A new year typically brings a host of opportunities, and this year is no different. With a new U.S. president and new leadership in the Senate, we may see changes in tax laws that could affect your future finances. We suggest evaluating your financial situation, reassessing your goals and implementing planning techniques to help set you on a path to success. By looking ahead and exploring your options, you can be confident that you are prepared for any potential changes.

Here are our top 10 tips to help you start 2025 from a position of financial strength and clarity.

1. Review your wealth plan and goals

Consider your priorities: Have your personal or financial goals shifted over the past year? Conducting a detailed review can help you align your strategy with your long-term vision and ensure that your financial resources are optimally positioned.

2. Organize your accounts and estate planning

Review your estate plan, starting with the names of account owners and beneficiaries. Double-check your life insurance policies and retirement accounts to make sure they name the correct beneficiaries (and that those designations reflect your current wishes). Proper documentation ensures that your assets will be distributed according to your intentions and may also provide significant tax benefits. Similarly, you should confirm that the fiduciaries – executors, trustees, guardians – named in your estate-planning documents continue to be correct.

We suggest taking time early in the new year to reflect on any life changes over the past 12 months that may affect your planning, such as welcoming a new family member or celebrating a marriage.

3. Complete annual “to-dos”

Start the year by completing these important tasks:

• Fully fund your retirement accounts, such as IRAs and 401(k) accounts, to take advantage of the tax-deferral benefits they provide.
• Make annual exclusion gifts¹ to family members. These transfers (up to $19,000 per individual recipient, or $38,000 for a married couple) are generally the most tax-efficient way to give to your family if you have the capacity and desire to do so.

4. Hold the right amount of cash

Ensure you have enough cash on hand to cover living expenses for one to five years, fund large capital expenditures and take advantage of opportunistic investments. With the possibility of interest rate reductions in 2025, you may want to lock in yields that match your time horizon and liquidity needs. Excess funds can then be invested to help you achieve your longer-term goals.

Consider establishing a portfolio line of credit to give you ready access to cash, so you don’t have to sell investments at an inopportune time or realize capital gains unnecessarily. If you can deduct the interest paid on a loan, borrowing may even enhance your balance sheet’s tax efficiency.

5. Renew your portfolio’s resilience

To safeguard any gains from the past year and defend against increased macroeconomic volatility, prepare to increase the resilience of your portfolio. While you strategically reassess your positioning, we suggest you focus on:

• Producing more income – Increase the share of your income-driven total return by generating additional yield. Core fixed income is a good place to look, and investment-grade corporate bonds still yield more than 5%.² Credit spreads are tight but supported by low downgrade risk and high credit quality. Also consider preferred stock or equities that pay relatively robust dividends.
• Defending against inflation – Real estate, commodities and infrastructure have historically risen and fallen differently from stocks and bonds (exhibiting low correlations), thereby providing even more portfolio diversification. Hedge funds can also be useful: Depending on the strategy chosen, they can capture more than 80% of the upside of a traditional 60/40 stock-bond portfolio with about half the volatility.³
• Considering other investment choices – Options can provide some downside protection while preserving some upside potential. Also, some ETFs use active option strategies to generate extra income or reduce volatility compared to outright equity exposure. Structured notes⁴ may also achieve similar outcomes with greater specificity.

6. Maximize tax efficiency

While tax law changes are possible in 2025, any legislation could take months to pass and may not become effective until 2026. As you await news about future proposals, take action now to maximize your portfolio’s tax efficiency:

• First, make sure you have assets in the right types of accounts. Generally, asset classes that generate ordinary income, have high turnover and offer high returns are best held in tax-advantaged accounts, such as IRAs.
• Next, for taxable accounts, consider implementing an investment strategy that either harvests tax losses throughout the year or focuses on generating returns (such as long-term capital gains and qualified dividends) that can be taxed at preferential rates.
• Finally, if you plan to withdraw cash from your portfolio, determine the most advantageous order for taking funds from your accounts. Generally, if you’re in the top tax bracket, you should pull first from taxable accounts, then from tax-deferred accounts and finally from those that are tax free.

If you are an executive, consider how to optimize your stock options, restricted stock units (RSUs) and deferred compensation. Stay informed about any new awards granted, those that have vested and any nearing expiration to plan for tax implications and how your concentration fits into your overall balance sheet.

7. Consider making substantial gifts to family

With the lifetime gift tax exclusion set to decrease significantly in 2026, now is a good time to consider making substantial gifts to family members. While tax laws could change – and today’s historically elevated amount could remain in force – we still suggest assessing your capacity and gifting now, if you wish to do so.

For 2025, individuals can give up to $13.99 million free of transfer taxes (or $27.98 million for a married couple). If your lifetime exclusion was exhausted as of 2024, you can gift an additional $380,000 tax free this year (or $760,000 for married couples).⁵

8. Plan your charitable giving

Use the new year to reflect on your philanthropic goals and plan your charitable contributions thoughtfully. Donor-advised funds (DAFs) offer a strategic way to pre-fund years of giving, providing an immediate tax deduction while allowing you time to select the organizations to support. Consider donating long-term appreciated securities directly to a DAF – by doing so, you can eliminate capital gains taxes and maximize the impact of your contributions.

If you are required to take IRA distributions in 2025, you can donate $108,000 directly to a charity from your IRA, up from $105,000 in 2024. But keep in mind: DAFs and private foundations are not permissible beneficiaries of these qualified charitable distributions, and this may not be the most tax-efficient way to give.

9. Strengthen family ties

Family meetings are an effective way to build family cohesiveness, share individual and family values, and learn from each other. Meeting with intentionality is key. These gatherings provide an opportunity to deepen relationships across generations and build the skills and knowledge needed for your family to manage wealth responsibly and collaboratively. Regular discussions can help align individual members’ visions with the family's overarching objectives, fostering a sense of unity and purpose.

10. Be cybersafe in an evolving digital landscape

As you start to use artificial intelligence (AI) apps and tools, it’s important to understand how your data and privacy might be at risk. Avoid entering specific details or private information into AI tools to prevent your data from being used to train large-language models. Use a dedicated email account for your AI tool subscriptions and send messages via a virtual private network (VPN).

On all accounts, adopt strong, unique, complex passwords and enable two-factor authentication. Remain vigilant against phishing attempts and other scams, verify the identity of anyone who contacts you, avoid clicking on suspicious links in emails or texts and don’t use your phone to scan unknown QR codes.

We can help

Your J.P. Morgan advisor is here to help you and your family prepare for the future. Together, we can help you navigate 2025’s potential opportunities and changes, ensuring that your current financial strategies align with your long-term goals.

IMPORTANT INFORMATION

Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments involve greater risks than traditional investments and should not be deemed a complete investment program. They are generally not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain. The value of the investment may fall as well as rise and investors may get back less than they invested.

Real estate, hedge funds, and other private investments may not be suitable for all individual investors, may present significant risks, and may be sold or redeemed at more or less than the original amount invested. Private investments are offered only by offering memoranda, which more fully describe the possible risks. There are no assurances that the stated investment objectives of any investment product will be met. Hedge funds (or funds of hedge funds): often engage in leveraging and other speculative investment practices that may increase the risk of investment loss; can be highly illiquid; are not required to provide periodic pricing or valuation information to investors; may involve complex tax structures and delays in distributing important tax information; are not subject to the same regulatory requirements as mutual funds; and often charge high fees. Further, any number of conflicts of interest may exist in the context of the management and/or operation of any hedge fund.

Structured product involves derivatives. Do not invest in it unless you fully understand and are willing to assume the risks associated with it.  The most common risks include, but are not limited to, risk of adverse or unanticipated market developments, issuer credit quality risk, risk of lack of uniform standard pricing, risk of adverse events involving any underlying reference obligations, risk of high volatility, risk of illiquidity/little to no secondary market, and conflicts of interest. Before investing in a structured product, investors should review the accompanying offering document, prospectus or prospectus supplement to understand the actual terms and key risks associated with the each individual structured product. Any payments on a structured product are subject to the credit risk of the issuer and/or guarantor. Investors may lose their entire investment, i.e., incur an unlimited loss. The risks listed above are not complete. For a more comprehensive list of the risks involved with this particular product, please speak to your J.P. Morgan representative. If you are in any doubt about the risks involved in the product, you may clarify with the intermediary or seek independent professional advice.

In discussion of options and other strategies, results and risks are based solely on hypothetical examples cited; actual results and risks will vary depending on specific circumstances. Investors are urged to consider carefully whether option or option-related products in general, as well as the products or strategies discussed herein are suitable to their needs. In actual transactions, the client’s counterparty for OTC derivatives applications is JPMorgan Chase Bank, N.A. and its affiliates. For a copy of the “Characteristics and Risks of Standardized Options” booklet, please contact your J.P. Morgan Advisor.

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