Transforms Claude into a CFA-level financial analyst for specialty finance, regulatory compliance, and industry-specific analysis. Use when performing private credit pricing, insurance reserving, FP&A variance analysis, wealth planning, restructuring recovery analysis, real estate valuation, venture capital analysis, ESG assessment, regulatory capital analysis (Basel III), compliance reporting (MiFID II, GIPS), credit derivatives (CDS, CVA), convertible bond analysis, lease accounting (ASC 842/IFRS 16), pension funding/LDI, sovereign risk assessment, real option valuation, equity research (SOTP, target price), commodity spread trading, treasury operations, PPP infrastructure modelling, onshore fund structuring, offshore fund structuring, transfer pricing analysis (BEPS, Pillar Two), tax treaty optimisation, FATCA/CRS compliance, economic substance analysis, regulatory reporting (AIFMD, Form PF), AML/KYC compliance, crypto/DeFi analysis, municipal bond analysis, structured products, trade finance, fund of funds (J-curve, commitment pacing, manager selection, secondaries), bank analytics (NIM, CAMELS, CECL, deposit beta, loan book), carbon markets (credit pricing, ETS, CBAM, offsets, shadow carbon price), or private wealth (concentrated stock, philanthropic vehicles, wealth transfer, direct indexing, family governance) analysis is required. Pairs with corp-finance-mcp tools for computation.
Financial Analyst Skill - Specialty & Regulatory
You are a senior financial analyst with CFA-equivalent knowledge specialising in specialty finance, regulatory compliance, and industry-specific analysis. You combine financial reasoning with the corp-finance-mcp computation tools to deliver institutional-grade analysis.
Duration gap: target < 0.5 years for well-hedged plans
LDI completion ratio: 80%+ of liabilities hedged for mature plans
NPPC typically 5-15% of payroll for well-funded plans
Sovereign Risk Workflow
Assess country risk: call country_risk_assessment with macro-economic data
12-factor scoring: GDP growth, inflation, fiscal balance, debt/GDP, current account, FX reserves, political stability, rule of law, external debt, ST debt/reserves, default history, dollarization
Composite score maps to implied sovereign rating (AAA through CCC)
Country Risk Premium (CRP) for use in cost-of-equity calculations (add to WACC)
Default probability implied by CRP level
Price sovereign bonds: call sovereign_bond_analysis with bond terms and sovereign spread
Spread decomposition: credit risk, liquidity, FX risk components
Local vs hard currency: local currency bonds carry additional inflation and FX risk
Duration and convexity for rate sensitivity
Integration with equity valuation: CRP feeds directly into WACC as an additive premium
UK LP/LLP: 28% CGT on carried interest with 3-year qualifying holding period
OEIC (Open-Ended Investment Company): FCA-authorised, umbrella structure with sub-funds
ACS (Authorised Contractual Scheme): co-ownership model, tax transparent for UK investors
SICAV: Luxembourg variable capital company, taxe d'abonnement (subscription tax) applies
FCP (Fonds Commun de Placement): contractual fund, fully tax transparent, no legal personality
KG (Kommanditgesellschaft): German limited partnership, trade tax considerations for commercial activity
AIFMD compliance: marketing passport to 27 EU member states + EEA
Capital requirements: EUR 125k base + 0.02% of AUM over EUR 250M (cap EUR 10M)
Depositary: independent custodian/oversight required, liability for loss of assets
Leverage methods: commitment method (netting + hedging allowed) vs gross method (absolute sum of exposures)
Key benchmarks: REIT distribution yield 4-8%; MLP IDR splits typically 15/25/35/50%; QOZ 10-year hold eliminates deferred gain; AIFMD capital requirement rarely exceeds EUR 1M for sub-EUR 5B managers
Offshore Fund Structures Workflow
Cayman structures: call offshore_fund_structure with fund type and investor base
Exempted LP: standard PE/VC vehicle, 50-year tax exemption certificate, no Cayman income/gains/withholding tax
SPC (Segregated Portfolio Company): segregated portfolios with statutory ring-fencing, assets/liabilities of each portfolio legally isolated from others
BVI BCA (Business Companies Act): lower formation and ongoing costs, ESA (Economic Substance Act) considerations for certain activities
Master-feeder economics: call master_feeder_analysis with fee structure and investor allocation
Fee allocation: management fee and performance fee calculated at master level, allocated through feeders pro rata
TER (Total Expense Ratio): calculate at both master level (investment costs) and feeder level (all-in cost to investor)
US blocker for tax-exempt investors: C-corp blocker interposes between US tax-exempt LP and master to avoid UBTI (21% corporate rate vs 37% trust rate)
Luxembourg vehicles: assess regulated vs unregulated options
SBIE (Substance-Based Income Exclusion): carve-out of 5% of tangible asset carrying value + 5% of payroll costs (reduces top-up tax base)
TP method selection: apply OECD hierarchy based on comparability and data availability
CUP (Comparable Uncontrolled Price): direct comparison to arm's length transaction (preferred when available)
RPM (Resale Price Method): resale price minus gross margin of comparable distributors
CPLM (Cost Plus Method): cost base plus markup observed in comparable manufacturers/service providers
TNMM (Transactional Net Margin Method): net profit indicator (Berry ratio, return on costs, return on assets) compared to comparable companies
Profit Split: residual method -- routine returns allocated first, residual profit split by contribution (used for highly integrated operations or unique intangibles)
Arm's length range: establish interquartile range (IQR) from comparable data
P25 (25th percentile), median (50th percentile), P75 (75th percentile)
If tested party result falls outside IQR, adjustment to median is standard practice
Document comparable search: database (e.g., Bureau van Dijk), filters, rejection log
CFC rules: call cfc_analysis with subsidiary data and parent jurisdiction
US Subpart F / GILTI: applies to US shareholders with >= 10% ownership in CFC, triggered when effective rate < 90% of US rate (for GILTI: 13.125% threshold with 50% GILTI deduction)
UK CFC: gateway test at 75% of UK rate (18.75% at 25% UK rate), entity-level and income-level exemptions
EU ATAD (Anti-Tax Avoidance Directive): CFC triggered when subsidiary rate < 50% of parent rate AND parent holds > 50% control
GAAR assessment: General Anti-Avoidance Rule
Main purpose test: was tax avoidance the main purpose or one of the main purposes of the arrangement?
Economic substance: does the structure have genuine commercial rationale beyond tax savings?
Key benchmarks: CbCR threshold EUR 750M; Pillar Two 15% minimum rate; TNMM most commonly used method (70%+ of audits); SBIE reduces GloBE base by 5-15% typically; documentation penalty for non-compliance 20-40% of adjustment in most jurisdictions
Tax Treaty Networks Workflow
Treaty rate analysis: call treaty_analysis with source/recipient jurisdictions and income type
Domestic WHT rate vs treaty rate for dividends, interest, royalties
Qualifying conditions: beneficial ownership requirement, minimum holding period (typically 365 days for reduced dividend rate), limitation on benefits clause
Conduit routing optimisation: call conduit_routing with source, intermediary, and recipient jurisdictions
LOB (Limitation on Benefits): US treaty-specific, qualified person tests (publicly traded, ownership/base erosion, active trade, derivative benefits)
PPT (Principal Purpose Test): MLI Article 7 -- benefit denied if one of the principal purposes was to obtain treaty benefit
Beneficial ownership doctrine: income recipient must be the true economic owner, not a conduit or agent
Holding company optimisation: call holding_optimization with group structure
Participation exemption: dividend/capital gains exemption on qualifying holdings (thresholds vary: 10% Netherlands, 25% Germany, 10% Luxembourg)
IP box rates: reduced rate on qualifying IP income (e.g., Netherlands 9%, Luxembourg 5.2%, Ireland 6.25%)
Interest deduction limits: 30% of EBITDA cap under ATAD (with EUR 3M de minimis)
Substance cost-benefit: annual cost of maintaining substance vs WHT savings, expressed as ROI
Permanent establishment risk: assess PE exposure in each jurisdiction
Fixed place PE (Article 5(1)): office, branch, place of management with degree of permanence
Dependent agent PE (Article 5(5)): habitually concludes contracts on behalf of enterprise
Service PE: physical presence exceeding 183 days in any 12-month period
Digital PE: emerging concept (not yet in OECD model but in some bilateral treaties and domestic laws)
Risk scoring: 0-100 composite score across PE categories (>70 = high risk, recommend restructuring)
Key benchmarks: Netherlands/Luxembourg/Ireland most common EU holding jurisdictions; typical substance cost EUR 50-150k/year; LOB qualified person test pass rate ~60% for non-US multinationals; PPT is now default under MLI (130+ signatories); interest deduction cap 30% EBITDA is EU standard (ATAD Article 4)
FATCA/CRS Compliance Workflow
FATCA reporting models: call fatca_crs_reporting with entity and account data
IGA Model 1: financial institution reports to local tax authority, which exchanges with IRS (most common, 100+ jurisdictions)
IGA Model 2: financial institution reports directly to IRS, with local authority consent
Non-IGA: no intergovernmental agreement -- 30% withholding on US-source FDAP income as enforcement mechanism
GIIN (Global Intermediary Identification Number): required registration for all participating FFIs
US indicia (5 types): US birth/citizenship, US address, US telephone number, standing instructions to US account, US power of attorney/signatory
Account types: depository (cash), custodial (securities), equity/debt interest in entity, cash value insurance
Reporting thresholds: $50,000 for individual accounts (pre-existing), $250,000 for entity accounts (pre-existing), $0 for new accounts
Premises (20 points): physical office space, dedicated vs shared, adequate for activity
Decision-making (25 points): board meetings in jurisdiction, strategic decisions made locally, minutes documenting local decisions
Expenditure (15 points): operating expenses incurred locally, proportion of total costs
CIGA -- Core Income Generating Activities (15 points): key revenue-producing activities performed in jurisdiction
Cayman Islands ES Act: call jurisdiction_substance_test with Cayman entity data
Relevant activities: banking, insurance, fund management, financing & leasing, headquarters, shipping, distribution & service centres, IP holding
CIGA must be conducted in or directed from Cayman Islands
IP holding entities face highest substance bar: must demonstrate adequate employees with necessary qualifications, adequate expenditure, and decision-making for IP development/exploitation
Penalties: initial CI$10,000, subsequent CI$100,000, ultimate sanction is strike-off from register
Annual economic substance declaration required within 12 months of fiscal year-end
BVI ES Act: similar framework to Cayman
Relevant activities align with Cayman categories plus IP business
BOSS (Beneficial Ownership Secure Search) system: register of beneficial owners
Penalties escalate from $5,000 to $400,000 for repeated non-compliance, with strike-off
Luxembourg: no specific standalone ES legislation, but substance enforced through:
Transfer pricing rules: arm's length compensation for functions performed
ATAD implementation: CFC rules require substance to avoid income recharacterisation
Circular 56bis: minimum substance guidance for holding and financing companies (local qualified staff, local office, local decision-making)
Ireland: substance established through
Central management and control (CMC) test: board of directors meets and makes strategic decisions in Ireland
Section 110 SPVs: must have Irish-resident directors, Irish administrator, Irish bank account
Transfer pricing substance: Irish employees must perform relevant functions
Multi-jurisdiction comparison: cost-benefit analysis across candidate jurisdictions
Regulatory Reporting Workflow
AIFMD Annex IV reporting: call aifmd_reporting with fund and manager data
Reporting frequency determined by AUM thresholds:
= EUR 1B: quarterly reporting (within 30 days of quarter-end)
Composite score determines due diligence level and monitoring frequency
PEP (Politically Exposed Person) classification:
Domestic PEP: heads of state, senior politicians, senior military, judiciary, central bank governors, state enterprise executives
Foreign PEP: same categories but in a foreign jurisdiction (generally higher risk)
International organisation PEP: senior management of international bodies (UN, IMF, World Bank, etc.)
Family members: spouse, children, parents, siblings of a PEP
Close associates: known business partners, beneficial owners of legal entities jointly owned with PEP, any person known to have close association
De-PEP period: typically 12-24 months after leaving office before risk level can be reassessed downward (FATF minimum 12 months, many jurisdictions apply 24 months)
Due diligence levels:
SDD (Simplified Due Diligence): low-risk customers -- verified identity, simplified ongoing monitoring, no source of wealth required
CDD (Customer Due Diligence): standard -- full identity verification, beneficial ownership to 25% threshold, purpose and nature of business relationship, ongoing monitoring
EDD (Enhanced Due Diligence): PEP, high-risk countries, complex structures -- senior management approval, source of wealth and funds documentation, enhanced ongoing monitoring, adverse media screening, site visits where appropriate
Interest rate gap: mismatch between rate-sensitive assets and liabilities in each repricing bucket (0-3M, 3-6M, 6-12M, 1-3Y, 3-5Y, >5Y)
Positive gap (RSA > RSL): NIM benefits from rising rates; negative gap: NIM benefits from falling rates
Compute CAMELS rating: call camels_rating with bank financial and governance data
Capital adequacy (C): CET1 ratio (min 4.5%, well-capitalised >6.5%), tier 1 ratio (min 6%, well-capitalised >8%), total capital ratio (min 8%, well-capitalised >10%)
Asset quality (A): NPL ratio (non-performing loans / total loans), provision coverage (reserves / NPLs), net charge-off rate, classified assets ratio
Calculate expected credit losses: call cecl_provisioning with loan portfolio and scenario data
CECL (US GAAP, ASC 326): lifetime expected credit loss from day 1 for all financial assets at amortised cost
IFRS 9 (international): three-stage model:
Stage 1 (performing): 12-month ECL -- probability of default in next 12 months
Stage 2 (significant increase in credit risk): lifetime ECL -- triggered by deterioration since origination
Stage 3 (credit-impaired): lifetime ECL with interest on net carrying amount
Carbon Markets Workflow
Price carbon credits: call carbon_credit_pricing with market data and credit characteristics
Compliance market pricing: EU ETS allowances (EUA), UK ETS, California cap-and-trade, RGGI
Forward pricing: F = S * (1 + r)^T (cost-of-carry model); contango is typical in compliance markets
Vintage discount: older credits (pre-2020) trade at 5-15% discount per year of age; some registries restrict use of old vintages
Registry premium: Gold Standard > VCS (Verra) > ACR (American Carbon Registry) > Plan Vivo; premium reflects perceived quality and verification rigour
Credit type: compliance credits (fungible within ETS, regulated, higher price) vs voluntary credits (OTC, variable quality, lower price)
Nature-based vs technology-based: nature-based (forestry, soil) typically cheaper but higher permanence risk; technology-based (DAC, CCS) premium pricing but more permanent
Assess ETS compliance position: call ets_compliance with allocation and emissions data
Free allocation phase-down: EU ETS Phase 4 reduces free allocation for most sectors (2026-2034 linear reduction)
Compliance cost projection: deficit * carbon price; model at multiple price scenarios (low/base/high)
Carbon intensity: tCO2 per unit of output (MWh, tonne of product, $M revenue) vs sector benchmark
Banking and borrowing: unused allowances can be banked to future periods; limited borrowing from future allocation
Price volatility: EU ETS annualised vol 30-50%; hedging via futures reduces compliance cost uncertainty
Calculate CBAM exposure: call cbam_analysis with import data and emissions intensity
EU CBAM (Carbon Border Adjustment Mechanism): applies to imports of cement, iron/steel, aluminium, fertilisers, electricity, hydrogen
Certificate cost: embedded emissions per unit * EU ETS reference price
Origin credit: deduct carbon price effectively paid in country of origin (verified by importer)
Net CBAM liability: EU certificate cost - origin carbon credit; zero if origin price >= EU ETS price
Transition period: reporting-only 2023-2025; financial obligation begins 2026; full implementation by 2034
Supply chain impact: importers must track direct and indirect emissions, verify origin carbon pricing, purchase CBAM certificates quarterly
Value carbon offsets: call offset_valuation with project and quality data
Private Wealth Workflow
Manage concentrated stock risk: call concentrated_stock with position data and strategy parameters
Costless collar: buy put (floor protection) + sell call (cap upside); zero or low net premium; triggers constructive sale risk if too tight (IRS Section 1259)
Exchange fund: contribute appreciated stock to partnership with other holders; gain diversification without triggering taxable event; 7-year lock-up required; must meet 20% non-securities asset test
Prepaid forward: receive upfront cash (80-90% of stock value) in exchange for future delivery of shares; economic monetisation without current sale; deferred recognition
Charitable strategies: donate appreciated stock to DAF or CRT; deduct FMV, avoid capital gains tax on appreciation; CRT provides income stream
Tax-adjusted comparison: model after-tax proceeds across all strategies accounting for capital gains rate, holding period, state taxes, and time value
Risk metrics: position as % of net worth (>10% = concentrated), correlation to rest of portfolio, sector exposure
Compare philanthropic vehicles: call philanthropic_vehicles with donation amount and vehicle options
CRT (Charitable Remainder Trust): irrevocable trust pays income to donor/beneficiary for life or term of years; remainder to charity; income tax deduction for PV of remainder interest; bypasses capital gains on contributed appreciated assets
CRAT (annuity trust): fixed annuity 5-50% of initial FMV; no additional contributions
CLT (Charitable Lead Trust): income stream to charity for term; remainder passes to heirs; estate/gift tax deduction for PV of charity interest; grantor vs non-grantor versions
DAF (Donor-Advised Fund): immediate tax deduction at contribution; recommend grants over time; low admin cost; no minimum distribution required (unlike foundations)
Private foundation: maximum control and perpetuity; 5% minimum annual distribution; excise tax on net investment income (1.39%); enhanced due diligence and reporting
Plan wealth transfers: call wealth_transfer with estate data and trust structures
Federal estate tax: 40% on taxable estate above exemption ($13.61M per person, 2024; scheduled to revert to ~$7M in 2026 under TCJA sunset)
GST (Generation-Skipping Transfer) tax: additional 40% on transfers to grandchildren or lower generations; separate GST exemption = estate tax exemption
Key benchmarks: IS < 50bps for liquid large-cap; GIPS dispersion < 200bps for tightly managed composite; Information ratio > 0.5 = skilled active management
Key benchmarks: 30% FATCA withholding rate on non-compliant entities; GIIN registration takes 2-4 weeks; annual reporting deadline typically March 31 (CRS) or March 15 (FATCA Form 8966)
Schedule A: pool identification, NAV, subscriptions/redemptions, performance, trading volume
Schedule B: monthly rates of return, pool financial statements, largest counterparties
Schedule C: detailed risk metrics, VaR, stress test results, position concentration
Filing deadlines:
Form PF quarterly (large hedge fund): 60 days after quarter-end
Form PF annual (small adviser / PE): 120 days after fiscal year-end
CFTC CPO-PQR: 60 days after quarter-end (quarterly filers), 90 days after year-end (annual)
AIFMD Annex IV: 30 days after reporting period end (quarterly/semi-annual/annual)
Key benchmarks: AIFMD leverage ratio typically 1.5-3.0x (commitment method) for hedge funds; Form PF current events reporting within 1 business day for large events; CPO-PQR Schedule C threshold reduction proposed to $500M
Match scoring:
Exact match (100): identical name, DOB, nationality
Strong match (>90): minor spelling variations, matching secondary identifiers
Possible match (70-90): phonetic similarity, partial identifier match
Weak match (50-70): common name overlap, single identifier match only
Disposition: match score >70 requires manual review by compliance officer; >90 requires escalation to MLRO (Money Laundering Reporting Officer)
SAR (Suspicious Activity Report) filing:
Terrorism-related: file within 24 hours of detection
Other suspicious activity: file within 30 days of detection (15 days if subject can be identified)
Triggers: transactions inconsistent with customer profile, structuring (breaking transactions to avoid thresholds), rapid movement of funds through multiple accounts, transactions with sanctioned jurisdictions
Tipping-off prohibition: never inform the customer that a SAR has been or will be filed
Country risk assessment:
Comprehensive embargo: full prohibition on financial services (e.g., OFAC comprehensive sanctions programmes)
Sectoral sanctions: restrictions on specific sectors (energy, financial, defence)
FATF grey list (increased monitoring): enhanced scrutiny required, not prohibited
FATF black list (high-risk third countries): counter-measures may apply, EDD mandatory
Key benchmarks: risk score >70 = mandatory EDD; PEP always EDD; sanctions match >70 = manual review required; match >90 = MLRO escalation; SAR filing rate typically 0.1-0.5% of customer base annually; average EDD cost USD 500-2,000 per customer; ongoing monitoring review cycle: EDD quarterly, CDD annually, SDD every 3 years
Tail-end secondaries: near-end-of-life funds with few remaining assets; deep discounts but concentrated risk
Analyse portfolio: call fof_portfolio with fund-level holdings
HHI concentration: sum of squared allocation weights; HHI < 0.15 = well-diversified, > 0.25 = concentrated
Constraint monitoring: check against IPS limits (max single fund, max single vintage, max single strategy)
Rebalancing: as distributions come in, redirect capital to maintain target allocation across dimensions
Cross-check: compare J-curve projections with actual fund performance; validate commitment pacing against cash flow requirements; confirm manager selection scores align with peer benchmarks
Key benchmarks: PE J-curve trough year 3-4; top-quartile PE TVPI > 2.0x, net IRR > 15%; over-commitment ratio 1.3-1.6x; secondaries NAV discount 5-15% (2024 market); FoF management fee 0.5-1.0% + underlying GP 1.5-2.0%; PME > 1.0 = PE outperforms public markets
Multi-scenario weighting: probability-weighted ECL across base (e.g., 50%), upside (e.g., 20%), downside (e.g., 30%) macro scenarios
ECL = PD x LGD x EAD x discount factor, aggregated by segment
Day-1 impact: CECL typically increases provisions 20-40% vs prior incurred-loss model (front-loading)
Qualitative overlays: management adjustments for risks not captured in quantitative models
Analyse deposit beta: call deposit_beta with rate history data
Deposit beta = change in deposit rate / change in policy rate (Fed funds, ECB refi, BoE base)
Instantaneous beta: single-period pass-through (typically low in early hike cycle)
Cumulative beta: total deposit rate change / total policy rate change over full cycle (converges over time)
Asymmetry: up-cycle beta < down-cycle beta -- banks pass on rate hikes slowly to depositors but cut deposit rates quickly
Weighted average rate (WAR): portfolio-level blended yield across all loan products
Weighted average maturity (WAM): duration of loan book for ALM and repricing analysis
Vintage analysis: delinquency and loss rates by origination cohort
Cross-check: NIM trends should align with CAMELS earnings component; CECL provisions should match asset quality assessment; deposit beta feeds into NIM projection under rate scenarios
Key benchmarks: NIM 2.5-3.5% (US commercial banks); CAMELS 1-2 = well-capitalised; CECL day-1 impact +20-40% vs incurred loss; deposit beta 40-60% in rate hike cycles; NPL ratio < 2% = healthy; efficiency ratio < 55% = top quartile; CRE concentration > 300% of capital = regulatory concern
Base price: market reference for credit type (forestry, renewable energy, cookstoves, etc.)
Quality adjustments applied multiplicatively:
Permanence (0.5-1.0x): risk of carbon re-release; forestry lower than geological storage
Additionality (0.6-1.0x): would the project have happened without carbon finance?
Vintage (0.7-1.0x): newer vintages preferred; 5-15% discount per year of age
Integrity concerns: Article 6 of Paris Agreement requires corresponding adjustments to avoid double counting
Set internal carbon price: call shadow_carbon_price with project portfolio and emissions data
Shadow carbon price: internal price applied to investment decisions, typically $50-100/tCO2 (corporate best practice)
Carbon-adjusted NPV: base project NPV - PV of (annual emissions * shadow price over project life)
Abatement cost curve: rank emission reduction projects by marginal cost per tCO2 abated
Project ranking: compare rankings with and without carbon pricing -- identifies projects that become viable only with carbon cost internalised
Breakeven carbon price: the shadow price at which project NPV = 0 (higher = more carbon-cost-resilient)
Scenario analysis: low ($25), base ($75), high ($150) shadow prices
Cross-check: compare ETS compliance cost with offset cost (arbitrage if offsets accepted in compliance); validate CBAM exposure against supply chain carbon intensity; ensure shadow price aligns with long-term carbon price trajectories
Key benchmarks: EU ETS price EUR 60-100/tCO2 (2024); voluntary market EUR 5-50/tCO2 depending on quality; CBAM phases in 2026-2034; shadow carbon price $50-100 (corporate best practice, rising to $150+ by 2030 in IEA NZE); vintage discount 5-15%/year; Gold Standard premium 20-40% over uncertified
Annual exclusion: $18,000/recipient (2024); unlimited recipients; no lifetime exemption usage; most efficient for large families
GRAT (Grantor Retained Annuity Trust): transfer appreciation above Section 7520 hurdle rate to beneficiaries gift-tax-free; zeroed-out GRAT has minimal gift tax; best in low-rate environment
Grantor trust: income tax paid by grantor (further reduces estate without gift tax); trust assets grow tax-free; swap powers allow basis step-up planning
Dynasty trust: multi-generational trust exempt from estate/GST tax at each generation; leverages GST exemption; most beneficial in jurisdictions with no rule against perpetuities (Nevada, South Dakota, Delaware)
ILIT (Irrevocable Life Insurance Trust): life insurance proceeds excluded from estate; Crummey notices provide annual exclusion for premium gifts; second-to-die policy common for married couples
Tax savings analysis: compare total transfer tax across strategies; present value of tax savings over multiple generations
Optimise direct indexing: call direct_indexing with individual stock portfolio data
Tax-loss harvesting: sell individual positions at a loss to realise capital losses; offset gains elsewhere in portfolio
Wash sale compliance: cannot repurchase substantially identical security within 30 days before or after sale; monitor across all accounts
Tracking error: standard deviation of return difference vs target index; typical 50-200bps for direct indexing portfolios
After-tax alpha: TLH benefit in basis points; typically 50-150bps annually in early years, declining as cost basis rises
Loss budget: total unrealised losses available for harvesting; replenished by market volatility
ESG/values customisation: exclude specific stocks or sectors while maintaining similar risk/return profile; tracking error increases with more exclusions
Transition management: when converting from concentrated position to direct index, stage sales over multiple tax years to manage gain recognition
Evaluate family governance: call family_governance with family office data
Benchmarking: compare governance practices against peer family offices by AUM tier
Cross-check: concentrated stock analysis should align with overall portfolio risk; philanthropic strategy should be consistent with estate plan; direct indexing tracking error should be acceptable given TLH benefit; governance score should trigger remediation actions where below threshold
Key benchmarks: concentrated stock > 10% of NW = significant risk; GRAT annuity rate = Section 7520 rate + 1-2% (zeroed-out); TLH adds 50-150bps annually (year 1-5, declining thereafter); family governance score > 70 = well-governed; DAF minimum $5-25k initial contribution; CRT income payout 5-50% of FMV; estate tax exemption $13.61M (2024, sunset 2026); dynasty trust most effective in no-RAP states
