Here’s what I told someone with $5m of income

Tax & Investment Planning

Income shifting: Push as much late-year income into next year as possible. That gives us a full calendar year to stack deductions and optimize every dollar.

Rental real estate + cost seg: He qualifies as a Real Estate Professional, so we can use that sweet sweet 100% bonus depreciation to directly offset W-2 and business income. That’s about as powerful as it gets.

Refinance his 6% securities-backed loan: Swapping into a ~3.8% synthetic borrow turns the interest into a capital loss, giving us another lever to pull against gains.

Tax-aware hedge fund allocation: Starts building ordinary losses now, diversifies away from his current stock/bond exposure.

Long/short extensions around low-basis ETFs: Continuously harvests losses to neutralize capital gains and potential depreciation recapture down the road.

Risk, Legacy, and Structure

With new wealth comes new complexity. Here’s what else we need to tackle:

Estate planning – Living trust, pour-over will, guardianship designations, powers of attorney.

Insurance – Life, umbrella liability, and disability coverage—most people are underinsured once wealth jumps.

Charitable planning – Whether it’s a DAF, CRT, or CLT, it’s time to get intentional and strategic.

Entity structuring & asset protection – Holding companies, LLCs, and trusts to protect personal wealth and limit exposure—especially with real estate or business interests.

When your income spikes like this, it often becomes more stressful, not less.

But with the right structure, you can reduce taxes, protect the downside, and actually enjoy the success you’ve worked so hard for.

If you’re entering one of those years—or know it’s coming—get proactive. The difference can be measured in millions.