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Ultra-high net worth estate planning is a complex task that requires careful consideration and attention to detail. Consider size, diversity, and complexity of assets, the potential tax implications, and your individual needs and goals. Estate planning for wealthy individuals requires the utmost care.
Consider this guidance for estate planning for ultra-high-net-worth individuals.
1. Succession and Legacy Planning
Ultra-high net worth estate planning and wealth management should also consider the businesses you own. This ensures a smooth transition of ownership and operations, safeguarding the business's future success.
Without a succession plan, the business may face significant challenges when you retire, sell, or, unfortunately, pass away. A comprehensive succession plan should:
- identify successors
- define their roles
- ensure clear communication
- provide training and support
Additionally, it should consider tax implications, legal considerations, and any specific industry or market dynamics that may impact the transition process.
Proactive succession planning shows commitment to sustainability and protects stakeholders, such as:
- Employees
- Customers
- Suppliers
- Shareholders
2. Philanthropy and Charitable Giving Options
Philanthropy has become an integral part of ultra high net worth legacy planning. You can engage in charitable giving directly or through vehicles such as charitable trusts or foundations. This not only allows you to support causes that are close to your heart, but also provides you with potential tax benefits.
Estate planning for high-net-worth individuals who value philanthropic causes may include establishing a private foundation. However, you should also explore the option of donor-advised funds. They offer a simpler alternative with substantial tax advantages for wealth management and estate planning. It lets you make charitable contributions while enjoying significant tax benefits hassle-free.
Charitable lead trusts are an excellent tool for ultra-high-net-worth estate planning. You can make a positive impact through philanthropic donations while ensuring loved ones have financial security. Designating income to a charity for a set period allows the remaining assets to go to beneficiaries, benefiting both.
3. Living Trusts Protect Your Privacy
Ultra-high-net-worth estate planning should ensure confidentiality to protect assets and keep affairs private. Revocable trusts let you transfer assets to a trustee, who manages and distributes them based on your terms.
Trusts help high-net-worth individuals keep their estate private and protected from public scrutiny.
One significant advantage of using trusts in estate planning for wealthy individuals is the ability to avoid probate. Probate is the legal process that distributes a deceased person's assets and settles their debts. It can be time-consuming, costly, and open personal information to public records. By establishing a trust, you can bypass probate entirely or significantly reduce its impact on their estate.
Moreover, trusts offer flexibility in terms of asset management and distribution. They allow for detailed instructions on how to handle assets during one's lifetime and after death. This level of control maintains privacy and provides peace of mind. You’ll have confidence in the accurate execution of your wishes.
4. Tax Considerations
Tax considerations for ultra-high net worth estate planning are complicated. Because of the sheer wealth, you could provide for multiple generations of heirs. Estate planning for wealthy families means you must pay generation-skipping transfer taxes when you transfer property to grandchildren or great-grandchildren. This tax is 40% of the asset’s value.
However, there is only a tax exemption of up to $13.99 million for 2025. This tax stops grantors from avoiding taxes and ignoring the next generation's financial needs.
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5. Get Clear on Objectives
These objectives for wealth and estate planning can vary greatly depending on your needs. Do you want to provide for heirs? What about reducing estate taxes or supporting charitable causes? Clarify your goals with an estate planner to create a plan that fits your objectives.
Estate planning for high-net-worth families needs to consider their family dynamics. You’re likely planning for multiple generations and want them to understand their financial status.
At Asset Preservation, our approach is rooted in understanding and addressing your unique goals. Understanding your goals helps us design a financial plan that preserves wealth and ensures long-term success.
What Do Ultra-Wealthy Do for Estate Planning?
Estate planning for wealthy individuals involves trusts, wills, and tax strategies. They use estate planning wealth management to protect assets and reduce taxes. Many set up family foundations or charitable trusts. They also create business succession plans to keep wealth in the family.
What Is Considered High net worth for estate planning?
Experts define high net worth as having $1 million or more in liquid assets. Wealth management and estate planning for these individuals focuses on asset protection and tax efficiency.
What Net Worth is Considered Ultra-High-Net-Worth?
A person is ultra-high-net-worth if they have at least $30 million in investable assets. Wealth and estate planning for them includes advanced tax strategies, multi-generational trusts, and offshore accounts.
What Is Tax Planning for Ultra-High-Net-Worth?
Tax planning helps estate planning for wealthy families reduce estate, gift, and capital gains taxes. They use trusts, charitable giving, and tax-efficient investments. Estate planning for rich people also includes strategies like grantor retained annuity trusts (GRATs) and family limited partnerships (FLPs).
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Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.
The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD # 175083.
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