By Danny Clark, CFP®, CPAW®
Successful entrepreneurs and executives are typically meticulous about growing their wealth. They negotiate deals, build companies, and make thoughtful career decisions with precision. But even the most financially savvy people can lose significant ground; not through bad investments or market crashes, but through a slow erosion of wealth that happens in the background.
These leaks don’t announce themselves. They don’t show up as a single catastrophic event. They’re often the sum of missed tax deadlines, poorly coordinated advisors, and overlooked beneficiary forms. Left unaddressed, they can cost a family hundreds of thousands—sometimes millions—of dollars over a lifetime. Here are eight of the most common leaks we see and what you can do to seal them.
1. RSU Tax Timing Mistakes
Restricted stock units have become a significant part of compensation for executives at technology and growth companies. The problem is that RSUs are taxed as ordinary income the moment they vest—whether you’re ready or not. Without a clear plan, you can end up with a large, unexpected tax bill. Or worse, you may sell shares at the wrong time and compound the cost.
The fix requires timing and coordination. Vesting schedules should be mapped out well in advance so you can anticipate the income, model the tax impact, and make decisions about whether to hold or sell with full awareness of what you’re walking into. For executives with large RSU grants, this kind of proactive planning can mean the difference between managing a tax event and being blindsided by one.
2. Poor Coordination Between Advisors
An often underestimated leak in a complex financial life, when your CPA, estate attorney, investment manager, and insurance provider aren’t talking to each other, critical details fall through the gaps. A tax strategy gets designed without knowledge of a pending business transaction. An estate plan gets drafted without accounting for recently vested equity. Insurance coverage gets renewed without a review of what is already held elsewhere.
Successful families with significant wealth deserve a team that functions as exactly that—a team. When advisors work in silos, you pay the price for their disconnection. Having a central point of coordination, someone who sees your entire financial picture and aligns all the moving parts, is not a luxury; it’s a necessity. This is a core belief and objective at Solidarity Wealth: coordinated strategies across several disciplines designed to maximize financial and tax efficiency to meet your objectives.
3. RMD Mismanagement
Required minimum distributions are one of the most predictable events in a retirement plan or traditional IRAs—and yet they’re consistently mishandled. Failing to take your RMD on time triggers a significant IRS penalty (25% of the required amount). But beyond compliance, the real cost is strategic. Many families simply take the distribution, pay the taxes, and move on without ever asking whether there is a smarter way to manage that income.
For families with charitable intent, a qualified charitable distribution allows you to direct up to $111,000 per year (2026) from an IRA directly to a qualified charity, satisfying your RMD obligation while completely eliminating the tax on that distribution. That is a powerful strategy that too few people take advantage of simply because they didn’t know about it and/or an advisor failed to bring it to the table.
4. Inefficient Philanthropy
Generosity is admirable. But giving cash when you could give appreciated stock is simply leaving money on the table. When you donate stock that has grown significantly in value, you avoid the capital gains tax you would have paid on a sale while still receiving a charitable deduction for the full fair market value. It’s a straightforward strategy that many families overlook entirely.
Beyond direct gifts, there are sophisticated vehicles worth knowing. A donor-advised fund allows you to make a contribution in a high-income year, take the deduction immediately, and distribute the funds to charities over time. A charitable remainder trust can provide income to you during your lifetime while ultimately benefiting a cause you care about. For families with a true legacy vision, a private foundation offers the highest level of control and the ability to involve multiple generations in a shared philanthropic mission.
5. Inadequate Diversification After a Windfall
Whether it’s a business sale, an IPO, or years of accumulated company stock, concentrated positions are a common source of risk we see in successful families’ portfolios. The emotional attachment is understandable; the company made you successful, and selling feels like a vote of no confidence. But holding too much in any single position exposes you to volatility and downside risk that simply doesn’t need to exist.
A thoughtful diversification strategy doesn’t require you to sell everything at once. Planned, tax-efficient distribution of a concentrated position over time can reduce your risk profile while managing the tax consequences intelligently. The goal is to make sure one company’s fortunes don’t determine your family’s future.
6. Unstrategic Use of Debt
Debt has a bad reputation in personal finance circles, but for successful families, the real problem is often not having enough of the right kind of debt—or having too much of the wrong kind. Holding large cash reserves while simultaneously paying high interest on a mortgage is a hidden drag on net worth. The spread between what your cash earns and what your debt costs matters.
Securities-backed lines of credit are a tool that many successful families underutilize. They allow you to access liquidity without selling investments, avoiding taxable events and keeping your portfolio intact. Used strategically and responsibly, debt can be a lever for wealth building rather than a drain on it. The key word is strategically—which means having a plan, not just reacting to cash needs as they arise.
7. Capital Gains Timing Errors
The tax code rewards patience, and it punishes carelessness around timing. Selling appreciated assets in a year when your income is already elevated can push gains into a higher bracket or trigger the net investment income tax. Failing to harvest losses in a down year means missing one of the few silver linings the market offers.
Capital gains timing isn’t just an accounting afterthought, it’s an integral part of a proactive wealth management strategy. Coordinating gains with income thresholds, harvesting losses systematically, and being intentional about when you realize appreciation in your portfolio can save families significant sums over time. This is especially relevant for anyone holding a portfolio with substantial unrealized gains, which describes many of the client families at our firm.
8. Forgetting to Update Beneficiary Designations
This one is deceptively simple, which is precisely why it gets overlooked. Beneficiary designations on retirement accounts, life insurance policies, and certain financial accounts supersede your Last Will entirely. That means if your designations are outdated (e.g., listing an ex-spouse, a deceased parent, or simply omitting someone who should be included), your assets may not end up where you intended, regardless of what your other estate documents say. As with other aspects of your financial life, estate planning tends to be a complex endeavor and requires coordination and strategic implementation to realize all you wish for your legacy.
Life tends to change: marriages, divorces, births, deaths. Every major transition is a trigger to revisit your designations. We recommend reviewing them at least annually as part of a broader financial review. It takes less than an hour and can prevent years of family conflict or unintended consequences that no one wanted and no one planned for.
The Leaks Add Up
None of these mistakes are necessarily catastrophic on their own. But taken together, over years and decades, the cumulative cost can be staggering. Families who build and preserve lasting wealth may not always be smarter or luckier; often they have a team that’s watching for the leaks before they become floods.
If you’d like a fresh set of eyes on your financial picture, we’d welcome the conversation. Reach out to us at info@solidaritywealth.com or call 385-374-1665 to schedule a discovery call.
Frequently Asked Questions
What happens if I don’t plan for RSU taxes?
If you don’t plan ahead for RSU taxes, you could face a surprisingly large tax bill when your restricted stock units vest. RSUs are typically taxed as ordinary income at vesting, which can push executives into a higher tax bracket or create cash-flow challenges if shares are sold at the wrong time. At Solidarity Wealth, we help executives proactively map vesting schedules, model tax impact, and coordinate selling strategies so RSUs support long-term wealth instead of draining it.
How can a donor-advised fund help reduce taxes?
A donor-advised fund can help reduce taxes by allowing you to contribute appreciated assets during a high-income year, receive an immediate charitable deduction, and distribute gifts to charities over time. This strategy may also help you avoid capital gains taxes on appreciated stock. For high-income earners, business owners, and executives, donor-advised funds can become a powerful part of a broader charitable and tax planning strategy.
Why should I review beneficiary designations regularly?
Beneficiary designations on retirement accounts, insurance policies, and investment accounts typically override your will, which means outdated forms can unintentionally send assets to the wrong person. Major life changes like marriage, divorce, births, or deaths should trigger a review. Solidarity Wealth helps families coordinate beneficiary designations alongside estate planning, tax strategy, and wealth management so important details don’t slip through the cracks.
About Danny
Danny Clark has over a decade of experience in the financial services and banking industry, creating personalized retirement and financial plans for families to help them pursue their financial and family goals throughout their life.
Solidarity Wealth is a registered investment adviser. This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Solidarity Wealth and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Solidarity Wealth unless a client service agreement is in place.
