In this conversation with Bernstein Private Wealth, this publication asked the US business about adopting a risk management approach toward tax and investment, the benefits – and challenges – of moving overseas, and more.

Bernstein Private Wealth says it is taking a cautious approach to the kind of tax and other government changes that might happen after the November elections, and it isn’t crafting asset allocation or location with specific political implications in mind. 

One outcome that appears set in stone is that doubling exemptions for estate tax during the Trump administration, in 2017, will “sunset” at the end of 2025, Shelly Meerovitch, senior national director, global families, Bernstein Private Wealth, told this publication. 

“Taxes are a key strategic and tactical driver of asset allocation. The after-tax return that a client gets to enjoy is what matters, so the expected return on any short-term, tactical investment idea has to consider a client’s tax rate and what they will actually receive in after-tax profit,” Meerovitch said. “From a strategic standpoint, having a strong tax harvesting strategy as part of your equity allocation can help offset gains elsewhere in your portfolio and noticeably improve a client’s after-tax return.” 

The Tax Cuts and Jobs Act of 2017 doubled the federal estate, gift, and generation-skipping transfer tax exemption from $5.49 million in 2017 to $11.18 in 2018. Since then, the exemption has risen alongside inflation to $13.610. On January 1, 2026, the exemption is scheduled to automatically reset (or sunset) to $5,000,000, indexed to inflation (about $7 million), unless Congress acts before that date.

Whatever happens on the ground with tax, diversification and associated risk management are essential. For example, some alternative investments can reduce volatility and protect risk-adjusted returns. Clients, of course, must understand what they need in terms of liquidity, Meerovitch said. 

The firm does not have a standard asset allocation/location approach for clients. 

“There is no standard approach for all clients [at the firm]. We start with client specifics and look at who the client is and what they want,” she said. 

Location
Asked about the mood ahead of the US election, Meerovitch said she sensed there was less noisy discussion on taxes than there was in 2020. There have been conversations about rises to capital gains tax. Politically, there are “so many steps to go through to get sweeping changes in taxes,” she said.

Another trend is that the firm is having more enquiries from people thinking of relocating overseas, she said. Covid, domestic US politics, geopolitics and other forces have added to an interest in diversifying where US citizens want to live.

This point has been echoed by specialist firms catering to US expats and would-be expatriates.

“Giving up US citizenship is not something they easily do and it is a very drastic decision to follow through on,” Meerovitch said. “Conversations have tended to start with someone saying `what are my options?’”

“We’re seeing an increased interest in Americans exploring overseas options. This is a trend that we saw starting with the pandemic when some of our clients experienced limitation on personal travel for the first time. There are many contributing factors to this trend. With increased global mobility, we also see more families with adult kids and grandchildren living out of the US for work and other reasons and that leads some US grandparents to think about purchasing a home in the country where their kids now live,” Meerovitch said. 

She referred to citizenship/residency-by-investment schemes, sometimes called “golden visas.”

“The chatter about golden visas has some of our clients asking about moving abroad, although very few Americans are willing to give up their citizenship and relocate overseas purely for tax savings. Some of the geopolitical conflicts that we’ve seen over the past few years in Europe and the Middle East cause anxiety and make clients want to explore diversification not only of their investments but also of the location of their residences and the countries of their citizenship. We don’t expect to see this trend changing. Families with global exposure – of assets, family members, and investments – are becoming more common,” she said. 

US expats, such as those in business, can struggle to obtain a foreign financial account because Americans are seen as presenting particular compliance challenges, due to the worldwide tax regime operated by the Internal Revenue Service.

“Americans moving abroad need to be very careful about their investments,” Meerovitch added. If they move to the UK, for example, they must consider the UK reporting status of any investments they have in addition to the US tax character of that investment.