The main goals for many individuals preparing an estate plan are protecting assets for future generations, reducing estate taxes, and exercising control over how their estate is distributed. For high-net-worth estates, advanced planning is essential to achieve those goals and other goals individuals might have for their estate. A Massachusetts estate-planning attorney can devise strategies for asset protection, a key building block of a successful high-net-worth estate plan.
Five Asset Protection Strategies for High-Net-Worth Estates
1. Title Property Correctly
How property is titled determines your control over the property during your lifetime and the distribution of your property after death. Some property may be titled in specific ways to allow for continued control, but upon your death, the asset passes outside of the estate to reduce the taxable value of the estate. Because there could be other financial and legal implications for titling property, it is best to work with an experienced estate attorney to determine exactly how to title each asset so that the effect has the desired outcome for your estate.
2. Utilize Trusts Wisely
Trusts can be effective asset protection tools when used correctly and wisely. There are many different types of trust available, including living trusts, irrevocable trusts, special needs trusts, charitable trusts, IRS Stretch Trusts, and many others. Some trusts offer grantor’s substantial control during their lifetime, but may not protect assets as well as other types of trust. It is important to work with your financial planner and estate planning lawyer to determine which trusts, if any, offer the benefits you want while minimizing potential downfalls.
3. Use Gifting Strategies
Gifting property and assets during your lifetime is an excellent way to reduce the taxable value of your estate, which is a concern for many high-net-worth individuals. However, once you give the assets, you lose control over the assets. You cannot protect those assets from the recipient’s creditors and other parties. Another option to explore may be paying for certain expenses for heirs instead of gifting money or property, such as college tuition and living expenses. You may also explore using trusts to gift property to heirs so that the property is protected from your heirs’ creditors.
4. Setting Up an FLLC or FLP
For some individuals, setting up a Family Limited Liability Company or Family Limited Partnership can provide asset protection during an individual’s lifetime and after the person’s death. In addition to asset protection, there may also be incidental tax advantages in using this high-net-worth estate planning strategy.
5. Business Succession Planning
Many high-net-worth individuals own businesses. It is important to include business succession planning when developing strategies for high-net-worth estate planning. A comprehensive business succession plan implements asset protection strategies while establishing how business interests are transferred to heirs after a person’s retirement, incapacitation, or death.
Contact a Massachusetts Estate-Planning Attorney for Help with High-Net-Worth Estate Planning
High-net worth estates require additional planning to protect assets, reduce tax liability, and ensure your legacy is preserved for future generations. A Massachusetts estate-planning attorney can help you identify your estate planning goals and draft documents that achieve those goals. Contact our office today to find out more.