Crisis may spawn big U.S. wealth transfer moves
BOSTON (Reuters) - The financial crisis is creating a huge opportunity for rich Americans to transfer wealth to their heirs or others, industry executives said on Monday.
The wealthy use trusts to pass on stocks, mutual funds and physical assets such as real estate. The tax rates for such transfers are linked to interest rates, and the current low rates and deteriorating asset values generally allow more wealth to be transferred tax-free, the executives said.
"With depressed asset values and low interest rates, this is absolutely a wonderful time to consider gift-giving wealth-transfer strategies," Richard Kohan, a partner at PricewaterhouseCoopers' (PWC) private company services practice, told the Reuters Wealth Management Summit.
The North American wealth market is estimated to be the biggest in the world, with assets of $39.2 trillion as of 2007, according to the Boston Consulting Group.
Robert Elliott, senior managing director at New York asset manager Bessemer Trust, said many advisors were until recently telling clients to hold off on wealth transfers on expectations the taxes on such transfers may be repealed. That has changed amid the intensifying credit market turmoil.
"The chances of any elimination of federal or state taxes are virtually nil, given the budget environment after the bailout and future bailouts that are probably coming," Elliott said, referring to the $700 billion rescue package passed by U.S. Congress this month.
"And so I think you will see more people going ahead with taxable transfers with lower values of assets," he added.
Kohan of PWC said the pace of transfers would pick up after the November U.S. presidential elections.
"We will see more activity after the election. It will give us one significant touch-point of certainty that doesn't exist today," Kohan added.
(Editing by Jason Szep)
