Key Estate Planning Strategies for High Net Worth Families
High net worth individuals are much more likely to have a federal taxable estate. As such, their estate planning strategies will typically include not just how they wish to divide their assets after their death and arrange for end-of-life care, but also how they can minimize their potential estate tax liability.
Here are a few examples of some commonly used estate planning strategies for high net worth families:
- Gift giving: Every taxpayer has a lifetime gift tax exemption, as well as an annual gift tax exemption. You can gift up to the annual limit each year without having to file a gift tax return to as many individuals as you want. Therefore, to avoid estate taxes, you can start passing on financial gifts to your chosen beneficiaries before you pass and maximize their impact.
- Charitable giving: You can reduce the size of your estate by assigning portions of your assets to be placed in a charitable lead trust or charitable remainder trust. These are both methods of transferring assets to charities that will reduce the taxable value of your estate.
- Life insurance: Life insurance proceeds can be used to offset some of your estate tax liability. If a lot of your estate is in illiquid assets you may end up owing more in tax than what you have in liquid assets. Life insurance policies can help bridge that gap.
- Split family income: You can reduce your estate tax burden by dividing income among family members. Dividing income among lower-income family members allows you to significantly reduce the overall tax burden facing your family.
For more tips about dealing with high net worth estates, contact an experienced Tampa, FL estate planning attorney at BaumannKangas Estate Law.