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Top 6 Financial Concerns Ultra-High-Net-Worth Individuals Face

Ultra-high-net-worth individuals (UHNWI) are people who have at least $30 million in assets. In recent years, the pool of people meeting those standards has expanded thanks to the recent upturn in the world economy.1 They have vast wealth, so they may not be worrying about meeting basic needs. However, there are potential problems for the UHNWI that concern them.

Top 6 Financial Concerns Ultra-High-Net-Worth Individuals Face

Concern #1: The Tax Code

UHNWI pay a large share of the income tax revenue that powers the national budget. They pay much less now than did others in their income bracket paid in the period from the 1960s to the 1980s. Still, at 39% that’s a sizeable portion of their income. Yes, the UHNWI can take advantage of provisions within the code to reduce their tax liability and they do. Yet, like many, they are concerned about the power of the state to effectively reduce their wealth.

The matters are up to the representatives in the Congress. Depending on which political party is in power and the economic landscape, the UHNWI could see changes in the tax code that could:

  • Remove deductions beneficial to the wealthy

  • Increase estate taxes

  • Return the top tax bracket to pre-1980 levels

Concern #2: A Volatile Stock Market

Most UHNWI are heavily invested in various companies and funds. For many, income from their investments is the source of their wealth. If the stock market were to crash, UHNWI could see their portfolios shrink or perhaps even vanish in a matter of days.

Concern #3: Retirement

UHNWI who arrived at that status via a job, like being a superstar athlete, could be forced into a lifestyle change after their regular income goes away. In fact, many athletes are closer to being in the same boat as the rest of us. They have a short career span, so they must be careful about spending while they are working. They may face significant health issues when they are older. They may have made bad investments in their early years.

Concern #4: Insurance

UHNWI face risks many of us don’t face, like the constant threat of massively expensive litigation from other businesses or the risk that a torn ligament could end a career. UHNWI take out special insurance policies to protect themselves and their money.

Concern #5: Asset Protection

Some UHNWI have large amounts of assets and real property. If finances take a turn for the worse, creditors may come for those assets to satisfy a debt. Depending on the state where the UHNWI lives, they may be able to set up a trust to protect those assets as ownership of the assets will be transferred.

Concern #6: Estate Planning

We could all stand to give some consideration to what happens with our assets and wealth after we’re gone. It is of particular concern for UHNWI who will undoubtedly have a significant amount of wealth to pass on to their heirs. Under the current tax code, the federal government will not tax first $5 million of an estate. However, when an estate exceeds that amount, the tax on the estate is 40 percent. Any UNHWI is going to have more than $5 million. Then, the state government may also apply an estate tax.

Many UHNWI may pay a team to look after their finances. Hopefully, that team includes an experienced financial advisor who can help them to protect their significant wealth.

Invest In a Life You Love,

Donovan Carson - founder of Carson Capital



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