Estate planning for wealthy individuals and families
While all families should have an estate plan of their own, it is even more important for high net worth families. Why? To put it bluntly, affluent families have more to lose from failing to plan properly… and of course, much more to gain from a comprehensive, well-designed plan.
Affluent families must address basic estate planning issues, such as putting their affairs in order, providing for their physical and emotional well-being in the event of incapacity, and planning for a comfortable retirement. But this is just the beginning: high net worth families must also concern themselves with the stewardship of their wealth, their enduring significance and impact on society, and the responsibilities they wish to pass on to their family members.
High net worth planning requires long-range vision and a thorough knowledge of both income and estate tax law, often from a global perspective. This is because international wealth transfers and the creation of cross-border financial instruments is becoming increasingly prevalent and desirable. Kirsten has the technical expertise, vision and experience to meet these and other planning needs that are unique to affluent families. She will take the time to work with you and your existing advisors to gain a complete understanding of your family’s business and investment holdings. Then, she will identify opportunities to reduce both estate and income taxes, as well as formulate a plan to achieve all of your goals while you are alive and efficiently transfer your family’s wealth to succeeding generations.
The most effective plans are the result of collaboration
By working closely with your advisors to combine your family’s legal, financial, tax, charitable and business matters into a cohesive overall plan, Kirsten can:
- Protect your assets today, tomorrow and beyond
- Help you and your loved ones continue to enjoy the lifestyle to which you are accustomed
- Ensure your hopes, values and expectations are passed on to your heirs
- Significantly lower income, gift, estate and generation-skipping taxes
- Maximize the value of your business interests, and transition out of them whenever and however you want
- Ensure your estate is administered efficiently and with minimal stress on family members
- Protect your estate from creditors, predators and even the poor decisions of your loved ones themselves
In short, Kirsten can meet your particular planning needs and objectives, all while generating substantial tax savings. The tools she can put to work on your behalf include:
Life Insurance
Properly structured life insurance can add an element of safety and certainty to most estate plans. Death benefits are generally income tax free and policies owned outside the estate can also be estate tax free. Many policies have guarantees to keep the policy in force regardless of fluctuations in interest rates or company mortalities (as long as the premiums are paid, of course).
Irrevocable Life Insurance Trust (ILIT)
This trust allows Life Insurance to be owned outside of the taxable estate. The ILIT is the “owner” and beneficiary of the Life Insurance policy. It pays the premiums, collects the proceeds at death and distributes funds to beneficiaries according to the provisions of the trust. ILITs can be established as Dynasty Trusts.
Grantor Retained Annuity Trust (GRAT)
In a GRAT, assets are typically transferred to a trust and the grantor of the trust receives an income stream for a period of years. What is left in the trust at the end of its term is transferred to beneficiaries. A GRAT helps reduce or eliminate the taxable gift to beneficiaries of the GRAT.
Grantor Retained Unitrust (GRUT)
Similar to a GRAT except that in a GRUT, the trust payment to the grantor is specified as a fixed percentage of the value of the trust assets determined annually. Because of this, the GRUT does not have the same potential for discounted gifting. In a GRUT, if the trust earns more than the payout rate, the earnings stay in the trust, increase the value of the trust assets, and increase the payment the next year, with a consequent lessening of the remainder value.
Family Limited Partnership (FLP)
FLPs are a type of business entity that can be used to facilitate the transfer of assets. Ownership is divided into General Partner and Limited Partner shares. General Partners maintain control of the entity even though they may own only a small percentage of the FLP. Limited Partners have ownership but no control. FLPs often receive major valuation adjustments because the Limited Partners have no control, allowing Limited Partner shares to be sold or transferred at less than their full value. FLPs also enjoy strong creditor protection, making them a powerful tool for asset protection.
Annual Gifting
This is a simple way to transfer assets to beneficiaries. Currently, an individual can gift $13,000 of property to another individual annually or up to $1,000,000 in assets during their lifetime without incurring gift taxes. Gifting property that is discounted in some way can be an effective way to transfer more than the statutory amount.
Charitable Remainder Trust (CRT)
A CRT is a trust ordinarily funded with appreciated assets. The current beneficiaries, whether the grantor or family members, receive distributions from the trust for a period of time, the remainder on termination of the trust goes to a charity. The grantor of the trust gets an income tax deduction for a charitable donation upon establishing the trust in the amount of current value of the charity’s remainder interest. Because this is a charitable trust, the appreciated asset can be sold by the trust without incurring capital gains tax.
Charitable Lead Trust (CLT)
A CLT pays an income stream to a charity from trust assets for a specific period of time and then leaves the remainder of the trust to named beneficiaries, typically family members. In effect, it allows the grantor to provide for heirs after death while minimizing estate taxes because some of the trust assets were given to charity.
Private Foundation
Typically, a Private Foundation is a charity operated by one family. It can be a trust or a corporation, and the family can maintain complete control of the board, make all investment decisions and all of the charitable grants. Private Foundations must distribute five percent of their assets annually, and there are strict guidelines about what types of investments can be owned. There are also limitations on the amount of charitable income tax deductions available for contributions.
