It has often been said that the only guarantees in this world are death and taxes. We all concede this point in conversation, but few of us will act on the predictable consequences. We do this because it’s uncomfortable. None of us wants to die, and few wish to think about taxes more than necessary. Our tendency is to delay until it’s too late for effective action.
But estate planning for high net worth individuals is especially vital, for the sake of loved ones, and other beneficiaries. In January of this year, Forbes reported that because the rock music artist known as Prince died intestate, his heirs will likely lose half of his estate to both the state and federal governments (why-uncle-sam-is-princes-biggest-fan). As Prince’s estate, again according to Forbes, was in the neighborhood of 200 million dollars, many sophisticated tools were available to his estate. One option, of course, would be a will. This would designate who was to receive a benefit upon his death, and in what proportion. This could also specify any charitable causes he might have intended as beneficiaries.
Another option would be trusts set up during his lifetime or established upon his death. When properly set up by a reliable estate planning professional, such instruments can reduce, possibly eliminate, taxes that might otherwise destroy the financial position of a wealthy individual’s heirs. Various legal entities such as corporations and limited liability companies can also be created, with minority interests passing to heirs. Such entities often allow substantial discounts to their valuation for taxes, when transferred to the individual’s heirs. We should note that policies may change with the new president of the United States, which is just one reason that seasoned, reliable estate planners should always assist our efforts. Their help could mean savings to surviving loved ones. Savings of millions, tens of millions, or possibly even more.
As more wealth is created in this dynamic free market, the number of wealthy individuals is on the rise. On balance, this is a positive trend. But increasing wealth means that an individual can be subject to greater tax liabilities. These liabilities will be passed on to survivors. Proper planning and execution of these plans become more important as time goes on. Click here to contact us. We owe it to ourselves.