Capital gains taxes

Trusts aren’t just for the .01%, as some advisors sell mass affluent and high-net-worth clients on their tax benefits.

The recent change in presidency is set to bring about substantial changes in the way high-net worth individuals are taxed in relation to capital gains.

The administration is aiming at trusts — particularly dynasty trusts, vehicles that wealthy families can use to benefit multiple generations of descendants.

The near doubling of the capital gains tax rate would have a large impact on the net profit from any sale of any capital asset.

It’s counterintuitive, but the cash benefit of delaying payouts can outweigh rate increases, thanks to compounding over time.

Stephen Schwarzman said the risk of an increase in U.S. capital gains taxes has led to explosive growth in potential targets for his alternative investment firm.

A combination of high valuations on companies and potentially higher taxes in the future is proving to be a potent motivator for selling private companies.

The Treasury secretary suggested that if Congress were to pass a capital-gains tax hike effective starting in April 2021, that wouldn’t count as a retroactive increase.

The proposed changes are worrying investors and their tax advisors, especially the possibility of making them retroactive.

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