Stuff. Lots of stuff.
How do we know this?
Through estate tax data released by our friends over at the IRS, since only the very wealthy pay federal estate taxes these days.
A recent article in The Wall Street Journal, titled “When the Superrich Die, Here’s What’s in Their Wallets,” reported that the returns in the data sample were all filed in 2014.
This means the data was for estates of those who died in 2013, after the federal estate tax exemption was pegged at $5 million per taxpayer (as adjusted for inflation) and up to $10 million per couple.
The inflation adjusted exemption numbers for 2013 were $5.25 million per taxpayer and $10.5 million per couple.
So, when Congress increased the exemption and indexed it to inflation, it effectively exempted nearly all of the 2.6 million people who die in the U.S. each year.
Of the fewer than 12,000 estate tax returns filed in 2014, more than 50% of owed no estate tax to the IRS.
Now, back to the title of this blog post.
What stuff do the wealthiest American decedents own at death?
For starters, the IRS data reveals little regarding estate planning tools and techniques to legally shift asset ownership and provide for reduced valuations prior to death.
That noted, of decedent taxpayers with north of $50 million (the top tier) many were heavily invested in stock and closely held businesses.
Those who were rich enough to file an estate tax return–but not at the very top–relied much more heavily on retirement accounts like 401k’s and on real estate.
One takeaway: the nature of one's assets changes as one becomes wealthier.
For example, the merely rich have houses, cash, farms and retirement accounts, while the very rich have bonds and real estate. But the very, very rich own art and stocks of businesses which they often want to pass to future generations.
In fact, art makes up 2.5 percent of the biggest estates and just 0.6 percent of those who had between $10 million and $20 million.
And we are not taking velvet Elvis art or works featuring dogs playing poker.
The richest decedents tend to leave smaller shares of their estates to their heirs and this is not simply due to estate shrinkage through a federal estate tax haircut of 40% above the applicable exemption limits.
No, these decedents tend to have larger debts and make more generous charitable contributions.
Here is another surprise yielded by the IRS data: charities collected $18.4 billion in bequests as gleaned from the returns filed in 2014 and 58% of that came from just 1.4% of the estates filing estate tax returns.
This is all very interesting in a TMZ sort of way.
One common characteristic shared by the mega-wealthy and the rest of us?
We all benefit individually and collectively when we take personal responsibility for everyone we love and everything we have through proper estate (and estate tax) planning.
Contact an experienced estate planning attorney to help you with your unique planning objectives.
So, how do you find an "experienced" estate planning attorney?
First, ask around. Friends, family and other professional advisors are trustworthy sources.
Second, conduct an "organic" search on "Google" for "estate planning" near you (e.g., "Estate Planning Anytown MoKan").
Third, either way, verify. Check out the education, experience, ratings and client reviews of any attorney before you contact him or her.
In fact, I use both of these services to thoroughly vett attorneys before referring members of our "client" family for legal help in other areas of law or for matters in jurisdictions outside Kansas or Missouri.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Wall Street Journal (October 30, 2015) “When the Superrich Die, Here’s What’s in Their Wallets”