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Related Terms

DEFINITION

Wealth Preservation

Wealth preservation is defined as a set of strategies and financial practices that are executed to protect and maintain the wealth and assets of an individual or family over time. In practice, this can include risk mitigation from market volatility, inflation, legal claims, and so on. Wealth preservation is usually a part of a larger financial plan aimed at increasing wealth.

Synonyms

Asset protection, capital preservation

Acronyms

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Synonyms

Asset protection, capital preservation

Acronyms

Examples

A family office creates a wealth preservation plan for a high-net-worth family and sets up a series of trusts to protect their assets from high estate taxes and potential legal liabilities. Furthermore, to mitigate market volatility, the family’s investment portfolio is diversified across multiple asset classes, including bonds, real estate, and conservative equities.

FAQ

Common wealth preservation strategies include diversification of investments, setting up trusts for estate planning, purchasing robust insurances, hedging strategies and implementing tax-efficient structures.

Wealth preservation focuses on protecting existing assets from risks and ensuring long-term stability. Wealth accumulation on the other hand focuses on growing a person’s or family’s wealth over time. While both wealth preservation and wealth accumulation are often key parts of the same financial plan, they serve different purposes.

High-net-worth and ultra-high-net-worth individuals face unique risks, such as significant tax burdens, asset linquidity and large downturns on large asset portfolios. Wealth preservation strategies are essential to minimize the risk of this heavily impacting the wealth of the person or family in question.

Related Terms

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