The outcome of the tax reform debate is likely to impact how we advise clients on tax planning, estate planning and a host of other topics. The dialogue in Washington is progressing, but we still do not know what tax law will look like going forward.

Philanthropic Options

Philanthropic giving is an essential component of many of our clients’ long-term financial plans. A well-developed philanthropic strategy involves a great deal of planning; there is upfront work to prioritize specific causes and issues, followed by decisions on optimal giving structures. Finally—in keeping with the topic of this publication—there is the choice of which assets the client will donate.

Family Wealth Transfer Options

Families can use a variety of strategies to reduce their estate tax burden. One of those is gifting assets from one generation to the next. By using various exemptions and exclusions, you can gift a certain amount of assets to your family members without triggering gift taxes, thereby reducing the size of your taxable estate. Moreover, gifts to so-called dynasty trusts may insulate gifted assets from estate tax for multiple generations.

Investment Planning Options

The decision to sell or hold a concentrated position may sound simple, but these situations are often more complex than they appear. They require the investor to reconcile investment dynamics, tax considerations and a variety of subjective, emotional factors. Taxes are not the only reason that a client may want to hold onto a concentrated position—a holding may have understandable sentimental value based on family history, or it may have proven its worth in the past with exceptional performance.

How We Advise Clients With Concentrated Positions

“Strategic advice” is a very open-ended term, but when we use it, we have a specific meaning in mind. We think of our role in relatively simple terms: Our job is to listen to each of our clients, understand the unique nature of their challenges and aspirations, and then deliver effective and creative solutions that help them achieve their goals. The listening component of our work is very important; we can only do good work for clients if we truly devote ourselves to understanding their subjective perspective as well as their objective circumstances.

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