High Net Worth Planning

Complexity Layers HNW Families Face

The complexity stacks across at least five dimensions. Concentrated stock — single-name exposure from a founder event, an executive comp package, or inherited shares — sits inside the portfolio with embedded capital gains that make conventional diversification expensive. Multi-state residency — second homes, snowbird patterns, an LLC operating across states — creates state-tax questions the federal-only model misses entirely. Multi-generational structures — irrevocable trusts, GRATs, dynasty trusts, family LLCs — already exist and have to be maintained, not just designed.

Charitable structures — private foundations, Donor-Advised Funds, Charitable Remainder Trusts — need annual coordination, not set-and-forget administration. And the next-generation conversation — what the children and grandchildren actually know about the family balance sheet, the values that govern its use, the structure of what they will inherit — is the conversation most HNW households have never had. Each layer has its own planning rhythm. Coordinating across them is the work.

Tax-Loss Harvesting and Direct Indexing Trade-Offs

Direct indexing — owning the underlying securities of an index rather than a pooled fund — has become the default pitch at most large wealth managers for $1M+ taxable accounts, sold as a way to capture ongoing tax-loss harvesting. The mechanism works. Over a market cycle, the volatility of individual names produces enough harvested losses to offset realized gains elsewhere in the household, often 1% to 2% of after-tax alpha over a decade.

But the trade-offs are real and they get under-discussed. Direct indexing accounts are difficult to gift cleanly to a Donor-Advised Fund or a CRT because the underlying lots are fragmented. The harvested losses are most valuable to households with realized gains to offset — which means the strategy works best for owners with concentrated stock to diversify or households inside a multi-year Roth conversion. And the fee stack — separately managed account fee plus custodial fee plus the advisor fee — often runs higher than the household realizes. The right answer depends on the cap gain profile, the charitable strategy, and the time horizon. It is rarely as obvious as the pitch deck implies.

IRMAA-Aware Roth Conversion Strategy at $5M+

At $5M+ portfolio size, multi-year Roth conversion planning becomes one of the highest-leverage tax decisions the household will make in its 60s. The math is simple to state. Every dollar of pre-tax retirement-account balance projects forward at the household's future ordinary-income tax rate — including Required Minimum Distributions that compress against Social Security, pension, and portfolio income post-72.

The IRMAA cliff sits inside this conversation. Medicare Part B and Part D premiums step up across income brackets, with the top tier — modified adjusted gross income above $394,000 single / $750,000 married joint in 2026 — adding nearly $4,500 of Part B surcharge per spouse per year. The 2026 single-filer threshold for the IRMAA surcharge to even begin is roughly $109K of MAGI. Married joint, roughly $218K. Aggressive Roth conversions that push MAGI past these thresholds incur surcharges most households never modeled. And the surcharges are based on income from two years prior, so the surprise lands at a delay.

The right Roth conversion strategy at the $5M+ level is multi-year, bracket-aware, IRMAA-aware, and coordinated with the household's charitable strategy — QCDs at 70.5+ are the most efficient way to satisfy RMDs for a household that is going to give anyway. We model these decisions out 15+ years.

Estate Planning: Irrevocable Trusts, GRATs, Dynasty Trusts

At $5M+, the federal estate tax exemption — $13.61M per individual in 2026, scheduled to sunset to roughly $7M per individual in 2027 absent congressional action — starts to matter. At $15M+, it almost certainly matters. State estate taxes in residency states like Maryland, Massachusetts, New York, Oregon, and others lower the threshold further.

The structures we coordinate most often: Irrevocable Life Insurance Trusts (ILITs) holding policies outside the taxable estate. Grantor Retained Annuity Trusts (GRATs) moving appreciating assets to the next generation at low gift-tax cost. Dynasty Trusts — in states like Delaware, South Dakota, and Nevada — holding wealth across multiple generations free of estate tax at each generational transition. And Spousal Lifetime Access Trusts (SLATs) using the current exemption before sunset.

None of these structures is right for every household, and the wrong structure is worse than no structure. The work is matching the right tools to the specific balance sheet, the family dynamics, and the state of residency — then coordinating the implementation across the estate attorney, the CPA, and the household's investment plan.

Charitable Strategy: DAFs, CRTs, QCDs at 70.5+

For households that already give meaningfully, the right charitable structure compounds both the impact and the tax efficiency. A Donor-Advised Fund (DAF) is the simplest tool. Contribute appreciated securities. Take the immediate deduction at fair market value. Avoid the capital gain. Grant out to operating charities on the household's timeline. It works well for bunching deductions into high-income years or seeding a charitable bucket ahead of a known liquidity event.

A Charitable Remainder Trust (CRT) is the right tool when the household wants income from the gifted assets during life and the remainder to go to charity at death. CRTs are particularly powerful against a low-basis concentrated stock position — the trust sells the stock without realizing the capital gain, reinvests the proceeds in a diversified portfolio, and pays the household income for a term of years or life.

At 70.5+, the Qualified Charitable Distribution (QCD) becomes available — up to $108,000 per year (2026, indexed) directly from an IRA to a qualified charity, satisfying RMDs without the income ever hitting the household's MAGI. For households that would have given anyway, the QCD is the most efficient form of giving in the code. The gift does not hit IRMAA. It does not reduce QBI deductions. It does not show up as income at all.

Family Meeting Governance and Wealth Transfer Prep

The conversation most HNW households have never had is the next-generation conversation. The children may know there will be an inheritance. They almost never know the structure, the rough size, the trust mechanics, or the values the parents would want to govern its use. The cost of that gap shows up at the worst possible moment — usually the year a parent dies — and it compounds badly.

We facilitate annual or semi-annual family meetings that gradually pull adult children into the conversation. The rough shape of the balance sheet. The trust structures that already exist. The philanthropic priorities of the parents. The practical mechanics of what an executor and a trustee actually do. The goal is not full disclosure on day one. The goal is a 10-year on-ramp, so that when the generational transition does happen, the next generation has the context, the advisor relationships, and the operating knowledge to handle it without freezing.

Our Services

• IRMAA-Aware Tax Planning
• Retirement Income Planning
• Tax-Aware Investment Management
• Comprehensive Retirement Planning

Related Reading

• Estate Planning 101
• The Compound Cultivator™ Approach

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