Being Tax Efficient Requires Timing, Planning, and Partnership

As your wealth grows so can the complexities of proper management. A higher level of expertise becomes necessary to make sure you are making the most of your wealth in an effective manner. And you are better positioned to protect your wealth and accomplish your family life goals.

Expertise should be delivered to you in many areas by professionals who have a specialty in working with affluent families like yours. In particular, you should review the services, credentials, and experience of your tax advisor, estate planning attorney, insurance broker, and wealth manager.

For this article, we’ve reached out to a couple of experienced tax advisors with whom we regularly partner to better serve our mutual clients. From their professional perspectives, here are several points of consideration for affluent individuals and families to ensure you are being the most tax effective with your wealth.

Ann Andrews, CPA

Bargsley, Totaro, Andrews & Steinbach, CPAs, LLC

Affluent, high-income individuals and families can greatly benefit from discussing both timing and method of transactions with their CPA and financial advisors. With specific regard to the new Tax Cuts and Jobs Act of 2017 (TCJA), there will be substantial increases in the standard deduction. So, do not give up on itemizing when you can! Consider making contributions via a donor-advised fund, so that you control the timing of your deductions and the timing of the distributions to the recipients. 

Other contribution methods may also be extremely valuable: 

  • For owners of traditional IRAs who are over age 70.5, the first choice for charitable contributions is a direct transfer from their IRA account. This method benefits the tax return in multiple ways and does not affect the standard or itemized deduction.
  • Taxpayers of any age can contribute long-term appreciated assets rather than cash.

Keeping current tax law in mind when selling your personal residence is important, too. The current law allows a generous tax-free amount of gain, which allows taxpayers to live in homes that fit the family situation and the changes that happen over a lifetime.

With all the changes resulting from the new TCJA law, this year as much as any is an important time to lean on your CPA for more than preparing tax returns. CPA’s can also assist in these areas:

  • Calculate tax for the potential sale of property. Take the cash or seller-finance?
  • Explain tax rates for types of income: earned income, interest, exempt income, dividends, qualified dividends, rent, royalty, various types of stock options.
  • Comment from a tax perspective on proposed factors in a divorce settlement.
  • Inform the investment advisor of loss carry-forwards and other tax issues.
  • Take an objective look at new business proposals.
  • Discuss timing and choice of assets in making gifts to children and grandchildren.
  • Discuss transition of business ownership.

Steve Johnson, CPA

Wood, Johnson, Heath, P.C.

Oftentimes, with changes in tax law, it’s not always about what steps you should add to your process, but what strategies can be removed or shifted.

For instance, with the passing of the TCJA in December 2017, estate tax considerations will become less important to many of our clients (at least through 2025) than income tax issues. In the past, most clients that were beneficiaries of trusts that were not required to distribute income did not take distributions because the distributions would increase their estate.

Not taking distribution of the income meant that the income was taxed to the trust – often at a rate much higher than the income tax rate that applied to the beneficiary. Now, with the estate tax exemption amount going to $11,200,000 (at least through 2025), the number of affluent families who will be more inclined to take distributions should rise, too.

From another perspective, there are certainly many tax strategies that should be evaluated annually with your tax and financial advisors that are often used for affluent families and individuals. Some examples would be:

  • Contributing to Section 529 accounts for children or grandchildren
  • Converting IRA’s into Roth IRA’s and paying the taxes now in exchange for making all future growth nontaxable
  • Making loans to family members at interest rates lower than what the family member could get with a commercial lender
  • And other strategies that involve controlling and protecting assets while shifting income to family members that are taxed at lower rates


At Slaughter Associates, we appreciate our partnerships with all professionals who have a common business model — to provide the highest level of expertise and service to help their clients reach their financial goals. We know that all situations are unique, and the examples above could be of interest to you.

If you would like to discuss your personal situation and wealth needs, please don’t hesitate to contact us. We are here to help you, and your team.