Individuals who hold substantial wealth may create an estate plan to manage their assets during their life and direct the distribution of their estate after death. However, they may face unique considerations and complexities when undertaking estate planning in Wisconsin. Here are some of the top challenges that arise in estate planning for high-net-worth people.
Complex Tax Considerations
First, high-net-worth individuals may own enough assets to trigger federal estate taxes. Although federal tax law currently has a substantial estate and gift tax exemption, estates whose assets exceed that threshold may face significant tax liability. Federal estate taxes can cut into the value of a high-net-worth individual’s estate, leaving less wealth behind to pass on to family members or charitable causes. Fortunately, various estate planning strategies can help mitigate potential estate tax liabilities, including irrevocable trusts and charitable giving.
Asset Protection Challenges
High-net-worth individuals may develop estate plans to provide asset protection during their life or to preserve generational wealth after they pass away. Legal and financial risks to assets include investment losses, business failures, lawsuits, and creditors. Individuals may leverage various estate planning tools to protect assets from these risks, such as family limited partnerships, irrevocable trusts, annuities, or life insurance products. People with a significant net worth may also need to balance the desire for asset protection against maintaining liquid access to their wealth. Fortunately, various estate planning strategies can provide income streams that individuals need while protecting the bulk of their wealth.
Family Dynamics and Succession Planning
People with substantial assets may also face unique challenges in family dynamics. Although a person who has worked hard throughout their life to build wealth may want to pass that wealth on to their loved ones, they may also worry that family members may not have the financial aptitude or discipline to preserve that wealth. Other challenging family dynamics include blended families, where an individual and their current spouse have children from different relationships, or owning a family business, which may raise questions about succession planning.
Individuals have various estate planning tools that can address specific concerns or achieve particular financial or legal objectives. Maintaining open communication among family members can help mitigate the potentially damaging effects of challenging family dynamics.
Charitable and Philanthropic Goals
Many high-net-worth individuals choose to include charitable and philanthropic goals in their estate plan, as they may want to leave behind a legacy or give back after achieving significant financial and professional success during their lives. Although charitable giving may come from noble intentions, adopting philanthropic estate planning strategies can also offer substantial tax benefits during and after a person’s life. For example, charitable trusts can help mitigate income or estate taxes, depending on the trust’s structure.
Regulatory and Legal Considerations
Large estates can trigger significantly more complex estate and tax laws than other individuals’ estates. High-net-worth individuals may rely on complex or novel legal strategies to achieve their legal or financial objectives, which makes it more critical to ensure compliance with state and federal laws. Hiring experienced legal counsel helps individuals achieve their estate planning goals, such as protecting assets, managing taxes, or avoiding probate.
Contact a High-Net-Worth Estate Planning Attorney
If you own significant or complex assets, hiring experienced legal counsel can help you address the specific considerations you might face in estate planning. Contact Peterson, Berk & Cross, S.C., today for a confidential consultation with an estate planning lawyer to learn more about the estate planning challenges high-net-worth individuals can experience and get help crafting a tailored, comprehensive estate plan in Wisconsin.