Estate Planning for High Net Worth Individuals

Family Limited Partnerships

A Family Limited Partnership (FLP) is a partnership among family members that accomplishes several estate planning objectives at once. Once established, you can transfer limited partnership interests to your children or other beneficiaries using your annual gift tax exclusion, reducing the value of your taxable estate without triggering gift tax.

Because limited partners do not control day-to-day operations, a minority discount applies to the value of the interests being transferred. An additional discount applies because the interests are not publicly traded. Together, these discounts allow you to transfer more wealth to your beneficiaries while retaining control of the underlying assets. A properly structured FLP also provides meaningful creditor protection.

Qualified Personal Residence Trusts

Your home is often your most valuable asset and one of the largest components of your taxable estate. A Qualified Personal Residence Trust (QPRT) allows you to transfer your home or vacation property to your family at a significant discount, freeze its value for estate tax purposes, and continue living in it for a specified term.

If you survive the trust term, the property passes to your beneficiaries free of additional estate or gift tax, along with all appreciation since the transfer. After the term ends you may continue to live in the home by paying fair market rent, which further reduces your taxable estate. A QPRT also functions as an asset protection vehicle, since you no longer technically own the property once it is transferred.

Irrevocable Life Insurance Trusts

Life insurance proceeds are not subject to income tax, but they are included in your taxable estate, meaning your beneficiaries can lose a significant portion of the death benefit to estate taxes. An Irrevocable Life Insurance Trust (ILIT) removes the policy from your estate entirely. The trust owns the policy, receives the proceeds, and distributes them to your beneficiaries free of estate tax and outside of probate.

ILITs can be structured to provide income to a surviving spouse with the remainder passing to children from a prior marriage, or to control distributions to a beneficiary who may not be equipped to manage a large lump sum. They are particularly effective for business owners and individuals whose estates approach or exceed the estate tax exemption.

Grantor Retained Annuity Trusts

A Grantor Retained Annuity Trust (GRAT) allows you to transfer appreciating assets such as closely held business interests or investment portfolios to your heirs at a reduced gift tax cost. You retain an annuity payment for a fixed term. If the assets appreciate faster than the IRS hurdle rate during that term, the excess passes to your beneficiaries gift-tax free. GRATs require precise timing and drafting but can be highly effective when assets are expected to grow significantly.

Generation-Skipping Trusts

When wealth passes from parent to child and then from child to grandchild, it can be subject to estate tax at each transfer, reducing the estate significantly at every generation. A generation-skipping trust holds assets for multiple generations, bypassing estate taxes at each transfer. Beneficiaries can receive income and principal during their lifetimes, but because they do not own the assets outright, those assets are not included in their own taxable estates when they die. Properly funded and administered, a generation-skipping trust can preserve wealth for grandchildren, great-grandchildren, and beyond.

Charitable Planning

For clients with philanthropic goals, charitable planning tools can reduce estate taxes significantly while creating a lasting legacy. A Charitable Remainder Trust allows you to convert appreciated assets into a lifetime income stream, take an immediate charitable income tax deduction, and pass the remainder to your designated charity at death. Other tools include Charitable Lead Trusts, donor-advised funds, and private foundations. I work with your financial advisors and CPAs to integrate charitable planning into a comprehensive estate plan that reflects both your financial and personal goals.

Asset Protection Planning

Advanced estate planning is not only about reducing taxes. Domestic Asset Protection Trusts, limited liability structures, and strategic titling of assets can place meaningful barriers between your wealth and future creditors or lawsuits. Asset protection planning must be done proactively, before a claim arises. Transfers made after a creditor problem has developed may be challenged. If protecting what you have built is a concern, the time to plan is now.

Business Succession Planning

For business owners, the estate plan and the succession plan must work together. Without a clear succession plan, the death or disability of an owner can trigger disputes among partners, force a sale of the business, or create significant estate tax liability. Buy-sell agreements, family limited partnerships, and properly structured trusts can ensure that your business passes to the right hands at the right time and on the right terms, whether to family members, a co-owner, or a key employee.