Strategies for High-Net-Worth Estate Planning

Originally published by thompsonlawtx.com.

The goals for an estate plan of any size are typically protecting assets for heirs, avoiding the probate process whenever possible, providing for loved ones, charitable giving, and avoiding estate and gift taxes. High-net-worth estate planning poses several challenges for an individual. However, working with a Texas estate planning attorney to develop a strategy using various estate planning tools can accomplish your goals for an estate plan.

Ways to Accomplish Your Estate Planning Goals for a High-Net-Worth Estate

Advanced estate planning strategies for high-net-worth individuals and families often involve a combination of several different estate planning tools. The main goal is to maintain the bulk of the wealth intact for future generations. It is important to avoid estate tax and minimize gift taxes during your lifetime. Also, asset protection becomes important, especially if the individual or family owns and operates a business. Maximizing gifting each year can help reduce the taxable value of the estate while placing money and property in the hands of your heirs. However, gifting is not sufficient for most high-net-worth individuals to accomplish their estate planning goals.

In many cases, various trusts are used to hold and manage the property for the benefit of the grantor’s heirs. Trusts can be useful in estate planning for high-net-worth estates because they check off many of the goals on your list.

For instance, property held by a trust does not pass through probate. Therefore, you can avoid probate and reduce the taxable value of your estate by transferring property to a trust. The trust manages the property for the benefit of your heirs during your lifetime. At your death, the trust can distribute property to your heirs, or you can set up the trust to continue managing the property to prevent heirs’ creditors or other parties from attempting to levy the property.

Family Partnerships (FPs) and Family Limited Liability Companies (Family LLC) are also useful strategies for high-net-worth estates. The entities are formed to hold title to family property, such as a residence, business, rental property, or vacation home. These business entities can be used to transfer property to children during a parent’s lifetime to avoid probate and gift or estate tax.

You Need a Texas Estate-Planning Attorney to Help Develop Your High-Net-Worth Estate Planning Strategies

Choosing the correct type of trust and drafting the terms of the trust is complex. Not all types of trusts offer the same protection from creditors and other estate benefits. You must carefully choose the type of trust and draft the terms of the trust with specific legal language and clauses to ensure that your property and heirs receive the highest level of property and estate planning benefits.

Similarly, drafting the partnership agreements and operating agreements for business entities for the purpose of estate planning is also complex. If the bylaws are not worded correctly and include specific language, the IRS could rule that the company is not a separate entity from the family members. In that case, the property could be included in a person’s estate or taxed as a transfer.

Work with a Texas Estate-Planning Attorney in Your Area

It is possible to create a high-net-worth estate plan that meets your needs and accomplishes your goals. However, you need to work with an experienced Texas estate planning attorney who understands how to use the various tools available for estate planning to create a strategy that meets all legal requirements, including laws governing estates, trusts, and tax matters. Schedule a consult with one of our experienced estate-planning lawyers today.

Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.

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