Factors to consider with high-net-worth estate planning

On Behalf of | Oct 23, 2022 | Estate Planning |

Wealth can solve many problems, but it can also create them, as most affluent individuals have learned. For example, if you leave behind a high-value estate, your loved ones may face substantial tax hardships.

Estate planning empowers you to scale down the apparent size of your estate, thus relieving many tax burdens for surviving family members. If you want to preserve your wealth while protecting your family, ask your legal counsel about the estate planning strategies below.

Charitable gifting

If you bequeath a portion of your wealth to your favorite charities, it reduces the size of your estate and its associated tax obligations. Two options to consider include creating a charitable lead or charitable remainder trust. Giving to charity can minimize estate, income and capital gains taxes.

Other forms of gifting

Every taxpayer in the nation can gift several million tax-free dollars ($12.06 million in 2022) over their lifetime. Taking advantage of the gift tax exemption is a highly effective way to reduce your tax burdens. You can also give up to $16,000 to multiple individuals each year without paying tax on the gift. Note that these figures change from year to year.

Life insurance

You probably have one or more life insurance policies, but did you know they can minimize tax obligations? A well-structured life insurance policy can cover much of the estate taxes your family may face after you die. Your loved ones will still receive other benefits (payouts) from your policies.

These are just a few things to discuss with an estate planning representative when you want to maximize wealth preservation and minimize tax burdens. Becoming more familiar with California estate and tax laws can also help.

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