Four Year-End Planning Pressure Points for Massachusetts & Rhode Island Families
Between Halloween candy, football Sundays, and holiday travel plans, the end of the year has a way of sneaking up on all of us – so now is a great time to take a breath and check in on where your financial situation lands before December 31st.
Here is something I have noticed over the years – once a family’s assets become more complex – i.e. crossing a $2-3 million net worth, cracking $500k or more in income, experiencing a liquidity event for the first time - the conversation shifts.
Said differently, the basics (spending less than you make, automating savings, maxing out the 401k) are hopefully already humming along in the background.
The bigger opportunities – and the bigger headaches – tend to show up in taxes on your investments, how you give charitably, and how your wealth eventually passes to the kids and hopefully one day, grandkids.
On top of that, 2026 was the first year a vast majority of last year’s tax law changes kicked in – and a handful of them hit higher-net-worth families the hardest.
So, grab a coffee or your favorite relaxation drink of choice, and let’s walk through four pressure points I see come up again and again with these types of clients at year-end, plus a few things to start thinking about for 2027.
Let’s dive in!
Managing Taxes Inside Your Investment Portfolio
For most folks at this level, a large headache may be found in the most surprising place, the portion of their net worth that is sitting in taxable brokerage account, or a concentrated position (employer stock or business they own).
In my opinion, this is where most tax dollars are left on the table at year-end.
During our year-end review meetings, we look at realized gains and losses year-to-date, along with any positions that are sitting at a loss. Selling those positions to “harvest” the loss can offset gains taken earlier in the year – and any excess loss can offset up to $3,000 of ordinary income, with the rest carried forward to future years.
The key is to stay invested while doing this and to be mindful of the wash sale rule (buying back the same or a substantially identical investment within 30 days disallows the loss).
To be frank – the above is table stakes at this point and is more of the ‘easy stuff’.
This should already be monitored and acted upon periodically throughout the year – the last quarter should be geared towards firm up assumptions and finalizing.
Another item that catches many folks off guard every December is mutual fund capital gain distributions. If you own actively managed mutual funds in a taxable account, you could receive a sizable taxable distribution this year – even if you did not sell anything.
Most fund companies publish their estimates in October and November, so this is a great time to review them before the distribution date.
It should also be noted that the 3.8% Net Investment Income Tax (NIIT) kicks in once Modified Adjusted Gross Income (MAGI) is above $200,000 for single filers and $250,000 for joint filers – and these thresholds are NOT indexed for inflation.
For many of our clients, this means their dividends, interest, rental income, and capital gains are effectively taxed at 18.8% or 23.8% at the federal level (depending on capitals gains thresholds), before state taxes.
Overall lesson here:
- Review realized gains and losses before December
- Harvest losses where it makes sense, while staying invested
- Check mutual fund distribution estimates
Rethinking Charitable Giving Under the New Rules
Charitable giving can play a large role in a families financial plan – personally, I have seen our share of client’s inch more and more over to having a meaningful intention of giving more to causes they feel strongly about, each year.
BUT, due to the One Big Beautiful Bill Act (OBBA) the rules changed in a surprisingly impactful way, as far as giving is concerned.
Starting in 2026, if you itemize your deductions, only charitable gifts above 0.5% of your Adjusted Gross Income are deductible.
In real numbers, a family with $800,000 of AGI will not receive a deduction for the first $4,000 of gifts.
In addition, for those in the top 37% tax bracket, the tax benefit of itemized deductions is now capped at 35 cents per dollar rather than 37 cents.
So, what does this mean? In my opinion, the “how” of giving matters more than ever:
- Gift appreciated stock instead of cash – you avoid paying capital gains tax on the growth, and the charity receives the full value. This is one of the simplest strategies out there, yet I still see families writing checks.
- Bunch your gifts using a Donor-Advised Fund (DAF) – because the 0.5% floor applies each year, front-loading several years of giving into a DAF in one year can reduce the impact of the floor, while still allowing you to grant the dollars to charities over time.
- Qualified Charitable Distributions (QCDs) – if you are age 70½ or older, you can give up to $111,000 directly from your IRA to charity in 2026. A QCD counts toward your Required Minimum Distribution and is excluded from your income entirely – which means it sidesteps both the 0.5% floor. For retirees, this is often the most tax-efficient way to give, period.
As we look ahead to 2027, it may be worth mapping out a multi-year giving plan, rather than deciding on a gift-by-gift basis each December.
If you wealth management firm is not handle tax planning or filing in house, it is VITAL to have seamless coordination between a clients CPA (and estate planning attorney when needed), to confirm the right approach, since they will be the one reporting the transaction on the tax return.
Annual Gifting & Keeping Your Estate Plan Current
This is a common shortfall I have noticed across the spectrum – individuals and families who have amassed a net worth well into the millions of dollars, but whose estate plan was put in place when their children were little and has not been updated since.
The good news is that last year’s tax law made the higher federal estate and gift tax exemption permanent.
For 2026, each person can transfer $15,000,000 (a combined $30,000,000 for married couples) during life or at death before federal estate tax applies, and this figure will be adjusted for inflation going forward. For many families with $3 million or more, this takes much of the federal estate tax pressure off.
However, this does NOT mean estate planning is off the table!
A few areas I always review at year-end with clients and encourage communication with their estate planning attorney:
- State estate taxes – here in New England, this is where a lot of families get caught off guard.
- Massachusetts only exempts the first $2,000,000 of an estate, and that number is NOT indexed for inflation.
- Rhode Island is even lower – for 2026, estates over $1,838,056 can be subject to Rhode Island estate tax, with rates as high as 16%.
- Said differently, a family with $3 million or more in either state that sits well below the federal exemption could still face a meaningful state estate tax bill – which is why strategies like credit shelter (bypass) trusts for married couples are still very much on the table. Always make sure a qualified estate planning attorney is looped in, and your advisor is NOT giving legal advice.
- Annual exclusion gifts – for 2026, you can give $19,000 per person ($38,000 for married couples) to as many people as you would like without using any of your lifetime exemption. These gifts need to be completed by December 31st – the exclusion does not carry over.
- 529 plan “super funding” – you can front-load five years of annual exclusion gifts into a grandchild’s 529 plan in one year. And as of 2026, 529 plans can be used for up to $20,000 per year of K-12 expenses.
- Beneficiary designations & account titling – these override your Will, so it is prudent to confirm they line up with your wishes.
- Trusts, Powers of Attorney & Medical Directives – Revocable vs. Irrevocable trusts, guardianship, and making sure the right people are in place to make decisions on your behalf.
- Liability protection – as your net worth grows, so does the risk of being sued. An umbrella policy is one of the most cost-effective ways to protect your assets, and I find many families are underinsured here.
Not having an updated plan is a very simple way to disrupt the transfer of your wealth and create family tension along the way. Very scary.
Managing Income Thresholds: Roth Conversions, SALT & AMT
At this level of wealth, a few thousand dollars of income in the wrong place can trigger a much bigger tax cost.
With eleven months of the year in the books, we should have a very good idea of where a client’s income will land – which in turn tells us how much room we have to work with before year-end.
Roth Conversions – in my opinion, the key is to understand what marginal tax bracket you are in today and to estimate your bracket down the line. For families with large pre-tax IRA and 401k balances, Required Minimum Distributions can push them into higher brackets in retirement – and leave their heirs with a large tax bill, since most non-spouse beneficiaries must empty an inherited IRA within 10 years.
Converting in lower income years (early retirement, a sabbatical, the year after selling a business) can reduce lifetime taxes for the whole family. Remember, a conversion must be completed by December 31st to count for 2026 – and custodians get very busy in the last couple weeks of the year!
The SALT Deduction – the cap on state and local tax deductions increased to $40,400 for 2026. However, this benefit phases out once MAGI exceeds $505,000, and drops back to $10,000 for those with MAGI above roughly $606,000.
For families sitting near this range, the timing of income (bonuses, capital gains, ROTH conversions) can make a real difference. Business owners may also be able to use their state’s pass-through entity tax (PTET) election to work around the cap – a conversation to have with your CPA before year-end.
Alternative Minimum Tax (AMT) – starting in 2026, the AMT exemption begins phasing out at lower income levels ($500,000 for single filers and $1,000,000 for joint filers), and at a faster rate. This is especially important for executives who exercise Incentive Stock Options (ISOs), as the spread on exercise can trigger AMT. If you are planning to exercise in 2027, we want to run the numbers well ahead of time.
Finally, for clients with significant investment income, it is very important to ensure that your estimated tax payments are dialed in.
If your AGI is over $150,000, paying in at least 110% of last year’s tax liability generally keeps you in the IRS “safe harbor” for underpayment penalties.
The fourth quarter estimated payment for 2026 is due January 15, 2027. However, for your state payments, it should be noted that if you make your state estimated in calendar year 2026 it can count for the SALT deduction. If you make it in January 2027 for 2026, it does not count.
Lots to consider!
Preparing for 2027
As we turn the page, a few items to put on the calendar:
- Update retirement plan contributions once the IRS releases the 2027 limits (expected in November)
- Map out a multi-year charitable giving plan
- Estate plan review if your documents are more than 3-5 years old
- Run tax projections early in the year for any anticipated liquidity events – a business sale, stock option exercise, or sale of real estate
To conclude, for folks in this situation, the biggest wins are rarely about finding the next great investment.
They come from managing taxes, giving intentionally, and making sure your wealth transfers the way you intend.
Addressing these four pressure points before December 31st can help you keep more of what you have built, today and down the road.