Estate planning secrets of HNWI

Estate planning can be challenging for high net worth individuals (HNWI). HNWIs and their families put an estate plan in place to protect their assets from taxes and creditors and secure those assets and their wealth for the future.

Estates of affluent individuals are often complex and multifaceted. Without proper planning, the wealth they have worked so hard to accumulate can wind up in the wrong hands or can be whittled down by taxes, irresponsible family members, and frivolous lawsuits.

The good news is there are a variety of estate planning secrets that can be used to create a comprehensive estate plan for preserving wealth and eventually passing on that wealth to the beneficiaries of your choosing with minimal tax implications.

Why does everyone have a foundation?

What are a few estate planning strategies that HNWIs and their families utilize for the purpose of estate and tax planning to ensure their legacy? The first is creating a private foundation.

There are two good reasons to start a private foundation as part of your estate planning strategy. Giving to a good cause is a great way to use your wealth to make a difference in the world. And the funding of your foundation will result in a tax deduction. It also reduces the size of your estate and, therefore, your estate taxes.

If you do not want to start a private foundation, consider making a substantial donation to a non-profit of your choice, such as funding a new museum or a new wing of a hospital.

Life insurance can be a critical estate planning tool. By maintaining a life insurance policy, HNWIs and their families can mitigate risk. Death benefits paid out from life insurance policies are tax-free and invaluable when funding estate tax.

High-net-worth individuals and their families can significantly reduce the value of assets that are going to be transferred to their children by setting up a Family Limited Partnership and contributing assets to that partnership. 

Typically, the goal of creating such an entity is for protection from creditors. You can also use the partnership to reduce gift and estate taxes while still maintaining control over the management as well as the distribution of the partnership’s assets.

Following the format

When considering these three HNWI estate planning secrets and other strategies that are available to you, it’s important to work with a reputable and experienced estate planning attorney. They can assist you in determining which strategy or strategies are best for your financial situation.

San Diego attorney, David Foley, has been specializing in estate planning since 1990. When you work with the Law Office of David W. Foley, you can be assured that all aspects of your estate will be evaluated to provide you with a comprehensive plan that protects your assets and distributes them per your wishes.