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Trust & wealth planning
August 19, 2021
2 mins

Using margin and securities backed finance in your US wealth transfer strategy

August 19, 2021
2 mins
Jason Britton
MSBF Investment Finance Transactor
Lee Garsson
Wealth Planner
SUMMARY

A flexible way to obtain liquidity from financial assets towards wealth transfer programs without the sale of investments.


Changes to wealth taxes and near-term levies to support increased government spending are likely in multiple jurisdictions. The US is no exception to such legislative headwinds affecting the wealthy. Recent political developments suggest that Grantor Retained Annuity Trusts (or “GRATs”), which often form an essential part of US ultra-high net worth individuals’ wealth transfer plans, could also be impacted.

In these uncertain times, margin and securities backed finance (MSBF) loans could offer a potential longer-term solution to GRATs. MSBF is an extension of credit that uses financial assets as collateral and costs are often lower than other lines of credit.

In our latest whitepaper, we discuss how MSBF is a flexible way to access liquidity from financial assets without selling investments, thus retaining the full upside potential of your investments. A MSBF loan could potentially be established at GRAT inception with minimal cost, and loan proceeds could be used to fund it.

We believe MSBF could be a solution to longer-term GRATs, allowing the Grantor to lock-in the value of appreciated assets at any time before expiration by exchanging the value of the GRAT’s asset with MSBF loan proceeds in the form of cash.

For a deep dive into the inner workings of GRATs and incorporating MSBF in your wealth transfer strategy, please download our whitepaper here.

Insights

See our insights and the issues that matter for your wealth. 

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Insights

See our insights and the issues that matter for your wealth. 

View all insights