Wealth preservation means taking steps to prevent the loss of assets that have been acquired by an entity. An entity seeking wealth preservation can be a person with assets he wishes to protect, or a business, like a corporation. The best ways to approach wealth preservation are to reduce the taxes on wealth, to protect against liabilities, and to plan the transfer of assets when the original owner is approaching death.
Reducing taxes can help further wealth preservation. To help reduce taxes, a company can move the physical location of the business to a place with a tax treaty with the country in which it does business. An area of the world with a tax treaty that reduces taxes for residents of another country or area is frequently called a tax haven. One famous tax haven, a British overseas territory called the Cayman Islands, has come under scrutiny for its tax practices but still remains a popular place for people and companies seeking to reduce taxes paid on wealth.
Another good tip for wealth preservation is to protect wealth against liabilities. Liabilities can include injuries involving vehicles or property owned by the entity. A common means of protecting assets from liabilities is to take out insurance policies that cover property owned by the company, including home, life, and auto insurance policies.
Estate planning is another important part of wealth preservation. When a person decides what will happen to his assets after death, he is planning his estate. As the assets of an estate are transferred to another person after the original owner of the wealth is deceased, the transferred wealth is subject to an estate tax, which can also be called the inheritance tax or death tax in less polite conversation. Even money from life insurance policies paid to the beneficiary of the policy are subject to the estate tax. By carefully planning the transfer of wealth in his estate, a person can reduce the amount taxed from his assets upon death.
Planning an estate usually requires an attorney well-versed in reducing the taxes paid on wealth after death. Techniques for wealth preservation by proper estate planning include maximizing investments and retirement benefits and arranging to gift the money or put it into a trust before death. In the United States, there is a limit on how much money a person can give any single person per year before being required to pay taxes on the gift, but no limit to how many people to whom he can give a tax-excluded gift.
