Definitions for the terms that matter at this altitude.
Short, structured entries on the designations, vehicles, and vocabulary used across private wealth. No jargon unpacked unless it actually matters in practice.
Qualified Purchaser
A qualified purchaser (QP) is a person or entity meeting investable-asset thresholds under the Investment Company Act of 1940 — generally $5 million in investments for individuals and $25 million for entities.
Accredited Investor vs Qualified Purchaser
Accredited investor and qualified purchaser are two different SEC designations. Accredited investor is the lower threshold ($1M net worth or $200K/$300K income) used by Regulation D funds. Qualified purchaser is the higher threshold ($5M in investments) used by 3(c)(7) funds.
Accredited Investor
An accredited investor is an individual or entity that meets income, net-worth, or professional-credential thresholds under SEC Regulation D, qualifying them to invest in private offerings exempt from registration.
Family Office
A family office is a private organization that manages the financial, legal, tax, and administrative affairs of a wealthy family. Single-family offices (SFOs) serve one family; multi-family offices (MFOs) serve several.
QSBS (Qualified Small Business Stock)
QSBS is stock of certain C corporations that, if held for at least five years, can qualify for a federal capital gains exclusion of up to $10 million or 10x basis under IRC Section 1202.
GRAT (Grantor Retained Annuity Trust)
A GRAT is an irrevocable trust that lets the grantor transfer asset appreciation to heirs with little or no gift tax, by retaining an annuity stream equal to the contributed value plus the IRS Section 7520 interest rate.
IDGT (Intentionally Defective Grantor Trust)
An IDGT is an irrevocable trust that is treated as the grantor's for income tax purposes but as separate from the grantor's estate for gift and estate tax purposes — a mismatch used to shift appreciation and pay tax from the estate, both of which reduce the taxable estate.
SLAT (Spousal Lifetime Access Trust)
A SLAT is an irrevocable trust created by one spouse for the benefit of the other, removing assets from the taxable estate while preserving indirect access through the beneficiary spouse.
Dynasty Trust
A dynasty trust is a long-duration irrevocable trust designed to hold and compound wealth across multiple generations free of estate, gift, and generation-skipping transfer tax.
Exchange Fund
An exchange fund is a pooled investment vehicle that lets holders of concentrated single-stock positions swap their shares into a diversified partnership interest without triggering immediate capital gains tax.
Donor-Advised Fund
A donor-advised fund (DAF) is a charitable giving account sponsored by a public charity. Contributions are deductible at funding, grow tax-free, and are granted out to qualified charities over time at the donor's recommendation.
Section 3(c)(7)
Section 3(c)(7) is the Investment Company Act exclusion that allows a private fund to avoid registration as an investment company, provided all investors are qualified purchasers and the fund does not make a public offering.
Opportunity Zone Fund
A Qualified Opportunity Fund (QOF) is an investment vehicle that holds assets in IRS-designated Opportunity Zones, offering capital gains deferral and, after sufficient holding periods, partial or full exclusion of gains on the OZ investment itself.