The Intelligent Investor's Almanac
Your Bi-Weekly Guide to Markets, Movements, & Money.
Presented By Ken Majmudar & Ridgewood Investments
Issue 8 • June 16 to June 30, 2025
Never miss another valuable edition of The Intelligent Investor's Almanac again.
Your TL;DR Institutional Intelligence
- Planning Insight: A proposed increase in the estate tax exemption and lower capital gains rates could make gifting, trust funding, and asset sales more efficient, but these rules are not yet final.
- Action Step: Use this period to revisit your estate plan, business structure, or investment strategy to ensure readiness if new laws pass.
- Wealth Preservation: The SECURE Act’s 10-year rule for Inherited IRAs limits long-term tax deferral for heirs, changing how retirement assets support multi-generational goals.
- Strategic Response: Now may be the time to consider Roth conversions, charitable planning, or trust structuring to reduce tax burden for future beneficiaries.
The Value Investor
Ken Majmudar, CFA & Founder of Ridgewood Investments
“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
~ Warren Buffett
Buffett’s words reflect a timeless principle at the heart of wealth planning: the most valuable outcomes often come from preparation done well in advance.
This is especially true right now. In an environment where we’re seeing proposed tax reforms, higher estate exemptions, enhanced business deductions, and reduced capital gains taxes, it is important to review future financial planning. While not yet finalized, they highlight the importance of readiness and being proactive with adjusting your strategy.
At the same time, some changes, such as the SECURE Act’s 10-year rule for inherited IRAs, are already in place, altering how retirement accounts are taxed and passed on to heirs.
Planning, in this context, is not a one-time decision. It works best when reviewed and adjusted over time, as tax law, financial goals, and family priorities evolve.
Whether you’re building a business, preserving family wealth, or considering legacy gifts, it’s worth asking: Are your financial plans positioned to support the people and priorities that matter most, not just today, but for years to come?
Three Proposed Shifts, and What They May Mean for Your Wealth Plan
1. A Higher Estate and Gift Tax Exemption
Under current law, the federal estate and gift tax exemption sits at approximately $13.99 million per individual. However, that number is scheduled to drop by about half in 2026, unless Congress acts.
The new proposal would not only raise the exemption to $15 million per person but also make it permanent and adjust it each year for inflation. That would give families more capacity to transfer assets to heirs or trusts without incurring federal estate tax.
Why this matters: Even though many families are currently under the exemption threshold, gifting and trust planning can benefit from clarity and lead time. For example, some older trusts contain clauses tied to exemption levels that may no longer reflect your current intentions. Others may benefit from additional contributions or restructuring while exemption limits remain high.
We regularly work with estate attorneys and tax advisors to make sure your planning documents and gifting strategy still reflect your current goals, especially around trusts, charitable intent, and intergenerational structure.
Key takeaway: Even without action from Congress, 2026 marks an important year for estate planning. It’s better to revisit the strategy now, while options are wide open.
2. A Revised QBI Deduction: A Subtle Boost for Business Owners
Another proposed change involves the Qualified Business Income (QBI) deduction — a tax break for owners of pass-through businesses like LLCs, partnerships, and S-corporations.
Currently, eligible business owners can deduct 20% of qualified income. Under the new bill, that figure would increase to 23%, and the deduction would be made permanent.
While the difference may seem modest, this change could improve after-tax efficiency over time, especially for families who draw significant income from real estate, consulting, healthcare, or other private businesses.
However, as many business owners know, not all income qualifies. Limitations based on total income, industry type, and entity structure can impact how much you can deduct..Wages, guaranteed payments to partners, capital gains, dividends, and interest income are excluded. Additionally, for higher earners, the benefit phases out entirely for certain professions, like lawyers, doctors, consultants, and investment managers, unless the business is structured or limited in specific ways.
Ridgewood regularly works with clients who are business owners to evaluate whether their current structures are still optimal. This includes reviewing whether the business is structured as an S-corp or LLC, whether income qualifies for the QBI deduction, and how retirement plan design (like defined benefit or cash balance plans) may interact with taxable income.
Additionally, for those planning long-term succession or ownership transitions, this may also be a good moment to clarify leadership roles, ownership agreements, and buy-sell mechanics.
Key takeaway: While the QBI deduction may appear modest, even a small percentage increase, especially if made permanent, can compound meaningfully for business owners. Whether or not your business qualifies depends on income thresholds, entity type, and industry, making it worth reviewing with your advisory team.
3. A Lower Capital Gains Rate: Flexibility for Investors and Givers
Finally, the bill proposes reducing the top long-term capital gains tax rate from 20% to 15%. While discussions around indexing gains for inflation remain ongoing, this rate cut alone could enhance net outcomes for long-held investments.
If enacted, investors who are holding appreciated assets, such as public equities, real estate, or private company shares, may see a more favorable environment for selling or rebalancing portfolios.
That said, we believe this should not be treated as a signal to sell pre-emptively. Instead, clients may wish to identify which positions they intend to hold long term and which might be considered for sale or gifting under new rules, should they pass.
For example, in a lower-rate environment:
A client might choose to harvest gains gradually from concentrated positions.
A charitable strategy involving appreciated securities may yield even more efficient outcomes.
A sale of a private business could retain more value for heirs or reinvestment.
At Ridgewood, we help clients explore how investment strategy, philanthropic giving, and estate goals intersect, especially when tax conditions may be changing.
Key takeaway: The timing of gains matters less than the clarity of purpose behind them. A lower rate may help, but only if tied to a long-term plan
Potential Impacts If the Trump Tax Plan Passes
As currently proposed, still subject to change.
Closing Thought: Strategy Before Speculation
While proposals like this can be helpful, it’s wise to wait for more clarity before adjusting your plan.
The current bill, sometimes referred to informally as part of the “Trump tax renewal proposals,” is not yet law. For it to pass, it would require approval from the House and Senate, including committee review and potential amendments. Whether this happens in 2025 or later will depend on the outcome of the 2024 U.S. presidential and congressional elections, as well as broader budget negotiations.
In the meantime, this may be an ideal opportunity to revisit key areas of your strategy and ensure everything is aligned with your long-term goals:
Are your estate documents up to date and still reflective of your values?
Is your business structured for long-term efficiency and succession?
Does your investment holdings align with future liquidity needs or giving plans?
At Ridgewood, we work alongside our clients and their legal and tax advisors to ensure these elements move in harmony, with or without new legislation.
Dynastic Wealth – Tips on Preserving and Building Your Legacy
How to Navigate an Inherited IRA?
For years, Inherited IRAs offered a quiet, tax-efficient way to pass wealth from one generation to the next. Families could leave these accounts to children or grandchildren, and the beneficiaries could “stretch” withdrawals over the course of their lifetimes. This allowed for decades of tax-deferred growth, smoother income recognition, and better alignment with multi-generational planning goals.
But that changed in 2019, when Congress passed the SECURE Act — and with it, a new rule that significantly altered how inherited IRAs function for most families. Under the updated law, non-spouse beneficiaries are now required to withdraw the full balance of an inherited IRA within 10 years of the original owner’s death. There are no annual minimum distribution requirements, but the entire account must be emptied — and taxed — by the end of that window.
This may seem like a subtle technicality. But in practice, it can create substantial tax friction, especially when large IRA balances are passed to adult children in their peak earning years. A $2 million inherited IRA, for example, could be withdrawn over 10 years at $200,000 per year, potentially elevating heirs into higher tax brackets and reducing the after-tax legacy that was intended.
What’s more, this change is already in effect. And while the IRS has offered some grace periods for compliance in recent years, the structure of the rule is unlikely to reverse. The implication is clear: families can no longer assume that retirement accounts will extend across generations in the same way they did in the past.
In certain cases, it may be more effective to delay withdrawals until the final year of the 10-year period. One of our clients inherited an IRA and, rather than distributing it evenly over the decade, we advised her to withdraw only the minimum necessary during the earlier years and then distribute the remainder in the 10th year. This will allow the account to benefit from continued tax-deferred growth and potential market appreciation, maximizing its value before any taxes were incurred.
While this approach depends on individual circumstances, including income level, market risk tolerance, and liquidity needs, it can be a useful strategy for families seeking to retain compounding benefits for as long as the rules allow.
At Ridgewood, we help certain clients reconsider how these accounts fit into their broader estate and tax planning. In some cases, staged Roth conversions during retirement, particularly in years with lower income, can be utilized to transition assets into tax-free accounts before they are passed on to heirs. In other cases, charitable planning techniques such as Qualified Charitable Distributions (QCDs) or gifting appreciated securities may help reduce the size of taxable accounts while supporting philanthropic goals.
We also assist in evaluating whether certain IRA assets should be directed to specific heirs or trusts, based on the tax impact and financial circumstances of each beneficiary. The aim isn’t to introduce unnecessary complexity; it’s to make sure thoughtful structures and timelines support your intentions for the next generation.
Estate planning needs to adjust as the rules evolve. Inherited IRAs remain a useful tool, but today, they call for more deliberate consideration than they once did.
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
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- 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.