What Are The Ways I Can Preserve Assets Against Current and Future Tax Law Changes?
Tax law changes are not an uncommon occurrence. At least a few changes are likely to occur on the local, state, or federal level in any given year. This presents a challenge for individuals who want to preserve their assets in a manner that makes it possible to maximize returns while also keeping the tax obligation to a minimum. Fortunately, there are a few ways to accomplish this goal.
Tax Deferred Accounts
One way to protect holdings from tax law changes is to open and contribute to investment accounts that are tax deferred. This includes various types of retirement accounts, including some forms of the Individual Retirement Account (IRA). Other accounts in this category include a 401 (k) and a 403 (b). The benefit of this approach is that taxes are not assessed until you actually withdraw funds from those accounts. And maybe tax laws will be more favorable at that time and you can enjoy more benefits from your assets.
Exchange Traded Funds and Index Mutual Funds
Another approach is to place some of your assets in investment funds that are considered tax efficient. This simply means that fund managers balance the need to generate returns with the projected tax obligation created by those returns. What this does for you is pull the focus away from pre-tax returns only and look at the bigger picture. With the right fund, you would actually come out with more money once that obligation is calculated and settled.
If you are very concerned about the direction that tax legislation is going, choosing to divert some of your wealth to offshore investing is worth considering. Focus on establishing accounts in nations that are considered stable politically and financially, and that have a reputation for tax obligations that you find favorable. Keep in mind that returns from those investments will have to be reported to a domestic tax agency as you transfer those proceeds back into your home country.
Before taking any action, make sure you understand how the taxation laws are currently written and what type of changes are likely to occur in the next year to two years. Work with a financial professional who has a solid grasp of those current and potential laws, and can apply them to your present asset allocation strategy. From there, it will be much easier to identify specific methods that will help you preserve your wealth and keep the amount of taxes owed within reason.
In connection with requests to Karlsberg International Insurance Company (KIIC) to obtain information on the insurance products and services being offered by KIIC, understand that KIIC Representatives are not tax or legal advisors and do not provide advice with respect to any insurance plan, policy, or trust structure. Consult with your own tax and legal advisors.