For many affluent families, the end of the year brings more than holiday traditions and travel. It's also one of the most critical windows for financial planning.
When done right, year-end planning can reduce taxes, align finances with family goals and set the stage for greater confidence heading into the new year.
Year-end planning shouldn't be seen as a scramble for last-minute tax breaks. Instead, planning is most effective when it's proactive, tax-aware and rooted in long-term values.
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Families are best served when strategies are connected to their most important goals, whether they're maximizing charitable impact, preparing for the next generation or simply confirming lifestyle stability in uncertain times.
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Here are seven moves high-net-worth families should consider before December 31.
1. Charitable giving with a donor-advised fund
A donor-advised fund (DAF) is a charitable account that lets you contribute cash or appreciated assets, take an immediate tax deduction and invest the funds to grow tax-free until you decide which charities to support.
It provides flexibility to separate the timing of your tax deduction from your actual giving, allowing for more strategic philanthropy over time.
A DAF can appeal to families focused on long-term charitable planning, particularly those facing a high-income year or a liquidity event.
In 2025, deduction limits were adjusted by the OBBBA, which means contribution plans should be reviewed carefully to ensure every dollar counts.
For those over age 70½, a qualified charitable distribution (QCD) from an IRA may be an even more efficient way to give, as it can reduce taxes on required withdrawals.
Choosing between a DAF and a QCD depends on age, income and philanthropic intent.
2. Use Roth conversions to unlock tax-free growth
A Roth conversion moves assets from a traditional IRA into a Roth IRA, creating a tax bill now in exchange for tax-free growth and withdrawals later.
This strategy is most beneficial during years of lower income, such as the period after retirement but before Social Security benefits and required minimum distributions (RMDs) begin.
The key is weighing the near-term tax hit against the long-term flexibility it provides.
Converting gradually over multiple years can help avoid large spikes in taxable income while building more predictable tax-free income streams for the future.
3. Harvest losses to manage taxes
Tax-loss harvesting may help reduce overall tax liability while keeping a portfolio aligned with long-term investment goals.
When markets have performed strongly, reviewing portfolios for losses that can be used to offset taxable gains is a prudent step.
This approach is particularly relevant after a business sale or other liquidity event that triggers significant capital gains.
In some cases, it may also make sense to spread sales across two calendar years. The goal is to manage the tax impact and take advantage of the opportunity to rebalance holdings with an eye toward future needs.
4. Do not miss retirement contribution and RMD deadlines
December 31 is the firm deadline for RMDs if you are age 73 or older and for beneficiaries with inherited IRAs. Missing this date can result in significant penalties.
It is also important to understand the different deadlines for retirement account contributions. Contributions to employer-sponsored plans such as 401(k)s must be made by December 31, 2025, to count for the 2025 tax year.
By contrast, contributions to IRAs (traditional or Roth) can be made up until the tax filing deadline of April 15, 2026.
Regardless of the deadline, year-end is the time to make sure contributions are on track. At a minimum, families should contribute enough to capture any employer match, but higher contributions may make sense depending on cash flow and tax planning goals.
Acting early and setting reminders helps avoid the year-end rush and ensures opportunities are not missed.
5. Revisit estate and gifting strategies
The OBBBA permanently made estate exemptions higher, which will be set at $15 million per person beginning in 2026. Even with these higher thresholds, year-end remains an important time to consider gifting strategies.
Families may want to take advantage of the annual gift tax exclusion, which allows $19,000 per person in 2025, enabling wealth transfer to children, grandchildren or other loved ones without dipping into lifetime exemption amounts.
While not every family will face estate taxes, intentional gifting helps reinforce family values and encourages multigenerational stewardship.
6. Review liquidity and cash flow for 2026
Looking ahead to next year's goals and expenses is an essential year-end step. Identifying upcoming needs, such as tuition payments, philanthropy or large purchases, provides the opportunity to align cash flow with tax planning.
For example, it may make sense to realize gains or take distributions in 2025 to fund 2026 expenses, especially if doing so fits within current tax brackets.
This forward-looking exercise eases stress and provides clarity, ensuring families enter the new year with a solid financial foundation.
7. Business owners and executives should plan ahead
Business owners and executives often face unique year-end decisions. Concentrated stock positions, restricted stock units (RSUs) and deferred compensation all require careful evaluation.
For executives, managing the timing of RSU sales after vesting events can help reduce tax burdens while also diversifying holdings.
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Business owners nearing retirement may want to gradually reduce exposure to their own company stock to better align assets with long-term investment goals.
Those with options to defer income must weigh the pros and cons of recognizing income now vs later. Each choice should be made in the context of long-term financial security and broader life goals.
The bigger picture
Year-end planning is not just about wrapping up 2025. It's about entering 2026 with clarity and confidence.
By taking time now to align tax strategies, gifting, savings and cash flow with long-term goals, families create the flexibility to handle both expected milestones and unexpected surprises.
Closing out the year with intention lays the groundwork for financial decisions that feel less reactive and more purposeful. A thoughtful December can make the year ahead less stressful, more strategic and ultimately more successful.
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