Private Air New York

www.privateairny.com Private Air New York | Summer 2014 29 FINANCE T he mindset of current investors in using credit to obtain planes and yachts is more aggressive today than in years past. Individual high-end investors are willing to take on intelligent debt to bridge their financial requirements. To gain further insight on this growing trend, Private Air spoke with Bill Lordi of U.S. Trust, Bank of America's Private Wealth Management business, a very knowledgeable credit executive when it comes to marine or aircraft investing and managing wealth. Lordi states that, "It is much wiser to employ prudent debt in today's low interest environment. e wealthy don't want to liquidate their assets, disrupt their investment strategy and potentially incur short term capital gains taxes, but rather, wish to make a higher return in this low interest rate environment." No wonder that employing sound credit and investment strategies has made U.S. Trust the largest leading financer of aircraft investment in particular. e initial approach at U.S. Trust is to understand the client's financial situation. One such example would be if you should need assistance in liquidity management due to uneven cash flows, or whether or not you desire to purchase an asset such as an aircraft or yacht for tax benefit purposes to preserve your liquid assets. Once a determination is made as to financial need, there are other experts in the marine or aircraft field on staff at U.S. Trust that have the industry expertise to put an optimal package together for a client. Lordi recalled an individual client who held large positions in the hedge fund industry with a large but sporadic cash flow. "We were able to take a lien on their hedge fund interests so that the client, who desired to make an aircraft purchase, could make this a reality." Lending to clients that use liquid assets to create liquidity for short term needs is also a win-win situation. e emphasis of course is on the initial purchase of a jet or yacht that will then become collateral for a loan, but clients can also use existing unencumbered assets to create liquidity for business or personal needs. U.S. Trust has been implementing this type of credit investment program for twenty plus years, and has a loan portfolio of more than $45 billion currently. And let's face it some high net-worth adults don't mind using collateral. Many access credit to gain liquidity. However, it is interesting to note that strategic use of debt for financial advantage is something younger and wealthy risk takers seem to be more adept at these days, but not all feel that they have a good understanding of how to use debt to their advantage. One such answer is for a tailored approach to yacht or plane ownership to fit one's particular financial circumstances. Taking into account interest rate alternatives, payment structures, competitive amortization schedules, or other credit solutions including progressive payment construction loans - for that new jet or yacht - can convert to tax leases or permanent loans as well. "Deciding which type of ownership structure is most beneficial to you is critical," added Lordi, "and the right team of specialists who know Maritime, FAA, and IRS regulations is necessary to making your decision." Admit it, flying aboard your own jet or sitting aboard your own private yacht can be a smart way to reach your travel destinations, especially if you are a well-compensated executive, business owner, or investor who also wishes to have your wealth administered properly for the long haul. But just now, the seemingly biggest bargains in boats and planes can have the biggest pitfalls unless you use due diligence. U.S. Trust's team of specialists can assist you in all phases of structuring your unique financing situation that best fit your wealth management needs. So get ready for takeoff in your private jet or perhaps you won't want to miss getting aboard your yacht either. In all cases, the key Lordi emphatically states," is to coordinate your portfolio with professional advisors that will help you to consider key issues regarding an A+ luxury yacht or jet purchase for that most beneficial ownership experience."

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