Accumulating wealth is not an easy task in Florida. But, when you finally build something worthwhile, it’s essential to take the necessary steps to protect it. And that brings us here: the different methods a high net worth individual can create an estate plan to suit their needs and that of their loved ones.
Focus on minimizing taxes
You can pay up to 40% in federal taxes when passing down your assets to your loved ones. That means if you have $6 million worth of property, the government can take up to $2.4 million of it, leaving only $3.6 million to pay your debts and uncategorized expenses. Whatever remains will be distributed among your loved ones.
Therefore, you should consider every tax scenario to find a plan that would have you save more for your heirs. The main types of taxes you should watch out for include Florida gift taxes, federal estate taxes, and income taxes.
Create trusts and choose the right trustee
Trusts can help you avoid probate and keep your assets out of reach from creditors and lawsuits. Depending on the type you set up, you can also use them to minimize taxes and provide for loved ones with special needs.
But even if trusts are a powerful tool, they only work as intended if you choose the right trustee. The trustee is the person who will manage the trust on your behalf and make sure that its purpose is fulfilled. And thus, it’ll be in your best interest to pick someone honest, reliable, organized, and has good financial knowledge.
Plan for incapacity
Suppose you become unable to make decisions for yourself, whether due to an accident or an illness, you need to have a plan in place so that your loved ones can make financial and medical decisions on your behalf. You can achieve this by creating a durable power of attorney and living will.
If you have a high net worth, don’t wait to start estate planning. The sooner you do it, the better prepared you’ll be for whatever life throws your way.