As the year draws to a close and the holiday season ramps up, it is easy to get caught up in the busy routines of everyday life. However, individuals should not lose sight of valuable year-end planning opportunities which could yield meaningful tax savings, strengthen one’s financial position and help ensure alignment with long-term goals.
Tax & Charitable Planning
Manage Tax Bracket Variability
Individuals should consider how their current tax picture compares to prior years, as there may be “levers” which can be used to produce considerable tax savings.
In higher-income years, individuals may wish to accelerate itemized deductions (most notably, charitable contributions) while deferring certain income items (such as the timing of a bonus payout, the sale of a business, the sale of certain investments or stock option exercises). Charitably inclined taxpayers may wish to use a donor-advised fund to recognize a larger current-year tax deduction while making charitable grants from the donor-advised fund at a future date and at a pace of their choosing.
In lower-income years, individuals may wish to defer itemized deductions (such as charitable contributions) while potentially accelerating certain income items (such as a bonus payout, investment sales, stock option exercises, Roth conversions, etc.).
Donate Appreciated Securities, Not Cash
Individuals with long-term appreciated securities held in a taxable account should consider gifting such securities to charity. Why? The charitable organization receives the same economic benefit as a cash donation, while the taxpayer receives a tax deduction for the full market value of the gift and, importantly, avoids paying capital gains taxes on the gifted security.
Gifting appreciated securities can also provide a tax-efficient means to rebalance a portfolio by reducing exposure to a given asset class or a concentrated stock position, without incurring capital gains.
Satisfy Required Minimum Distributions (RMDs) via a Qualified Charitable Distribution (QCD)
SECURE Act 2.0 raised the beginning age for required minimum distributions (RMDs) to 73, yet eligibility to make a Qualified Charitable Distribution (QCD) remains at age 70½.
With a QCD, taxpayers aged 70½ or older can donate up to $108,000 (as of 2025) from an IRA directly to eligible 501(c)(3) charities (note: donor-advised funds, private foundations and supporting organizations are excluded). This limit will increase to $115,000 in 2026.[1]
This strategy may be particularly beneficial for charitably inclined individuals who receive a greater tax benefit from the increased standard deduction rather than itemized deductions.
Estate Planning
Review Estate Plans and Consider Using the Lifetime Gift Tax Exemption
The Tax Cuts and Jobs Act (TCJA) significantly increased gifting limits, with the lifetime gift tax exemption currently at $13.99 million per person (as of 2025), with a top federal estate tax rate of 40%. The TCJA limits were scheduled to sunset at the end of 2025 and revert back to the pre-TCJA limit of $5 million.
However, the One Big Beautiful Bill Act (OBBBA) signed into effect in July 2025 permanently extended the gifting limit. In 2026, the lifetime gift tax exemption will increase to $15 million per individual ($30 million for married couples)[2] and be annually adjusted for inflation.
High-net-worth individuals should evaluate current assets and assess how much might be needed for their remaining lifetime, with consideration to gift “excess assets” to loved ones. Depending on the size of an outright gift, estate planning which incorporates making gifts to trusts may be advisable to provide parameters or safeguards for the intended beneficiaries.
Make Annual Exclusion Gifts
Individuals are allowed to make “annual exclusion gifts” which do not have gift tax implications. In 2025, the annual exclusion is $19,000 per donor ($38,000 for joint taxpayers) and will remain the same for 2026. [2]
For high-net-worth individuals with, or likely to have a taxable estate, utilizing annual exclusion gifts can be an effective way to reduce one’s taxable estate while also helping loved ones.
For those saving for future education expenses, special rules allow a donor to use five years of annual exclusion gifts for contributions to 529 education savings plans (a limit of up to $95,000 for a single taxpayer or up to $190,000 for joint taxpayers, as of 2025). [2]
It is worth noting that medical payments made directly to a medical provider do not count as taxable gifts. In addition, tuition payments made directly to an educational institution do not constitute taxable gifts. Tuition is narrowly defined as the cost for enrollment; it does not include books, supplies or room and board. For more information on education payments and 529 plans see How to use College Funding as a Wealth Planning Tool.
Sources
[1] Schwab – “Reducing RMDs with QCDs” (September 30, 2025)
[2] IRS – “IRS releases tax inflation adjustments for tax year 2026 Including amendments from the One Big Beautiful Bill” (October 9, 2025)
Disclosures
The information provided is illustrative and for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
The views expressed in this commentary are subject to change based on market and other conditions. This document may contain certain statements that may be deemed forward looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur. Certain targets within the presentation are estimates based on certain assumptions and analysis made by the advisor. There is no guarantee that the estimates will be achieved.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. All investments include a risk of loss that clients should be prepared to bear. The principal risks of Clarendon Private’s strategies are disclosed in the publicly available Form ADV Part 2A.
Diversification does not ensure a profit or guarantee against loss. Asset Allocation may be used in an effort to manage risk and enhance returns. It does not, however, guarantee a profit or protect against loss. Index returns are unmanaged and do not reflect the deduction of any fees or expenses.
Comparisons to any indices referenced herein are for illustrative purposes only and are not meant to imply that actual returns or volatility will be similar to the indices. Index returns reflect all items of income, gain and loss and the reinvestment of dividends and other income. You cannot invest directly in an Index.
Clarendon Private, LLC (“Clarendon Private”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Clarendon Private and its representatives are properly licensed or exempt from licensure. For additional information, please visit our website at https://www.clarendonprivate.com/ or the Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov by searching with Clarendon’s CRD # 316616
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