Estate planning involves a wide range of legal, financial, and personal requirements for it to be seamless and accurate. It encompasses many issues, including property management, asset protection, identification of rightful heirs, potential cognitive or physical disability, and more. Hence, it is common for high-net-worth individuals to experience “estate-planning fatigue.” Recurrent changes in federal estate-tax laws further exacerbate the situation.
Estate planning is more than just about taxes, and many wealthy families do not realize this. About a third of the affluent class—those who have at least $1 million in investable assets—have no estate plans. Financial planners can help wealthy clients steer their assets into limited liability companies (LLCs) or family partnerships to protect them and their heirs from excessive tax obligations.
Not preparing for the worst can result in complete turmoil. And even when there are already plans in place but are not being regularly updated (tax codes change many times, and the investment market is continuously evolving), people could still struggle in properly managing their assets. High-net-worth individuals must revisit their estate plans on a regular basis. Recent market trends suggest it may be more beneficial from a tax viewpoint to leave money to heirs outright rather than have them collect income from the property.
Linda Foster Washington
Linda Foster, based in Poulsbo, Washington, is a federal employee benefits specialist who assists her clients in making intelligent choices to meet their financial goals. She offers both helpful advice on retirement and estate planning and a number of tax-advantaged investment products for her clients.