$16m portfolio retiree that’s focused on tax-efficient income and legacy planning

Problems:

• Losing 1–2% per year to taxes on portfolio income
• Direct indexing had stopped producing real tax benefits
• Tax-exempt munis only yielding ~4%
• A $3M IRA creating growing RMD headaches
• No strategy in place to avoid future estate taxes
• Exposure is limited to public stocks/bonds

Here’s how we’re fixing it:

1. Make their income tax-efficient

Instead of relying on 4% muni yields, we use real estate where double-digit after-tax returns are achievable. Higher yield + tax efficiency + equity upside.

2. Upgrade muni exposure

Securitized affordable-housing loans offer double-digit, tax-exempt yields — a major upgrade over traditional muni funds when appropriate for the client.

3. Reinvent the equity sleeve

Direct indexing loses steam after a couple years.

A long/short SMA adds a new return source and reinvigorates tax-loss harvesting, allowing us to generate losses to offset gains for years.

4. Solve the RMD problem

Tax-aware hedge funds can realize ordinary deductions to offset RMD income.

That opens the door for tax-free Roth conversions, letting the client leave Roth assets (not taxable IRAs) to their kids.

5. Build long-term compounding into the Roth

With decades-long time horizons for heirs, diversified private equity exposure inside the Roth maximizes after-tax compounding.

6. Lock in estate tax savings

Use GRATs (while exemptions are high) and reduce the estate each year with annual gifts and/or life insurance strategies.

The result:

A portfolio that produces higher after-tax income, fewer RMD issues, and a better legacy plan — all while reducing lifetime taxes by millions.