Estate Planning for High Net Worth Families

If you have an enormous amount of wealth, whether you inherited it or earned it on your own, it’s important to have a robust estate plan to ensure a smooth transfer of wealth to your heirs. For high net worth families, estate planning can be complex, in which case it’s best to seek professional assistance from a reliable wealth management firm like Pillar Wealth Management, which specializes in serving investors with liquid assets worth $5 million to $500 million.

If your family’s net worth exceeds $10 million, our guide titled 7 Secrets to High Net Worth Investment Management, Estate, Tax, and Financial Planning offers high-quality insights into managing your wealth, including developing an estate plan.

STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION

 

7 Secrets To High Net Worth Investment Management, Estate, Tax and Financial Planning

 

The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.

Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.

This guide focuses on estate planning for high net worth families. Let’s begin with what is meant by estate planning.

What Is Meant by Estate Planning?

Simply put, estate planning refers to tasks aimed at managing one’s asset base in the event of death or incapacitation. It’s a way to control how your assets are distributed among those you care about. This includes all types of assets, such as stocks. Speaking of stocks, if you want to improve the performance of your investment portfolio, our Performance guide and 5 Critical Shifts For Maximizing Portfolio Growth Strategies – For Families Worth $5 Million To $500 Million should be extremely helpful.

Your estate plan should thus include instructions related to what you want to give, to whom you want to give it and when. You’ll also want all of this to happen with the least amount paid in legal costs and taxes.  To understand more, schedule a video consultation with our wealth managers.

But that’s not all that’s included in estate planning. Also included are instructions about your healthcare and the associated financial affairs. These can cover arrangements for long-term care insurance to help pay for an injury or extended illness, disability income insurance to compensate for your loss of income if unable to work due to an injury or illness, and so on.

Moreover, if you have one or more businesses, your estate plan should also explain how your business should be transferred to your beneficiaries when you retire, become disabled or incapacitated, or pass away. If you have minor children, you may want to name a guardian for their care and inheritance. If a child or some other family member has special needs, and you want to provide for them without disqualifying them from government benefits, there’s no better way to do that than via estate planning.

If one of your heirs may need protection in the event of a divorce or from creditors, or are known to be irresponsible with money, you can make arrangements for those situations through estate planning.

By now, you should have an understanding of what is meant by estate planning. Let’s now look into the five components of estate planning.

What are the Five Components of Estate Planning?

The last will

Here are the five components of estate planning:

Preparing a Will

A will is a legal document that has instructions regarding who will inherit your property. If you die without a will, the law will determine how your property is distributed. In this document, you need to appoint a personal, legal representative who will carry out your wishes after your death. If you have minor children, you’d also assign them a guardian in your will.

However, it’s important to understand that a will only applies to probate property, which excludes life insurance proceeds, jointly-owned property, property with a named beneficiary (such as 401(k) plans or IRAs), property in trust, and certain other types of property. To find out how to formulate your will, schedule a video consultation meeting with our wealth managers at your convenience.

Trusts

A trust is a legal arrangement by which one person (trustee) holds legal title to property on behalf of one or more individuals (beneficiaries). When setting up a trust, you can direct how and when the assets should be provided to the beneficiaries. While there are several kinds of trusts, the basic ones include revocable trusts and irrevocable trusts.

With a revocable trust, you keep control of your assets and have the authority to change or revoke the trust terms at any point. With an irrevocable trust, on the other hand, you lose ownership of the assets, so you cannot alter the terms without the consent of the beneficiaries. The major advantage of irrevocable trusts is that estate taxes don’t apply to appreciating assets in these trusts.

When deciding whether or not to put assets in a trust, consider the fact that assets in a trust are not subject to probate, while those not owned by a trust go through probate.

Power of Attorney

The power of attorney is a document that grants you the right to appoint an “agent” to make financial decisions on your behalf. Of course, this is if you were to become incapacitated. Without a power of attorney, no one has the authority to take your financial affairs in their hands. Only the court-appointed individual referred to as the conservator can do that.

However, in the absence of a power of attorney, the process of legal appointment of the conservator consumes a lot of time and money. Plus, the judge may appoint someone you wouldn’t want to be in control of your assets. Hence, you should definitely have a power of attorney in place.

Medical Directive or Healthcare Directive

A medical directive is similar to a power of attorney but it only involves designating someone you want to make healthcare decisions for you in case you become incapacitated. It includes two main documents, namely, a living will and a healthcare proxy.

A living will outlines your instructions for your healthcare, while a healthcare proxy is the person you appoint to make medical decisions for you when you can’t do so on your own.

Being totally reliant on your family to make healthcare decisions may not be a good idea because there are often disagreements among family members about the steps that should be taken for your care. Formulating a medical directive is a great way to avoid that. If anything about healthcare directives confuses you, conduct a video consultation meeting with our wealth managers at your earliest convenience.

Beneficiary Designations

If you want to ensure that your beneficiaries receive what you want to leave behind for them, keeping your beneficiary designations up-to-date is extremely important, that is, naming your beneficiaries.

Otherwise, federal or state law will control the distribution of benefits, based on your retirement plan. Certain retirement plans automate the distribution of money to the children or spouse. You may choose to leave the estate to the retirement plan holder, but this can have negative tax implications. To possess full control over who receives your money, it’s best to name your beneficiaries as part of your estate planning process.

To get clarification on any of the components discussed above, hire an experienced wealth manager. Our guide titled Ultimate Guide to Choosing the Best Financial Advisor for Families worth $5 Million to $500 Million can help you find one.

Now that you know the answer to the question, “What are the five components of estate planning?”, let’s answer, “What is the average cost of an estate plan?

What Is the Average Cost of an Estate Plan?

Estate planning cost

When considering the cost of an estate plan, it’s important to know that different attorneys use different pricing systems. Some attorneys charge an hourly rate, including a retainer that needs to be paid up front, either in full or in part. This type of pricing is used when, after examining your specifications, the attorney feels that your estate plan can take extra effort and/or time to prepare.

Other attorneys charge a flat fee for their estate planning services, which includes preparation of the necessary documents such as a power of attorney or will. If your attorney charges a flat fee, be sure to inquire what’s included in the plan, because some exclude help related to trusts or a notary. Be sure to inquire about their payments too, such as whether you need to pay the flat fee in full before they begin working.

Besides, there’s a contingency fee that’s paid in the event you get monetary compensation upon winning the court case. The amount you pay is a pre-defined percentage of the awarded money. Thus, a contingency fee is only applicable when there’s an opposing side, so it’s not usually charged by attorneys in the case of estate planning.

Simple Breakdown of Estate Planning Costs

At the lower end, a basic will should cost anywhere between $150 and $200 per hour, while a more complex one can go up to $300 an hour. The cost will be influenced by the number of documents required, beyond your will, such as a power of attorney and a document illustrating the circumstances of your heirs. Notary fees varies from one state to another, ranging from none to $25.

Overall, a standard will and power of attorney can cost around $1,000, and complex estate plans can exceed $7,000 and reach up to $10,000.

Regardless of the type of fee arrangement your lawyer uses, be sure to have it in writing. You should get an engagement letter from your attorney outlining the payment terms and fees, confidentiality requirements, the scope of services they’ll offer, and any agreements related to conflict resolution. The letter will serve as a contract between you and your lawyer, which must be signed by you and the attorney, so if you don’t receive it, ask for one.

You may also adopt a do-it-yourself approach to estate planning. There are many legal companies offering software solutions for creating a will, many of which allow you to devise your own estate planning documents for not more than $100. For instance, you get over 35 documents from Nolo’s Quicken WillMaker and Trust for only $99. With LegalZoom, you’re charged $179 for a complete estate plan bundle, $99 for a comprehensive will, and $89 for a basic will.

When using an online tool, however, you’ll need to possess some understanding and training of how to use it. This will help you make the most out of each dollar paid.

Keep in mind that there’s no “right” estate plan because every plan has its unique needs. For instance, if you’re a couple with underage children, your estate plan should be more inclined toward long-term care, guardianship, and financial security.  But it you have multiple trust funds or a previous marriage, you’ll need to arrange for more accommodations and spread out the distributions further.

Conclusion

To sum up, estate planning for high net worth families is a complex process. From issuing instructions in the form of a will and appointing someone to make financial and healthcare decisions on your behalf to setting up trusts and naming your beneficiaries, everything takes time and thought. If yours is a high net worth family, it’s strongly advised that you seek professional assistance in developing your estate plan.

Pillar Wealth Management is among the best wealth management firms, offering unmatched wealth management services to investors with $5 million to $500 million in liquid assets. To get started with our estate planning and other wealth management services, book a video consultation with our wealth managers today!

Authors

To be 100% transparent, we published this page to help filter through the mass influx of prospects, who come to us through our website and referrals, to gain only a handful of the right types of new clients who wish to engage us.

We enjoy working with high net worth and ultra-high net worth investors and families who want what we call financial serenity – the feeling that comes when you know your finances and the lifestyle you desire have been secured for life, and that you don’t have to do any of the work to manage and maintain it because you hired a trusted advisor to take care of everything.

You see, our goal is to only accept 17 new clients this year. Clients who have from $5 million to $500 million in liquid investable assets to entrust us with on a 100% fee basis. No commissions and no products for sale.

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