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.
In addition to gifting assets to loved ones, high-net-worth people can also gift funds to charities to reduce their estate size. This can be accomplished by assigning portions of the estate to a charitable lead trust as charitable donations. With a charitable lead trust, an individual will put a portion of their assets within a trust and are given to a selected charity. This means the individual can no longer access these funds and they are not counted as part of their estate for tax purposes. At a later, pre-determined time—or after the individual has passed away—the remainder of the funds in the trust are passed to beneficiaries.
Because high net worth individuals have many considerations that they need to take into account during the estate planning process, they should contact an experienced estate planning attorney. And because these considerations may change over time, it is important that high net worth individuals remain in contact with their attorney and review their estate plan every few years.
Contact a Colorado Estate Planning Attorney
If you or a loved one needs advice about estate planning strategies, contact the Boulder estate planning attorneys at the Braverman Law Group. For many years, the estate planning attorneys at the Braverman Law Group have provided advice to Coloradans on estate plans, trusts, asset protection strategies, and more. We understand the unique needs of high-net-worth families and can advise them on strategies that will assist them in protecting their assets for future generations. For a free, no-obligation consultation with one of our estate planning attorneys, give us a call today at (303) 800-1588.