The earning power of an asset is based on the pre-tax value not the after tax value. We look at taxes by using a financial projection tool like Naviplan, to get a sense of when a client will “likely” pay taxes. In fact for most of our clients, we expect that the last dollar of taxes on most IRA’s won’t be paid until well after the client’s death.

When it comes to unrealized gains on taxable assets, some of the capital gains for most of our clients will actually be tax free due to step up at death.