Have you or will you experience a large liquidity event that will significantly impact your financial life? This will undoubtedly generate a large tax bill that will reduce your total proceeds. The tax event is extremely significant to the liquidity event itself, but are you taking as much care to optimize your tax bill?
There are many ways to mitigate the impact depending on personal goals and life plans, but for those of you who are philanthropic and are thinking about donating a meaningful portion of the proceeds to a good cause, making a large charitable contribution is one option you may be considering. One of our clients was ready to donate $10 million to his donor advised fund after one such liquidity event, but his natural approach to doing so was going to cost him over one million dollars in extra taxes. This is a very common mistake and many others do exactly the same thing.
To learn more how we helped this client avoid an expensive mistake, as well how we may be able to help you, read about Bordeaux’s approach to charitable tax planning and analysis.
Previously in this series:
Alternative Investments
Personal CFO