what Is a High Net Worth Individual?
basically, a High Net Worth Individual Is Someone Who Has Financial Assets With a Value That Is More Than $1 Million. This Definition Is Used by Some Segments of the Financial Services Industry.
liquid Assets
having Liquid Assets of a High Net Worth Can Help You Pay for Unexpected Expenses. This Includes Emergency Funds, Major Home Repairs, and Starting a New Business. it Can Also Help You Avoid Running up High Interest Credit Card Debt. the Key Is to Understand How to Calculate the Value of These Assets.
liquid Assets Are Assets That Can Be Converted Into Cash Quickly. These Include Cash, Savings Accounts, and Checking Accounts. You Can Also Count Stocks as Liquid Assets. They Can Be Sold for Cash Within Three Business Days. However, the Value of a Stock Can Vary Greatly Depending on Its Condition.
if You Are Looking to Increase Your Liquid Assets of a High Net Worth, Consider Diversifying Your Investment Portfolio. This May Sound Like a Lifestyle Goal, but It’s Also a Good Way to Increase Your Overall Net Worth.
you May Also Want to Start Building an Emergency Fund. This Can Prevent You from Running up High Interest Credit Card Debt and Falling Behind on Your Monthly Bills. You Can Also Use the Emergency Fund to Pay for Car Repairs or Other Major Expenses.
you May Also Want to Start a Debt Reduction Plan to Pay Off Your Credit Card Debt Faster. This Can Reduce Your Monthly Expenses, and Help You Avoid High Interest Credit Card Debt in the Future.
while You Are Calculating Your Liquid Assets of a High Net Worth, Make Sure to Factor in the Value of Your Retirement Accounts. You Should Reduce the Value of Your Retirement Accounts by 10% to 30% to Get the Most Accurate Cash Value. However, You May Need to Pay a Tax Penalty for Early Withdrawals.
liquid Assets of a High Net Worth Include Everything from Cash and Savings Accounts to Real Estate Holdings and Retirement Accounts. It’s Best to Calculate the Value of All of Your Assets Before You Decide to Start a Savings Plan.
estate Planning
whether You Are a High Net Worth Individual or You Have a Large Family, You Need to Have an Estate Plan in Place. Having an Estate Plan Is Not Only Important for Your Own Peace of Mind, but it Also Protects Your Family’s Future.
the Estate Plan You Establish Will Include a Legal Document That Outlines How You Want Your Assets Transferred After Your Death. the Document Also Includes a Power of Attorney, Which Allows You to Appoint Someone to Take Care of Your Affairs If You Become Incapacitated. it Also Includes Instructions on How You Want Your Assets Distributed to Your Heirs and How You Want to Manage Your Medical Care.
high Net Worth Individuals Have More Assets Than Average Citizens, So They Will Need to Take Extra Precautions to Protect Their Assets. This Includes Planning to Minimize Taxes, as Higher Income Earners Pay Higher Taxes. Having an Estate Plan Can Also Allow You to Pass Your Assets Onto Your Heirs Without Paying a Huge Amount of Inheritance Taxes.
another Strategy for Minimizing Estate Taxes Is Gifting. Married Couples Can Gift up to $23,200 Per Year Without Incurring a Gift Tax. in Addition, a Charitable Remainder Trust, or Grat, Can Help Minimize Gift Taxes on Your Estate Upon Death.
you Can Also Reduce Your Overall Taxes by Splitting Your Income Among Family Members. in Addition, Charitable Giving Can Help Reduce the Amount of Your Estate That Is Passed to Your Beneficiaries. Giving to a Charity Can Also Help You Reduce Your Capital Gains Taxes.
in Addition, If You Own a Farm, You Can Protect it from Creditors by Creating an Irrevocable Farmland Trust. This Will Save You Time and Money in Probate Court.
tax Planning
having a High Net Worth Means That You Will Have to Be Aware of Tax Planning. a Good Tax Planning Strategy Is Important to All Taxpayers. This Article Will Offer Some Tips to Help You Get Started.
investing in a Tax-efficient Retirement Plan Is a Great Way to Save Money. it Provides a Tax Reduction Opportunity and it Can Also Boost Your Portfolio Performance.
donating Items Can Also Be a Tax-saving Strategy for High Net Worth Individuals. You Can Donate Clothes, Real Estate, Cars, or Stock Options. You Can Also Donate to a Charitable Organization.
another Tax Strategy Is to Set up a Donor Advised Fund. This Fund Can Help to Blunt the Tax Consequences of Large Distributions.
donating Items and Setting up a Donor Advised Fund Can Be an Effective Tax Planning Strategy for High Net Worth Individuals. However, These Strategies Should Be Used Strategically to Minimize the Tax.
in Addition, Tax-savvy Lawyers Should Understand the Client’s Assets and Goals. They Also Need to Be Alert to Changes in the Law.
some Tax-savvy Lawyers May Even Be Able to Help You Develop a More Complex Tax Strategy. These Strategies May Include a Private Annuity, a Dynasty Trust, or a Generation Skipping Trust.
tax Planning Is a Dynamic Process. Changes in the Law and Your Personal Situation Should Be Reviewed Periodically. This Is Especially True If You Are Planning to Transfer Assets to Your Heirs. You May Also Wish to Consult With a Financial Professional Before Taking Your Investments Offshore.
a Good Tax Planning Strategy for High Net Worth Individuals Is to Donate a Portion of Your Adjusted Gross Income to a Charitable Organization. in Addition, a High Net Worth Household Can Take Advantage of Tax Free Growth by Making Donations to a 529 Plan for Their Children.
shifting Wealth Into Next-gen’s Hands
across the Globe, a Massive Handoff of Wealth Is Taking Place. in the United States, Baby Boomers Are Passing Down Assets to Their Younger Heirs. It’s Expected to Bring in Over $53 Trillion. but the Transfer Can Be Confusing to the Younger Generations. and the Process Can Last for Years.
one of the Most Interesting Trends in the High-net-worth Segment Is the Multigenerational Wealth Transfer. Today, Baby Boomers Account for About 63% of All Transfers. and They Will Continue to Be the Wealthiest Generation Until 2030.
this Transfer Is Set to Change Many Aspects of the American Economy. It’s Estimated That $10 Percent of Total Wealth in America Changes Hands Every Five Years. Experts Don’t Know Where the Money Will Go, but They Think Significant Change Is Coming.
in the United States, Baby Boomers and Silent Generations Hold Nearly $30 Trillion in Assets. They Will Transfer This Wealth to the Next Generation in the Next 25 Years. and the Total Value of Transfers Is Set to Jump to Over $68 Trillion. and That Doesn’t Include the Estimated Transfer from Generation X and Millennials.
wealth Transfers Will Also Have a Major Impact on Family Dynamics. It’s Estimated That 35% of Adults Between the Ages of 18 and 35 Live at Home With Their Parents. and Some Families Will Require Their Children to Work Outside the Family Business After College.
in Asia, a Report from Wealth-x Suggests That 1.9 Trillion Will Be Transferred by Families to the Next Generation. the Report Also Says That $8.8 Trillion Will Be Transferred in America and Europe in the Next Twenty Years.
in Australia, the National Australia Bank (nab) Insists That Intergenerational Families Must Have Clarity About Their Respective Responsibilities. Next Generation Heirs Active in Philanthropy Are More Attuned to Networking and Collaboration.
