September 2023 Market Update/Estate Planning

Dear clients and friends,

Happy Labor Day to all. August was a difficult month in the markets until equities came roaring back the last five trading days of the month. As of this writing the S&P 500 sits about 6% off of the all-time high from 2021. 

The big move over the last month came from the bond market where fear of higher interest rates took hold moving the yield on the 2 and 10-year treasury even further north while pressuring equities at the same time. Better than expected data from a slowdown in employment coupled with data showing inflation slightly slowing allowed for this reversal at the end of the month.

We continue to believe we could see another rate increase by November but believe the economy will continue to contract allowing the Fed to eventually pause and look to start lowering rates by the 2nd half of 2024. This does not mean a mild recession is not in the cards just that we do not believe it will be deep or long if it does materialize. 

With so much happening by way of our private equity investments across the firm, we felt it was a good time now to address a topic we discuss with clients on the daily, which is estate planning. 

Estate Planning

Estate planning is a key component of long-term financial health and well-being and can mean many things to different people. Historically, most looked to providing for heirs and loved ones but we have seen a big transition to also setting up philanthropic entities allowing a pathway to give to charities or setting up a personal foundation. The following gives a broad outline of estate planning and we encourage each of you to take a minute to think about your own plan. 

Estate and tax planning plays a crucial role in the financial strategies of high-net-worth individuals, their families, and private family offices. For these individuals, estate planning is not only about distributing assets after death but also about maximizing the wealth accumulated during their lifetime. By implementing effective estate and tax planning strategies, these individuals can minimize tax liabilities and preserve their wealth for future generations.

One key aspect of estate planning for high-net-worth individuals is the establishment of a comprehensive estate plan. This involves creating wills, financial and mediacl power of attorney, and potentially trusts and other legal instruments that outline how the individual’s assets will be distributed upon their death. By utilizing trusts, such as revocable living trusts or irrevocable trusts, these individuals can ensure that their assets are passed down to their beneficiaries according to their wishes while also minimizing estate taxes.

Furthermore, tax planning for high-net-worth individuals involves developing strategies to reduce their overall tax burden. This can include leveraging various tax-saving techniques, such as gifting assets to family members or charitable organizations, structuring businesses in tax-efficient ways, and taking advantage of tax deductions and credits. By employing these strategies, high-net-worth families can lower their tax liabilities, allowing them to preserve more of their wealth.

Private family offices, which provide comprehensive wealth management and advisory services to affluent families usually with over 25 million in assets have a critical role in estate and tax planning for high-net-worth individuals. These family offices employ tax professionals, estate planners, and financial advisors who specialize in managing the complex financial affairs of wealthy families. They work closely with the families to develop personalized strategies that align with their goals and priorities. This can include coordinating with accountants and attorneys to ensure compliance with tax laws and creating customized estate plans that address unique family dynamics and objectives.

In summary, estate and tax planning for high-net-worth individuals, families, and private family offices is essential for preserving wealth and ensuring a smooth transfer of assets to future generations. Through comprehensive estate plans and strategic tax-saving techniques, these individuals can minimize tax liabilities, protect their assets, and leave a lasting legacy for their loved ones. It’s also the tool used to allow for the establishment of a family foundation or charitable gifting trust to ensure one’s philanthropic vision is brought to reality.

We look forward to the opportunity to review each of your estate plans while ensuring they are up-to-date and in line with your current goals and wishes.

We look forward to the remainder of 2023 and to a very fruitful 2024.

The team at Bauer Heitzmann is incredibly thankful for the continued trust and confidence placed in us and strive each day to make your financial dreams a reality.

All the best,

Dan, Stephen, and Chris

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