The New Economy Begins: 4 Money Moves High-Net-Worth Individuals Should Make Before Inauguration Day

December 31, 2024

As a new administration prepares to take office, high-net-worth individuals face an opportunity to review their financial strategies. Changes in tax policy, market dynamics, and economic priorities often follow a transition in leadership, making this a key moment to adjust your financial plan. Here are four strategic moves to consider before Inauguration Day to protect and grow your wealth.

1. Evaluate Potential Tax Policy Changes

Every new administration brings the possibility of tax reform. This might include changes to income tax rates, capital gains taxes, or estate tax exemptions. For high-net-worth individuals and families, these adjustments could significantly impact financial strategies.

What to Do Now:

• Review Estate Plans: Consider using your lifetime gift exemption now, as future estate tax policies may reduce it.
• Realize Capital Gains: If higher capital gains taxes are anticipated, selling assets before year-end could lock in current rates.
• Strategic Deferrals: For income, decide whether to accelerate or defer earnings based on anticipated tax brackets.

2. Reassess Investment Allocations

A shift in economic policies can influence industries, markets, and asset classes. Aligning your portfolio with potential changes can help you capitalize on emerging opportunities and minimize risks.

What to Do Now:

• Sector Adjustments: Identify industries likely to benefit from new policies, such as renewable energy, infrastructure, or technology.
• Diversify Globally: Consider increasing exposure to international markets, especially if new trade policies may impact U.S. markets.
• Stay Flexible: Keep some liquidity in your portfolio to take advantage of opportunities as the economic direction becomes clearer.

3. Optimize Charitable Giving Strategies

New tax policies may influence the deductibility of charitable contributions. By acting now, you can maximize your philanthropic impact while potentially reducing your taxable income.

What to Do Now:

• Donor-Advised Funds (DAFs): Fund a DAF now to lock in deductions at current rates while planning future giving.
• Appreciated Assets: Donate stocks or other appreciated assets to avoid capital gains taxes and receive a deduction for their fair market value.
• Timing Matters: Front-load multi-year pledges if changes to deduction thresholds are on the horizon.

4. Plan for Interest Rate and Inflation Shifts

Economic policies from the new administration may influence interest rates and inflation. High-net-worth individuals should consider how these shifts might affect borrowing, investing, and preserving wealth.

What to Do Now:

• Lock in Rates: If you’re planning to borrow, consider locking in low rates now before potential hikes.
• Review Fixed Income: Rising rates may impact bond values, so evaluate duration and credit quality in your fixed-income portfolio.
• Hedge Against Inflation: Explore assets like real estate, commodities, or Treasury Inflation-Protected Securities (TIPS) to guard against inflation risks.

Stay Ahead of the Curve

By addressing tax strategies, investment allocations, charitable giving, and interest rate planning before Inauguration Day, you can position yourself to thrive in the new economic landscape.

At First Western Trust, we specialize in helping high-net-worth individuals navigate the future with tailored strategies that align with your financial goals. Contact us today to ensure your wealth plan is prepared for the road ahead.