When people think about growing their wealth, they often focus on smart investments, savings goals, or estate plans. But there’s another piece of the puzzle that’s just as important: taxes. Taxes impact nearly every corner of your financial picture. From investment earnings to the assets you pass on to future generations, strategic tax planning plays a key role in helping preserve and grow your wealth.
At Hilltop Wealth & Tax Solutions, we believe that tax planning should never be an afterthought. Instead, it should be built into the core of your wealth management strategy. Here’s why, and how a proactive approach can help you keep more of what you earn.
The Overlap Between Tax Planning and Wealth Management
Smart financial strategies take the long view. That means focusing not just on growing your assets, but on protecting them from unnecessary tax burdens. Done right, tax planning helps you enhance your wealth strategy by allowing your money to work harder and last longer.
In fact, a recent study found that 80% of investors believe their financial advisors should provide tax planning services. And 90% of those investors worry that tax obligations will eat away at their portfolio over time. When taxes go unaddressed, they can quietly chip away at even the most carefully built financial plan.
Let’s take a closer look at where tax planning and wealth management often intersect.
Investment Gains: Capitalizing on Timing and Tax Efficiency
The way your investments are structured plays a major role in how much tax you’ll pay. By timing asset sales carefully, placing investments in tax-advantaged accounts, and using tax-loss harvesting strategies, you can reduce your overall exposure to capital gains taxes.¹ This approach allows you to reinvest more of your returns and keep your investment goals on track.
For example, holding onto certain investments for over a year can shift gains into a lower tax bracket. Similarly, placing high-yield or actively traded assets in tax-deferred or tax-free accounts can shield them from annual tax drag.
Income Management: Especially Important in Retirement
When you retire, your income doesn’t disappear. It just comes from different sources. And how that income is structured can have a direct impact on your tax bill. By carefully planning distributions from various accounts (401(k)s, IRAs, pensions, taxable accounts), you can potentially lower your effective tax rate each year.
Strategic Roth conversions, timing withdrawals, and coordinating with Social Security benefits are all tools that fall under the umbrella of income-focused tax planning. With the right moves, you may be able to reduce taxes not just for yourself, but for your heirs down the line.
Estate and Legacy Planning: Passing on Wealth Wisely
Taxes don’t stop when your life does. Without a clear strategy, estate taxes and probate fees can significantly reduce the assets your loved ones receive. That’s why integrating tax planning into your estate plan is so important.
Whether you’re setting up trusts, making tax-efficient charitable donations, or using annual gift exclusions, a forward-thinking approach can help preserve your wealth across generations. Planning now means your legacy can support the people and causes you care about most.
Business Transitions: Managing a Major Milestone
If you’re a business owner, selling or passing on your company is likely one of the biggest financial decisions you’ll ever make. It’s also one of the most complex from a tax perspective. Timing, valuation, and the structure of the sale all have tax implications that can either protect or drain your profits.
Tax planning in this context isn’t just about the sale itself. It’s about positioning your business in the years leading up to that event. Working with advisors who understand both tax law and business strategy can help you structure a transition that supports your long-term financial goals.
Tax Planning Is More Than a Year-End Task
Many people only think about taxes during filing season. But true tax planning happens year-round. It’s a dynamic part of your wealth management approach and should evolve as your income, goals, and life stages change.
Incorporating tax strategies into your broader plan can help you enhance your wealth strategy, not just in the short term, but for decades to come. Whether you’re building a retirement plan, managing a business, or preparing your estate, tax planning offers tools to help you stay one step ahead.
Partner With a Team That Understands Both
At Hilltop Wealth & Tax Solutions, we combine in-depth tax knowledge with a comprehensive approach to wealth management. Our team works closely with you to tailor a plan that reflects your goals, minimizes your tax exposure, and grows with you over time.
After all, wealth isn’t just about what you earn, it’s about what you keep. And thoughtful tax planning helps you do exactly that. Contact us today to get started.
No Client or potential client should assume that any information presented or made available on or through this article should be construed as personalized financial planning or investment advice. Personalized financial planning and investment advice can only be rendered after engagement of the firm for services, execution of the required documentation, and receipt of required disclosures. Please contact the firm for further information. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice.
Hilltop Wealth Solutions (“Hilltop”) is a registered investment advisor with the Securities and Exchange Commission (“SEC”) and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. SEC registration does not imply a certain level of skill or training. Please refer to our Form ADV Part 2A disclosure and Client Relationship Summary (Form CRS) for additional information regarding the qualifications and business practices of Hilltop. Hilltop Wealth Solutions, LLC is an SEC Registered Investment Adviser firm. Hilltop Tax Solutions, LLC, is an affiliate of Hilltop. Wealth Solutions that provides tax and bookkeeping services.
