Those who inherit significant fortunes are clearly going to have certain advantages. However, they also have extraordinary responsibilities with regard to wealth preservation.
We have a powerful source of asset erosion built into the economic system. In the United States we have an estate tax, and at the time of this writing it carries a 40% maximum rate. Every time a given generation passes along wealth to the next this 40% levy is potentially applied.
There is an exclusion, but right now it sits at $5.25 million. That may sound like a lot of money to some people, but if you are in possession of tens of millions, hundreds of millions, or billions of dollars it is next to nothing relatively speaking.
A recent article that is published on the Wall Street Journal website talks about the evaporation of large inheritances. By the end of the third generation on average only 10% of an original family fortune remains.
It is true that some people make very bad financial decisions that contribute to the above statistic. Market conditions are certainly going to be a factor as well. However, when you are faced with recurring estate tax levies generation in and generation out you’re going to be hard-pressed to retain control of the family wealth.
If you are interested in wealth preservation we invite you to contact our firm to set up an informative initial consultation. We are experienced wealth preservation strategists, and we would be glad to assist you.
You can give us a call at (563) 445-7400 or contact us electronically by clicking this link: Wealth Preservation Consultation
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