Estate Planning For High-Net Worth Households

by | Mar 5, 2019 | Estate Planning

An elderly couple sits on a couch reviewing a document with a man in a suit. They look engaged and focused, discussing estate planning for high net-worth households. The setting appears to be a living room with bookshelves in the background. The man in the suit holds a folder with a golden emblem on it.

High-net-worth households need proper estate planning strategies for wealth conservation. Unfortunately, not every high-net-worth individuals/families understand the essence of properly executed personal estate plans. Resultantly, their ignorance, poor estate planning decisions lead to costly mistakes that threaten the preservation of their wealth. To protect your family’s invaluable legacy, you must be committed and focused on making well-informed estate planning decisions habitually.

4 highly effective estate planning strategies for high net worth households

Trustworthy attorney

Every powerful high net worth family or individual understands the importance of having a reliable, vastly-experienced and trustworthy attorney by their side. Estate planning involves an abundance of sensitive legal documents. For this reason, you cannot afford to designate the wrong person to handle your financial issues in an event of injuries, illness, mental incapacitation or even death. The power of attorney should be designated to an individual who takes your interests at heart 24/7 rather than selfishness and triggering family feuds.

Trusts

Trusts should always be utilized as powerful estate planning strategies for endless reasons. Nonetheless; trusts should never be confused with wills. For effectiveness and relevance, trusts are best when combined with your well-detailed will among other vital estate planning documents. Trusts are aimed at assigning wealth management responsibilities to a trustworthy trustee in an event of death. An ideal trustee should have the ability to assemble a credible team of accountants, lawyers, insurance attorneys, and trust officers among others. He/she should also know how to collaborate the distribution of your wealth to beneficiaries as per the pre-determined terms in your will. As a high net worth individual, you have the option of surrendering control of some of your wealth to a revocable or irrevocable trust depending on your own special needs.

Life insurance

While some people overlook the essence of life insurance policies, most high net worth families splurge heavily on maximum coverage for their loved ones’ sake. Incorporating a good life insurance policy into your estate can be beneficial to your beneficiaries upon your demise. For effectiveness, high net worth individuals empower their irrevocable trustees to purchase life insurance policies on their behalf. In such an arrangement, your designated trustee becomes the official applicant, owner and life insurance policy beneficiary. Life insurance trusts are perfect tools for wealth diversification and preservation.

Charitable Trusts

Many ultra-high net worth families are taking into charitable donating by incorporating charitable trusts into their estate planning strategies. Charitable trusts can be in form of charitable remainder trusts or charitable lead trusts. Drafting charitable trusts is an excellent strategy for wealthy families to distribute their wealth to their beneficiaries in a tax efficient way.