Elderly couple discussing estate plans with attorney

The Complete Guide to High-Net-Worth Estate Planning

Affluent families and individuals of high-net-worth need specialized estate planning techniques to help safeguard their assets. This can be done in several ways, and our Virginia Beach estate planning team outlines the most effective strategies below.

Family Limited Partnerships

Family Limited Partnerships (FLPs) are some of the best ways to help preserve a family business for several generations. They have the ability to protect assets as well as minimize gift and estate taxes. Married couples also favor LPs with children who wish to protect their business assets and grant limited partnership to their children.

Whatever assets you choose to keep within the partnership are shielded from the limited partner’s creditors, making them exceptionally suited for asset protection on all sides of the agreement. Interests can also be divided effortlessly among family members, and transferring ownership of the business to the next generation is also possible.

FLPs are also the ideal vehicle for gifting. When general partners gift limited partnership interests to their children or other beneficiaries, the value given away is also deducted from the general partner’s taxable estate. Utilizing the annual gift tax exclusion, both the gifter and giftee may both be able to avoid paying taxes on the gift itself.

Qualified Personal Residence Trusts

Homes are some of the largest pieces of a taxable estate due to the fact that homes are generally the most valuable assets that people own. Qualified Personal Residence Trusts (QPRTs) allow you to give away your house or vacation home at a significantly lower price.

One of the biggest advantages of QPRTs is that they allow you to freeze your home’s value for tax purposes while simultaneously allowing you to live it in. When you transfer the title to a family member or beneficiary, you are also able to remain living in your home, but only for an allotted number of years. You do have the ability to remain in the home after this period of time is over; however, you will have to pay rent to your family member or beneficiary to exclude the home from your taxable estate.

Additionally, when you transfer the title to a beneficiary after living in the home, the house itself and any increase in its value are gifted tax-free to the recipient.

Irrevocable Life Insurance Trusts

The common misconception when it comes to life insurance is that the payout of the policy is immune to taxes. Though any proceeds that your loved ones receive from the policy is not taxed on the basis of income, it can be taxed as part of your estate.

The advantage of an irrevocable life insurance trust is the ability to hold the life insurance proceeds out of our estate in order to protect them from being taxed. Once the life insurance policy is held within the trust, it can be used to help pay off estate taxes, outstanding debts, and final expenses.

Whatever cash gifts are placed within the trust are not available to beneficiaries at the time of the gifting but become available when the life insurance proceeds are distributed.

Contact Our Virginia Beach Estate Planning Team Today

We understand how confusing the estate planning process can be, and we want to make sure you are able to plan for a future that benefits you and your loved ones. With over 100 years of combines legal experience, we are uniquely equipped to help guide you through a personalized estate planning strategy.

Contact us today through our website or give us a call at (757) 500-5135 to find out more information about how we can help safeguard your future.