Much of the information that purports to provide tax techniques for ultra-high net worth investors apply to all investors. Common sense isn't necessarily terrible counsel, but it isn't enough. Those of you with investable assets of $5 million or more can benefit from having a long-term partner who can provide sound wealth management and tax advice.
Reduced to 7 Essential Points There is a wide variety of complex estate and tax preparation options.
Avoiding taxes as a member of the 1%
Create Tax Losses to Counteract Yearly Gains Learn more about how to locate a financial advisor that works with clients who have more than $10 million in liquid assets and can help you minimize your tax liability by clicking here if you are an ultra-high net worth investor in need of assistance with tax reduction. Among our many services, tax preparation is one of our specialties at Pillar Wealth Management. Reduce your expenses and increase your profits with the help of our fiduciary advising services. Visit this link now to have free speech with one of our wealth managers.
You indeed fall into a unique niche, and in a minute, we'll discuss seven tax tactics that only people with a high net worth may take advantage of.
How do affluent incomes minimize their tax liability?
Do not read this article if you have a weak stomach. These are sophisticated methods, not the basic ones commonly discussed on blogs by recent college finance graduates with little experience.
For thirty years, Pillar Wealth Management has served the needs of the uber-wealthy. We have experience managing portfolios during all market conditions, including recessions. We are committed to safeguarding your assets by employing the most effective strategies for your portfolio, as required by our fiduciary duty to you.
Our ultra-high-net-worth clientele has significantly benefited from implementing these seven tax methods, which have allowed us to save them a substantial amount of money and boost their investment returns by eliminating these avoidable losses.
Are wealth managers able to assist with tax preparation?
Reducing Brokerage Accounts' Reliance on Active Management It's important to note that your tax rate will increase proportionally with your trading volume. The account holder must disclose any realized gains when a trade is made in a brokerage account. Brokerage accounts that are actively maintained typically engage in regular trading. High-net-worth individuals rarely see improved returns when they place too much faith in active management and end up paying more taxes than they should.
Tax Strategies for the Affluent
A client who switched to us in 2017 had realized capital gains of $375,000 in 2016 in her actively managed brokerage accounts with her previous firm. That resulted in extremely high tax rates. The following year, her taxes were cut by 30% because we decreased her realized gains to zero.
How does a 30% reduction in your taxes sound? The compliment had gone well, and she was pleased.
High-net-worth investors can get hit hard by this tax, yet it's often forgotten. Contact Hutch Ashoo, CEO and Co-Founder of Pillar Wealth Management, if you're interested in learning high net worth tax methods, especially as they relate to your portfolio. He will advise you on how to minimize your taxes as a high- or ultra-high-net-worth investor and will do so on a fee-only, independent, fiduciary basis. Read his free book on maintaining your ultra-high net worth status to learn more about his strategy.
Methods of tax depreciation for the wealthy
Reduce the number of taxable bond issues As this article from Fidelity explains, whenever a fund manager buys or sells securities, taxable bonds also generate capital gains, just like stocks do. You may also be required to pay capital gains taxes when you sell your bond shares.
This Investopedia article outlines why high-net-worth investors should avoid taxable bond funds. To get the most significant tax break, you should invest in municipal bonds rather than federal ones because you pay the highest tax rate. The federal government does not tax the dividends from municipal bonds, and many states do not tax them either.
Financial planning for managing wealth
Since annualized rates of return on bond funds are calculated before taxes, considering them alone is not enough to make a wise investment decision. If you're a high-net-worth investor in a high-tax state like California, a taxable bond with a 5% performance is probably a poorer deal than a municipal bond with a 2.5% return. Check out our no-cost manual if you need assistance locating a financial advisor who is conversant with these complexities.
Send your Required Minimum Distributions to an organization, retirees with a high net worth! Retirees with significant assets over 70.5 years old (before 2020) may not need to take RMDs from their retirement accounts. You still have access to sufficient funds, and this demanding condition does nothing but increases your tax liability.
