A business sale. A retirement. A divorce. The death of a spouse. Each can create a radically different financial picture, but according to Jeffrey Fratarcangeli, founder and CEO of Fratarcangeli Wealth Management, the underlying discipline required to protect wealth through any of them doesn’t change.
“Timing and preparation matter when you’re planning for a major life event,” Fratarcangeli said. “You should never put yourself in a position where you need to make quick decisions. Give yourself space to plan well in advance of your life transition.”
Below are four takeaways Fratarcangeli shares for high-net-worth clients navigating major life transitions.
A business sale is a tax and estate planning event, not just a transaction
Few events carry higher financial stakes than selling a business.
“A business sale often triggers the single largest tax bill of someone’s life,” Fratarcangeli said.
But he noted strategies exist to reduce that hit, starting with a foundational question.
“The first question is, is it regular income or is it capital gains? Because you have to approach each differently,” he explained. “If proceeds are treated as capital gains, tax-harvesting strategies should ideally be in place before the sale closes, not after.”
Estate planning should also happen in advance, particularly for owners approaching the lifetime gift and estate tax exemption.
“If you complete an estate plan prior to the sale of your business, in that plan, you gift part of that company at a discounted value to a trust, and you can lock in lower valuations,” Fratarcangeli said. “Once the sale occurs, the company’s higher valuation is realized, but the earlier, lower value has already been locked in for estate purposes.”
After a liquidity event, discipline beats speed
Conventional wisdom might suggest that putting a large sum of new money to work too quickly is the risk. Fratarcangeli said the opposite is usually true.
“I don’t really find that people go too fast. If anything, people are too tentative because they just got more money than they typically would have,” he said.
His approach centers on dollar-cost averaging rather than market timing.
“Every year, the market dips 10% at least one time, and every other year 20%, and then every quarter 3% to 5%. Amongst all of that, the market average growth is over 11%,” he explained. “Spreading investment activity out, rather than reacting emotionally to short-term swings, tends to produce a lower average cost basis over time. Maintaining adequate liquidity throughout that process is absolutely essential.”
Structure is cheapest when you build it early
When asked what protection high-net-worth clients most often wish they’d had in place before a major event, Fratarcangeli reiterated the importance of an estate plan. It is the piece that is hardest, and most expensive, to build after the fact.
That’s part of why he pushes clients to start planning earlier than they think they need to. For example, trust structures, he said, are never too early to establish.
“You always plan for the worst and prepare for the best,” he said. “Identify what your goal is, and then build toward that goal.”
Give major decisions time, and know your first move if you didn’t plan ahead
Retirement, a business sale, or any transition that ends a career can disrupt more than a balance sheet.
“Your identity has been taken from you. You were a financial planner, or a pro athlete or a CEO. You are no longer that person,” Fratarcangeli said.
He recommends treating that adjustment like any other major loss.
“Give yourself a minimum of six months to make any major decisions that could alter anything relative to your typical scenario,” he said, pointing to major purchases or other significant life changes as examples.
For those who reach out to him after a major event has already occurred with no prior planning, Fratarcangeli’s first move is straightforward: separate fixed costs from variable costs to determine exactly how much liquidity needs to be preserved before anything else happens.
For more insight from Jeffrey Fratarcangeli, visit www.fratarcangeliwealth.com.