High Net Worth Estate Planning


From charitable strategies for minimizing taxes, to quality life insurance plans, affluent individuals are in a unique position to protect their legacy. Be that as it may, about a third of them don’t take advantage of being in this position.

If you want to leave your family in the best possible shape when you pass on or become incapacitated, a smart estate plan is your best bet. Every household is different and will require unique plans and tools. But there are some key strategies for estate planning that can help you maximize the estate you leave behind and help protect your loved ones. Let’s look at a few of these now.


Trusts are one of the best ways to minimize liability in estate tax and protect your assets from divorce, legal claims, and creditors. One of the most commonly used types of trusts is a revocable living trust. This allows property and assets to be placed in a trust and managed for beneficiaries by a trustee. Any assets within this trust won’t be subject to probate, which is the lengthy and expensive process of settling a will.

With a revocable living trust, these assets can instead be directly distributed to heirs and administered or held under the trust terms. As implied by the name, revocable living trusts may be dissolved or altered while the trust maker is still alive and only become irrevocable upon death.

There are dozens of types of trusts out there and each accomplishes a different financial objective. This is why consulting a trusted professional is always best. An accredited estate planner can assemble a team of trust officers (if needed), accountants, insurance professionals, and lawyers. This can help wealthy individuals document and clarify their goals, values, and vision for their estate.

Powers of Attorney

In estate planning, especially for high net worth individuals, having the necessary documents in order should be priority number one. Powers of attorney are an important part of this process. These documents will designate the person you choose to handle your affairs if you are mentally incapacitated, injured, or seriously ill.

Similarly, you can designate someone to make medical decisions for you in case you can’t yourself by appointing a medical durable power of attorney. You may also choose to make a living will (or healthcare directive) to further define your preferences for medical treatment like end-of-life care or life support. These documents not only ensure that your wishes are granted, but will take the burden off your loved ones to make these choices.

Life Insurance in High Net Worth Estate Planning

Life insurance policies are a great strategy to hedge against risk for wealthy families, particularly when they are put “in trust.” The life insurance death benefit that the insured person owns will be a part of his estate. If that person’s assets, plus the death benefit, exceed the estate tax exemption amount of the current year, the excess might be taxed.

Death benefits for life insurance policies are typically income tax-free for the beneficiaries you select. But if you choose to instead make an irrevocable life insurance trust, you could potentially shelter these assets permanently. For this to be possible, the irrevocable trust’s trustee would purchase the policy on your life.

The insurance policy would have the trust as the beneficiary, owner, and policy applicant. You would then make yearly gift payments to this trust, making sure the trust is not within the taxable estate. It’s possible to structure life insurance trusts so that there is no estate or income tax on the proceeds.

Charity in Estate Planning

Philanthropy is another effective tool for estate planning. If you’re charitably inclined, you can maximize the advantages of your goodwill, donating not cash but appreciated securities to a charity that qualifies. This would allow you to deduct your financial donations’ fair market value. In addition, you may not have to sell those assets yourself, donate the amount after taxes, or deal with a capital gains tax.

Monitor your Beneficiaries

Once your estate planning process is done, don’t forget to keep it up-to-date. Any time there’s a new marriage, divorce, death, birth, or another life-changing event, you might need to revise your beneficiary forms. This includes your 401(k), IRA, or any other tax-deferred accounts for retirement.

Keep in mind, whoever you named as the beneficiary for these retirement accounts will get the capital when you pass on, even if it isn’t the same beneficiaries mentioned in your will. Without updating your documents occasionally, your assets could end up in your ex’s hands. Life insurance policies and trusts must also be regularly reviewed to ensure they still accurately reflect your goals and financial wishes.

“Updating does not entail recreating, so there is no need to draft a new will,” said Lewis Saret, federal taxation attorney and Forbes contributor. “Nonetheless, since your will, which protects your most important assets after death, is one of the most important legal documents that you sign, the benefits of keeping it up-to-date far outweigh the periodic inconvenience of the updating process.”

Incapacitation Preparation and Planning

Imagine working your whole life to create a retirement fund and support the ones you leave behind, only to have the inheritance ruined. This would be a disaster, so it’s better to plan ahead and avoid that scenario at all costs. In case you get ill, have an accident, or otherwise become incapacitated, you will want to:

  • Offer support for your dependents
  • Make sure your property is managed the right way
  • Choose a trustee in your estate plan
  • Make your preferences known for end-of-life treatment

In order to achieve each of these goals, appointing powers of attorney is necessary. This will be how you decide who opens your mail, manages your assets, sells your property, manages your accounts, and determines your medical care or treatments if applicable.

Avoiding Probate

Probate is the initial legal processing step that involves administering a deceased person’s estate, distributing their property, and resolving claims under a will. The probate court will decide whether the will is legal and valid. This process can, in many cases, be expensive, stressful, and long-lasting.

Avoiding probate is an important part of high net worth estate planning. While a living trust will cost more initially, it won’t over the long term. To avoid unnecessary time and financial costs, you must avoid probate. A living trust can be one method for doing this.

Choosing a trust can help you bypass probate as not everything will be listed under your name. Despite this, you can still control your assets during life and appoint someone to take over if you become incapacitated. Don’t forget to talk to an estate planning professional to find out how best to plan your estate and protect your wealth.

Call our Estate team at (480)467-4325 to discuss your case today.

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