Ultra Rich Estate Planning Secrets

Ultra High Net Worth Estate Planning Secrets

Affluent individuals have the same fears as those living at other income levels: outliving their assets, the volatility of the stock market, and the possibility of becoming a burden to their children as they grow older. And, many individuals may not have set aside enough funds for future medical care.

High net worth individuals have any number of financial vehicles at their disposal to protect their personal wealth. Such as trusts to shelter assets, charitable giving plans for minimizing taxes, and life insurance products that help preserve their legacy for future generations. However, some individuals do not take advantage of these options.

There are a few important estate planning strategies for protecting your family as well as maximizing the amount of money that you  leave after your death. Every situation is unique and not every strategy will make good financial sense for your situation. Therefore, carefully consider your options and then decide which strategies will best secure your family’s future and your legacy.

Estate Plan Considerations

If you’re an ultra rich individual, the following are some different approaches you can use for estate planning and tax purposes so that a significant percentage of your wealth goes where you want it after your death.

One option would be to choose to create a private foundation, a non-profit entity that can be funded with cash or appreciated assets. The funding of the foundation will provide a tax deduction as well as reduce the size of your estate, and, therefore, your estate taxes. Creating a private foundation that gives to causes you’re passionate about is a great way to use your wealth to make a difference.

Life insurance can play a significant part in estate planning for affluent families. A strong gambit would be to form an irrevocable life insurance trust or ILIT which takes ownership of your policy. The trust is funded by placing your life insurance policy into its ownership and relinquishing any right to amend it or dissolve it. After your death, the ILIT can direct those funds to your spouse or designated trustee to be distributed per your wishes.

Another option would be to create a Family Limited Partnership, which is a form of a limited partnership among members of a family. The main advantage of drafting and funding a FLP involves estate and gift tax savings as well as asset protection. With an FLP, you retain control over the transferred assets while enjoying the benefits that it provides.

Once the FLP is created and your assets have been transferred to it, you can make gifts of interest in the limited partnership to your beneficiaries. This decreases that value of your taxable estate, and consequently, the amount of estate taxes which your beneficiaries would have to pay.

Doing More for the Community

Creating an HNW estate plan should be about protecting inheritances for their beneficiaries, minimizing estate tax liability, and avoiding the probate process. Whether you form a private foundation to give back to your community or to a cause that you’re invested in, or set up a FLP to protect your family, you should discuss your options with a trusted advisor in order to make educated and informed decisions about your estate plan.

Jeffrey M. Verdon, estate planning attorney, specializes in comprehensive estate planning solutions for the ultra rich. Contact our office for information on how you can protect your assets and your legacy.


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