facebook1) What are the robo-advisors' stand on US Estate Tax? 2) How has it impacted the robo-advisors in terms of funds selection for portfolio construction? 3) Why is your strategy (with respect to US Estate Tax) superior to the other robo-advisors? - Seedly

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Anonymous

31 Aug 2020

Robo-Advisors

1) What are the robo-advisors' stand on US Estate Tax? 2) How has it impacted the robo-advisors in terms of funds selection for portfolio construction? 3) Why is your strategy (with respect to US Estate Tax) superior to the other robo-advisors?

The U.S. imposes a 40% estate tax rate on U.S. assets above a $60,000 exemption threshold on assets of the deceased nonresidents.

SeedlyTV S1E04

Discussion (6)

What are your thoughts?

Estate taxes- You need to be very very careful when you get joint accounts. In multiple court cases, even 'joint account with survivorship rights' have been turned down. Court will ask the account to be frozen and then divided into 50%. Until both parties have mirror WILLs, can get very complicated. If you look at IBKR, even for joint account, they are very clear that estate taxes may get applied. To avoid the other living party needs to prove or 'Trace' that the money being transferred were invested by the living person and not dead person (as estate taxes will apply on dead person money transfer). For IBKR joint account, you can only transfer to a Joint bank account. If your bank doesn't have joint survivorship clause, bank account will be frozen and any money coming in will be frozen. I assume Saxo being a broker, may have same concept- please check

I enquired about Stashaway roboadvisor and US-Estate Tax. Their response was the following - " With StashAway, the ownership of the US assets is indirect as StashAways' legal entity (Asia Wealth Platform Pte Ltd) is the one that holds the assets, and fractionalize them for our clients. Because of this structure, our clients should not be subject to this estate and gift tax."

So looks like even though they have robo-advisor they have got the estate tax part covered.
I am not sure if there are other downsides to this.

M

View 1 replies

Samuel Rhee

Samuel Rhee

15 May 2019

Level 8·Chief Investment Officer at Endowus

Dear Anonymous,

There are no estate duties in Singapore and the US estate tax can be avoided alto...

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