In a recent discussion hosted by Investment News, three wealth-management veterans outlined how proactive tax planning can significantly alter financial outcomes during major life transitions. Stan Gregor, Todd Bryant, and David Pickler each brought distinct perspectives on reducing tax drag for clients navigating retirement, divorce, and multi-generational wealth transfers. The conversation underscored the growing importance of embedding tax awareness into every client engagement.
Gregor, a certified financial planner based in Chicago, emphasized that retirement income planning often overlooks the impact of required minimum distributions (RMDs) from tax-deferred accounts. He noted that clients with combined IRA and 401(k) balances exceeding $1 million face RMDs that can push them into higher tax brackets. Gregor recommended a strategy of partial Roth conversions in the years between retirement and the onset of RMDs, typically between ages 60 and 72, to smooth tax liabilities over time.
Bryant, a wealth advisor with a focus on divorce planning, highlighted the tax pitfalls that arise when dividing retirement assets. He pointed out that a Qualified Domestic Relations Order (QDRO) is essential to avoid early-withdrawal penalties on IRA transfers incident to divorce, but many advisors fail to execute it properly. Bryant cited a case where a client lost $45,000 in penalties because the QDRO was not filed before the transfer. He urged advisors to coordinate with family-law attorneys to ensure proper documentation.
Pickler, a family-office strategist, addressed the $83 trillion wealth transfer currently underway, as detailed in a recent UBS report. He argued that many high-net-worth families underestimate the tax burden on heirs, especially when assets include appreciated real estate or closely held businesses. Pickler recommended using grantor retained annuity trusts (GRATs) and charitable remainder trusts (CRTs) to shift appreciation out of estates while generating income for donors. He also noted that the current interest-rate environment makes GRATs particularly attractive, as low Section 7520 rates reduce the taxable gift component.
The panelists agreed that tax planning must be integrated into the broader financial plan rather than treated as a year-end afterthought. Gregor suggested that advisors conduct a "tax exposure audit" for clients approaching retirement, reviewing the mix of taxable, tax-deferred, and tax-free accounts. Bryant added that divorce settlements should include a tax-impact analysis of asset division, especially for stock options and restricted stock units.
Pickler concluded by noting that the UBS report on the $83 trillion wealth transfer underscores the urgency of preparing heirs for their new roles. He recommended that advisors host family meetings to discuss tax-efficient gifting strategies, such as annual exclusion gifts of $18,000 per recipient (2024 limit) and lifetime gifts using the current $13.61 million exemption. The panelists stressed that proactive planning can save clients hundreds of thousands of dollars over a lifetime.
For advisors seeking to deepen their tax expertise, the discussion highlighted resources such as the AICPA's personal financial planning section and the CFP Board's tax planning standards. The panelists also referenced the strategies for preventing cash crunches among ultra-rich clients as a complementary area of focus. Ultimately, the message was clear: tax awareness is no longer optional in wealth management—it is a core competency.
