Common Financial Planning Mistakes Made By HNWI

Avoid these Common Mistakes that even HNWI Make

Estate planning is a necessity whether your net worth is $200,000 or $10 million. However, it’s especially important for high net worth individuals as well as their families. Affluent individuals have many tools available to them when it comes to financial planning. 

Whether it’s sheltering assets in well-designed trusts, charitable donation strategies in order to minimize taxes, or life insurance products that can help to protect and preserve their legacies for future generations, high net worth individuals are in a great position when it comes to protecting their wealth.

There are some common mistakes that affluent individuals and their families make that can prevent the successful execution of their estate plans. Becoming educated about these pitfalls now can help you avoid them when making important estate planning decisions in the present as well as the future. It may save you millions of dollars in the long run.

Planning for the Entire Family

One of the primary goals of your estate plan should be to provide for your family after your death. Talking about estate planning is never an easy discussion to have. It’s important that you have ongoing communication with your children and other family members concerning how your wealth will be distributed and used in the future in order to prevent animosity and resentment that could lead to dissention and even future litigation.

Your estate plan should be focused on asset distribution. In other words, how will your wealth be passed down? You’ll need to determine which assets your beneficiaries are going to receive in a way that minimizes your tax obligations while preserving assets for your beneficiaries.

Working with multiple financial advisors that are in charge of a different subset of your estate plan can increase the risk of a delay in the execution of your plan or even prevent its successful execution. Stick to working with one solid team of advisors.

A good rule of thumb is to review your current estate plan at least every three years and especially after a major life event such as a marriage or divorce.  Failing to review your estate plan can result in increased tax liabilities, conflict between family members, and reduced protection of your assets.

The underutilization of trusts can create another problem for high net worth individuals. There are a variety of trusts that can help you when it comes to your unique estate planning goals such as minimizing estate taxes and providing for individuals with special needs.

Finally, picking the right trustee or executor of your estate is one of the most important decisions you’re going to be faced with when creating your estate plan.  Whether you choose a family member, friend, or professional trustee, you need to take into consideration all of the responsibilities that your trustee or executor will have to fulfill.

Making the Right Decisions

Estate planning for high net worth individuals is complex. In order to avoid mistakes making your estate planning decisions, seeking advice from a qualified estate planning attorney that specializes in complete estate planning solutions for high net worth individuals is highly recommended

With more than 30 years of experience in estate planning and asset protection, the Jeffrey M. Verdon Law Group, Orange County estate planning attorneys, is a recognized authority in both fields. 

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