Tax Season, How an Advisor Can Help

March 22, 2018

John came to us last year with a lot on his mind, specifically taxes. He had what he thought was a six-figure tax bill staring him in the face, the result of a house sale and an unexpected stock sale to financially assist with a family emergency. John was stressed, trying to plan for an imminent retirement with this enormous roadblock in the way.

John was the primary bread winner for the family and fearful of volatile markets, however his new tax bill was his immediate pain point. We needed to provide clarity first, and then put together a game-plan for him.

Our first course of action was to meet with John and his accountant together to determine exactly what his final tax bill would be. That meeting brought some good news as the amount due was lower than expected but was still $30,000. After we had clarity on the bill, our second course of action was to engage with John’s estate attorney. John’s financial help during his family emergency had changed his overall estate goals so we needed to brainstorm new strategies. In the discussion, John brought up a desire that he hadn’t yet told us, his accountant, or his attorney.

“I don’t want to wait until I pass away to make a donation to my alma mater. If I can do it now, I’d like to,” John said.

After running the numbers, we found that John could make a generous one-time gift to his alma mater and still have a secure retirement. In fact, the strategy we put together solved three problems for John all at once:

  • John will get a large enough charitable deduction from the gift to his alma mater to reduce the taxes he owes this year, thus reducing his stress
  • He will receive an income stream from this gift for the rest of his and his wife’s life, which will reduce concerns about living off his money
  • He will get the satisfaction of knowing that he could live his best life AND have an impact on the people and organizations that mattered to him.

When it comes to managing your life and your wealth, there are always tradeoffs. However, not every tradeoff needs to be a sacrifice. Tax season is the best time of the year to strategize with your advisor and create a game plan that resonates with what matters to you. Give yourself plenty of time to work with your advisor and your team of outside professionals.

As always, visit the “Contact Us” section of our website to see if we can help.

Chris Gibbons, CFP®, CAP®, CLU®, FIC

Senior Financial Advisor