Advising the Wealthy

Wealthy clients bring problems that standard financial planning does not cover: several passports and residences, second marriages and dependants with special needs, a business that holds most of the family's wealth, or a career in which pay arrives as stock options or in a few peak years. This module covers residency and citizenship planning, complex family situations and family offices, the tools for business owners and concentrated stock (staged sales, collars, monetization and exchange funds), and the particular needs of executives, professionals and athletes.

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What you will learn

1. Discuss how citizenship, nationality, domicile and tax residence affect a private client's taxation and planning, including exit taxes, pre-immigration planning and residence or citizenship programmes.

Most countries tax residents on worldwide income; the US also taxes its citizens wherever they live.
Tax residence tests: days of presence, permanent home, centre of vital interests; treaty tie-breakers settle dual residence.
Exit taxes treat departing residents as having sold assets; renouncing US citizenship can trigger an expatriation tax.
Pre-immigration planning (realising gains before arrival) resets the basis when the new country would tax pre-arrival gains.
Residence must have substance; it also drives CRS reporting and can decide which succession law applies.

2. Recommend wealth management approaches for complex family situations, including blended families, divorce, dependants with special needs and the use and governance of family offices.

Blended families: prenups, life-interest trusts, life insurance to equalise, and current beneficiary designations.
Community property splits assets acquired during marriage equally; gifts, inheritances and pre-marital assets stay separate if not commingled.
Special needs trusts provide for a dependant without disqualifying them from public benefits; name guardians and trustees.
Unmarried partners and ageing members need wills, titling, powers of attorney and protection from abuse.
Family offices need governance: IPS, investment committee with independent members, risk limits and transparent reporting.

3. Recommend approaches for entrepreneurs and business owners, including exit and succession planning and strategies for concentrated positions such as staged sales, collars, monetization and exchange funds.

Plan the exit years ahead: governance, successor, and gifting or trust transfers before the sale while values are lower.
Staged sales diversify simply but realise tax as they go; collars set a floor and cap without a sale.
Monetization: lenders advance more against collared stock; borrowing against unhedged stock risks forced sales.
Prepaid variable forwards combine a collar with upfront cash; exchange funds diversify without a sale but lock up capital for years.
Check legal limits (lock-ups, insider rules, constructive-sale rules) and use completion portfolios for the rest of the wealth.

4. Recommend approaches for executives, professionals, athletes and other clients whose wealth and income have distinctive features, including equity compensation, trading restrictions and short earning careers.

Options are worth intrinsic value plus time value; exercising early gives up time value, holding adds employer concentration.
Equity pay is often taxed at exercise or vesting; plan for the tax and the concentration together.
Executives face insider rules, blackouts and ownership guidelines; pre-arranged trading plans allow scheduled diversification.
Professionals need disability and liability cover and a plan for the value tied up in their practice.
Athletes and entertainers: sustainable spending = PV of a short career / long-life annuity factor, often a small share of peak pay.

Module at a glance

Residence is the usual basis for worldwide taxation; the US also taxes its citizens wherever they live.
Treaty tie-breakers settle dual residence; exit taxes and pre-immigration planning make the timing of a move valuable.
Blended families need marital agreements, life-interest trusts, insurance and current beneficiary designations.
Community property splits assets acquired during marriage; special needs trusts protect dependants without losing benefits.
Family offices need an IPS, independent oversight, risk limits and reporting to all branches.
Concentrated stock: staged sales, collars, collar-and-borrow, prepaid variable forwards and exchange funds; avoid unhedged margin loans.
Executives diversify through pre-arranged trading plans; athletes must turn a short career into lifetime spending.

This free module has 4 lessons, 16 practice questions with full explanations and 1 essay case with a model answer.

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