Just became a millionaire

bostonerimus

Deleted_User said:

bostonerimus said:

DairyQueen said:

We have been 'paper' millionaires for over a decade. Why doesn't it feel that way?

Because how much money you have does not (or at least should not) define you. Also I think people who have become wealthy over many years by thrift and regular saving/investing tend to keep the same lifestyle they had before they become "rich".

But being wealthy comes with it's own set of issues...I won't call them problems. There's LTA and tax and you quickly realize that giving money away is a new goal. Estate planning becomes a big issue. Right now I'm trying to stay below some US government IHT thresholds and almost battling against stock market and home price increases.

$11M exemption threshold? If you are ever stuck looking for someone to donate to, I could be of assistance.

I'm single so half of that for Federal. I will have to move or give a lot to charity to avoid state estate taxes. When stocks go up by 10% plus, things can actually start to runaway a bit without a plan.

[Deleted User]

bostonerimus said:

Deleted_User said:

bostonerimus said:

DairyQueen said:

We have been 'paper' millionaires for over a decade. Why doesn't it feel that way?

Because how much money you have does not (or at least should not) define you. Also I think people who have become wealthy over many years by thrift and regular saving/investing tend to keep the same lifestyle they had before they become "rich".

But being wealthy comes with it's own set of issues...I won't call them problems. There's LTA and tax and you quickly realize that giving money away is a new goal. Estate planning becomes a big issue. Right now I'm trying to stay below some US government IHT thresholds and almost battling against stock market and home price increases.

$11M exemption threshold? If you are ever stuck looking for someone to donate to, I could be of assistance.

I'm single so half of that for Federal. I will have to move or give a lot to charity to avoid state estate taxes. When stocks go up by 10% plus, things can actually start to runaway a bit without a plan.

Funny enough, it is a potential issue for me because we own some US assets and in this case IRS helpfully counts worldwide assets.  My plan is to sell out US assets before I decide to pop the clogs. 

Albermarle

michaels said:

Albermarle said:

fizio said:

On an earlier point I think being a ‘asset’ millionaire when you include a home and pension is within grasp of many people who are HRT with a ‘corporate’ job and the real challenge is to get to 1m excluding those 2 asset classes. Once retired its a different measure as you can downsize and access the pension fund so getting your hands on 1m is more do-able.

As said earlier there are various definitions of a millionaire.
An asset millionaire family/couple being the most numerous( about 15% of the population according to the ONS )  and at the other end to lead a millionaire lifestyle you need a few Millions 

ONS statistics show that if a couple has £2M in assets ( including pensions and property ) that includes about 5% of the population.

I wonder what those percentages would be if you valued DB pensions at the cost of buying an equivalent annuity?

These surveys are fraught with problems in exactly how to measure items and many assumptions are made .
Having had a look at the details then I find these points .
Estimates of the value of pension pots where a specific level of payment is guaranteed at retirement, such as occupational defined benefit type schemes (actively contributing or preserved), or for pensions in payment where an annuity has already been purchased, are calculated using expected or received retirement income with external economic indicators such as annuity rates and discount factors.

Perhaps more importantly 

 We do not include a measure of the expected individual value for future public pension payments, as there is no contractual obligation for the government to maintain future pension payments at levels currently expected. In which case, a consistent alternative to our approach would be to include the effective value of an individual’s entitlement to the entire existing social security system.

In which case if public sector pensions were added then more than 5% of households would be worth £2Million 

bostonerimus

Deleted_User said:

bostonerimus said:

Deleted_User said:

bostonerimus said:

DairyQueen said:

We have been 'paper' millionaires for over a decade. Why doesn't it feel that way?

Because how much money you have does not (or at least should not) define you. Also I think people who have become wealthy over many years by thrift and regular saving/investing tend to keep the same lifestyle they had before they become "rich".

But being wealthy comes with it's own set of issues...I won't call them problems. There's LTA and tax and you quickly realize that giving money away is a new goal. Estate planning becomes a big issue. Right now I'm trying to stay below some US government IHT thresholds and almost battling against stock market and home price increases.

$11M exemption threshold? If you are ever stuck looking for someone to donate to, I could be of assistance.

I'm single so half of that for Federal. I will have to move or give a lot to charity to avoid state estate taxes. When stocks go up by 10% plus, things can actually start to runaway a bit without a plan.

Funny enough, it is a potential issue for me because we own some US assets and in this case IRS helpfully counts worldwide assets.  My plan is to sell out US assets before I decide to pop the clogs. 

US estate taxes will only apply to US residents or citizens

NannaH

Some people don’t seem to realise how precarious it is not to be married to a partner with significantly more in the way of assets.  Especially when they have sacrificed earning capacity to raise children.
I hope OP has a cast iron will and good life cover with clear beneficiaries and written in trust, protecting both his partner and his children. 

It’s far, far simpler to be married though. 

EdSwippet

bostonerimus said:

US estate taxes will only apply to US residents or citizens

Not so, I'm afraid. The US attempts to apply its estate tax in a confiscatory manner to the 'US situs' holdings of nonresident aliens. And unlike US citizens, who have a $11mm exemption, US nonresident aliens are allowed a mere $60k exemption.

Nonresidents, Think You Are Safe from U.S. Gift and Estate Taxes? Think Again.

If you are a nonresident who is NOT domiciled in the U.S., then the U.S. estate tax (at rates of 18% to 40%) would be levied on any “U.S. situs” assets you own in excess of $60,000 at the time of your death. U.S. situs assets generally include real and tangible personal property located in the U.S., business assets located in the U.S., and stock of U.S. corporations.

The most common U.S. situs assets reported on a U.S. nonresident estate tax return include U.S. real estate and U.S. stocks.

Fortunately, the UK and Canada both have decent US estate tax treaties, and a good estate tax treaty will blunt most or all US estate tax issues for the majority of investors from those treaty countries.

However, the number of countries with a good US estate tax treaty is tiny. Residents of countries lacking a US estate tax treaty may well be running significant risks if they invest directly in US stocks or US domiciled ETFs. Most should ideally be using intermediate holding corporations, non-US domiciled ETFs, or other similar "arms-length" blockers.

DairyQueen

NannaH said:

Some people don’t seem to realise how precarious it is not to be married to a partner with significantly more in the way of assets.  Especially when they have sacrificed earning capacity to raise children.
I hope OP has a cast iron will and good life cover with clear beneficiaries and written in trust, protecting both his partner and his children. 

It’s far, far simpler to be married though. 

I think OP's partner needs her head examined. She has sacrificed her earning and pension potential for many years and is totally reliant on the largesse of OP (who, apparently 'owns' most of their assets).

Rule 1... always have your own income regardless of whether you are married
Rule 2... never depend on a significant other (and, especially a non-spouse) to provide for you.

I note that OP refers to 'their' (his?) assets as 'our's'. That definition will last as long as the relationship. His partner has no rights to 'his' assets other than a vicarious connection via their children.

Sorry OP but this arrangement may work to your advantage (as I am sure you are aware) but your SO is extremely vulnerable (as I am sure you are equally aware).

Our legal system discriminates harshly between those who are married and those who are not. 

[Deleted User]

bostonerimus said:

Deleted_User said:

bostonerimus said:

Deleted_User said:

bostonerimus said:

DairyQueen said:

We have been 'paper' millionaires for over a decade. Why doesn't it feel that way?

Because how much money you have does not (or at least should not) define you. Also I think people who have become wealthy over many years by thrift and regular saving/investing tend to keep the same lifestyle they had before they become "rich".

But being wealthy comes with it's own set of issues...I won't call them problems. There's LTA and tax and you quickly realize that giving money away is a new goal. Estate planning becomes a big issue. Right now I'm trying to stay below some US government IHT thresholds and almost battling against stock market and home price increases.

$11M exemption threshold? If you are ever stuck looking for someone to donate to, I could be of assistance.

I'm single so half of that for Federal. I will have to move or give a lot to charity to avoid state estate taxes. When stocks go up by 10% plus, things can actually start to runaway a bit without a plan.

Funny enough, it is a potential issue for me because we own some US assets and in this case IRS helpfully counts worldwide assets.  My plan is to sell out US assets before I decide to pop the clogs. 

US estate taxes will only apply to US residents or citizens

Nope. https://www.taxtips.ca/personaltax/usestatetax.htm

[Deleted User]

Fortunately, the UK and Canada both have decent US estate tax treaties, and a good estate tax treaty will blunt most or all US estate tax issues for the majority of investors from those treaty countries.

IRS still gets you if they think you have too much worldwide assets, even if they have a treaty.  Its a state-sponsored scum. 

EdSwippet

Deleted_User said:

Fortunately, the UK and Canada both have decent US estate tax treaties, and a good estate tax treaty will blunt most or all US estate tax issues for the majority of investors from those treaty countries.

IRS still gets you if they think you have too much worldwide assets, even if they have a treaty.  Its a state-sponsored scum. 

Scum, or scam? But ... yes (to both!). It's the fact they rope your worldwide assets, not just your US ones, into the calculation, that causes the pain. There's credit for non-US estate taxes paid, but that might not be enough to wipe out a US estate tax liability. Blunts, but may not eliminate.

Like you, I have investments still in the US, from having worked there. And also like you, I very much plan to extract these from the US before I croak.