When you have substantial wealth, estate planning can help you preserve your assets and efficiently share them with or pass them on to your loved ones. Estate planning should work with your ongoing financial, tax, and business planning to protect the wealth you’ve worked hard to build. Gueronniere P.A. can help you identify strategies that fulfill your financial and personal goals for you and your family.
Understanding High Net Worth Estate Planning
An estate consists of all your property, including real estate, investments, vehicles, bank accounts, retirement accounts, life insurance, and personal possessions. Estate planning uses documents and legal structures to give you control over the disposition of your assets during your life and at your death. Estate planning may include:
- Giving instructions for your personal care and financial affairs if you become incapacitated
- Transferring business ownership interests upon your retirement, disability, or death
- Nominating guardians for your minor children
- Providing for family members with special needs
- Protecting loved ones who have difficulty managing their financial or personal affairs or have substantial debt
- Minimizing tax liabilities and legal costs
Although families from all financial backgrounds engage in estate planning, high-net-worth individuals have unique considerations in estate planning, including:
- Taxes: Wealthy individuals may have net worths high enough to trigger estate tax liabilities at the local, state, and federal levels. Estate planning must consider the implications of estate taxes, gift taxes, and generation-skipping transfer taxes.
- Wealth preservation: In addition to minimizing tax liabilities, high-net-worth estate planning may focus on protecting family wealth. Wealth preservation efforts may include protecting family assets from creditors or ensuring that succeeding generations don’t waste family wealth.
- Legacy planning: People who experience considerable financial and professional success may choose to “give back” through charitable giving, endowing educational institutions, or establishing foundations.
Critical Components of a High-Net-Worth Estate Plan
An effective estate plan for a high-net-worth individual will incorporate multiple components. Standard tools used in high net worth estate planning include:
Wills represent the cornerstone of estate planning. A will allows an individual to direct the disposition of their estate following death. A person can appoint one or more people to serve as executor of their estate. Parents of young children can also nominate a guardian for their minor children if both parents pass away.
Individuals and families with high net worth typically include trusts in their estate planning. Trusts offer many estate planning benefits, including financial management, passing on assets without the time and expense of probate, and protecting and preserving wealth.
Individuals with financial accounts or assets like annuities or insurance plans can use beneficiary designations to pass money, securities, or insurance benefits to loved ones without the need to probate those assets. With a beneficiary or transfer/pay-on-death designation, you can select someone to receive assets in an account or insurance/annuity benefits upon your death.
Powers of Attorney
People with substantial wealth or complex financial interests may consider establishing powers of attorney. These are tools that allow trusted loved ones to manage their financial and legal interests if they become unable to do so themselves as they age or due to disability. Individuals may also set up healthcare powers of attorney to authorize a loved one to make medical decisions on their behalf if they become incapacitated.
High-net-worth individuals might use business entities like corporations and LLCs to manage valuable assets like real estate. Wealthy individuals who own businesses should also consider their business interests in estate planning, including preparing for leadership succession in their business or planning for the disposition/sale of the business.
Many high-net-worth individuals also incorporate charitable giving in their estate planning. Charitable giving allows you to set your legacy and offers tax benefits. Including charitable giving in your estate plan can help maximize the wealth you pass on to your loved ones.
Common Challenges and Considerations in High-Net-Worth Estate Planning
Planning for the future when you have a high net worth or complex assets can present unique challenges. Some of the top considerations you may have when engaging in estate planning include:
- Ensuring family communication: Substantial wealth can lead to intrafamily conflicts when the matriarch/patriarch of the family establishes their estate plan. Family members may feel they won’t get their “fair share” or believe that specific family members will receive inheritances they don’t deserve. When planning the distribution of your estate, engage in open communication with your family to ensure they understand your wishes and the reasons for your estate planning decisions.
- Changing tax and estate laws: Once you’ve established your estate plan, you should regularly review and update the plan to account for new estate or tax laws. Federal or state legislatures may eliminate estate planning tools you’ve included in your plan. New laws may offer alternatives that better implement your estate planning goals.
- Shifting economic and financial circumstances: Regularly reviewing your estate plan can also ensure that it reflects your goals and interests as they change with increased or decreased wealth. You may also want to review and update your estate plan in response to changing economic conditions like recessions or a downturn in your business.
How Can the Right Attorney Help You with High Net Worth Estate Planning
Hiring seasoned legal counsel can make a difference in the success of your estate planning. An estate planning attorney with extensive experience working with high-net-worth individuals can help you by identifying strategies that most effectively fulfill your needs and goals. An attorney can also ensure that your estate plan works with your financial, tax, and business planning so you can protect your wealth and pass it on as you prefer.
Contact an Estate Planning Attorney Today
Estate planning can help protect the wealth you’ve worked hard to build. Working with a seasoned high-net-worth estate planning attorney will ensure you have an estate plan that fulfills your financial goals and protects your family’s future interests. Contact Gueronniere, P.A., today for an initial consultation to discuss your legal options with a knowledgeable West Palm Beach estate planning attorney.