Estate Planning for High-Net-Worth Individuals

Many of the same tools used in ordinary estate planning apply to high-net-worth individuals. Estate planners of all income and asset levels should consider utilizing a last will and testament, guardianship designations, trusts, life insurance policies, planning for incapacity, and various powers of attorney documents. In addition, the complexity and sheer volume of high-net-worth individuals’ assets necessitate further consideration. High-net-worth clients may consider gifting to reduce tax implications on their estates. Charitable donations can also generate a tax benefit for the estate. Tax planning in general should be carefully considered by high-net-worth individuals, as substantial rates can diminish the amount left to your beneficiaries.

A skilled team of estate planning attorneys can help navigate these strategies and formulate a plan tailored to you and your family’s needs and special circumstances. A good attorney will help you minimize your tax exposure with their up-to-date knowledge of ever-changing tax laws.

Who is Considered High Net Worth?

Net worth, or a simple calculation of your household’s debt minus your household’s liquid assets such as cash, cryptocurrency, and other investments, can help determine your estate planning strategy. Forbes has classified high-net-worth individuals or households as holding liquid assets between $1 million and $5 million. Between $5 million and $30 million is considered very high net worth. Finally, assets in excess of $30 million fall in to the ultra-high-net-worth category.

Pitfalls to Avoid

In addition to different strategies, high-net-worth individuals also have different estate planning pitfalls to consider. Everyone, regardless of income or assets, should have an estate plan, update those estate plans regularly, and consider their fiduciaries, such as executors and trustees, frequently. High-net-worth individuals and families may be more prone to underutilizing or underfunding trusts, however. Not using a trust to its fullest potential could result in some assets going through probate court, which can be a hassle for beneficiaries.

Furthermore, tax considerations are especially important for high-net-worth clients. Taxes change and fluctuate over time, so a stale tax strategy may not do the work in shielding your estate from exposure. New exemptions may arise, or rates could change.

Finally, your family and beneficiaries may have expectations for what happens to your estate after you pass. These expectations may not align with reality, which could result in expensive litigation and challenges that impede the probate process and deplete the value of your estate. A common pitfall of any estate planning journey, but especially one with considerable assets, is failing to communicate with your family, beneficiaries, and fiduciaries. Knowledge of your plans and wishes can result in a surprise-free probate process that is less prone to fighting.

Contact a Houston Estate Planning Attorney for Immediate Assistance with Your Estate Plan

High-net-worth individuals and families should contact skilled estate planning attorneys to avoid these pitfalls and develop a strategy. The team at McCulloch Miller, PLLC have extensive experience in estate planning and other family law and financial matters. Contact our office at 713-936-9073 to schedule an initial consultation with an attorney on our team.


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