Risk Management Services
Tax Risk & Wealth Preservation
Tax legislation is one of the most underestimated threats to long-term wealth. Rate increases, estate tax changes, RMD obligations, and SALT limitations can permanently impair your financial plan if not addressed proactively. We design strategies that protect your wealth from adverse tax changes — today and in the future.
40%
Federal estate tax rate on assets above exemption
~50%
Combined federal + NY + NYC top marginal rate
2026
Year the estate tax exemption is scheduled to sunset
10 Yrs
SECURE Act window for inherited IRA distribution
Six Tax Risk Categories
Tax Risks That Threaten Your Financial Plan
Estate Tax Exemption Sunset (2026)
Impact: HighThe Tax Cuts and Jobs Act doubled the estate tax exemption to $13.6M per individual. Without Congressional action, this reverts to approximately $7M (inflation-adjusted) on January 1, 2026. Estates between $7M and $13.6M will face a sudden 40% tax on assets that were previously exempt. The window to act is closing.
Mitigation Actions
Ordinary Income Tax Rate Increases
Impact: Medium–HighThe current 37% top marginal rate was established by TCJA and is subject to congressional revision. For high earners in New York, combined federal + state + city rates already approach 50%. Any increase in the top federal rate materially amplifies the impact on investment income, retirement distributions, and business sale proceeds.
Mitigation Actions
Capital Gains Rate Changes
Impact: Medium–HighProposals to tax capital gains as ordinary income (effectively doubling the rate for top earners) have appeared in multiple legislative cycles. Portfolios with large embedded gains in real estate, equities, or closely held businesses are most exposed. Planning to defer or eliminate gain recognition is critical.
Mitigation Actions
IRA & Retirement Account Tax Risk
Impact: MediumSECURE Act 2.0 eliminated the stretch IRA for most non-spouse beneficiaries — requiring full distribution within 10 years. If tax rates are higher in the future, inherited retirement accounts become significantly less valuable. Roth conversions during lower-income years and before legislative changes can lock in current rates.
Mitigation Actions
State & Local Tax (SALT) Exposure
Impact: Medium (NY Specific)New York City residents face combined state and city income tax rates exceeding 12% on top of federal taxes. The $10,000 SALT deduction cap effectively eliminates this deduction for most high earners. Domicile planning, trust siting strategies, and tax-efficient investment structures become essential for long-term wealth preservation.
Mitigation Actions
Required Minimum Distribution (RMD) Risk
Impact: MediumRMDs force taxable distributions from retirement accounts beginning at age 73, often pushing retirees into higher tax brackets. A large traditional IRA or 401(k) balance can generate compulsory income that triggers Medicare IRMAA surcharges, taxes on Social Security benefits, and higher capital gains rates.
Mitigation Actions
Core Strategies
Tax Risk Mitigation Strategies
Tax-Advantaged Life Insurance (PPLI & Whole Life)
Permanent life insurance is one of the most tax-efficient accumulation vehicles available. Cash value grows tax-deferred, can be accessed tax-free via policy loans, and death benefits pass income-tax-free to beneficiaries. Private Placement Life Insurance (PPLI) extends this wrapper to institutional-quality investment portfolios for ultra-high-net-worth clients.
Roth IRA Conversion Strategy
Converting traditional IRA assets to Roth during lower-income years — or before expected tax rate increases — locks in current rates and eliminates future RMD obligations. A multi-year conversion plan coordinates with Social Security timing, business exit events, and capital gains to minimize the total tax cost.
Incomplete Non-Grantor (ING) Trust
An ING Trust is a sophisticated strategy for New York residents to shift income-generating assets to a state with no income tax — legally reducing state income taxes on investment income, capital gains, and business sale proceeds without changing personal domicile.
Grantor Retained Annuity Trust (GRAT)
A GRAT allows assets to be transferred to heirs with minimal or zero gift tax if the assets appreciate above the IRS hurdle rate. If the grantor outlives the GRAT term, the appreciation passes to beneficiaries estate-tax-free — one of the most powerful tools for transferring rapidly appreciating assets.
Charitable Remainder Trust (CRT)
A CRT allows you to contribute appreciated assets — eliminating capital gains on the sale — receive a charitable deduction and income stream, and ultimately transfer the residual to a charity or donor-advised fund. Highly effective for clients with concentrated stock positions, real estate, or private business interests.
Municipal Bond Allocation
New York municipal bonds are triple-tax-exempt — free from federal, New York State, and New York City taxes. For high earners in New York, the taxable equivalent yield can far exceed investment-grade corporate bonds. A strategic muni allocation reduces the tax drag on the fixed income portion of a portfolio.
Act Before the Sunset
Schedule Your Tax Risk Review
We'll evaluate your exposure to estate tax changes, income tax increases, and RMD risk — and design a proactive strategy to protect your wealth before the window closes.
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Speak with an Advisor
Have questions about this topic or how it applies to your financial situation? Our team is available to provide personalized guidance.