How Nevada’s Structural Alpha℠ Works for You and Your Family
For decades, Nevada has been a magnet for affluent American and international families.
From the gold and silver barons who enjoyed Lake Tahoe, to the rise of the entertainment and gaming businesses in Las Vegas, Nevada has always attracted, and in some cases built, family empires.
Today, many household names across the country use Nevada for their estate planning needs because of Nevada’s Structural Alpha℠.
What is Alpha?
Alpha is defined as an investment return level over an expected rate of return based on risk. It is a popular measurement tool to gauge the ability of a portfolio manager to provide risk-adjusted return levels above risk expectations on a consistent basis.
The problem with Alpha is that it often proves elusive to replicate over time. Alpha rarely repeats itself and often encourages investors to chase certain hot sectors or styles of investing that soon underperform, often dramatically. This leads to increased risk-taking in portfolios and typically even greater underperformance.
Should investors then minimize the importance of Alpha? No. The key is utilizing another type of Alpha – Structural Alpha.
What is Structural Alpha?
Unlike investment manager Alpha, Structural Alpha is predictable and repeatable. It’s simple to define, produces better portfolio designs and return levels, and can immediately pass a cost-benefit analysis. Structural Alpha is designing the best structure for your assets to maximize after-tax returns and predictability, based on your goals. Structural Alpha is pure Alpha – adding to after-tax returns without adding any investment risk – simply by structuring your assets more efficiently and effectively.
Working with Alliance Trust Company and leveraging Nevada’s Structural Alpha℠ can greatly benefit you and your family for generations to come. Nevada has developed a combination of business, trust, and income tax laws to attract wealth and estate plans from affluent families and organizations from around the world.
However, it is not only the super-wealthy that can benefit from Nevada’s Structural Alpha℠. As federal, state, and local taxes continue to increase, and assets have become the target of lawsuits – families across the globe are now exploring how Alliance Trust Company can help them benefit from Nevada’s Structural Alpha℠ to address these problems and risks.
Structural Alpha in Nevada
Structural Alpha comes from picking the best environment for your estate plan and portfolio assets. Many families employ multiple strategies to ensure their assets are efficiently transferred from one generation to another.
Charitable interests are recognized, and taxes and other expenses are minimized. Some strategies will leverage lifetime gift and estate tax exemptions while other strategies may protect assets by using Dynasty Trust provisions to minimize estate tax and while maximizing your legacy and goals.
Tax shifting between generations, protective features, options of Limited Liability Companies (LLCs), and other discounting techniques for closely held companies can also be applied depending on where you execute these strategies. Alliance Trust Company (located in Nevada) can facilitate and administer any and all of these options for you and your family.
Where you choose to execute these strategies is critical. Some states compete for the favorable range of laws that allow this type of planning and design to work while others do not. Many strategies complement each other, and families typically like to see their strategies executed and administered by the family’s closest trusted advisors, for the benefits of continuity and continuous depth of the relationship the family and advisor-team. For this reason, families often look for the state with the most flexibility and best options to execute their strategies.
Simply put, Nevada’s trust situs is ideal for domestic and global clients and is the best state for Structural Alpha.
For more information on the advantages of Structural Alpha Trusts, please contact Alliance Trust Company.