What are the first steps in tax planning for high net worth individuals?

To build an effective tax plan, high-net-worth individuals should follow these steps:

Step 1. Assess Income Sources and Taxable Events:

• Map out all sources of income, including active, passive, and capital gains, to understand tax exposure.
• Evaluate estate or business income streams that could impact liability.

Step 2. Identify Tax-Efficient Investments:

• Explore options like tax-free municipal bonds, opportunity zones, and trusts to manage tax burdens effectively.

Step 3. Leverage Deductions and Credits:

• Maximize deductions such as mortgage interest, donations, and high medical expenses.
• Take full advantage of available tax credits, like those for energy-efficient homes or vehicles.

Step 4. Secure Legacy and Estate Planning:

• Establish trusts, charitable foundations, and gifting strategies to preserve wealth while minimizing estate taxes.

Step 5. Partner with Experts:

• Consult a tax strategist to create tailored approaches and stay compliance-ready with current IRS rules.

Proactively aligning tax planning with wealth-management objectives can lead to substantial savings and long-term financial security.