Why taxes become more complex as wealth grows
For high-net-worth (HNW) and ultra-high-net-worth (UHNW) families, taxes are rarely a single-year issue. As income sources diversify and assets become more complex, tax strategy evolves from an annual exercise into a long-term planning discipline.
Many families still approach taxes reactively, focusing on filing accurately and minimizing liability for the current year. While important, this approach often misses larger opportunities and can introduce avoidable risk over time.
At OnePoint BFG, we believe tax planning is most effective when guided by perspective. Your OnePoint helps ensure tax decisions support long-term goals rather than drive short-term behavior.
What tax strategy really means for HNW and UHNW families
At higher levels of wealth, tax exposure comes from multiple directions, including:
- Earned income and bonuses
- Capital gains from investments or business sales
- Pass-through business income
- Trust and estate taxation
- State and local tax considerations
Because these elements interact, tax decisions made in isolation can create unintended consequences. A multi-year perspective allows families to coordinate timing, structure, and strategy.
Major financial institutions consistently emphasize that proactive tax planning over multiple years leads to better outcomes than reactive, single-year decisions.¹
Common tax planning mistakes affluent families make
Focusing only on this year’s tax bill
Minimizing taxes in the current year can sometimes increase taxes later. Deferring income or accelerating deductions without understanding future implications may reduce flexibility or increase long-term liability.
Tax efficiency is not about winning a single year. It is about managing the cumulative impact over time.²
Separating tax planning from investment decisions
Investment choices often carry significant tax consequences. When tax considerations are treated as an afterthought, families may experience unnecessary capital gains, lost deductions, or inefficient asset placement.
Integrated planning aligns investment strategy with tax awareness rather than allowing one to undermine the other.³
Overlooking the role of timing
Timing matters. The year income is recognized, gains are realized, or deductions are taken can materially affect tax outcomes. This is especially true around liquidity events, business transitions, or charitable planning.
Strategic timing is a core element of effective tax planning for affluent families.⁴
Ignoring state and local tax exposure
For HNW families, state residency and local tax rules can have a meaningful impact. Changes in domicile, business location, or property ownership can alter tax obligations significantly.
Understanding these factors early helps avoid surprises later.⁵
How OnePoint reframes tax strategy
At OnePoint BFG, tax planning begins with perspective rather than tactics.
Your OnePoint helps answer questions such as:
- What does long-term financial success look like after taxes?
- How much flexibility do we want to preserve?
- How should tax strategy support lifestyle, family, and legacy goals?
- Which trade-offs are acceptable and which are not?
This perspective allows tax decisions to support broader objectives rather than dictate them.
Key elements of a multi-year tax strategy
- Coordinating income and deductions over time
Rather than optimizing year by year, many families benefit from smoothing income and deductions across multiple years. This may include:
- Deferring or accelerating income strategically
- Coordinating bonuses, equity compensation, or distributions
- Aligning deductions with higher-income years
The goal is consistency and predictability rather than volatility.⁶
- Integrating charitable planning
Charitable giving often plays a meaningful role in multi-year tax strategy. When aligned with values, it can provide both impact and efficiency.
Tools such as donor-advised funds or charitable trusts allow families to separate the timing of deductions from the timing of giving.⁷
- Tax-aware investment management
Asset location, tax-loss harvesting, and realization strategies can meaningfully influence after-tax outcomes. Over time, small efficiencies compound.
Research consistently shows that tax-aware portfolio management can improve long-term results without increasing risk.⁸
- Planning around liquidity events
Business sales, large asset dispositions, or equity compensation events often create concentrated tax exposure. Planning ahead allows families to:
- Evaluate installment or staged transactions
- Incorporate charitable or gifting strategies
- Coordinate investment and estate planning
Advance planning provides optionality that last-minute decisions cannot.⁹
The importance of advisor coordination
Tax strategy rarely succeeds when handled in isolation. Effective planning requires coordination between:
- Wealth advisors
- Tax professionals
- Estate planning attorneys
When advisors collaborate, strategies reinforce one another rather than compete. This coordination is especially important for families with complex income and asset structures.¹⁰
The behavioral side of tax planning
Taxes can influence decision-making emotionally as well as financially. Fear of paying taxes sometimes leads to inaction, while fear of missing opportunities can drive unnecessary complexity.
A multi-year perspective helps reduce emotional pressure and encourages deliberate decision-making. Studies show that families who plan taxes proactively report greater confidence and less financial stress.¹¹
Conclusion
For high-net-worth and ultra-high-net-worth families, tax strategy is not a single-year exercise. It is an ongoing process that requires coordination, perspective, and long-term thinking.
By grounding tax planning in your OnePoint and aligning decisions with broader goals, families can move beyond reactive strategies and build confidence in their financial direction.
At OnePoint BFG, we believe the right perspective transforms complexity into clarity.
Continue the conversation
Sources
- Envestnet, High-net-worth financial planning strategies for advisors
https://www.envestnet.com/financial-planning/high-net-worth-clients - Fidelity, Tax-Efficient Investing
https://www.fidelity.com/viewpoints/investing-ideas/tax-efficient-investing - Vanguard, A smarter way to build tax-aware portfolios
https://corporate.vanguard.com/content/corporatesite/us/en/corp/articles/smarter-way-build-tax-aware-portfolios.html - IRS, Tax Topics and Capital Gains
https://www.irs.gov/taxtopics - Tax Foundation, State and Local Tax Burdens
https://taxfoundation.org/state-local-tax-collections/ - PwC, Individual Tax Planning Strategies
https://www.pwc.com/us/en/services/audit-assurance/private-company-services/library/tax-wealth-planning-guide.html - Fidelity Charitable, Charitable Tax Strategies
https://www.fidelitycharitable.org/?immid=PCD&account=&campaign=230666294&adgroup=176805346921&keyword=fidelity%20daf%20account&gad_source=1&gad_campaignid=230666294&gbraid=0AAAAAD-T465ymdLZwvVqgTsexk8RhEdTe&gclid=EAIaIQobChMIy6Dm3MX1kQMV-LIDAB17oSXEEAAYASAAEgK_TvD_BwE - BlackRock, The Importance of After-Tax Returns
https://www.blackrock.com/us/financial-professionals/insights/invest-for-after-tax-returns - Investopedia, Tax Planning: Strategies, Benefits, and Real-life Examples
https://www.investopedia.com/terms/t/tax-planning.asp - CFA Institute, Comprehensive Wealth Planning Requires Coordination
https://www.cfainstitute.org/insights/articles/mass-affluent-wealth-inheritance-planning - Meegle, Understanding the core concepts of the psychology of financial decision-making, https://www.meegle.com/en_us/topics/behavioral-finance/psychology-of-financial-decision-making
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This communication has been provided for informational purposes only and should not be considered as investment, legal or tax advice or as a recommendation. This material provides general information only. OnePoint BFG does not offer legal or tax advice. Please contact legal counsel or your tax advisor to recommend the application of this general information to any particular situation or prepare an instrument chosen to implement the design discussed herein. Circular 230 notice: To ensure compliance with requirements imposed by the IRS, this notice is to inform you that any tax advice included in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of avoiding any federal tax penalty or promoting, marketing, or recommending to another party any transaction or matter.
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