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What high-net-worth individuals should consider when estate planning

Estate planning is a crucial process that every individual, regardless of their net worth, should consider. However, for high-net-worth individuals, estate planning takes on a whole new level of complexity. With substantial assets, investments, and businesses, there are many factors to consider when planning for the distribution of one's estate.

Here are some considerations that high-net-worth individuals should take into account when estate planning:

Tax implications

One of the primary considerations for high-net-worth individuals is the tax implications of their estate plan. Estate taxes can significantly reduce the value of an individual's estate, and careful planning can minimize or eliminate these taxes altogether. The current federal estate tax exemption is $12.92 million per individual, but this number can change over time, so it's essential to keep up with current tax laws and regulations.

High-net-worth individuals should work with a qualified tax professional to understand their options for reducing estate taxes. For example, one strategy is to gift assets to family members or charity during the individual's lifetime, which can reduce the value of the estate and lower estate taxes. Trusts can also be established to transfer assets and manage estate taxes more efficiently. Regardless of the strategy, it is important to talk to someone about your unique estate.

Asset protection

High-net-worth individuals often have a significant amount of assets that require protection. Estate planning can help protect assets from creditors and potential lawsuits. Asset protection strategies include establishing trusts or creating limited liability companies. However, it's essential to work with an experienced attorney who specializes in asset protection to ensure these strategies are legal and effective.

Business succession planning

If you own any business, you should have a plan in place for succession in the event of your death. A business succession plan outlines who will take over the business and how it will be managed after an individual's death. It's essential to involve family members and key employees in this process to ensure a smooth transition.

Charitable giving

High-net-worth individuals often have a desire to give back to their communities and support charitable causes. Estate planning can help facilitate this desire by creating a plan for charitable giving. Charitable trusts can be established to support causes that align with an individual's values, and the tax benefits of charitable giving can help reduce estate taxes.

Family dynamics

Estate planning is not just about the distribution of assets; it's also about managing family dynamics. High-net-worth individuals should consider how their estate plan will impact their family members and how to prevent conflicts and disputes. Open communication and transparency can help mitigate potential conflicts and ensure that everyone understands the plan's intentions.

Life insurance

Life insurance can be an essential component of an estate plan. It can provide liquidity to pay estate taxes and debts, fund buy-sell agreements for businesses, and provide for loved ones' financial needs. It's essential to review and update life insurance policies regularly to ensure they align with an individual's estate plan.

Digital assets

In today's digital age, everyone often has significant digital assets that require management and protection. Estate planning should include a plan for digital assets, such as social media accounts, online banking and investment accounts, and cryptocurrency. It's important to provide access to these assets to trusted individuals in the event of an individual's death or incapacitation.

Estate planning is a critical process for high-net-worth individuals to ensure their assets are distributed according to their wishes and to protect their assets and loved ones. By working with qualified professionals, high-net-worth individuals can create a comprehensive estate plan that considers tax implications, asset protection, business succession, charitable giving, family dynamics, life insurance, and digital assets.

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Gabe Caldwell
Gabe Caldwell

Gabe Caldwell is an entrepreneur, investor, biohacker and co-founder at Addio. He leads Addio’s partnership efforts and makes sure that families have access to the top experts in Addio’s Expert Network. In his free time, you can find him riding bikes, lifting weights, or playing beach volleyball.

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Should you create an online will or use an attorney?

If you're weighing the pros and cons of doing it online versus going through an attorney, let us break it down.

Take the quiz