[ad_1]
In 2020, as the world groaned under the weight of the Covid-19 pandemic and the global economy faced its worst recession since World War II, billionaires saw their wealth reach new heights.
Now, some are reaching out to their wealth managers to discuss how to preserve and sustain it amid the global ravages caused by the pandemic.
Others are studying how to push back all demands from governments and the general public to ensure that the wealthy bear their share of the cost of recovering the Corona virus, and how to deal with those demands.
“The stock market collapsed a year ago and by July my portfolio was back to where it was,” said Morris Pearl, former managing director of BlackRock who runs the Patriotech Millionaires (Patriotic Millionaires) group. believes that the rich should do more to close the gap between the rich and the poor. It was before that at the start of the year. It is now much higher. “
“The fundamental problem is this grave injustice which continues to worsen,” he added.
A series of Reuters interviews with seven millionaires and billionaires and more than 20 advisers advising the wealthy revealed that the plans discussed by the very wealthy range from philanthropy to transferring money and businesses to endowments or relocation of activities to other countries or to countries with favorable tax regimes.
“It is clear that the bill is on the way for everyone,” said Rob Weber, managing director of Tedman Constantia, a Swiss wealth management company. He added that some clients are also considering selling large assets, such as businesses, before tax brackets go up.
Wealth managers say Joe Biden’s election as president of the United States and expectations of tax hikes on the wealthy have notably led to a surge in client demand for the creation of endowment funds .
This will allow them to transfer money to their children or other parents under the currently exempt tax limit of $ 11.7 million per person.
During the election campaign, Biden suggested a return to levels in effect in 2009, when the exemption threshold was $ 3.5 million.
“We saw a boom in new endowments in the last quarter of last year,” said Alvina Low, chief wealth strategist at Wilmington Trust.
“The vast majority of our customers took a wait-and-see approach until the November elections, then the speed increased dramatically,” she added.
Extraordinary agility
Forbes claims that nearly two-thirds of the world’s billionaire class increased their fortunes in 2020, and the top beneficiaries have reached unprecedented levels of wealth thanks to the trillions of dollars policymakers have poured into the economy.
Forbes estimates that wealth fortunes increased 20% in 2020 in mid-December.
Many of them took advantage of investment opportunities that were not available to ordinary small investors, so they took advantage of market volatility in trading in short-term derivative financial instruments, according to Maximilian Kunkle, Senior Investment Manager for Family Fortunes at UBS Bank.
When asset prices collapsed, Kunkle said, many of the bank’s high net worth clients sold options or resorted to more sophisticated hedging strategies, helping them capitalize on their bets that prices would end. by increasing.
“Some of our clients have been extremely nimble in taking advantage of the turmoil in the market,” he added.
Now, as governments around the world grapple with rising debt and growing popular unrest, billionaires realize that the spotlight on their wealth will only get louder, interviews with Reuters.
Large numbers of wealthy people have awakened to the demands on the horizon from the tax authorities and have worked to speed up plans to inject money into endowment funds for their children.
Jason Kane, a wealth strategist, said many very wealthy families have also sought to transfer other assets, including businesses, to endowments, taking advantage of a “unique” position offered by interest rates. low interest rates and low valuations due to the pandemic, creating conditions that could generate significant tax savings in the years to come.
Ken, who works at Boston Private Wealth Consultants in the United States, said inquiries about these strategies tripled in the first seven or eight months of the pandemic.
“Between 75 and 80 percent of the families we speak to are convinced that this time was an opportunity and that they should take action,” he said.
Think about moving
Others around the world are taking even bolder steps by moving to countries and regions with tax regimes and corporations favorable to the super-rich.
Henley & Partners, a London-based global citizenship and residency consultancy firm, said demands from wealthy people seeking to leave their countries have skyrocketed during the pandemic.
She added that the number of calls from customers to the United States jumped 206% in 2020 from the previous year, while calls from Brazil rose 156%.
For many emerging countries, fears that the intense pressure on public services could lead to popular unrest has prompted younger generations of wealthy families in particular to seek opportunities abroad.
Charitable work
As countries continue to grapple with the fallout from the pandemic, economists are signaling a larger problem looming on the horizon – the separation between excess wealth and economic prosperity in general.
By early March, the fortunes of billionaires in the United States had increased by $ 1.3 trillion, about half since the start of the pandemic, according to research from the Institute for Policy Studies and the Americans for Tax Justice.
Thus, their wealth amounted to $ 4.2 trillion, or about a fifth of U.S. economic output in 2020, and nearly double the total wealth of the poorest half of the population of 330 million. inhabitants.
The pandemic has drawn the attention of many wealthy to social issues, according to Judy Spaltoff, head of the U.S. Department of Consulting and Charitable Services at UBS.
For many, this means the direction of philanthropy.
The Spaltoff team has seen an increase in the number of clients entering into a partnership with UBS’s Optimus Foundation which manages money transfers to issues such as Action Against Hunger, and donations have increased by 74% last year compared to 2019, reaching $ 168 million.
But millionaire Gary Stevenson, who lives in Britain and is a former Citibank trader, believes any plan to address this wealth disparity must include a wealth tax.
“We live in a situation where billionaires often pay less tax brackets on their income than ordinary workers,” he said.
“But I don’t think that taxing their income will just be enough … It just requires taxes that apply to wealth,” he added.
Source link
