High net worth individuals (HNWI) are generally defined as people who have liquid assets of $1M or more. “Liquid assets” are assets that can readily be turned into cash – such as bank accounts or stocks and bonds held in a brokerage or investment account.
If you are a HNWI, you likely have a unique and diverse set of financial opportunities and concerns that separate you from the average investor. Doors may be open to you given your financial wherewithal that may not be so for others, such as certain types of accounts or investment vehicles that have account minimums but also make you eligible for more specialized services. You also may have to deal with more complex challenges that need exceptional care including trust and estate issues and tax management. We work with many HNW clients helping them navigate these waters in a way that maximizes their opportunities, minimizes risk, manages their tax situation, and addresses their unique goals, many of which are very personal to their family or business situation.
Below are some of the key concerns of the HNWI:
Wealth Preservation
Preserving wealth is the primary concern we see with our HNW clients and understandably so. After spending years dedicating their lives to working and being disciplined savers, they want to protect their nest egg. Or, for many business owners, they built a successful enterprise, sold it, and are faced with a large liquidation event. Implementing investment and financial planning strategies that address wealth preservation and risk management issues should be coordinated with the other priorities noted below.
Tax Management
Tax smart investing can be complex and even more so for the HNWI. By employing disciplined and methodical tax management strategies that leverage the type, location, and composition of your investments can make a significant difference in how much you pay in taxes and your long-term investment returns. Capitalizing on the expertise of your financial advisor, portfolio manager and tax professional all working together ensures the implementation of the most optimal tax management plan for you.
Estate Planning
The process of planning for the ultimate transfer of your assets to your beneficiaries upon your passing can be complicated, especially if you are a HNWI with significant and diverse assets. Estate planning is also more than transferring assets, it’s about the legacy you want to leave behind, what matters to you, what kind of mark you want to leave behind to your family and beyond? It can also provide protection and peace of mind to you now during your life knowing your ducks are in order. Do you have a will? Has it been updated to reflect any change of your intentions? Are your assets held in the appropriate type of account for transfer, tax efficiency, and protection purposes? Are your beneficiaries properly named and documented? Working with the right professionals to create wills, trusts, and gifting strategies can optimize the transfer of wealth while simplifying any complexities of the probate process.
Charitable Giving
For those who are charitably inclined, there is comfort in knowing that their wealth can have a positive impact on others besides themselves and their families. Making charitable donations is not only beneficial to the charity and a contribution to the communities you care about, but it can also provide tax benefits. For example, establishing a Donor Advised Fund or using Qualified Charitable Contributions (QCD’s) to manage your required minimum distributions from your IRA are useful techniques that serve this purpose. We work with our clients to determine the best giving strategies tailored to them so that their philanthropic efforts are both impactful and tax efficient.
At McLaughlin Private Wealth, we are focused on helping our clients plan for the future so they can live life to the fullest today with peace of mind and know they are making a positive impact where it matters most to them.