For high-net-worth individuals (HNWIs), 2025 has been one of the most significant years. With substantial changes in tax law now occurring or on the horizon, the final months of the year present an opportunity for proactive planning. Therefore, inaction is not an option for those whose wealth exceeds the multi-millions.
In light of changes in the legislative landscape, such as exemptions from estate and gift taxes, it’s necessary to review long-held strategies. To preserve your wealth, maximize your tax position, and protect your family’s legacy from ruin, it’s time to coordinate with your advisor team, including your wealth manager, tax professional, and estate planning attorney.
Before 2025 wraps up, high-net-worth individuals should make these 10 financial and estate planning moves.
I. Secure Your Legacy: Estate Planning Urgency
A looming, or recently altered, federal estate and gift tax exemption dominated estate planning in 2025. Even though new legislation made some changes permanent, maximizing the use of the highest exemption amounts remains a key dynamic.
1. Maximize the annual gift tax exclusion.
Don’t forget to take advantage of the annual gift tax exclusion before December 31, 2025, which is $19,000 per recipient (or $38,000 if married and gift-splitting).
- The power of consistency. In addition to removing assets and future appreciation from your taxable estate, these gifts do not count against your lifetime exemption. Over time, this simple, powerful technique can be used to systematically transfer wealth from one generation to the next.
- The best assets to gift. You may want to consider gifting assets with high growth potential. If you move these assets out of your estate now, all future appreciation will be tax-free.
2. Lock in current high lifetime exemption amounts.
Despite the new legislation changing the previous sunset date and raising the long-term exemption, action in 2025 remains essential. The lifetime gift and estate tax exemption, which is currently at a historically high level (e.g., $13.99 million per individual), is slated to increase slightly by 2026 to $15 million per individual.
It is still possible, however, to make large gifts now while the value of the estate is still high to receive the benefits of moving appreciating assets to the estate in the long-term future.
- Fund advanced trusts. Don’t wait to fund irrevocable trusts. Speak to your estate attorney right now. You can transfer significant wealth and its future appreciation tax-free through sophisticated trusts such as Spousal Lifetime Access Trusts, Grantor Retained Annuity Trusts, or Dynasty Trusts.
- GRATs for appreciation. When assets are expected to appreciate quickly, a GRAT is particularly effective. For transfer tax purposes, appreciation over the IRS hurdle rate is passed to beneficiaries gift-tax-free.
3. Review and update all trust documents.
As the landscape changes, your estate plan needs to be audited. After all, it may not be possible to align trusts set up years ago with the latest tax laws or family dynamics.
- Check trust flexibility. Consider including asset-swap powers in your trusts so you can exchange your personal assets for the trust’s assets. For income tax planning, this can be a powerful tool.
- Verify the beneficiary designation. In most cases, life insurance policies and IRAs are transferred through beneficiary designations, not through your Will. Be sure that these designations are current and conform to the new RMD rules for inherited accounts, especially for non-spouse beneficiaries, under the SECURE Act 2.0.
II. Strategic Tax and Investment Optimization
An effective year-end planning strategy minimizes your current year’s taxable income while positioning your investment accounts for future tax-free growth.
4. Strategically harvest investment losses.
Traditionally, tax losses are harvested at year-end. By selling investments that have lost value, capital gains from winning investments can be offset.
- Offsetting gains. Capital losses in 2025 can be used to offset capital gains. You can deduct up to $3,000 of your net capital loss against ordinary income, if losses exceed gains, as an individual taxpayer. The limit for married individuals who file separately is $1,500 per person. Any remaining balance will be carried forward to future years.
- Beware the wash sale rule. A claim for loss cannot be made if you purchase the same or a “substantially identical” security within 30 days of the sale. To maintain market exposure, reinvest the proceeds into a similar but not identical fund.
5. Execute Roth IRA conversions.
A Roth IRA conversion may be optimal for many high-net-worth individuals in 2025. Your conversion amount will be taxed at today’s rates, and any future growth and withdrawals will be tax-free.
- Future tax rate considerations. You may benefit from paying the tax now at a lower rate if you expect to be in a higher tax bracket in the future (e.g., after selling a business).
- Tax-free growth for heirs. Unlike traditional IRAs, Roth IRAs do not require required minimum distributions during the original owner’s lifetime, making them excellent wealth transfer vehicles.
6. Maximize retirement plan contributions.
Despite significant wealth, high earners should contribute to all available tax-free accounts.
- 401(k)s and other employer plans. Don’t forget to make contributions to your 401(k), 403(b), or 457(b) plan before December 31, 2025 — plus catch-up contributions if over 50.
- Specialty plans for business owners. If you own a business, consider a Defined Benefit Plan or Solo 401(k). With these plans, you can make significant tax-deductible contributions, reducing your taxable income significantly.
7. Take Required Minimum Distributions (RMDs).
Most individuals age 73 or older in 2025 must meet the December 31, 2025, deadline in order to avoid a stiff penalty. It is possible, however, to delay your very first RMD until April 1, 2026, if you are turning 73 this year.
- Inherited IRAs. Beneficiaries of inherited IRAs must also comply with complicated RMD rules, in particular the 10-year rule. Don’t overlook distributions, as penalties for missing them can be severe. Consult your advisor to ensure compliance.
- Qualified Charitable Distributions (QCDs). Your RMD can be satisfied by making a QCD (up to $108,000 in 2025) directly from your IRA to a qualified charity if you are 7012 or older. Even if you do not itemize, this amount is excluded from your taxable income.
III. Charitable and Alternative Investing
A hallmark of HNWI planning is integrating your values with your finances. Giving strategically and exploring alternative investment vehicles offer powerful tax-management and growth opportunities.
8. Optimize charitable giving with appreciated assets.
When high-net-worth individuals itemize their deductions, giving to charity can offer a two-fold tax benefit: income tax deductions and capital gains tax exemptions.
- Donor-Advised Funds (DAFs). DAFs are a great way to give appreciated non-cash assets, like stocks and mutual funds held for more than a year. As a result, you can deduct the fair market value of the assets immediately, avoid paying capital gains tax on appreciation, and grant the funds to charities over time.
- Bunching deductions. To maximize your tax benefit, consider bundling several years’ worth of donations into a DAF in 2025.
9. Revisit alternative and private market allocations.
Although public market investments are the foundation of most HNWI portfolios, alternative assets can offer non-correlated returns and unique tax structures.
- Private equity and venture capital. Investing in these illiquid assets can provide access to growth not available on public markets. Review your allocations to ensure they align with your long-term liquidity needs.
- Real estate and opportunity zones. Investing directly in real estate, or investing through a fund, can offer powerful depreciation deductions. A Qualified Opportunity Fund (QOF) may provide significant tax deferral and capital gain exclusion for investors with capital gains from other investments.
10. Implement advanced asset protection structures.
Creditors, lawsuits, and unforeseeable liabilities pose a great danger to your accumulated wealth.
- Review umbrella liability coverage. Ensure that your personal umbrella policy covers your total net worth. In many cases, this is an inexpensive way to add millions of dollars in liability protection.
- Evaluate asset location. You should invest in tax-efficient accounts: tax-deferred accounts (401(k), IRAs) for high-tax assets, while taxable or Roth accounts for low-tax assets.
The Bottom Line
The end of 2025 isn’t just a calendar deadline; it’s an important milestone in strategic planning. With high estate exemptions and opportunities for tax optimization at year’s end, now is the time for action. Taking action on these 10 critical moves now will allow you to navigate the complex financial landscape with confidence, ensure your legacy, and position your wealth for continued growth.
Image Credit: Dziana Hasanbekava; Pexels
