Estate Planning Tools
Various tools exist for the mitigation of wealth transfer taxes. Common tools include: Trusts. Foundations. Life insurance. Companies. This reading will focus on trusts, the various types of trusts commonly used, and their benefits concerning estate planning. Trusts A trust…
Managing and shifting wealth
An estate refers to all the property a person owns or controls. The property in one's estate may consist of financial assets (bank accounts, stocks, bonds, or business interests), tangible personal assets (artwork, collectibles, or vehicles), immovable property (residential real…
Wealth Transfer Planning
Many business owners find it difficult to free up capital that has been tied up in business assets, making liquidity a challenge, and often complicating wealth transfer efforts. Many strategies exist to help alleviate this issue: Initial public offering (IPO)….
A Private Equity Management Strategy for Concentrated Positions
Staged Diversification and Completion Portfolios Staged diversification refers to selling the concentrated position, paying the tax, and reinvesting the proceeds in a diversified portfolio. This is often done over several years and has the advantage of spreading out the tax…
Managing Concentrated Positions in Public Equities
The three main types of concentrated positions include: Public company shares. Private company ownership. Real estate. This learning outcome statement focuses on public equity ownership. There is no singular definition for a concentrated position in public equities. Anything that inhibits…
Implementation of Tax Optimization Techniques
The following are several important topics for tax-aware portfolio management, each summarized in greater detail below: Selection of the investment vehicle (i.e., whether the assets are held in a partnership, fund, or separate account). Tax lot accounting. Tax-loss harvesting. Tax…
Asset Accumulation and Portfolio Positioning
Financial Planning Clients often have a mixture of taxable, non-taxable, and tax-advantaged accounts, savvy wealth managers need to consider the interplay of these accounts, especially as clients approach retirement and begin to spend down their portfolios. The following are tax-savvy…
Assessing Tax Efficiency through Post-Tax Returns
Tax-efficient strategies are those that sacrifice less return to a tax loss. Managers should always seek to provide the best after-tax returns possible, for any given client. Tax-Efficiency of Various Asset Classes and Investment Strategies The following return measures are…
Tax Efficiency of Investments
Each jurisdiction globally taxes to discourage certain activities (i.e. short-term trading, gambling, etc.), and subsidizes activities it wants to encourage. The CFA is a global exam and does not test specific jurisdictional rules. Candidates need only learn the basic elements…
Elements of Return and Taxation Status for the Account
To make optimal after-tax investment decisions for clients, wealth managers focus on three crucial aspects: Component Returns Taxation: This involves understanding how different investment components, like dividends, capital gains, and interest, will be taxed. Account Taxable Status: Wealth managers determine…
