YOUR FINANCIAL FUTURE DESERVES STRATEGIC WEALTH MANAGEMENT TAX PLANNING

Your wealth took years to build. Yet without proper tax planning, you could be losing thousands, or even millions, to unnecessary taxation. As tax codes grow increasingly complex, high-net-worth individuals face unique challenges that require specialized expertise.

At Patten & Company, we’ve spent 40 years helping successful entrepreneurs, business owners, and investors in Dallas and throughout Texas develop tax strategies that protect what they’ve built. We understand that effective wealth management tax planning isn’t just about minimizing this year’s tax bill, it’s about creating a comprehensive strategy that aligns with your long-term financial goals.

The difference between reactive tax preparation and proactive tax planning can significantly impact your wealth preservation and growth. Let’s look at the key strategies that can help you protect and grow your assets.

Understanding Wealth Management Tax Planning

Wealth management tax planning is significantly more extensive than mere tax compliance. It’s a holistic approach that considers your entire financial picture, income sources, business interests, investments, estate plans, and philanthropic goals, to create strategies that minimize tax burdens while maximizing wealth preservation and growth.

For high-net-worth individuals and entrepreneurial clients, the stakes are particularly high. Your complex financial situation likely includes multiple income streams, sophisticated investments, business interests, and significant assets, all of which create multifaceted tax challenges.

The tax landscape affecting wealth management includes:

• Income taxes – Federal and state taxes on earnings from various sources
• Capital gains taxes – Taxes on investment profits and asset sales
• Estate taxes – Potential taxation of assets transferred to heirs
• Gift taxes – Taxes on transfers of assets to others during your lifetime
• Self-employment taxes – Additional taxes for business owners and entrepreneurs

Core Wealth Management Tax Strategies

Strategic tax planning requires a multi-faceted approach. These proven strategies can help preserve your wealth while minimizing tax burdens.

Use Trusts for Asset Protection and Tax Minimization

Trusts are effective tools for safeguarding assets and optimizing tax efficiency. Different types of trusts serve various purposes within your overall wealth management strategy:

• Revocable Living Trusts provide flexibility and control during your lifetime while avoiding probate for your heirs. While they don’t reduce taxes during your lifetime, they create a seamless transition of assets after your passing.
• Irrevocable Trusts remove assets from your taxable estate, potentially reducing estate taxes. These can be particularly valuable for high-net-worth individuals with estates exceeding the federal exemption threshold.
• Charitable Remainder Trusts (CRTs) allow you to support causes you care about while potentially receiving income, tax deductions, and reducing capital gains taxes on appreciated assets.
• Grantor Retained Annuity Trusts (GRATs) can transfer appreciation on assets to beneficiaries with minimal gift tax consequences, a strategy favored by many wealthy families.

Maximize Retirement Account Contributions

Tax-advantaged retirement accounts remain one of the most effective tax shelters available. The key is maximizing these opportunities:

• 401(k) and SEP IRA Plans allow business owners and employees to make substantial pre-tax contributions. For 2025, the contribution limit for 401(k) plans is $23,000, with an additional $7,500 catch-up contribution for those 50 and older.
• Traditional IRAs offer tax-deferred growth, with potential tax deductions for contributions depending on income and whether you participate in employer-sponsored plans.
• Roth IRAs provide tax-free growth and withdrawals in retirement. While high-income earners may face contribution limitations, “backdoor” Roth conversion strategies might still be viable for some high-net-worth individuals.
• Roth Conversions can be particularly strategic during years with lower income or when tax rates are expected to rise in the future.

The long-term value of these accounts comes not just from immediate tax benefits, but from years, or decades, of tax-deferred or tax-free growth. The compounding effect can substantially increase your retirement resources compared to taxable investment accounts.

Tax-Loss Harvesting and Capital Gains Management

Sophisticated investors understand that it’s not just what you earn, it’s what you keep after taxes that truly matters. Strategic management of capital gains and losses can significantly impact your after-tax returns:

• Tax-Loss Harvesting involves selling investments that have declined in value to offset capital gains realized elsewhere in your portfolio. This strategy can reduce your current tax liability while repositioning your investments.
• When implementing tax-loss harvesting, careful attention must be paid to the IRS wash-sale rules, which prohibit claiming losses on securities repurchased within 30 days.
• Long-Term vs. Short-Term Gains Management can save substantial tax dollars. Assets held longer than one year qualify for preferential long-term capital gains rates (0%, 15%, or 20% depending on your income bracket), compared to short-term gains taxed at ordinary income rates (potentially up to 37%).
• Timing of Gain Recognition can be strategically managed across tax years to optimize your tax situation. In some cases, it may make sense to accelerate or defer capital gains based on your expected income and tax rates.

Advanced tools and technology platforms like Mezzi help optimize these strategies across multiple accounts, making sure your overall portfolio remains aligned with your investment goals while maximizing tax efficiency.

Strategic Gifting and Estate Planning

For high-net-worth families, estate planning is an essential component of wealth management tax planning:

• Annual Gift Tax Exclusions allow you to give up to $18,000 (for 2025) per recipient annually without reducing your lifetime exemption amount. For married couples, this means potentially transferring $36,000 per year to each child, grandchild, or other recipient gift-tax-free.
• Lifetime Exemption Utilization is increasingly important with the potential for changing exemption amounts. The current federal estate tax exemption is historically high but scheduled to be reduced after 2025 unless Congress acts to extend it.
• Strategic Lifetime Giving often results in greater tax efficiency than transferring the same assets through your estate. This is particularly true for assets expected to appreciate significantly, as future appreciation occurs outside your taxable estate.

Investing in Tax-Efficient Vehicles

From a tax standpoint, not all ways to invest are equivalent. Structuring your portfolio with tax efficiency in mind can significantly improve long-term results:

• Municipal Bonds generate interest income that’s generally exempt from federal taxes and, in some cases, state and local taxes as well. For high-income investors in top tax brackets, the tax-equivalent yield of municipal bonds often exceeds that of comparable taxable investments.
• Tax-Managed Fund Strategies aim to minimize distributions of capital gains and non-qualified dividends, reducing the tax drag on your investment returns.
• ETFs vs. Mutual Funds – Exchange-traded funds (ETFs) usually generate fewer capital gains distributions than actively managed mutual funds, potentially making them more tax-efficient for taxable accounts.
• Asset Location Optimization involves strategically placing different types of investments in the most tax-appropriate accounts:
  • Tax-inefficient investments (generating ordinary income or short-term gains) may be better held in tax-deferred accounts
  • Tax-efficient investments (like qualified dividend-paying stocks or municipal bonds) often make more sense in taxable accounts
  • Investments with the highest growth potential might be optimal for Roth accounts, where all growth can potentially be tax-free

Proper asset location can add significant value over time without changing your overall investment allocation or risk profile.

Accumulating and Timing Deductions

Strategic timing and bunching of deductions can help high-net-worth taxpayers maximize their benefit:

• Bunching Deductions involves concentrating deductible expenses into a single tax year to exceed the standard deduction threshold, then potentially taking the standard deduction in alternate years. Common expenses that can be bunched include:
  • Charitable contributions
  • Medical expenses
  • Property taxes (within SALT limitations)
  • State income tax prepayments (within SALT limitations)

• Charitable Giving Strategies might include donor-advised funds, which allow you to make contributions in high-income years while distributing grants to charities over time.
• Medical Expense Timing can be particularly valuable for taxpayers with significant healthcare costs. By concentrating elective procedures and other medical expenses in a single year, you may exceed the 7.5% of AGI threshold needed to deduct these costs.

The key is understanding your specific tax situation and proactively planning which strategies will provide the greatest benefit.

Year-End And Ongoing Tax Planning Best Practices

While tax planning should be a year-round activity, year-end strategies can still provide significant benefits:

• Fourth Quarter Review provides an opportunity to analyze your year-to-date income, gains, losses, and projected tax liability. This allows time to implement tax-saving strategies before year-end deadlines. Key year-end actions to consider:
  • Harvesting investment losses to offset gains
  • Accelerating or deferring income based on projected tax brackets
  • Maximizing retirement plan contributions
  • Completing charitable giving
  • Making Q4 estimated tax payments
  • Reviewing Required Minimum Distributions (RMDs)
• Tax Law Change Monitoring is crucial in today’s dynamic tax environment. Staying ahead of changes to SALT limitations, Medicare surtaxes, and other provisions can help you adapt your strategies accordingly.
• Regular Strategy Reviews make  sure your tax planning remains aligned with your overall financial goals and current tax laws. At Patten & Company, our client onboarding process establishes a baseline understanding of your needs, while our ongoing review process ensures strategies evolve with your changing situation.

Why Choose Patten & Company?

In a world where generic tax advice is readily available, personalized expertise makes all the difference for high-net-worth individuals and business owners.

Patten & Company offers several distinct advantages:

• Boutique Experience – As a small firm with 40 years of experience in Dallas, we provide personalized attention that larger firms simply cannot match. Our team takes the time to understand your unique situation and goals.
• Industry-Specific Expertise – Our deep experience across oil & gas, agriculture, real estate, private equity, and investment partnerships means we understand the tax nuances specific to your industry.
• Relationship-Focused Approach – We believe in building long-term partnerships with our clients. Our strategic vetting process ensures we only take on clients where we can deliver exceptional value.
• Advanced Technology – We use sophisticated tools and software (Lacerte, CCH Axcess, Sharefile, RightSignature, and QBO) to maintain efficient and secure tax planning and compliance.
• Results-Driven Strategy – Our focus isn’t just on completing tax forms, it’s on developing comprehensive strategies that measurably improve your financial outcomes.

Our experience serving clients throughout Texas has shown that proactive planning consistently yields better results than reactive tax preparation. The difference can amount to thousands, or even millions, over your lifetime.

Ready to develop a tax strategy that protects and grows your wealth? Contact us today to schedule a consultation with the Patten & Company team. Our experienced professionals are ready to help you manage the complexities of wealth management tax planning.

Looking for more tax strategies for high-income earners? Download our free guide: 10 high-income tax planning tips for additional insights and actionable strategies.

FAQs