At Heritage Lake Advisors, we know that successful wealth management is about more than just growing your investments—it’s about keeping as much of that growth as possible. Taxes can take a significant bite out of your hard-earned wealth, but with the right planning, you can minimize those losses in service of helping to maximize your financial outcomes. That’s why tax planning isn’t an afterthought for us—it’s an integral part of our comprehensive wealth management process.
Here’s how our detailed, tax planning process helps you keep more of what you’ve worked so hard to build:
1. Understanding Your Full Tax Picture
Before we dive into specific strategies, we start by getting a full understanding of your tax situation. This means not only reviewing your current tax filings and income sources but also looking at how your wealth is structured and where there might be opportunities for improvement.
We examine your:
- Income from all sources: wages, investments, business income, etc.
- Tax-deferred accounts like IRAs or 401(k)s
- Taxable accounts, trusts, and any other assets that might be subject to different tax treatments
- Estate plans and potential future tax liabilities for your heirs
This thorough review allows us to spot potential inefficiencies and areas where you might be overpaying. Once we’ve mapped out your full tax landscape, we can begin designing strategies to help optimize it.
2. Comprehensive Tax Strategies, Not Just Reactionary Moves
Too often, tax planning is reactionary—something people think about once a year when filing returns. But at Heritage Lake Advisors, tax planning is woven into everything we do, all year round. Our goal is to be proactive, taking action ahead of time to help ensure you’re in the best possible position when tax season rolls around.
Here are some of the strategies we can implement to keep your taxes low:
- Tax-Efficient Investment Strategies: We carefully consider tax implications when building your investment portfolio. This means choosing investments that not only align with your goals but are also tax-efficient. For example, we might favor tax-advantaged accounts like Roth IRAs or tax-efficient investments like index funds, depending on your situation.
- Tax-Loss Harvesting: If certain investments in your portfolio experience a loss, we can sell them strategically to help offset gains in other areas, potentially reducing your overall tax liability. This technique helps lower the taxes you owe on capital gains, while still allowing you to reinvest in similar assets to help stay on track with your financial goals.
- Maximizing Retirement Contributions: Contributing to tax-deferred retirement accounts can be one of the easiest ways to potentially lower your taxable income. We help ensure you’re taking full advantage of retirement plan contributions, helping to reduce your taxable income in the short term while also building your retirement savings for the future.
- Roth Conversions: We keep an eye out for low-income years or market downturns as prime opportunities for Roth conversions. By converting some of your traditional IRA funds to a Roth IRA in a year when your tax rate is lower, we help you minimize the tax hit and set you up for tax-free growth moving forward.
3. Tax-Efficient Withdrawals and Income Distribution
For clients in or near retirement, how and when you withdraw money from your accounts can have a significant impact on your tax liability. Our team carefully plans the timing and source of your income distributions to help ensure you’re not hit with an unnecessarily large tax bill.
For example:
- Coordinating IRA Distributions and Social Security: We help you plan the best time to begin Social Security and how to coordinate that with your required minimum distributions (RMDs) to keep your tax rate as low as possible.
- Strategizing Required Minimum Distributions (RMDs): After you turn 73, RMDs from your tax-deferred accounts (like traditional IRAs and 401(k)s) can have a huge tax impact. We design strategies to spread these out over time to help minimize large, taxable withdrawals.
- Utilizing Tax Brackets Wisely: We map out your income distribution strategy, so you can potentially take advantage of lower tax brackets when possible. This means carefully timing when to take distributions or even when to sell investments, spreading out income over multiple years to help stay in a lower bracket.
4. Estate and Legacy Tax Planning Strategies
Preserving your wealth for future generations means paying careful attention to potential estate taxes. Without proper planning, a significant portion of your wealth could be lost to taxes when it’s passed on. We help you preserve your legacy by assisting in the design estate plans that can help minimize or eliminate tax liabilities for your heirs.
Some of our estate planning strategies include:
- Gifting Strategies: We can help you utilize annual gifting exemptions to potentially reduce the size of your taxable estate while passing wealth to your heirs during your lifetime.
- Trust Structures: By placing assets in the appropriate trusts, you can shield those assets from estate taxes while still retaining control over how they’re distributed.
- Charitable Giving: If philanthropy is part of your legacy plan, we help you maximize the tax benefits of charitable giving through donor-advised funds or charitable remainder trusts, allowing you to support the causes you care about while reducing your tax burden.
5. Staying Ahead of Tax Law Changes
Tax laws are constantly evolving, and staying ahead of changes is crucial to long-term success. At Heritage Lake Advisors, we continuously monitor the shifting tax landscape, striving to ensure that our strategies are always up to date with the latest laws and regulations.
Whether it’s taking advantage of new opportunities or adjusting to new tax challenges, we help ensure your tax plan is flexible and forward-thinking. Our clients never have to worry about missing out on potential savings or getting caught off guard by new regulations.
Comprehensive Tax Planning Can Help Lead to Better Outcomes
At the end of the day, tax planning is one of the most powerful tools for preserving and growing your wealth. The right tax strategy can save you significant sums over time, and at Heritage Lake Advisors, we’re committed to checking that no opportunity is overlooked.
From dynamic strategies like tax-loss harvesting and Roth conversions to long-term estate planning, we take a comprehensive and thoughtful approach to help minimize your tax burden and strive to maximize your financial outcomes.
Want to see how thoughtful tax planning can help enhance your financial future? Let’s chat. Contact us today to learn more about how our tax planning process can help you achieve better outcomes, both today and for generations to come.
Fiduciary service is reserved only for clients who have entered into an Advisory relationship with our practice, reach out to hear the details of how that would look for your specific situation. Heritage Lake nor &Partners renders legal or tax advice. Please consult your tax or legal advisors before taking any action that may have tax consequences.
