{"id":5100,"date":"2018-06-12T01:03:02","date_gmt":"2018-06-12T05:03:02","guid":{"rendered":"http:\/\/collitonlaw.com\/?p=5100"},"modified":"2018-06-12T14:58:34","modified_gmt":"2018-06-12T18:58:34","slug":"how-much-does-it-take-to-be-rich","status":"publish","type":"post","link":"https:\/\/collitonlaw.com\/how-much-does-it-take-to-be-rich\/","title":{"rendered":"How Much Does It Take To Be Rich"},"content":{"rendered":"

A recent article in Financial Advisor, an on-line magazine targeting financial planners, attracted my attention with its title \u201cHere\u2019s How Much Money You Need for Bankers To Think You\u2019re Rich,\u201d https:\/\/www.fa-mag.com<\/a>. The article authored by Suzanne Wooley and cited back to Bloomberg News, was intriguing especially since I had heard informally that bankers value a portfolio differently now considering the immense amount of wealth developed in the last several years that passed either through inheritance or business.<\/p>\n

One point of interest to me regarding estate planning is deconstructing many of the old Wills that were drafted at a time when we thought a few million dollars in inheritable assets justified or maybe even necessitated planning using by-pass trusts and similar structuring techniques.<\/p>\n

Another factor is just how much service does an individual or family or small business receive where some banks or financial institutions might not consider the investor to be wealthy.<\/p>\n

The article begins by asking \u201cJust how rich is \u2018rich\u2019?\u201d\u2026 It then goes on to explain \u201cIn rich-tropolises such as New York and London, 1 percenters moan that living on $500,000 a year feels Dickensian. With a pot of $40 million\u2014and private schools, a Hamptons retreat, a horse and a charity to feed\u2014a hedge funder on the Showtime drama \u201cBillions: exclaims: \u201c<expletive deleted> I\u2019m broke!\u201d<\/p>\n

I have to admit I do not watch the show \u201cBillions\u201d or Showtime, for that matter but the author of the article did not leave us in suspense. \u201cHere, then, is a real answer, courtesy of the hush-hush world of private banking: $25 million\u2026\u201d<\/p>\n

So, twenty-five million dollars in investable assets is what it would take for \u201celite private bankers\u201d to consider a client wealthy. Note this observation is made by the author of the article only. Also, it does not include many bankers who work in the day to day world handling regular clients.<\/p>\n

However, the number does make sense in today\u2019s tax climate. This could be why. The figure for the unified credit, the amount that is exempt from federal estate taxes, now has been raised to $11.2 million for individuals and $22.4 million for married couples. So $25 million would be in the range, in theory at least if no planning were done, where there could begin to be some exposure to the federal estate tax.<\/p>\n

What does this mean? It means that, if you only have a few million dollars in assets you can probably rest easy that the federal estate tax is not going to apply to you. Also, if you are single and die with assets a bit higher than the $11.2 million indicated \u2013 that by the way is this year since the number is indexed to raise higher with inflation \u2013 your $11.4 million would only be taxed for federal estate tax purposes on the additional $200,000. $11.2 million would be exempted.<\/p>\n

If you are married, it is even better. Spouses, due to the unlimited marital exemption, pay nothing in federal estate taxes no matter how much is inherited from their deceased spouse. It is only when the estate is inherited \u2013 usually by the children \u2013 that estate tax could become a problem and then typically to the extent that the inheritance is more than $22.4 million, again indexed for inflation. Because of a concept known as portability the unused portion of the unified credit on the death of the first spouse can carry over on the death of the second spouse. To preserve this figure a federal estate tax return should be filed on the death of the first high net worth spouse even if no tax is due.<\/p>\n

Returning to the article, the author notes what makes someone rich has changed dramatically in the past two decades. \u201cIn 1994, when Peter Charrington, global head of Citi Private Bank, first joined the firm, \u2018Three million was largely considered ultra-high net worth across the industry\u2026Fast-forward almost 25 years, and $25 million is how we define ultra-high net worth.<\/p>\n

\u2026a married couple with an estate valued well below $22 million, held largely in a diversified portfolio of publicly traded stocks, may not need a lot of fancy trusts-and-estates-work\u2026A much wealthier family with homes and assets in multiple countries and currencies might require more cash flow management, customized financing for mortgages, yachts or planes, and the ability to borrow against art or investment portfolios\u2026\u201d<\/p>\n

So there you have it. If you have $25 million in investable assets you are wealthy. If not, you may be wealthy in other ways.<\/p>\n","protected":false},"excerpt":{"rendered":"

A recent article in Financial Advisor, an on-line magazine targeting financial planners, attracted my attention with its title \u201cHere\u2019s How Much Money You Need for Bankers To Think You\u2019re Rich,\u201d https:\/\/www.fa-mag.com. The article authored by Suzanne Wooley and cited back to Bloomberg News, was intriguing especially since I had heard informally that bankers value a […]<\/p>\n","protected":false},"author":9,"featured_media":5103,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[327,39],"tags":[],"yoast_head":"\nHow Much Does It Take To Be Rich -<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/collitonlaw.com\/how-much-does-it-take-to-be-rich\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Much Does It Take To Be Rich -\" \/>\n<meta property=\"og:description\" content=\"A recent article in Financial Advisor, an on-line magazine targeting financial planners, attracted my attention with its title \u201cHere\u2019s How Much Money You Need for Bankers To Think You\u2019re Rich,\u201d https:\/\/www.fa-mag.com. 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