Estate planning can be an overwhelming task for just about anyone, but it becomes especially complicated when you have a high net worth.
High net worth families tend to have unique challenges that include tax liability, avoiding probate, charitable donations and planning for future generations. A standard, boilerplate estate plan process might not cover all the bases that a high net worth individual requires.
Here are some of the top considerations for high net worth estate plans:
Core Components of a Comprehensive Estate Plan
Estate plans for high net worth individuals incorporate elements that go beyond a standard plan, including:
Advanced trust structures
- Spousal Lifetime Access Trust (SLAT) – A SLAT is an irrevocable trust that one spouse creates to benefit the other spouse to take advantage of estate and gift tax exclusions. The donor spouse can include up to the gift tax exemption amount, which is $13.99 million in 20251. When the beneficiary spouse passes, that money can be passed on to the other beneficiaries, which are typically their children. The SLAT offers flexibility for the donor spouse, and allows them to draw on the funds as needed.
- Intentionally Defective Grantor Trust (IDGT) – An IDGT is an estate planning technique that involves removing some assets from the estate, while continuing to pay income taxes on the money they generate. This allows your assets to grow separately from the estate, and reduces your taxable estate in the process. Keep in mind that an IDGT is irrevocable, which makes it difficult to amend or change once it has been established.
- Qualified Personal Residence Trust (QPRT) – A QPRT is an irrevocable trust that permits you to remove a personal home from your estate, thereby decreasing how much you’ll pay in gift taxes when you transfer the assets to a beneficiary. It does not come without risk, however; the beneficiary must outlive the trust term, or else the home will be returned to the estate – and subject to taxes.
Family Limited Partnerships (FLPs)
An FLP enables members of the same family to share ownership of a business. In high net worth estate planning, an FLP creates a path that easily transfers business ownership to pass to the next generation. Shares are not available to the public, so they stay within the family, allowing each member to earn wealth.
FLPs also take advantage of gift tax benefits; shares can be gifted up to the annual exclusion amount without incurring gift taxes.
Life insurance strategies and ILIT considerations
High net worth estate plans can be subject to steep taxes upon the owner’s death, which can be a challenge for heirs. It’s especially difficult when dealing with assets that are not liquid or easy to sell, like businesses, property, art or other valuables. A life insurance policy can help cover those costs while your heirs decide what to do next.
An irrevocable life insurance trust (ILIT) can be another effective estate planning tool. In this case, a grantor transfers ownership of the policy to the ILIT, and the proceeds are not counted as part of the insured’s gross estate. Since they’re not part of the estate, those proceeds are not subject to state and federal estate taxes.
Charitable giving vehicles (Private foundations vs. DAFs)
Private foundations and donor advised funds are both effective ways to include charitable giving in your estate plan, but they offer different benefits.
Private foundations are non profit organizations that are created to benefit a charitable cause. Establishing a foundation gives you full control over how it is structured and managed, and where funds are allocated. Family foundations can preserve your family legacy, giving future generations a strategic vision to support your most passionate causes.
Foundations also offer tax benefits, including tax deductions for contributions, and tax-exempt income.
Donor advised funds (DAFs) are charitable accounts maintained by a sponsoring organization. They give you the flexibility to support multiple charities, all from one account. This is an excellent way to incorporate giving into your estate plan, because your DAF can allow you to continue to support multiple charities at the amount and schedule you choose.
There are tax benefits, as well. Contributions are tax deductible, and the funds in a DAF account grow tax-free.
Tax-Efficient Wealth Transfer Strategies
The Current Tax Climate
The current tax climate includes some favorable high net worth estate planning provisions, thanks in part to the Tax Cuts and Jobs Act (TCJA) of 2017. For example, this act included a doubling of the federal lifetime gift tax exemption amount, which is up to $13.99 million in 2025 per individual. That means that an individual can give up to that amount in their lifetime – or at death – without triggering federal estate or gift taxes.
However, the TCJA is on track to sunset after 20252, at which point all provisions would revert back to their levels before the TCJA took effect. This sunsetting coincides with a new presidential administration, which adds to the uncertainty of the upcoming tax landscape. For now, it’s a good idea to check in with your plan, and determine some possible strategies as we head into a new year.
Lifetime Gifting Strategies
There are a couple ways to include lifetime gifting in your estate plan strategy.
One option is through the annual gift tax exclusion3, which allows you to gift up to $19,000 per year (by 2025 limits) to an unlimited number of people, without incurring federal gift or estate tax fees. This also helps to reduce your taxable estate.
If you want to give a gift that is more than $19,000, you could opt to use the lifetime gift and federal estate tax exclusion. In 2025, this exemption permits you to give up to $13.99 million over the course of your life.
Valuation discount opportunities
Valuation discounts help to lower gift or estate planning transfer taxes, especially when gifting a business, FLP, LLC or trust. These discounts can be significant, ranging from 10 to 45 percent depending on the circumstances.
Discounts can be made due to lack of marketability based on fair market value, or lack of control (i.e. not having the power to control the decisions of a business.)
Generation-skipping transfer tax planning
The generation-skipping transfer tax is a tax incurred when assets are transferred to recipients who are a generation below the transferor. This would be like a grandparent gifting assets to a grandchild, or anyone who is more than 37.5 years younger than the transferor.
There are a few ways to avoid this tax, including:
- Direct gifts (while being mindful of gift taxes)
- 529 plan contributions
- Dynasty trusts, which are irrevocable trusts designed to last for generations
International estate planning considerations
No matter where a U.S. citizen lives (or dies,) the standard U.S. transfer taxes still apply. Estate taxes apply to all assets around the world, including properties, life insurance policies, retirement accounts and more.
Keep in mind that some factors – like marriage to a non-U.S. citizen – can make estate planning strategies a bit more complicated. Knowing the rules ahead of time can help you create an estate plan that will benefit both spouses as much as possible.
Business Succession Planning
Preparing for the succession of your business is another crucial component of estate planning. A well-executed plan can preserve the legacy of your business, and make sure it is managed and passed on the way you want it to be. Some key components of succession planning include:
Family business transfer strategies
Successfully transitioning your business to another member of your family is a process that requires years of careful planning and preparation. Establishing an FLP is one way to ensure a seamless handover within your family.
From the beginning, transparency is key. Make sure it’s very clear who is interested in taking on the business, how long the transition will take, and everything that process will entail.
Your transfer strategy should also include:
- A buy-sell agreement, which is a contract that specifies what happens to a business if the owner dies or has to leave the business.
- Management transition planning, which identifies the process and responsibilities for bringing on a new management team or leader.
- Equalization strategies for heirs, which help determine how each family member should be compensated based on their involvement with the company.
Legacy Planning Beyond Money
Money is an important consideration in legacy planning, but it’s only one part of the puzzle.
Complete legacy planning should also include your values, goals and overall vision for your estate. Here are some additional elements to consider in your legacy plan:
Family mission statements
A family mission statement helps to clarify your family’s values and principles in making decisions. This should be a shared vision that you and your family members create together.
Ethical wills and letters of intent
An ethical will, sometimes referred to as a legacy letter, includes those non-tangible things you want to pass on to your loved ones. It often includes life lessons, wishes and gratitude that you want to express in your estate plan. It’s meant to be your final message, and an opportunity to say the things you don’t want to go unsaid.
Ethical wills can take many forms, including simple letters, a quick video, or more elaborate presentations.
Family governance structures
Family governance typically applies to setting up the necessary systems to keep your business running effectively. For example, you might need to organize recurring meetings to get the entire family together on a regular basis, or create a written policy that details each family member’s role in the business.
Putting clear guidelines in place helps to avoid conflict and confusion, and supports your business as it grows and changes.
Common Pitfalls and How to Avoid Them
Estate planning as a high net worth family includes some unique pitfalls and challenges, but being aware of them ahead of time can help you avoid any serious trouble. Some of those include:
- Outdated documents: Make it a point to review your estate plan and beneficiaries regularly, especially after any major life changes like births, deaths, marriages or divorces.
- Poor communication with heirs: So many estate planning headaches can be avoided with a simple conversation. Take the time to have a frank conversation with your heirs about their role in your estate plan, and make sure everyone is clear on the terms.
- Inadequate liquidity planning: It’s not uncommon for high net worth estate plans to include significant non-liquid assets, like properties, vehicles, artwork and other valuables. You want to make sure your estate plan includes enough liquid assets to support your heirs (and any taxes or fees on the estate) after you pass.
- Failure to consider state-specific issues: Each state has its own set of laws and taxes that apply to estate plans. Failing to be aware of your state’s requirements could result in unexpected fees or compliance issues with your estate.
Estate planning is essential for everyone, but it can be particularly intricate for high net worth individuals. Taking the time to make sure it’s done right – and working with a professional when you need to – can ensure that your estate plan will support your goals, and your family’s needs, for generations to come.
Sources:
- https://www.kiplinger.com/taxes/gift-tax-exclusion
- https://taxfoundation.org/blog/2026-tax-brackets-tax-cuts-and-jobs-act-expires/
- https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025
Meris Collier, CFP®
COLLIER, Sustainable Wealth Management
1833 N 105th Street #101
Seattle, WA 98133
(206)805-1770
Click here to book a 15-minute phone call with Meris https://calendly.com/collierswm/appt
For 1 hour-long appointments, please email or call to request an in-person or Zoom Calendly link.
Collier Sustainable Wealth Management is a dba of Axxcess Wealth Management, LLC (“Axxcess”) a Registered Investment Advisor (RIA) located in the State of California. Axxcess Wealth Management, LLC provides investment advisory and related services for clients nationally. Axxcess Wealth Management, LLC will maintain all applicable registration and licenses as required by the various states in which Axxcess Wealth Management, LLC conducts business, as applicable. Axxcess Wealth Management, LLC renders individualized responses to persons in a particular state only after complying with all regulatory requirements or pursuant to an applicablestate exemption or exclusion.
CONFIDENTIALITY NOTICE: This email may contain privileged or confidential information and is for the sole use of the intended recipient(s). Any unauthorized use or disclosure of this communication is prohibited. If you believe that you have received this email in error, please notify the sender immediately and delete it from your system. NO OFFER OR SOLICITATION: The contents of this electronic mail message: (i) do not constitute an offer of securities or a solicitation of an offer to buy securities, and (ii) may not be relied upon in making an investment decision related to any investment offering by Axxcess Wealth Management, LLC, an SEC Registered Investment Advisor. AWM does not warrant the accuracy or completeness of the information contained herein. Opinions are our current opinions and are subject to change without notice. Prices, quotes, rates are subject to change without notice. Generally, investments are NOT FDIC INSURED, NOT BANK GUARANTEED, and MAY LOSE VALUE. Collier and AWM do not accept trading or money movement instructions via email.
AWM often communicates with its clients and prospective clients through electronic mail (“email”), short message service (“SMS”), and other electronic means. Your privacy and security are very important to us. AWM makes every effort to ensure that electronic communications do not contain sensitive information. We remind our clients and others not to send AWM private information over email. If you have sensitive data to deliver, we can provide secure means for such delivery. All emails and business-related SMS communications are sent through systems that can be archived and monitored. Please contact us at www.collierswm.com for our approved texting number. As a registered investment advisor, AWM emails and SMS communications may be subject to inspection by the Chief Compliance Officer (“CCO”) of AWM or the securities regulators. If you have any questions regarding our email policies, please Contact Us.
The information provided is for educational and informational purposes only and does not constitute investment, legal, tax advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.