Key Estate Planning Tips for High-Net-Worth Individuals

Without the right estate plan, there’s a significant risk of losing large portions of wealth to taxes, probate costs, and lengthy legal disputes. Family disagreements, business partner conflicts, and creditor claims can also add emotional and financial stress, making it difficult to have one’s wishes carried out.

Estate planning isn’t just about passing on wealth; it’s about making sure your assets are distributed the way you intended while minimizing taxes and protecting your legacy.

Heritage Capital is a financial planning firm in Connecticut that specializes in helping affluent families with active investment management and creating comprehensive estate plans. Our services address the financial complexities of wealth transfer so you and your family don’t have to worry extensively about these matters.

This article covers vital estate planning strategies, including minimizing estate taxes, protecting assets, and planning for business succession.

Estate Planning Challenges for High-Net-Worth Individuals

The more wealth you have, the more detailed your estate plan needs to be. Large estates often consist of various assets such as real estate, retirement accounts, brokerage accounts, personal collections (like art, jewelry, or antiques), pets, and digital assets.

Additional considerations include how long-term care will be funded and managed, charitable giving intentions, and business succession plans. Balancing these with family responsibilities, like providing for children or dependents, adds to the complexity.

The current federal estate tax exemption allows estates worth up to $12.92 million per individual (or $25.84 million for married couples) to pass without incurring federal estate tax. This exemption is set to remain in place through 2025. After that, the exemption is scheduled to revert to the pre-2018 level of approximately $5.49 million per individual (adjusted for inflation) unless laws are changed before then.

Given the uncertainty of future tax laws, it’s wise to stay informed and have a well-structured estate plan in place. Heritage has a team of fee-only financial advisors in Connecticut ready to assist you.

Key Strategies for Estate Planning

Protect Assets and Distribute Effectively

Establishing a thoughtful asset protection and distribution plan helps safeguard your wealth from creditors, taxes, and legal challenges while aligning it with your wishes. Here are a few practical strategies:

• Beneficiary designations: Designating beneficiaries on retirement accounts, life insurance policies, and transfer-on-death (TOD) accounts helps keep these assets out of probate court, protecting them from unnecessary legal delays and potential creditor claims.
• Revocable and Irrevocable Trusts: Irrevocable trusts protect assets from creditors by removing them from your taxable estate, making them inaccessible to creditors. Revocable trusts, while offering less protection from creditors, still help streamline asset distribution and avoid probate, which can protect your heirs from court involvement and additional fees.
• 529 Accounts: Setting up 529 college savings plans can reduce your taxable estate while protecting these funds from creditors and taxes. These accounts also offer a tax-efficient way to help cover education expenses for your children or other family members.
• Qualified Charitable Distributions (QCDs): For those over 70½, QCDs allow you to donate to charity directly from your IRA, which reduces your taxable income and helps prevent your assets from being subject to estate or income tax later on.
• Donor-Advised Funds: DAFs provide a flexible, tax-efficient way to support charitable giving while preserving your legacy. They can simplify estate planning by consolidating charitable donations and allowing you to involve your heirs in your philanthropic goals.

Minimize Estate Taxes

There are strategies to help reduce the taxable portion of your estate.

Irrevocable Trusts (including ILITs): Assets placed in irrevocable trusts are removed from your taxable estate, reducing estate tax liability. An Irrevocable Life Insurance Trust (ILIT) is a specific type of irrevocable trust that holds life insurance policies outside your estate, allowing the proceeds to provide liquidity for estate taxes without increasing the taxable estate.

Grantor Retained Annuity Trusts (GRATs): GRATs allow you to transfer appreciating assets out of your estate while retaining an annuity payment for a set term. The appreciation passes to beneficiaries tax-free, lowering the overall estate tax burden.

Charitable Remainder Trusts (CRTs): These trusts allow you to receive income from your assets during your lifetime while the remaining assets go to charity upon death. This reduces the size of your taxable estate and offers income tax deductions.

By implementing these strategies, you can minimize estate taxes and maximize the wealth passed on to your beneficiaries.

Succession Planning for Businesses

For business owners, a clear succession plan is needed to preserve the value of the business and ensure a smooth transition to the next generation or other key stakeholders. Your company may face legal disputes, tax challenges, or dissolution without a plan.

Buy-sell agreements outline how ownership will be transferred in the event of death, disability, or retirement. This helps avoid conflicts and ensures the business remains stable.

Family business trusts allow the business to be transferred to heirs while providing income to beneficiaries and shielding the assets from estate taxes.

If you’re a business owner, Heritage Capital offers recommendations on how to develop succession plans that match with your overall estate and financial planning goals.

Benefits of Working With Estate Planning Professionals

If it’s been a while since you reviewed or updated your estate plan, now is the time. As discussed, estate tax laws are set to change in 2026, and your financial situation may have evolved.

Working with an experienced estate planning attorney to draft the legal paperwork, along with knowledgeable financial advisors like Heritage Capital, can simplify the process and help you stay on track.

In addition to estate planning, Heritage’s Paul Schatz, an experienced portfolio manager with the AIF® designation, can demonstrate the benefits of active management in a volatile market and recommend strategies for investment protection. Our team also offers guidance on retirement planning and Social Security in Connecticut.

Heritage Can Help With Your Estate Planning

Heritage Capital has been a trusted partner for high-net-worth families in Connecticut for over 30 years. Our team of experts creates personalized estate planning strategies and active management solutions designed to protect your wealth for future generations.

If you have questions about legacy planning or how to protect your investments during market volatility, contact us today for a free, no-obligation consultation.