Should You Hire a Fiduciary for Opportunity Zones?

Opportunity Zones have an association with the Tax Cuts and Job Acts authenticated in 2017, created as an economic developmental tool to aid clients in investing in low-income locations throughout the United States. They also generate capital gains tax deferment opportunities for investors until the last day of 2026. Should investors hire fiduciaries for Opportunity Zones?

How Opportunity Zones Function

Qualified Opportunity Zones (QOZs) involve a 180-day timeline of investing eligible gains and financing QOZ Fund-eligible gains to meet tax incentives. After a five-year holding period, Opportunity Zone investments earn a 10 percent deferment increase. From there, an additional five percent is added after the seventh holding year. Finally, the 10-year holding mark results in a permanent gains exclusion.

Opportunity Zone investment benefits include a step-up basis for heirs and future generations, temporary tax deferral, and permanent exclusions after holding for 10 years. Opportunity Zones allow temporary taxable income deferment on capital gains tax if they are recognized before December 31st, 2026, or before disposal.

Reasons To Hire a Fiduciary

Hiring a fiduciary can do a lot of good for investors. Firstly, they always avoid conflict of interest by prioritizing the investor’s needs and goals. They practice transparency and act in good faith by guiding investors in the right direction that fits their financial goals and abilities. Working with a fiduciary can give investors peace of mind when investing in Opportunity Zones.

Fiduciaries also provide the necessary services and advice to maximize the investor’s savings. By working with a fiduciary, you gain their extensive knowledge of investment strategies and an understanding of which investment options give the best savings opportunities.

Expectations for Hiring a Fiduciary

Hiring a qualified fiduciary for Opportunity Zones requires asking the right questions. Investors should consider asking about the following:

  • How and where to invest funds
  • How much money they’ll need and where
  • If the funds can help them retire
  • Long and short-term investment goals
  • Existing net worth

Additionally, inquire about the fiduciary’s profession, their services, how they’ll work with you, their performance tracking, and investment philosophy.

Understanding legal jargon will help eager investors reach complete compliance, which is crucial for getting everything they want out of Opportunity Zone investments. Following Opportunity Zone regulations and compliance requirements ensures the investment and the fiduciary have an understanding and established foundation for pursuing Opportunity Zone investments.

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Dianne Pajo

Dianne Pajo is a writer based out of the Chicagoland area with a passion for music, combat sports, and animals. She enjoys competing in amateur boxing and kickboxing, but in her other leisure time, you can find her performing music around the city. She is also a dog mom of 2.

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