The Best Estate Planning Strategies for High Net Worth Investors

Estate planning is no small feat; in fact, for most individuals, it’s an ongoing process. Even with the guidance of a team of financial and tax advisors, estate planning experts, and specialists in life insurance, annuities, and other investment alternatives, you may be shocked to learn how much of your estate could be lost to taxes. Estate tax mitigation is a key element of estate planning, but in order to be effective in minimizing tax liability, it’s vital that you understand the criteria for imposing both estate and income taxes.


In 2017, the estate tax exemption was set at $5.49 million per individual and $10.98 million for married couples. Any assets over and above these sums will typically be subject to taxation, which can reach well over 50% or more if you include the impact of any possible state estate taxes. High net worth individuals with an estate valued above these thresholds must employ a number of strategies in order to maximize the transfer of wealth to heirs and charitable interests. The good news is that only two out of every 1,000 estates will be subject to federal estate taxes this year, which is largely attributable to the efforts of expert estate planning advisors who work with high net worth investors to minimize their estate tax liability.

So, how then can you develop a solid estate planning strategy as a high net worth investor? I routinely encourage our clients to consider the approaches described below. However, before taking any sort of action, be sure to discuss strategies with your financial advisor and estate planning team. This will ensure that you make the right move for your precise priorities and requirements.

Properly Titling Assets as a High Net Worth Estate Planning Strategy

A properly structured estate should provide ample access to assets needed while you are alive without compromising your overall estate and legacy plans. While certain assets may be directly owned by you or your spouse, it is wise to make certain that other assets are safely outside your estate for estate tax purposes. Some assets such as business interests and investment portfolios, and retirement accounts will require you to maintain direct control, while other assets such as life insurance may be outside of the estate in a properly structured trust.

Estate taxes can reduce the value of your estate by 50% or more, but these taxes apply only to assets owned directly by you. By ensuring that your assets are properly titled, you’ll be better equipped for the estate planning process.

Systematically and Strategically Reducing the Size of Your Estate

While it may seem counterintuitive, reducing the size of your estate could result in a larger transfer of wealth to your heirs as you may qualify for a lower tax bracket. An effective strategy will often include developing a plan that includes the creation of trusts, reallocation of assets to children, and qualified donations, all with the goal of helping you achieve the transfer of as much of your wealth as allowable.

Additionally, strategic gifting may also be beneficial as it entails distributing up to $15,000 per recipient each year—and it is free of taxation and does not reduce your estate/gift tax exemption. This can serve as an effective method for reducing the size of your estate in a tax-free manner.

Finally, it may be possible to pay for certain expenses for your heirs, such as college tuition, without being subject to gift taxes.This is another key area to explore with your accounting and financial team as well as your estate planning advisors.

Leveraging Qualified Charitable Donations as an Estate Planning Strategy

Another estate planning strategy is to take advantage of IRA Qualified Charitable Donations (QCDs). This serves to reduce the size of your estate while guaranteeing that your funds go to the intended recipient with minimal—if any—taxes due.

QCDs are available to IRA owners who are at least 70 ½ years old. The distribution must be paid directly to the non-profit organization. Married couples can each donate up to $100,000 per year from their own IRA, for a maximum gift of up to $200,000 per year, provided they maintain separate IRAs.

Using Trusts to Transfer Wealth from a High Net Worth Estate

Trusts often become a topic of discussion during the estate planning process, but trusts are not suitable for everyone—and not all trusts offer any substantial tax sheltering. This is because financial allocations to the beneficiary are typically considered taxable income unless properly structured.

That said, there are a number of types of trust, such as living trusts and irrevocable trusts, which serve different purposes and can be useful. Living trusts offer access to assets and offer maximum control while alive, while Irrevocable trusts seek to maximize tax exemptions on the wealth they’re passing along to heirs and charities. Therefore, it’s wise to work with your financial planner and estate planning consultants to determine which trust, if any,  may be beneficial for transferring wealth in your unique situation.

Life Insurance as an Estate Planning Tool for High Net Worth Individuals

Life insurance policies can serve as a very effective technique for conveying wealth to your loved ones—and even to charities. In fact, it’s often possible to secure a life insurance policy even later in life, imparting a greater tax-free sum to the beneficiary when you pass.


For instance, a sum of $80,000 could be used to secure a life insurance policy with a payout of up to $5 million (depending upon age and health, of course). Even when taxation on a life insurance policy is taken into account, the overall sum provided to the beneficiary would be greater than the amount of money that was paid into the policy. Life insurance should definitely be explored with an estate planning and life insurance expert if you are a high net worth individual looking for estate planning tools and investment alternatives.

Choosing the Right Estate Planning Advisor

If you are concerned about choosing a trusted advisor to work on your estate plan, you are not alone. A 2016 survey found that 53% of respondents reported challenges as they sought out the advice and guidance of an estate planning professional. To complicate matters further, many other consultants may have a role in your estate planning process as well, including your financial advisors, attorneys, CPAs, and life insurance advisors. Your individual goals are central to your estate plan; choosing an advisor that you feel can help you meet your unique objectives and overcome any challenges you may encounter is critical. In my many years of advising clients, I’ve found that while every client has their own story and their own goals, maximizing wealth transfer is typically their top priority.

source: howardkayeinsurance.com

For over 55 years, the professional team of advisors at Howard Kaye Insurance has been working with clients to achieve their estate planning goals using investment alternatives such as annuities and life insurance. Our experts have devised a number of effective strategies that serve to maximize the transfer of your wealth while simultaneously limiting and minimizing tax liability. This ensures that your loved ones and the charities that are close to your heart can enjoy the maximum benefit from your estate. Our advisors are ready to discuss your goals today, so contact our team by calling 1-800-DIE-RICH.

8 men own half the world’s wealth — Oxfam

LONDON, United Kingdom — Eight men own the same wealth as half the world’s population, a level of inequality which “threatens to pull our societies apart”, Oxfam said on Monday ahead of the World Economic Forum opening in Davos.

The wealth of the world’s poorest 3.6 billion people is the equivalent to the combined net worth of six American businessmen, one from Spain and another from Mexico.

Picked from Forbes’ billionaires list, they include Microsoft founder Bill Gates, Mark Zuckerberg who co-founded Facebook, and Jeff Bezos, founder of Amazon.


Oxfam pointed to a link between the vast gap between rich and poor and growing discontent with mainstream politics around the world.

“From Brexit to the success of Donald Trump’s presidential campaign, a worrying rise in racism and the widespread disillusionment with mainstream politics, there are increasing signs that more and more people in rich countries are no longer willing to tolerate the status quo,” Oxfam said in its new report, “An economy for the 99 percent”.

The charity said new data on wealth distribution from countries such as India and China had prompted it to revise its own calculation, having said a year ago the wealth of half the world’s population was in the hands of 62 people.

Inequality will be among the issues topping the agenda as the world’s political and business elite meet in Davos from Tuesday until Friday, when 3,000 people will gather for the annual meeting of the World Economic Forum.

“Responsive and responsible leadership” has been chosen as the theme of the summit, which organisers said was a response to a “backlash against globalization leading to two surprising vote results and a rise in populism in the West”.

In its report Oxfam called for an increase in tax rates targeting “rich individuals and cooperations”, as well as a global agreement to end competition between countries to lower corporate tax rates.

The charity also decried lobbying by corporations and the closeness of business and politics, calling for mandatory public lobby registries and stronger rules on conflicts of interest. CBB

source: newsinfo.inquirer.net

Richest 1 percent will own more than the rest by 2016 – Oxfam

LONDON - More than half the world's wealth will be owned by just one percent of the population by next year as global inequality soars, anti-poverty charity Oxfam said on Monday.

In a report released ahead of this week's annual meeting of the international elite at Davos in Switzerland, Oxfam said the top tier had seen their share of wealth increase from 44 percent in 2009 to 48 percent in 2014.

On current trends, it will exceed 50 percent in 2016.

The charity's executive director, Winnie Byanyima, who is co-chairing the World Economic Forum meeting in Davos, said an explosion in inequality was holding back the fight against poverty.

"Do we really want to live in a world where the one percent own more than the rest of us combined?" she said on Monday.

"Business as usual for the elite isn't a cost free option. Failure to tackle inequality will set the fight against poverty back decades. The poor are hurt twice by rising inequality—they get a smaller share of the economic pie and because extreme inequality hurts growth, there is less pie to be shared around."

Oxfam said it would call for action to tackle rising inequality at the Davos meeting, which starts on Wednesday, including a crackdown on tax dodging by corporations and progress towards a global deal on climate change.

The richest 80 individuals in the world had the same wealth as the poorest 50 percent of the entire population, some 3.5 billion people, Oxfam said. This was an even bigger concentration at the top than a year ago, when half the world's wealth was in the hands of 85 of the ultra rich.

Members of the top 1 percent had an average wealth of $2.7 million per adult, Oxfam said.

The bulk of the world's remaining wealth was owned by the rest of the richest fifth, while the other 80 percent shared just 5.5 percent of the pot, equalling an average wealth of $3,851 per adult, it said.

Oxfam used data from the Credit Suisse Global Wealth Datebook, 2013 and 2014, and the Forbes' billionaires list to compile its research. — Reuters