Estate Plan Strategies For Your High-Net-Worth Clients

Assuming that the estate planning game moves along at a snail's pace can put a burden on your clients, especially those with significant estates. The estate, gift and generation-skipping transfer tax exemption currently stands at $11,580,000, which means the federal transfer tax system imposes a tax on gifts made when the client is alive or on clients’ assets when they die if their estates’ value exceeds the exemption. That can be a serious burden for you high-net-worth clients.

Luckily, there are a number of techniques available that allow your clients to avoid some of these tax burdens. Whether it’s transfering appreciation to younger generations or reducing the value of assets included in their taxable estate, options are aplenty when it comes to helping high-net-worth clients.

Those over the exemption are taxed at a rate of 40%. That’s a hefty chunk of change and one your high-net-worth clients don’t want to give up.

Team Effort

When it comes to high-wealth-clients, it takes a team effort. Those who are going to have to work together include any number of advisors, CPAs, attorneys, insurance professionals, and trustees. 

Game Plan

What are your clients goals? All clients are different and each has their own consideration when it comes to their assets. Is the goal simply to efficiently transfer assets to descendants? Or are they more interested in charitable donations? Might it be a matter of asset protection over everything else? Most likely, it’s a mix of all three.

The point is to come up with a game plan that is tax-efficient. 

Plan A: Descendants

The goal for your high-net-worth clients who are interested in transferring wealth to descendants is to lower the value of assets retained by the client. This is where discount valuation comes into play, which would create a legal wrapper around certain assets, lowering the valuation.

Another option is to establish a family limited partnership or llc, and transfer assets to the entity. This limited interest should be entitled to a valuation discount. However, a structure like this needs to exist for other reasons than just estate wealth holding. Otherwise, you risk the IRS getting involved.

These are just two of a number of options when it comes to helping clients who are most interested in passing assets onto their descendents.

Plan B: Charitable Giving

While many high-net-worth clients would like to establish and make charitable gifts to their own private foundations, those gifts are often subject to more restrictive limitations when it comes to income tax deduction. 

A donor-advised fund on the other hand might be the way to go. These funds are established at a public charity, which allows for higher limitations for an income tax deduction. Of course, going this route means clients give up legal control over the assets, but they do get advisory privileges over which charities receive the donation.

Those looking to get some benefit from their charitable donations might want to check out charitable remainder trusts and charitable lead trusts. In these, the charitable remainder trust pays the client a certain amount over a set period of time, at the end, the balance of the client’s interest passes to charity.

Plan C: Asset Protection

Clients interested in limiting their exposure to creditor claims may already get protection from states or the federal government, but those who don’t may want to look into a domestic asset-protection trust. Usually, these trusts allow clients some access to the assets in the trust while preventing creditors from accessing trust assets.

These are just some of the options out there when it comes to strategies for transferring wealth. And while there are plenty of plans out there, the most important is to plan ahead.


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