Team-Based Planning: Why Collaboration Pays Off
When your financial advisor, CPA, and estate attorney work together, you benefit from a more aligned and strategic financial plan. Each professional brings a unique perspective—your advisor focuses on growing and preserving wealth, your CPA on minimizing taxes, and your attorney on protecting and distributing assets efficiently.
Example: Direct Indexing and Tax Planning
Suppose we implement a direct indexing strategy within your taxable investment account. Direct indexing allows us to own individual stocks that mirror an index (e.g., the S&P 500), but unlike a traditional ETF, it lets us harvest tax losses more precisely. We may sell certain positions at a loss—even as the overall index rises—to offset capital gains elsewhere in your portfolio.
By coordinating with your CPA:
Those harvested losses can offset short- or long-term gains from other assets (like real estate or a business sale).
If not fully used in the current year, those losses can carry forward for future use.
We may even time gains or charitable contributions strategically to minimize your overall tax burden.
And by working with your estate attorney:
We can ensure your appreciated positions are held in the right entities to take advantage of step-up in basis or gifting strategies aligned with your estate plan.
This is just one example of how integrated advice can lead to better results. Without this collaboration, key opportunities—like optimizing tax-loss harvesting or aligning with upcoming tax law changes—can be missed.
If you’d like us to coordinate directly with your CPA or estate attorney, we’re happy to initiate that conversation.
Behavioral Insight: The Cost of Market Timing
April 2, 2025, dubbed “Liberation Day,” marked a significant market turnaround following positive economic indicators and Federal Reserve commentary. Since then, the S&P 500 has risen from 5,670.97 to 5,935.94 as of June 2—a gain of nearly 4.7% in just two months. Investors who exited the market during the late March lows missed this substantial recovery, highlighting the risks associated with market timing. Staying invested through volatility often proves more beneficial than attempting to predict market movements.
Opportunity Zones: Leveraging Tax-Advantaged Investments
Opportunity Zones (OZs), created by the Tax Cuts and Jobs Act of 2017, are designated economically distressed communities where investors can receive preferential tax treatment on capital gains. For investors with significant taxable events—such as the sale of a business, stock, or real estate—OZs offer a compelling way to reduce and potentially eliminate certain capital gains taxes.
Here’s how the core benefits work:
Deferral of Capital Gains:
If you reinvest a capital gain into a Qualified Opportunity Fund (QOF) within 180 days, you can defer paying tax on that gain until the earlier of the date you sell your QOF investment or December 31, 2026.Exclusion of Future Gains:
If you hold your QOF investment for at least 10 years, you may exclude 100% of the appreciation on that new investment from capital gains taxes.
Pending Legislation: A Potential Reset for Opportunity Zones
There is currently bipartisan momentum in Congress behind extending and enhancing Opportunity Zone benefits. The Opportunity Zones Transparency, Extension, and Improvement Act, reintroduced in the House, proposes several changes, including:
Extending the deferral window beyond 2026, giving investors more time to deploy capital.
Reinstating the 10% basis step-up for investments held 5 years and the 15% step-up for 7 years.
Improved reporting requirements for funds, bringing more transparency and accountability to OZ investments.
Planning Tip: Timing Matters
Opportunity Zones work best when carefully coordinated with your broader tax and estate plan. For example, if you are selling a closely held business or large real estate asset, we can help you:
Identify suitable QOFs aligned with your investment goals and risk tolerance
Coordinate with your CPA to ensure proper deferral timing and documentation
Explore trust structures for passing down OZ investments tax-efficiently
Opportunity Zones are not for everyone, but for clients facing meaningful capital gains and looking to diversify into long-term, potentially impactful investments, they can be an excellent strategy to consider before year-end.
If you’re anticipating a liquidity event or want to revisit how Opportunity Zones might fit into your financial plan, let’s discuss the details.
