If you have an ultra high net worth of $10 million or more, you probably already understand the basics of wealth management. Yet the bigger your estate, the more critical each decision can be, not only for you but also for your heirs. Take some time with your wealth manager to review and rebalance your portfolio to be sure you are maximizing your investments, and then sit down to create a careful estate plan.
Estate Planning for Ultra High Net Worth
Your estate planning goals should include minimizing estate taxes, planning for your future incapacitation, and avoiding probate. Please note that the following information is provided for general planning purposes, and that it is vital to seek specific advice from both your wealth management advisor and your attorney.
Minimizing Estate Taxes
Minimizing estate taxes is extremely complicated, because estate taxes are actually broken down into a few distinct types of taxes. There is also a unified tax credit, which is affected by all the different types of taxable items. For example, the total dollar value of tax exempt gifts you give across your lifetime reduces the tax exemption available for estate taxes.
Because estate taxes are so complicated, a detailed plan is essential. Your wealth management advisor and attorney can help you understand all of the implications of changing any part of the plan.
Short-term or long-term incapacitation can happen to anyone at any time. What happens during your incapacitation can destroy your carefully planned legacy, so proper planning and documentation is key. At a minimum, your incapacitation plan should cover the following:
Property management plan
End-of-life treatment plan
There are several steps you must take to ensure that all of your wishes are met. These include:
Durable Power of Attorney: The named person will be able to manage your bank accounts and other assets, open your mail, and buy and sell property on your behalf.
Healthcare Power of Attorney: The named person will be able to choose your doctors and hospital and determine your medical treatment, including long-term care. This person may also act as your HIPAA (Health Insurance Portability and Accountability Act) Release Agent, allowing him or her to access your protected medical information.
Living Will: This documents allows you to specify the end-of-life care you desire, such as the removal of a feeding tube and the cessation of all but palliative treatments to allow for a natural death.
Guardianship Declaration: A guardianship declaration specifies who will take care of any minor children you have if you become incapacitated or pass away.
Avoiding Probate: Revocable Trust
Probate is a complicated legal process that occurs after someone passes away, as expenses are settled and the estate is distributed to heirs. It can take a long time, and the result may be that your estate is not distributed as you intended.
A revocable trust, or living trust, can bypass the probate process while allowing you to retain control of your assets throughout your lifetime. It can be amended, revoked, or modified at any time, and because it qualifies as a grantor trust, you can move assets in and out of it tax-free.
A revocable trust also allows you to set limitations on individual beneficiaries’ inheritances. For example, you might require that a particular beneficiary not receive her part of the inheritance until she turns 25, or that another beneficiary use his portion only for health or education purposes. You can disallow a spouse from transferring assets to a new spouse or to children from a previous marriage. In short, through a revocable trust, you can retain more control over how your estate is allocated and each portion is used.
If you have a net worth of $10 million or more, planning your legacy is complicated. The above suggestions should be considered guidance rather than specific advice. You need professional advice from an experienced wealth management advisor and an estate planning attorney to help you avoid mistakes that could be costly not only to you but also to future generations.
CORDA Investment Management, LLC, is an investment advisory firm that provides wealth management services for clients nationwide. CORDA’s headquarters is in Houston, and the firm also has offices in Austin and Dallas. If you are ready to begin a long-term professional relationship with a proven investment firm, please contact CORDA today at https://cordamanagement.com or by phone at (855) 439-0665.
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