Strategies for high-net-worth estate planning in California

A good estate planning formula covers all your bases. Gaining an understanding a few simple concepts can help you build a strategy for estate planning that provides optimal disbursement of funds and protection for your later years. 

If you are an individual with a high net worth, knowing how your decisions can affect estate taxes, help you avoid probate and plan for your potential incapacitation can prove invaluable to your legacy. These three areas come with a myriad of different options from which to choose, and everyone’s situation is unique. However, with proper guidance and support, you can gain much-needed peace of mind from knowing that your estate is properly protected and your final wishes will all someday be granted.

Estate tax concerns

The power of your legacy can be eaten away by estate taxes unless certain proactive steps are taken. Without any form of estate plan, federal taxes can take up to 35 percent of the estate funds, with some states also imposing their own taxes in addition to the federal government’s portion.

Two examples of how you can avoid federal taxes on significant portions of your estate are the unified credit along with annual exclusion gifts. Under the unified credit’s lifetime tax exemption, the 35 percent federal gift tax only comes into effect after the first $5 million of your estate. Annual exclusion gifts allow you to give up to $14,000 as a tax-free gift annually to any individuals of your choice.

Avoiding probate

Keeping your estate plans crystal clear will keep you out of the court system. The best way to avoid probate is through a trust. A trust enables you to keep certain assets out of your name, so that in the event of your death, the successor trustee will have immediate access to funds and assets without going through the probate process. It also allows the successor trustee to take over should you become unable to handle your affairs.

There are different types of trusts available to you, and each has its own advantages. One example is a revocable trust, which allows you to make changes to it anytime you deem it necessary. A revocable trust is also a form of grantor trust, which allows you, the trustee, to move assets in and out of the trust without paying taxes.  

In case of incapacitation

If you become unable to care for yourself because of disease or disability, who will ensure that your needs are met? Will your intended beneficiaries still receive their inheritance?

There are many safeguards that you can choose to protect you in case of incapacitation. By appointing a durable power of attorney, a healthcare power of attorney and a HIPAA release agent, you will be able to choose someone you trust to manage your assets, make important healthcare decisions for you and access your sensitive medical information.

Where to find the help and support you need

Don’t let your high net worth intimidate you into thinking you will not be able to escape complicated wealth transfers. Careful estate planning now can pave the way for smoother transitions in the future and prevent the loss of your accumulated assets. In California, you can choose an estate planning attorney to help create and maintain important estate documents. An experienced estate planning attorney will help you determine and implement the best possible strategy for your end-of-life care and passing on of your legacy.


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