October 24, 2024

Optimizing Tax Strategies for High-Net-Worth Individuals

Optimizing Tax Strategies for High-Net-Worth Individuals

Federal and Arizona State tax law is complex, with a diverse variety of deductions and credits that taxpayers of different types can potentially leverage to their benefit. The types of income a person earns, the value of an earner’s assets, and the categories of investments they hold should influence their overarching tax strategy.

The inherent complexity of the system means there is no single best tax strategy. What’s ideal for one high-net-worth individual may be entirely different from the optimal approach for another. It’s not always easy or accurate to make generalizations about tax optimization best practices, but there are some broad strategies high-net-worth individuals often adopt to maximize their tax savings.

Utilizing Tax-Deferred Accounts Where Possible

Although some types of tax-deferred accounts have income limitations, such as Roth IRAs, even high-net-worth individuals have access to a variety of tax-deferred accounts. The use of tax-deferred accounts can be particularly impactful for retirees who earn a higher income during their working years. They may pay a much lower rate in retirement when they begin drawing income from tax-deferred accounts.

Charitable Contributions

Although not everyone will use charitable donations to reduce their taxable income, it is one of the more widely utilized strategies among high-net-worth individuals. The complexity of charitable contribution strategies can vary greatly depending on the taxpayer’s preferences and income. Some investment tools, like donor-advised funds (DAFs), may allow taxpayers to more easily maximize charitable giving for tax purposes.

Maximizing Deductions and Credits

Professional tax preparation is not reserved solely for high-income individuals and households. Even median earners can potentially benefit from deductions and credits that will reduce their tax liabilities.

Which deductions or credits a high-net-worth individual may be eligible to use will depend on the sources of their income and the types of business expenses they have. The complexity of tax law can make it difficult for the average taxpayer to identify all their potential credits and deductions on their own and use them correctly to avoid running afoul of the IRS. Professional tax preparation assistance provided by accounting professionals experienced with high-net-worth individuals is advisable.

Optimizing Capital Gains

Capital gains tax rates are significantly lower than income tax rates for high-net-worth and high-income individuals and households. There are only three brackets for capital gains rates compared to seven income tax brackets.

The rate for long-term capital gains, which is dependent on the taxpayer’s income, is either 0 percent, 15 percent or 20 percent. Short-term gains are taxed as regular income at the earner’s higher income tax rate.

How long an investor holds on to assets before selling is highly dependent on their financial situation and the performance of the investment, but as a general rule it’s preferable to pay the lower long-term capital gains rate rather than the income tax rate on the proceeds of investments.

Trust and Estate Planning

Estate planning and the formation of trusts is often central to the tax optimization plans of high-net-worth individuals. There are more than a dozen types of trusts, from grantor retained annuity trusts (GRATs) to bypass trusts that allow couples to maximize federal estate tax exemptions. You don’t need to be extraordinarily wealthy to optimize tax planning by leveraging trusts. Even low- or moderate-income savers can make use of wisely crafted estate planning tools to reduce estate taxes.

High-net-worth individuals can use a variety of trusts and estate planning tools in creative combinations to reduce their taxable income and assets, even during their working years. It’s best to consult with experienced estate planning professionals to develop a dependable plan that will provide long-term protection with the ideal level of control and access for your situation.

Income Shifting and Gifting Strategies

Some high-net-worth individuals may benefit from income-shifting strategies, which may entail gifting assets to family members in a lower tax bracket or leveraging family limited partnerships to reduce their taxable income. It’s important income shifting strategies are implemented with the help of experienced accounting professionals who can ensure everything is done within the boundaries of tax laws and regulations.

Professional Assistance Is Key for Optimizing Tax Strategies

Tax law in the United States is extraordinarily complex, which is why high-net-worth individuals often work with experienced tax preparers and financial planners to develop thorough plans. Periodically consulting with your tax preparer and financial planning advisors can help ensure your wealth is consistently optimized and maintains compliance with the latest laws and regulations.  

Our Financial Advisors Excel at Helping High-Net-Worth Households Protect Their Assets

The team at Fullerton Financial Planning take a holistic approach to investment management and retirement savings. Our financial advisors help savers develop comprehensive plans that incorporate estate planningtax strategies and portfolio management to provide long-term financial security and peace of mind. Schedule a free consultation today by calling (623) 974-0300.

Begin the Conversation with a Free Retirement Review

This isn’t a sales call. It’s a focused, one-on-one conversation about where you stand and what’s possible from here.

What We’ll Cover in Your Retirement Review


Lifestyle Goals

What do you want retirement to actually look like? Travel, freedom, family, security — we start with the life you want, then build around it.


Current Assets

We’ll review what you’ve built — and help uncover smarter ways to use your 401(k), IRA, or savings more effectively for retirement income.


Income Planning

We’ll identify where your income will come from — and how to make sure it covers what you care about without relying too heavily on the market.


Risk & Tax Exposure

We’ll evaluate how your plan holds up to taxes, longevity, healthcare costs, and market shifts — so your income stays steady, even when life doesn’t.


Long-Term Strategy

We’ll help you turn what you’ve saved into income that lasts — without sacrificing the lifestyle you worked so hard to build.


The Next Steps

By the end of the meeting, you’ll have clarity on what’s working, what’s missing, and what to do next.

What You Get With Fullerton

  • A retirement income plan built around your lifestyle goals — not a generic formula
  • A coordinated investment and withdrawal strategy that supports income for life
  • Social Security timing guidance to help you get the most from your benefits
  • A reliable income floor — often supported by high-quality annuities with GLWBs, when appropriate
  • Tax-smart withdrawal strategies designed to adapt to changing laws and future needs
  • Personalized guidance on Medicare and long-term care planning
  • A clear roadmap for RMDs, Roth conversions, and income sequencing
  • Legacy and beneficiary planning that protects your spouse and supports your values
  • Ongoing reviews and proactive adjustments to keep your plan aligned as life evolves
  • Direct access to your advisor — no call centers, no hand-offs
  • A secure client portal with full access to your plan and documents
    Invitations to Fullerton’s exclusive client events and appreciation gatherings
  • A local, retirement-minded community with shared goals and values
  • Financial confidence for your spouse and family — with clarity, not complexity
  • Experienced, time-tested guidance from a leading independent Arizona-based planning firm focused on your future

Income
Planning

A strategy to turn your savings into reliable, steady income — so your lifestyle stays on track in retirement.

Tax
Planning

Smart planning to reduce future taxes and keep more of your money working for you.

Health Care
Planning

Protection against rising healthcare costs, including long-term care, built into your plan.

Risk
Management

A clear approach to guarding your wealth from market swings, inflation, and the unexpected.

Real Estate
And Legacy
Planning

A plan for your assets and property that preserves your legacy and supports your loved ones.

Planning With Fullerton

Relationship Building

You’re not just another account. At Fullerton, every relationship begins with real conversation — taking time to understand your values, priorities, and goals. That connection becomes the foundation for a plan that’s built around you, not a formula.

Personalized Experience

No two retirements are the same. Your strategy will reflect your unique goals, lifestyle, and financial position. Everything is tailor-made: your income structured, your tax plan, and the preservation of legacy. The difference in the details — because it is built around you.

Holistic Approach

A good plan looks beyond the numbers. Your lifestyle, your family, your values — it’s all connected. That’s why our planning process considers every part of your life, not just your portfolio — leaving no stone unturned.

See What Fullerton Can Do For You

Going from "I hope this works" to "I know I'm covered".

Experience You Can Trust

Retirement is too important to trust to a generalist. That’s why for over 20 years, Fullerton Financial Planning has focused exclusively on helping people transition from work to retirement — and thrive throughout it. We’re not trying to be everything to everyone. We’re built to help you do one thing incredibly well: Turn your life savings into reliable income and lasting financial confidence.

Why Families Across Arizona Trust Fullerton

  • Over 20 years helping Arizona retirees create income that lasts
  • Trusted by more than 2,000 Arizona households — and growing
  • Independent, fiduciary-based advice — no quotas, no product push
  • Certified Financial Planner™ (CFP®) professionals on staff
  • Regularly featured on ABC15, MoneyRadio, and financial education outlets
  • Local, in-person service — no national call centers or rotating advisor teams
  • Planning approach integrates investments, income, tax, Medicare, and legacy goals
  • Collaborative relationships with CPAs, estate attorneys, and insurance professionals
  • Focused on education-first guidance, not sales pitches or one-size-fits-all plans
  • Supported by a dedicated client service team with a reputation for proactive care

“I was nervous about retiring — but they helped me see the whole picture and gave me confidence to move forward.”

— Mary J., Scottsdale


“They made a complicated plan feel simple. I wish we’d come here five years earlier.”

— Brian & Sandra T., Mesa


“They treated me like a person, not a portfolio. I never felt pressured — just supported.”

— Teresa D., Chandler


“Our old advisor never talked about income or taxes — this team gave us a plan we could actually live on.”

— Kevin M., Sun City

The Fullerton Family

Standing Strong For Clients.
Stepping Up For the Community.

Begin the Conversation

We’re here to listen, understand, and help you take control of your financial future.