An ultra-high-net-worth individual may seem to have the perfect life from the outside. And they mostly do, but it doesn’t come with some downsides. The wealth they accompany also brings along certain events that can’t be avoided. Apart from the cost of living for wealthy individuals or their accustomed and extravagant lifestyle, their unique challenges bring down their fun.
Amidst their massive wealth, navigating through tons of obstacles that change more drastically than the UK weather. But what makes ultra-high-net-worth, ultra? Let’s figure that out, and then we will discuss their problems.
What Makes A UHNWI?
An ultra-high-net-worth individual (UHNWI) is a term used to describe someone whose net worth in liquid assets is $30 million or more. It’s only considered when the asset is liquid as numerous successful businesspeople and investors might have a net worth of $30 million. But they may not be UHNWIs because they’ve tied up most of the funds into illiquid assets like real estate, collections, or else.
Conversely, UHNWIs can invest at least $30 million into a new business or venture at any given time. They often require a multi-family office like Avestar Capital, as it streamlines their management and governance. It helps them devoid of several challenges, but what are the hidden costs of ultra-high-net-worth living? Let’s get to it.
Changing Tax Codes
Taxation is the biggest challenge they face regarding their wealth. Unlike the regular folks who have a limited set of taxation to go through, it can’t be said for a high net-worth individual. Expense management consultants for UHNWIs help with their investments, holdings, assets, and liquid cash, which are all in separate taxable brackets.
The UHNWI have to worry about retaining their riches which allows them to use their wealth to continue with their lifestyle. Again the government, deducting an amount from them, makes them not want to liquidate their assets. But most of them bestow their assets or fortunes to future generations.
The estate tax of which 90% of the total is paid by the top 1% of the wealthy individuals. This drastically changes their value. Several states have their estate tax which are imposed even after their federal estate tax has been paid. Hence, UHNWIs struggle to keep their immovable and liquid assets away from unwanted taxation.
Wealth Protection
Now this is a broader point that traverses through not just taxation like the above mentioned, but more. Safeguarding their wealth, which is often spread out across different investments becomes a task. They’re the most common targets for financial threats and risks.
Apart from fraud and cyberattacks, financial pitfalls for HNWIs are also a threat. They must also fend their wealth from any financial instability that may incur in the market. As they are at high stakes and will lose if any crisis unfolds anywhere in the world. Cause of the uncertainty, financial advisors for high-net-worth individuals help them to safeguard their wealth effectively.
Lifestyle Sustainability In Retirement
UHNWIs who accumulated their wealth through work, such as CEOs and highly paid employees, often experience a drop in income upon retirement and may need to downsize their lifestyles.
A significant challenge they face is illiquidity; despite having millions in net worth, much of it is tied up in real estate and other assets that are not easily converted to cash. These are the common hidden fees in luxury living which isn’t much on monetary loss but limited accessibility
The Bottom Line
Hire financial planners for ultra-wealthy families that allow them to manage their wealth and do more without having to worry. UHNW lifestyle expense solutions by Avestar Capital help them to easily manage their day-to-day lifestyles along with protecting and financially securing their future.
Financial planning by Avestar Capital lets UHNWIs be more focused on their personal goal, without them putting too much time into taxation, investments, and other financial decisions.
