Wealth Transfer
Who Should Redistribute Your Wealth: You or the Government?
Problems
Wealth can be created through concentrated, sometimes high-risk endeavors. Wealth can be maintained through asset diversification and strategies designed to maintain control. Wealth can be divided into “personal” and “social” capital. Social capital is the portion of an estate which belongs to the United States Department of Treasury. Or does it? Social capital is best known as estate taxes.
Solutions
Americans believe they can do a better job redistributing social capital and directing personal capital. A holistic methodology coupled with advisor collaboration is critical. Smith, Frank & Partners adheres to a procedural tradition of teamwork insuring our position in the process. Typically, opportunities may include asset valuation suppression coupled with strategies to transfer wealth and future growth through loans, gifts and sale to future generations. Charitable tax laws create tremendous tax leverage, preserving wealth for future generations. Controlling future wealth rather than owning future wealth will slow the escalation of wealth subject to estate taxes.
A premature death may short circuit recently implemented wealth shifting strategies, exposing the estate to a recapture of assets for estate tax purposes. Creating “predictability”, through life insurance, represents a relatively small percentage of total assets needed to create a hedge for cash. The hedge is an asset class designed to perform as a future’s contract for cash to offset short-term losses due to death. Clients prefer controlling the redistribution of wealth on their terms.
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Using diversification as part of your investment strategy neither assures nor guarantees better performance and cannot protect against loss of principal due to changing market conditions.
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