U.S. On Low End Of World’s Estate Taxes
The United States has among the lowest estate and inheritance taxes compared with other developed and emerging countries, according to a recent analysis by UHY International.

The study by UHY International, a global network of professional services firms that provide audit, tax and consulting services, looked at inheritance taxes paid by individuals in 23 countries.

The study found that the United Kingdom and Ireland impose the highest taxes on inheritances of all major economies, with Ireland imposing a 26% tax and the U.K. imposing a 25.8% tax on estates of $544,862 or more. The tax threshold is expected to remain the same in the U.K. for at least another four years, UHY said.

The U.S. exempts the first $5.3 million of an estate before imposing a tax. The exemption on the federal level is increased each year for inflation.
The level at which inheritance tax thresholds are set is a crucial issue for middle class families, said UHY, adding that if exemptions are not adjusted with inflation it means that estate taxes will affect a larger portion of the population.

With the current high threshold for U.S. federal estate taxes, the majority of estates will escape such taxation, said Joseph Falanga, partner and member of the Private Client Services Group at UHY LLP, a member of UHY International.

Only 14 of the 50 states have an inheritance tax.

“While a majority of the states do not impose an estate tax, many retirees consider the existence of such taxes when selecting a retirement location,” Falanga said. “With the anti-tax movement continuing to gain ground in the U.S., we may well see more states increasing their exemption or repealing their estate taxes.”

Several major developed and emerging economies, including Australia, New Zealand, Israel, India and Russia, have repealed inheritance taxes in a bid to encourage more wealth creation and transmission, he added.

Generally, countries do not assess an inheritance tax on estates passing from a deceased spouse to the surviving one.

After Ireland and the United Kingdom, Japan, France and Spain have the highest taxes. The Netherlands, Germany and Nigeria also have taxes of 10% or more.

In addition to the countries that repealed their estate taxes, China, Croatia and UAE are among the 23 looked at that have no inheritance tax.
—Karen DeMasters

SRI Core Concern Of Young Investors, Calvert Says
Sustainable and responsible investing has moved out of the shadows to become a core concern of young, wealthy investors, according to research by Calvert Investments.

Moreover, financial advisors who can help these investors address their environmental, social and governance concerns with their investment dollars stand a good chance of retaining them as clients, Lynne Ford, executive vice president at Calvert Investment Distributors, said during a recent press briefing in New York.

“SRI (socially responsible investing) is hardly a niche anymore,” Ford said. SRI resonates with investors of the Gen-X and Millennial generations in a way it did not with older ones, she said.

An internal study conducted by Calvert in the fourth quarter of 2013 found that 57% of investors 35 and younger were familiar with SRI, compared with 29% of older investors. These younger investors were also three times as likely to have discussed SRI investing with friends and family.

Younger investors were 60% more likely to have researched, inquired about or considered investing in SRI mutual funds, and were twice as likely as older investors to have actually made that type of an investment, according to Calvert’s research.

“Issues of sustainability offer advisors an opportunity to engage with their clients,” Ford said.

But the study found advisors and investors weren’t frequently connecting on the issue of sustainability. Eighty-two percent of advisors said they waited for clients to bring up the topic, while 72% of investors said they waited for advisors to initiate a conversation.

Investors and advisors were also at odds about the reasons for choosing SRI. Half of investors surveyed said their two chief reasons for choosing SRI were “an opportunity for strong investment performance” and to “diversify the portfolio.”

For their part, 82% of advisors said their top reason for selecting SRI was to “invest in a way that is consistent with my clients’ values.”
—Michael S. Fischer