Achieving wealth in life is an accomplishment indeed. But with much wealth come many considerations and concerns about protecting it. High-net-worth estate planning takes into account the special needs of wealthy individuals and protects their valuable assets from tax and other liabilities.
Are you in need of quality high-net-worth estate planning services? If so, the estate planning lawyers at OC Wills & Trust Attorneys are ready to listen and help you protect your hard-earned assets and your future. Contact our office in Orange County, CA, today for a consultation and learn how we can help!
Minimizing Your Tax Liability
As an individual with a high net worth, you know that taxes can never entirely be avoided. Estate taxes can, however, be mitigated or reduced through careful estate planning strategies. An experienced high-net-worth estate planning attorney is an instrumental ally in this process and will present you with the most optimal solutions for your circumstances.
Trusts
Various types of trusts can prove beneficial for high-wealth-estate planning. Irrevocable and revocable living trusts, for example, allow individuals to remove assets from their estate and assign beneficiaries to these assets without incurring a gift tax. Upon the death of the grantor of the trust, the assets within the trust will not go through probate but will remain in the trust for the beneficiaries to enjoy.
Trusts allow you as the grantor to dictate how the trust will be administered. The appointed trustee must oversee distributions in the manner you have prescribed during the creation of your trust.
Another effective type of trust that can benefit wealthy individuals is an irrevocable life insurance trust. This type of trust helps individuals avoid the payment of federal estate taxes on life insurance proceeds.
Many mistakenly believe that life insurance payouts are not subject to taxes. They are partially correct. Life insurance proceeds are not subject to income tax liability. However, they are subject to the federal estate tax. In cases of high-paying policies, the beneficiaries of an insurance policy could see themselves paying up to half of their payout to Uncle Sam.
With an irrevocable life insurance trust, the policy is not held as part of your estate. It is held in trust but is under your control. Therefore, it is not subject to estate taxes.
Gift Planning
Gift planning with an experienced estate planning attorney is a powerful and beneficial way to give to charities and individuals while enjoying protection from taxation. Gifts to certain charities and individuals are tax deductible and can help significantly reduce the tax exposure of your estate.
Gifting can also be accomplished through the creation of a charitable trust. With estate assets transferred to a trust, they no longer form part of the trust’s net worth and are not taxable. Foundations are also an excellent option for many looking to give and save substantially on estate tax, capital gains, and income taxes.
Family Limited Partnerships (FLPs)
Family limited partnerships are great wealth protectors for high-wealth individuals and families. Family members essentially form a partnership of jointly held assets. At any time, a partner, who must typically be a family member, may transfer portions of their assets into the partnership and to another member of the family.
This accomplishes a few important objectives. First, the transfer of the assets into the partnership removes the value of the assets from the transferrer’s estate, which, in turn, reduces the estate tax liability.
FLPs can also protect assets from creditors and claims from ex-spouses. The distributions that an interested party might seek cannot be made without approval from the FLP’s general partners, effectively keeping the money from being accessed.
Dynasty Trusts
California is one of a few states that allow dynasty trusts. Dynasty trusts allow individuals to pass on wealth to more than one generation. Under California law, a dynasty trust can potentially last as long as 90 years.
One of the main benefits of a dynasty trust is that it allows wealthy individuals to provide valuable funds for multiple generations while bypassing various tax liabilities throughout the years. These tax liabilities, which may include transfer, estate, and capital gains taxes, add up over the years and may eclipse up to and over 50% of the estate’s value.
Dynasty trusts can also keep valuable estate funds safe from creditors and divorce judgments for decades because the funds are no longer part of the estate. The sheer length of these trusts works greatly in favor of establishing or maintaining an individual’s or family’s legacy over the years.
Speak With an Experienced High-Net-Worth Estate Planning Attorney Today!
As an individual with a high net worth, you want nothing more than to keep your assets safe and under your control. Effective high-net-worth estate planning from OC Wills & Trust Attorneys can accomplish your objectives and give you the peace of mind you deserve. Contact our team to discuss your desires and options today.
