Learn how to reduce your income and estate tax, fast.
Get our tips on big-picture strategy and actionable tactics for startup equity, small businesses, crypto, real estate, and more.
JOIN 1,000+ FOUNDERS, EMPLOYEES, AND INVESTORS WHO TRUST VALUR



Get our tips on big-picture strategy and actionable tactics for startup equity, small businesses, crypto, real estate, and more.
JOIN 1,000+ FOUNDERS, EMPLOYEES, AND INVESTORS WHO TRUST VALUR
Tax planning for unrealized gains helps you keep more of your hard-earned gains by reducing your applicable taxes. Unfortunately, most people are unaware of how impactful it could be and that it could boost their investment returns by 40% or more! The goal of tax planning is to make sure there is tax efficient and it should be essential for anyone’s financial plans, but what exactly is it?
Tax planning is the process of analyzing and preparing a financial plan or a situation from a tax perspective that helps you to legally minimize how much you pay in taxes to help you keep more of your earned money, both for your use over time and to build your wealth for the long term.
We know there’s nothing simple about taxes, so Valur is here to help by taking the sophisticated tax planning and asset protection tools of the ultra-rich and making them seamless and accessible to everyone.
If you’re still holding your assets and you’ve got a big gain coming, (or even if you have taken gains off the table recently or received a large amount of income from selling an asset, please see our Realized Income guide if you would like to read more about it) – Valur can help you understand, choose and set up the right tax planning structure.
In this guide, we’ll focus on the characteristics of three different tax planning structures commonly used for unrealized gains, and we’ll also use an example to help you visualize the benefits and the tradeoffs of each one.
Unrealized gains are the hypothetical gain you would realize above your purchase price if you sell any financial instrument at the current market price. In other words, these gains are the potential profit that you would gain from selling any investment.
Realized gains, instead, are the actual gains that take part as a result of a sale of any financial instrument.
We are going to walk through a few tax planning structures for unrealized gains:
CRUTs are tax-exempt accounts for appreciated assets you have not sold yet. They are like a more flexible IRA, but they have no contribution limit and they allow you to use your money today instead of having to wait until you are 59.5.
Their key benefits are:
There are another two key decisions to make when establishing a CRUT:
One important trade off of these structures is they have a limitation if you would like to leave your money to another beneficiary in case something happens to you. However, it is also good to know there are strategies that can help you work around to make sure you don’t lose the value of your trust.
Exchange funds are similar to a mutual fund: they are a type of investment vehicle consisting of a portfolio of stocks, bonds or other securities, but instead of contributing cash, you contribute stock.
Their key benefits are:
The main downsides of Exchange Funds include the following:
If you’re interested in learning more about Exchange Funds, please visit our blog post on this topic here.
Opportunity Zones are an economic development tool that allows you to invest in distressed areas in the United States through tax deferrals.
Investments in Opportunity Zones are eligible for preferential tax treatment if they are made through a Qualified Opportunity Fund (QOF), which is an official designation for investment vehicles that commit to investing 90% or more of its assets in Qualified Opportunity Zones.
Some of the advantages include:
The main downsides of Opportunity Zones include:
If interested in reading more, please check our blog post for a detailed explanation of Opportunity zones.
As you might guess, each structure has its own set of positive and negative trade-offs. Choosing which one to use is a personal decision that depends on your circumstances, financial goals and broader priorities.
Below, we’ll compare each across several useful metrics, including, most importantly, the bottom line: how much you’ll earn using each.
We understand that this can be a lot to digest, and while the qualitative trade-offs above are important, it’ll be helpful to walk through an example to see the ROI of each structure.
Through the example, we will evaluate each of these tax planning structures based on post-tax return on investment after year 10 (any payouts that might happen after year 10 are discounted by their growth rate, to calculate the net present value in year 10).
Chris is 35 years old, based in California, with a $1m appreciated asset at a $0 cost basis. He expects a 35% tax rate (long term capital gains) and for the stock market to grow 10% annually, while an opportunity zone investment would appreciate 9% annually (net of fees). This also assumes a base level of expenses for each strategy.
The order of returns by strategy would be as follows:
You can also find more detailed information about the three structures and their trade-offs in this article.
In conclusion, Charitable Remainder Trusts, Exchange Funds and Opportunity Zones are all viable options for tax planning, with each offering its own merits:
There’s no “one size fits all” solution, and the right choice will depend on your personal preferences and tax position.
Valur has a singular goal: help our customers access tax planning structures that are otherwise inaccessible to them. From picking the best strategy to organizing your distributions and other important financial events, we’ll be with you the whole way.
We have built a system to streamline the tax planning tools of the ultra-rich to make them seamless, affordable and accessible to everyone. We’re the only providers of crypto-focused, technology-first tax planning tools.
What we offer:
If you would like to learn more, check out your potential tax savings with our online calculator or schedule a time to chat with us!