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Articles Posted in High Net Worth Estate Planning

Because everyone is different, they have unique estate planning needs. For some people, this means prioritizing savings for retirement, whereas for others, it may mean planning how they would like end-of-life care handled. For ultra-high net worth individuals, their primary estate planning goal is protecting their current assets for future generations. Ultra-high net worth individuals are those with over $30 million in net worth. Because of this, their estate planning strategies may be different from other individuals. Below are some estate planning strategies that ultra-high net worth individuals can utilize to maximize their wealth for future generations.

Splitting Family Income

Splitting family income can assist ultra-high net worth individuals in mitigating their estate tax liability—one of the primary estate planning goals for these people. The American tax system is based on the idea that individuals who earn more pay higher taxes. Because of this, their estate tends to be larger—meaning, their estate will have to pay an estate tax before assets are distributed amongst beneficiaries. By dividing income among other lower-income earners in the family, the family’s tax burden will be reduced. This reduction will be seen both yearly through income taxes and when a person passes away in their estate tax liability.

Planning for Business Succession and Instilling Financial Responsibility

Many ultra-high net worth families have accumulated most of their wealth through owning a business. For those families who this is true, they should start taking steps now to plan for the future of the business. This may include planning for who will take over the business in the future, discussing the transition, and giving them the ability to ease into a larger role in the corporation over time. Planning for a business’s future can allow owners to know that the business will be in capable hands, even after they pass away. While this may not seem like an estate planning issue, attorneys can advise clients on how to ensure a smoother transition and how to incorporate the business success into their estate planning documents.

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Estate planning strategies greatly vary depending on many factors. These include family structure, health needs, and the amount of assets. Because of this, high net worth families have unique needs and strategies they must utilize in the estate planning process. For example, most of the intentions of high net worth families focus more on protecting assets for future generations, rather than accumulating more wealth. Below are some strategies for high-net-worth families to incorporate into their estate plan—along with why these strategies are beneficial in the short and long term.

Gifting Assets—Both to Family Members and Charities

High net worth individuals can benefit from gifting some of their assets, so they can limit their estate size. Why individuals may not seem the inherent benefits in decreasing the estate size, it reduces the estate and gift tax liability after they pass away. To reduce the estate size—while still having enough to pass along significant assets to loved ones—high net worth individuals can gift up to $15,000 per year without having to pay a tax. So, individuals can gift assets to loved ones, that they would otherwise gift them in their will later, to reduce their tax liability now.

Similarly, it is important for high-net-worth individuals to remember that they can gift up to $11.7 million over their lifetime without having to pay a gift tax. Because of this high tax exemption, this gifting option is the most optimal strategy to reduce the estate size and minimize tax liability.

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