The Intelligent Investor's Almanac
Your Bi-Weekly Guide to Markets, Movements, & Money.
Presented By Ken Majmudar & Ridgewood Investments
Issue 9 • July 01 to July 15, 2025
Never miss another valuable edition of The Intelligent Investor's Almanac again.
Your TL;DR Institutional Intelligence
- Planning Insight: The $84T wealth transfer represents an opportunity for families to help future generations manage both the wealth and the responsibility that comes with it.
- Action Step: Revisit your trust, gifting, and concentrated stock strategy ahead of the 2026 estate tax reset, especially with Trump’s proposed “One Big Beautiful Bill” potentially enabling more tax-efficient high-exemption transfers and trust planning.
Wealth Preservation: Concentrated positions may drive growth but erode flexibility. Tax-aware tools like exchange funds and direct indexing can unlock liquidity without a tax hit.
- Strategic Response: Unifying estate planning, investment strategy, and long-term purpose can help families preserve both wealth and purpose across generations.
The Value Investor
Ken Majmudar, CFA & Founder of Ridgewood Investments
“Your children are not your bank accounts, and your wealth is not your identity. If you want both to last, you must separate the two.”
~ Inspired by James E. Hughes Jr. (family governance expert) and Carl Jung (depth psychologist)
Over the next 20 years, high-net-worth families in the U.S. will pass down more than $84 trillion to the next generation. Yet, history shows that the vast majority of that wealth will dissipate within two generations, not because of poor investment choices, but because of a lack of clarity, structure, and conversation.
At Ridgewood, we believe the most meaningful financial conversations go beyond asset allocation or tax strategy. They focus on the deeper questions, what the wealth is meant to support, who it’s structured to benefit, and how it should adapt as the family’s needs and values evolve.
Because in the end, it’s not just about passing on capital, it’s about passing on a clear sense of direction and purpose.
The $84 Trillion Shift: Why Structure Alone Isn’t Enough
As reported in a recent article in the Financial Times, this $84 trillion shift in assets, from baby boomers and older generations to their children and grandchildren, is not simply a family affair, but a defining macroeconomic event.
Wealth is becoming more concentrated as the top 10% of U.S. households are expected to account for the majority of this transfer. Many next-generation family members have inherited wealth in a different economic landscape, facing higher costs, slower wage growth, and increasing financial complexity.
As a result they may be less prepared to manage this capital effectively, both in terms of knowledge and mindset. Studies show that 70% of families lose their wealth by the second generation, and 90% by the third, often due to lack of planning and communication rather than poor investment decisions.
The nature of wealth has evolved too. Since 2015, the threshold for “real” ultra-high-net-worth status has shifted from hundreds of millions to billions, driven by tech-led value creation and a decade of asset inflation. A new generation of family members (primarily Millennials and Gen Z) is increasingly investing in relatively new asset classes, which is reshaping traditional family portfolios with new risks and opportunities.
For families committed to continuity, the challenge is no longer just minimizing taxes or selecting the right legal structure, it’s building a framework that helps the next generation think clearly, act responsibly, and adapt confidently. At Ridgewood, we help bridge that gap, preserving not just capital, but the long-term vision behind it.
Wills and Trusts: Building Legacy with Structure
At Ridgewood, we often remind clients that the foundation of a well-prepared legacy involves more than financial assets, it requires a well considered structure. For families planning ahead, that structure typically involves a well-designed trust, with a simple will used only as secondary support, if needed.
A trust offers continuity and control. When set up properly, it helps ensure assets are managed and transferred according to your preferences, without the delays or visibility often associated with probate. For this reason, trusts are generally the preferred estate planning approach for Ridgewood clients.
One widely used tool is the revocable living trust, which can be adjusted over time and provides a clear framework for managing assets should circumstances change. The trust can outline how resources are to be handled, when distributions should occur, and how responsibilities are delegated, whether for family support, charitable goals, or oversight of long-term holdings.
In certain cases, a pour-over will may be used to support the trust by capturing any assets not previously titled into it. However, with careful preparation, the trust typically serves as the central organizing structure.
How Ridgewood helps: we collaborate closely with clients and their estate counsel to help organize accounts, clarify planning objectives, and ensure the overall structure, from trust design to beneficiary arrangements, works cohesively and efficiently.
Trusts, Gifting, and Asset Segmentation: Planning Beyond the Balance Sheet
Estate planning strategies involving specialized trusts and gifting are most effective when designed with asset-level specificity. For instance, a $10 million position in a single stock with embedded gains may be appropriate for a Grantor Retained Annuity Trust (GRAT) to freeze future appreciation. In contrast, cash-flowing real estate might be better allocated to a Spousal Lifetime Access Trust (SLAT), which offers asset protection and interspousal access.
Gifting strategies must also align with IRS limits. In 2025, the annual exclusion amount remains at $18,000 per recipient, and the lifetime estate and gift tax exemption is scheduled to sunset from $13.61 million per person to approximately $6.8 million (adjusted for inflation) in 2026. This makes proactive segmentation essential.
Asset segmentation might include:
Allocating growth assets to irrevocable trusts before the exemption reduction.
Using Crummey Trusts for annual exclusion gifts, with withdrawal rights structured for minor or young adult beneficiaries.
Planning for philanthropic goals through a Donor-Advised Fund (DAF) or Charitable Lead Trust (CLT), which can help reduce taxable estate values.
How Ridgewood helps: We help clients explore thoughtful gifting strategies that fit their broader goals, working closely with legal counsel to ensure everything aligns with IRS guidelines and state-specific considerations.
Legacy Planning in Practice
Dynastic Wealth – Tips on Preserving and Building Your Legacy
Tax-Aware Liquidity from Concentrated Stock Positions
Over time, it’s not uncommon for a single stock to grow into an outsized portion of a portfolio, whether through stock options, long-term ownership, inheritance, or the sale of a business. While that position may have created meaningful wealth, it can also bring unintended risks.
Deciding what to do next requires more than simply looking at performance. It involves navigating taxes, timing, and ensuring any move aligns with your broader financial goals.
At Ridgewood, we help clients take a structured approach, so that concentrated positions are managed proactively, reducing risk while ensuring the assets continue to serve the family’s evolving financial needs over time.
We don’t just reduce concentration, we design portfolios that protect, preserve, and position your wealth to succeed across generations.
Here are three of the strategies we frequently implement:
Exchange Funds: Diversify Without Selling
Exchange funds let you contribute appreciated stock into a private pooled fund in exchange for a diversified portfolio, without triggering immediate capital gains. This helps reduce single-stock risk while deferring taxes.
With a typical seven-year holding period, they suit investors seeking diversification without liquidation. Ridgewood helps evaluate fund suitability and integrates the strategy with your broader estate plan.
Direct Indexing: Gradual, Tax-Efficient Diversification
Direct indexing allows for a customized transition out of concentrated stock by building a portfolio of individual securities that mirrors an index. This enables ongoing tax-loss harvesting and controlled diversification over time.
More flexible than ETFs, it reduces tax impact while improving alignment with long-term goals. Ridgewood handles the full design and implementation process.
Trust-Based Gifting: Shift Future Growth Out of Your Estate
Transferring concentrated stock into a trust, such as a Grantor Trust or SLAT, removes future appreciation from your taxable estate while preserving structure and objectives. It’s a strategic way to reduce estate tax exposure, especially ahead of the 2026 exemption changes.
A concentrated stock position may have helped build wealth, but managing it wisely is what preserves it. At Ridgewood, we help convert embedded value into long-term opportunity, strategically, tax-efficiently, and with purpose.
Here’s to building lasting wealth,
Ken Majmudar, CFA
Founder & Chief Investment Officer Ridgewood Investments
P.S. If you’re ready to explore how our institutional-grade investment approach can work for your portfolio, let’s schedule a time to talk below.
Gain Industry – Level Intelligence For Your Investment Strategy
Transform your approach to wealth building with institutional-grade insights. Schedule a private discovery call with Ken and the Ridgewood team to:
- Analyze your current portfolio positioning
- Explore sophisticated investment opportunities
- Design your personalized wealth architecture
Building generational wealth requires institutional-grade thinking. Let’s discuss how our sophisticated approach can work for your family’s future.
Important Disclosure: Ridgewood Investments is a registered investment adviser. This newsletter is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results.