I’m a Financial Expert: 8 Money Moves the Rich Make When Planning a Move
Written by
Cindy Lamothe
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Amber Barkley
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When the wealthy plan a move, it’s not just about packing boxes — it’s a strategic financial event. According to experts, they often engage in meticulous planning to optimize their assets and liabilities during this transition.
GOBankingRates spoke with Dennis Shirshikov, head of growth at GoSummer and professor of finance at City University of New York, and Melanie Musson, finance expert with Insurance Providers, to discuss the money moves the rich make when planning a move.
“When wealthy people plan a move, they hire professional movers to package their items, pack them on a truck and unload them in their new house,” said Musson. “Wealthy people use their money to make updates and upgrades to their new house before they move in. They don’t have the financial constraint of needing to move in right away.”
Read below for more expert insights on wealthy money moves.
Building Up Savings First
According to Musson, in advance of moving, wealthy people build their savings, so they can make a down payment and purchase a home without the contingency of selling their current house.
“Even though they’ll usually sell their old house, the need to do so won’t hinder their chances of getting their offer accepted for their new house,” she explained.
Purchasing Custom Furniture
“Wealthy people get custom furniture for their new house,” Musson said. “They don’t try to make their couch and chairs work in a new space.”
Instead, she said they purchase the right size and color to complement the new space.
Tax Optimization Strategies
One of the first steps, according to Shirshikov, is consulting with tax advisors to understand the implications of moving to a new state or country. For example, relocating from a high-tax state like New York to a no-income-tax state like Florida can result in significant savings.
“They might accelerate income or defer deductions to take advantage of more favorable tax rates post-move,” he added.
Reevaluating Investment Portfolios
“Wealthy individuals often reassess their investment portfolios to ensure they align with their new circumstances,” said Shirshikov.
He said this could involve liquidating certain assets or investing in local opportunities.
“I recall a client who, before moving abroad, diversified into international markets to hedge against currency fluctuations,” he said.
Estate and Trust Planning
A move is an opportune time to update estate plans, Shirshikov explained. “They might establish new trusts or revise wills to reflect changes in residency laws.”
Setting up a trust in the new location can offer asset protection and tax benefits.
Real Estate Investments
Rather than simply purchasing a new home, the affluent may invest in additional properties in their new locale.
“This not only serves as an investment but also helps them integrate into the community,” said Shirshikov. “For instance, buying commercial real estate can open doors to local business networks.”
Philanthropic Endeavors
Engaging in philanthropy is another avenue, according to Shirshikov. He added that establishing donor-advised funds or foundations in the new area can provide tax advantages and strengthen community ties.
“I worked with a client who funded a local arts program, which not only benefited the community but also offered significant tax deductions,” he explained.
Non-Standard Options
- Private Placement Life Insurance: According to Shirshikov, this is a specialized insurance product that allows investment growth without immediate tax liabilities.
- Art and Collectibles Relocation: “High-net-worth individuals might use the move to appraise and insure valuable collections differently, sometimes storing them in tax-advantaged locations,” he said.
- Currency and Asset Conversion: “If moving internationally, they might convert assets to different currencies or invest in offshore accounts to mitigate risk,” Shirshikov explained.
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