4 tax strategies for investors, regardless of who wins the presidency, according to UBS

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Depending on who is sitting in the Oval Office for the next presidential term, fiscal policy is going to look pretty different, UBS said. But whether Donald Trump or Joe Biden wins, Americans can take steps now to shore up their tax strategies.

“Regardless of whom voters decide to return to office, the accumulated federal deficit is likely to serve as an ever larger constraint on future fiscal policy,” UBS analysts wrote in a note. “As interest rates have risen, it has become progressively more expensive to finance the federal deficit.”

According to the analysts, there are four strategies investors can adopt to manage tax liabilities, regardless of who wins the 2024 general election.

First, investors can (1) diversify their tax treatments. That means distributing wealth across various accounts subject to different rules, like taxable ones, tax-deferred, or tax exempt, UBS said. Doing so will give investors more leeway by being able to choose which retirement fund to withdraw from depending on which is one is more tax-efficient in that year.

Second, investors should (2) defer capital gains for as long as they can, the analysts wrote. Instead of trying to cash in on investments and paying taxes on them today, investors could benefit from holding onto those investments which will make more money and face a smaller capital gains tax rate increase in the future.

Another strategy is (3) accelerating lifetime gifting. There is a certain amount of money you can give away tax-free, but that lifetime gift and estate tax exemption looks like it’s going to be reduced, analysts said. So it’s better to give away the money you want to parcel up sooner rather than later so you can avoid paying higher taxes on it.

Finally, investors can (4) get moving on estate planning. After the election results roll in, trust and estate lawyers will face a deluge of families seeking estate planning advice. That means investors will benefit from being proactive and getting started earlier, ensuring they have access to key resources beforehand, UBS said.

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