Four Proactive Year-End Strategies for High-Net-Worth Families

When it comes to managing wealth, the end of the year is a critical time to take stock and ensure your financial strategies are aligned with your goals. For high-net-worth families, the stakes are higher, given the complexity of tax laws and investment opportunities. But taking proactive steps now can help you minimize liabilities, maximize savings, and set the stage for a successful year ahead. 

We regularly see the significant impact strategic year-end planning can make, helping families navigate these complexities with confidence. Let’s take a look at key strategies to consider implementing before the clock runs out on this tax year.

1. Optimize Charitable Contributions

Charitable giving is more than just an act of goodwill—it’s a powerful financial strategy for reducing taxable income while supporting causes close to your heart. High-net-worth families, in particular, can benefit from leveraging advanced giving tools. 

Donor-Advised Funds (DAFs) 

A DAF allows you to make a sizable charitable donation now, while giving you the flexibility to decide which organizations to support later. This lets you secure a tax deduction for the current year, even if you distribute the funds in the future. It’s an excellent option if you’ve had a high-income year and want to offset taxes without rushing the decision on which charities to support. 

Qualified Charitable Distributions (QCDs) 

For individuals aged 70½ and older, QCDs provide a way to donate up to $105,000 directly from your IRA to a qualified charity. These donations satisfy required minimum distributions (RMDs) and reduce taxable income—ideal for retirees looking to lower their tax burden while contributing to causes they care about.

2. Review Investment Strategies for Tax Efficiency

A well-structured portfolio does more than grow wealth—it can save you money at tax time. Strategic adjustments to your investments now can yield substantial savings. 

Tax-Loss Harvesting 

The end of the year is an excellent time to review underperforming investments. Selling these assets can offset capital gains from successful investments, reducing your overall taxable income.  

Research suggests that tax-loss harvesting can improve returns by up to 1.08% annually, a significant boost over time for high-net-worth investors.¹ The IRS allows you to deduct up to $3,000 each year in net capital losses against ordinary income. 

To maintain your portfolio’s exposure, consider reinvesting in similar but not identical securities to avoid the wash-sale rule, which disallows tax benefits if you buy back the same investment within 30 days. 

Consider Roth IRA Conversions 

If you expect to be in a lower tax bracket this year—perhaps due to reduced income or other circumstances—a Roth IRA conversion could be advantageous. This move requires paying taxes on the amount you convert now, but in exchange, your withdrawals in the future will be tax-free.

3. Maximize Retirement Contributions

Retirement accounts are crucial for tax benefits and long-term growth. Now’s the time to make sure you’re taking full advantage of these accounts. 

401(k) and IRA Contributions 

Maxing out your 401(k) or IRA is an easy way to lower your taxable income while growing your retirement savings. In 2024, the 401(k) contribution limit is $23,000, plus an extra $7,500 in catch-up contributions if you’re 50 or older.³ 

If you’re self-employed, consider a SEP IRA or solo 401(k), which allows for even higher contribution limits based on your earnings. 

Employer Stock Options 

If your compensation includes stock options, reviewing their tax implications is crucial. Exercising options strategically—especially in a lower-income year—can help you manage taxable income and avoid higher rates. 

4. Plan for Gift and Estate Taxes 

Smart planning ensures your wealth supports your loved ones while minimizing taxes, and taking a strategic approach to securing your legacy can make a big difference. 

Annual Exclusion Gifts 

Use the $18,000 annual gift tax exclusion to transfer wealth tax-free to children, grandchildren, or other loved ones. Married couples can combine their exclusions to gift up to $36,000 per recipient in 2024.⁴ 

Example: If you have three children and two grandchildren, you and your spouse can gift a total of $180,000 tax-free in one year. 

According to the IRS’s most recently reported data, over $86 billion was transferred tax-free using the annual gift exclusion in 2021, demonstrating its effectiveness as a wealth transfer strategy.² 

Review Estate Plans 

High-net-worth families should regularly update their estate plans to keep up with changes in laws, personal situations, and financial goals. Trusts, for example, can be an effective way to reduce estate taxes and ensure your assets are distributed as you intend. 

Act Now to Reap the Benefits 

Year-end planning should be more than just a checklist, particularly for high-net-worth families. It’s an opportunity to align your wealth with your long-term goals while taking advantage of every available tax-saving strategy. The earlier you act, the more options you’ll have—and the less stressful the process will be. 

Don’t wait until the last minute to address these critical strategies. Contact Opal Wealth Advisors today for personalized guidance to make the most of your finances. Let’s make sure you close out the year with confidence, knowing your wealth is working as hard as you are. 

SOURCES:
¹Chaudhuri, S. E., Burnham, T. C., & Lo, A. W. (2020). An empirical evaluation of tax-loss-harvesting alpha. Financial Analysts Journal, 76(3). 

²Internal Revenue Service (2023). Statistics of Income – 2021 Gifts. Publication 5368 (Rev. 7–2023). Department of the Treasury. 

³ Internal Revenue Service (2024). 401(k) limit increases to $23,500 for 2025, IRA limit remains $7,000. (2024, November 1). Department of the Treasury. 

⁴Taylor, K. R. (2024, October 27). What is the Gift Tax Exclusion for 2024 and 2025? Kiplinger.com. https://www.kiplinger.com/taxes/gift-tax-exclusion