If You Have Complex Assets, Your Estate Plan Requires More Assistance

Estate planning is a crucial responsibility regardless of your net worth. However, individuals with large or complex estates must pay careful attention to how they structure their estate plans. The particular estate planning instruments and strategies you utilize can have profound financial implications and tax-related consequences. Failure to plan appropriately can also force your loved ones to hash out inheritance concerns on their own. The burdensome task of guessing how a deceased relative would have allocated his or her estate often leads to stress, confusion, and contentious family arguments. If you own a business, multiple real estate properties, complex investments, or other high-value assets, it is important to consider how your estate plans will differ from estate plans involving simpler estates.

Minimizing Your Tax Liability May Be a Top Priority

You have worked hard to earn your assets, so it is understandable that you want to keep this wealth in the family. Unfortunately, the larger your estate, the more significant your tax liability is likely to be. For high-income individuals and those with complex assets, minimizing wealth transfer taxes such as estate taxes and gift taxes is a top priority. The 2017 Tax Cuts and Jobs Act increased the gift and estate tax exemption, and for 2021 the exemption is $11.7 million per person (or $23.4 million per married couple). Anything above the limit is taxed at a rate of 40 percent. Money or property that you gift to others during your lifetime counts against the $11.7 million estate tax exemption. However, there are other strategies available that could help you limit the taxes that will apply to your situation. With this in mind, it is important to work with an estate planning attorney who has experience handling the unique tax concerns that accompany high-value and complex estates.

You Will Need a Combination of Estate Planning Instruments

Many people assume that a will alone will suffice when in reality, most estate plans contain a combination of several different estate planning tools. Trusts are key elements of most estate plans involving high-value and complex assets. A revocable living trust may be modified at any time during your life and allows assets contained in the trust to avoid probate. An irrevocable trust may not be modified but it may also have significant tax advantages. Because assets contained in an irrevocable trust are no longer owned by the grantor, the assets have no impact on the size of the grantor’s estate or tax liabilities. Irrevocable trusts can also be useful in protecting assets from creditors or future legal actions. Family limited partnerships, charitable remainder trusts, donor advised funds, and a number of other estate planning tools could also help you accomplish your estate planning goals.

Legal Support and Guidance for Estate Planning Concerns

Your estate planning process will differ significantly from simpler estates if  you have high-value or complex assets. You will likely need a combination of trusts and other estate planning documents in place to carry out your personal and financial objectives. You may also need help in selling a business or property and could benefit from a professional attorney being your executor. An estate planning lawyer familiar with the unique issues involved in high-value and complex estates, as well as a strong knowledge of tax law, can help you explore your options and determine the best course of action.

The Naperville estate planning lawyers at the Gierach Law Firm have the legal knowledge, practical experience, and resources needed to build effective estate plans involving complex and high-value estates. Call 630-228-9413 to discuss your specific situation.

Sources:

Investopedia

Forbes