At Forward Point Solutions, we specialize in working with affluent individuals and families to implement forward-thinking tax strategies that go beyond compliance and into true wealth preservation. Below, we outline key tactics every HNWI should consider in the current economic and regulatory landscape.
Proactive Income Structuring
One of the most impactful strategies for HNWIs involves how income is structured. Wages, dividends, carried interest, capital gains, and distributions from pass-through entities are all taxed differently.
- Capital Gains Optimization: Where possible, structure investments to benefit from long-term capital gains treatment.
- Business Entity Review: For entrepreneurs, aligning business structures (LLCs, S-corps, C-corps) with income and estate goals can yield significant tax advantages.
- Opportunity Zones & Qualified Small Business Stock (QSBS): These incentives allow for substantial tax exclusions when conditions are met.
Trust & Estate Planning Integration
Wealth transfer is one of the most overlooked aspects of tax strategy, especially given the anticipated sunset of current estate tax exemptions.
- Use of Grantor Trusts, GRATs, and SLATs: These instruments allow wealth transfer while minimizing estate and gift tax exposure.
- Dynasty Trusts: For families seeking multi-generational wealth preservation, a well-structured dynasty trust can shield assets from taxation and creditors for generations.
- Annual Exclusion Gifting: Even basic tactics—like leveraging the annual gift exclusion ($18,000 per recipient for 2024)—can compound into major savings over time.
Philanthropy as a Strategic Tool
Charitable giving is not just a noble endeavor—it’s a sophisticated tax strategy when done correctly.
- Donor-Advised Funds (DAFs): These offer flexibility and immediate deductions while maintaining control over future distributions.
- Charitable Remainder Trusts (CRTs): Generate income today while reducing future estate taxes.
- Appreciated Asset Donations: Donating highly appreciated securities can avoid capital gains and yield a fair market value deduction.
State Residency Optimization
State income taxes can range from zero to over 13%. For HNWIs, establishing or maintaining residency in a low- or no-tax state can translate into substantial savings.
- Domicile Planning: Proving a legitimate change in domicile requires more than a driver’s license. It involves a full lifestyle and documentation shift.
- Multistate Compliance: For individuals with homes or business interests in multiple states, careful planning avoids dual taxation and audit triggers.
Alternative Investments & Tax Deferral
Private equity, real estate, and hedge fund investments offer unique tax deferral and income-shielding opportunities.
- Private Placement Life Insurance (PPLI): A lesser-known but powerful tool to grow wealth tax-free while maintaining investment control.
- 1031 Exchanges: Real estate investors can defer capital gains taxes by rolling proceeds into new properties.
- Deferred Compensation Plans: Especially relevant for executives and business owners seeking to smooth income over lower-tax years.
Staying Ahead of Legislative Change
With shifting political dynamics and evolving tax law proposals, static planning is a risk. We continuously monitor:
- Proposed estate tax reforms
- Capital gains rate changes
- Global reporting requirements (e.g., FATCA, CRS)
- IRS enforcement trends targeting HNWIs
At Forward Point Solutions, we help clients implement adaptive strategies that are both robust today and agile for tomorrow.
Tax strategy for HNWIs is not just about reducing tax—it’s about creating a holistic plan that aligns with your goals, protects your legacy, and anticipates what’s ahead.
By partnering with Forward Point Solutions, you gain more than a tax advisor—you gain a strategic ally focused on long-term wealth preservation and peace of mind.
📩 Interested in optimizing your tax position?
Schedule a confidential consultation with our wealth strategy team at [Forward Point Solutions Contact Page] today.
