It is said that the rich are different from you and me, and that is true. The assets of wealthy people can be grouped into a few categories, and trust us, they are different than regular people.
There is a lot of media coverage and discussion about the federal income tax, but despite that, the number of estates that actually pay this federal tax are proportionately small. Less than 12,000 estate tax returns were filed with the IRS in 2014, and of those, most of the estates did not even have to pay any federal estate taxes.
Thus, the estates that do pay the tax are those of the wealthiest of the wealthy in the country. By looking at the data on the returns where an estate tax was due it is possible to get an idea of what kind of assets wealthy people have.
As reported by the Wall Street Journal, in "When the Superrich Die, Here's What's in Their Wallets," the IRS has recently released that information for estate tax returns filed in 2014.
While the article breaks the data down into what the extremely wealthy few hold and what the just wealthy enough to pay the estate tax hold, there are things both groups have in common when they pass away.
Overwhelmingly, the most common asset is stock in publicly traded companies. The next most popular assets are closely held stock and bonds. Real estate, cash, retirement accounts and limited partnerships also make up a large percentage of the assets held by estates that are subject to the estate tax.
What this data reveals is that wealthy people have several different types of assets that need to be included in an estate plan.
It is important to treat each asset appropriately to limit the estate tax burden and to ensure that if any estate tax is owed, that the assets are liquid enough for the estate to pay it.
A qualified estate planning attorney can guide you through this process.
Reference: Wall Street Journal (October 30, 2015) "When the Superrich Die, Here's What's in Their Wallets"