Client Newsletter 4Q25
Dear Ambassador Family,
As we enter the final quarter of 2025, we find ourselves reflecting on a year marked by both growth and change. Markets have rewarded patient investors, yet uncertainty remains—reminding us that discipline continues to be the foundation of long-term success.
This season also invites reflection on the bigger picture: how we steward what we’ve been given and plan wisely for those who come after us. In this quarter’s update, we share insights on the current investment landscape and explore how thoughtful estate planning, particularly through the use of trusts, can help preserve your family’s legacy for generations to come.
2025: Broader Market Upside Beyond AI—But Stay Cautious
After a volatile start, 2025 has been a strong year for client portfolios. Many investments have appreciated nicely, but we do not want to get carried away. To prepare for potential downside risk, we have made incremental adjustments—rotating into commodities, diversified funds, and cash to help reduce exposure to volatility.
We have also maintained several key portfolio sleeves:
- Commodities: Dedollarization themes, including precious metals and crypto.
- New economy growth: Diversified equity exposures positioned to benefit from renewed investment in America.
- International growth: Emerging and developed international companies with strong growth prospects and attractive valuations.
Beyond T-bills—which we have been gradually reducing—we have avoided fixed income, favoring assets with better upside potential and stronger diversification benefits.
One area that has not performed as well is income and diversification managers. However, we believe these could offer the next pocket of upside for investors.
For example, a fund focused on mergers, acquisitions, and other corporate events recently delivered a substantial low double-digit gain from an investment in a data center—demonstrating the return potential above inflation with measured volatility.
We also see opportunity in a couple of managers that have remained flat during the recent market rally, including late-stage venture capital growth and an equity long-short strategy.
In venture capital, up to half of the portfolio companies have filed for IPOs or other strategic transactions that could drive appreciation. Similarly, a market correction—or even a rotation out of high-flying names like AI into other sectors—might lift valuations for the equity long-short manager.
Roth accounts are popular for a reason—you pay taxes on the money you contribute now, and both your contributions and earnings can grow and be withdrawn tax-free later. But if you have access to both a Roth IRA and a Roth 401(k), how do you decide where to save?
Roth IRAs potentially offer more flexibility. You can choose from almost any investment, access your contributions at any time, and face simpler tax rules for withdrawals. Roth IRAs do not require minimum distributions (RMDs) in retirement, and your money generally remains under your control no matter where you work.
Roth 401(k)s, on the other hand, can be valuable if your employer offers a match—that’s free money. They may also provide stronger legal protection from creditors and the option to borrow from your balance while you’re still employed.
In many cases, contributing to both might make sense. Start with the plan that offers a match, then consider adding to a Roth IRA for more flexibility and investment choice.
How Trusts Can Help Preserve Your Family Legacy
Wise families plan ahead—and one of our key roles is helping clients think through how today’s decisions shape tomorrow’s outcomes. Planning how your heirs will receive your legacy is one of the most important steps in a comprehensive financial plan.
For families passing on substantial wealth, trusts continue to be one of the most effective tools available.
- Potential tax savings
Trusts can help reduce or even eliminate estate taxes that would otherwise erode what your heirs receive. In 2025, Washington State raised its estate tax exemption to $3 million. However, the tax rates above that amount have also increased significantly—now ranging from 10% to 35%, among the highest in the nation. Each state periodically makes changes, and we want to keep you informed when they occur. For many families, this means a larger portion of their estate could go to taxes rather than loved ones.
Proactive estate planning—especially through properly structured trusts—can provide flexibility in how assets are distributed and help manage or reduce the tax burden before it becomes permanent.
- Protection and flexibility
Beyond tax benefits, trusts offer control and protection. They allow you to set conditions on how funds are accessed, support beneficiaries with different financial habits, and ensure your legacy is used responsibly. For example, you can direct distributions for education, home purchases, or matched income rather than large, unrestricted payouts.
Consider this scenario: a widow with three children plans to divide her estate equally. Two of her children handle money responsibly, but the third struggles with managing finances. The widow worries that a large inheritance could do more harm than good. Through a trust, she can create guardrails that help protect her child’s future. For example, she might:
- Require the child to show proof of income before receiving matching trust distributions
- Allow withdrawals only for specific purposes, such as a home purchase or education expenses
- Set up regular, limited distributions instead of a lump sum
Trusts offer the flexibility to design these arrangements around the grantor’s wishes—passing assets on thoughtfully and responsibly.
With these 2025 changes, the cost of inaction has never been higher. Estate planning is no longer optional—it’s essential. Before making major financial or gifting decisions, seek professional advice. We’re here to help you plan ahead—to keep more of what you’ve worked so hard to build.
Qualified Charitable Distributions (QCDs) are a powerful giving tool, but they’re often misunderstood. Yes, a QCD can reduce your adjusted gross income (AGI) — but only when used strategically.
A QCD allows individuals age 70½ or older to donate up to $100,000 per year directly from an IRA to a qualified charity. The donated amount is excluded from taxable income and can count toward your required minimum distribution (RMD). However, timing matters.
If you’ve already taken your RMD for the year, making an additional QCD afterward won’t lower your AGI—it will simply offset that new distribution. To actually reduce your AGI, you need to plan ahead and make the QCD as part of your RMD, not after it.
For example, using part or all of your RMD for a QCD can lower your taxable income and potentially reduce taxes on Social Security benefits or Medicare premiums.
The bottom line: QCDs aren’t a last-minute tax fix—they work best as part of a thoughtful, proactive strategy.
We Help You Keep More of Your Money
In today’s complex financial world, pulling the trigger before planning can cost far more than most realize. Every decision—when to sell, gift, convert, or invest—carries tax, estate, and legacy consequences. The real power isn’t in reacting to opportunities, but in anticipating them. For years, our philosophy has remained the same: It’s not about how much you make—it’s about how much you keep. That’s why proactive financial, tax, and estate planning isn’t just smart—it’s essential. At Ambassador Wealth Management, that’s exactly why we’re here—we help you see the full picture before you act, so you can make confident decisions that build, preserve, and protect your wealth for generations.
Sincerely,
Petr P. Burunov
President / Certified Financial Planner™