High net worth estates involve more than simply passing down assets; they also require a strategic approach to transferring assets effectively. Business interests, multiple properties, valuable collections, and estate tax exposure create unique legal and financial challenges. Without a clear strategy, families can face unnecessary costs, delays, and conflict.
At the Law Office of David S. Schleiffarth, LLC, we help clients across St. Louis structure comprehensive estate plans that preserve wealth, minimize tax burdens, and honor family priorities. This article explains how an experienced estate planning lawyer can guide you through the process and help protect what you have worked hard to build.
Why Estate Planning Is Essential for High Net Worth Individuals
A seven-figure net worth often includes business interests, multiple properties, and complex investments. Without a written plan, those pieces can scatter, triggering family tension and avoidable taxes. A clear estate plan sets the rules in advance, so assets flow smoothly and privately.
Leaving matters to chance carries real risks:
- Asset freezes during probate can stall business payroll or real estate upkeep.
- The federal estate tax can claim up to 40 percent of the value above current exemptions.
- Feuding heirs may spend years in court and a considerable amount of money litigating over intent.
Coordinating with financial advisors and CPAs helps an estate lawyer match legal tools to liquidity needs, investment strategy, and family goals. When those professionals collaborate early, wealth moves from one generation to the next with fewer surprises.
Handling Estate Tax Complexities with Legal Guidance
High net worth estates face specific considerations regarding the federal estate tax, especially in relation to the estate tax exemption that applies. This is a tax imposed on the transfer of a person’s assets at their death. For individuals with significant wealth, understanding and planning for this tax is crucial to preserving wealth for future generations.
The federal estate tax applies when the value of a taxable estate exceeds a certain threshold, known as the lifetime exemption. For 2024, this amount is $13.61 million per individual. Any portion of the estate above this exemption may be subject to a graduated tax rate, which can go as high as 40%.
Beyond the federal levy, some states also have their own estate or inheritance taxes. For instance, while Missouri does not impose such a tax, Illinois does. This means families with property in both Missouri and Illinois need to consider both federal and state tax systems in their planning.
Estate planning attorneys follow these changing tax figures closely. They help create legal documents and tax strategies that account for current laws and anticipate future adjustments. For example, using lifetime gifts or certain trusts can help make the most of today’s higher exemption amounts, potentially saving substantial sums if the exemption is reduced in the future.
Strategic Tax Planning Tools for the Wealthy
When straightforward gifting methods are not sufficient, advanced trusts offer additional options for managing wealth and reducing tax exposure.
One such tool is a Grantor Retained Annuity Trust (GRAT). With a GRAT, appreciated assets are placed into the trust, and the person who established the trust receives a fixed annual payment for a set period. Any growth of the assets within the trust beyond a certain IRS-defined rate can then pass to heirs with minimal or no gift tax implications.
Another option is an Intentionally Defective Grantor Trust (IDGT). Assets within an IDGT grow outside of the creator’s taxable estate. However, the creator of the trust pays the income tax on the trust’s earnings. This payment further reduces the creator’s estate without triggering additional gift taxes.
A Qualified Personal Residence Trust (QPRT) allows for the transfer of a primary or vacation home out of an estate. The person who established the trust can continue to live in the home for a specified number of years. After this period, the property transfers to the designated beneficiaries, often at a reduced transfer tax cost.
For those interested in philanthropy, charitable vehicles can also play a role in estate tax planning. A Charitable Remainder Trust, for example, can provide income to the creator for their lifetime or a set term. After that period, the remaining assets benefit a chosen charity. A Donor-Advised Fund provides flexibility, allowing families to make a significant charitable contribution in one year to receive an immediate tax deduction, and then recommend grants to various charities over time.
Estate planning attorneys consider an individual’s financial situation and personal objectives when suggesting these tools. They balance factors such as the degree of control the individual wishes to maintain over their assets, the financial benefit to heirs, and the overall tax efficiency of the chosen strategies. The approach is tailored for each client, recognizing that no two financial pictures are identical.
Succession Planning for Family-Owned Businesses
Passing a closely held company is harder than leaving a brokerage account. Shares may lack a ready market, key employees might leave if ownership is unclear, and the IRS will scrutinize valuations.
A thoughtful plan often uses:
- A Buy-sell agreement funded by life insurance creates a guaranteed buyer and a fair price.
- Key person insurance so cash is available if a founder’s sudden death rattles operations.
- Grantor trusts or discounted gifts to shift value to children while you retain voting control during a training period.
The Generation-Skipping Transfer Tax can also creep in if ownership leaps to grandchildren. Your attorney will balance tax impact with the business’s need for consistent leadership.
Incorporating Philanthropy and Private Foundations
Giving back can reduce taxes and set a powerful family example. For some, yearly direct gifts to public charities are enough. Others prefer a longer-term structure, such as a private foundation or donor-advised fund.
Foundations offer board seats, educational opportunities for younger relatives, and the ability to hire staff. They also demand yearly filings and minimum distributions. An estate lawyer helps draft the governing documents, secure tax-exempt status, and tailor grant-making rules so the entity supports both community impact and tax efficiency.
Planning for Wealth Transfer and Multigenerational Legacies
A plan should outlive its creator. That means focusing on education as much as documents. Revocable living trusts handle incapacity and speed up distribution. Dynasty trusts, allowed in Missouri, can hold family assets for 100 years or more, shielding growth from estate tax each time a generation passes.
Many parents also leave a “letter of wishes” that explains values and hopes for future trustees. Meeting with heirs while you’re still around clears confusion and teaches them how to manage newfound responsibility.
Managing Specialized and Non-Traditional Assets
High net worth estates often include assets beyond traditional stocks and bonds. These can be complex and require specific attention during estate planning.
Examples of such assets include:
- Intellectual property: This covers patents, copyrights, trademarks, and royalties.
- Private equity stakes: Investments in privately held companies or funds.
- Valuable collections: Art, antiques, rare books, or other significant collections.
- Vacation homes or multiple properties: Real estate holdings that may have unique ownership structures or tax implications.
- Cryptocurrency: Digital assets that require careful handling for transfer and valuation.
Valuing and transferring these assets can present challenges. For instance, determining the fair market value of a private business interest or a rare art collection requires specific appraisal methods. Transferring certain assets, like fractional shares of a private jet, may involve adherence to specific regulatory body rules.
Attorneys help ensure regulatory compliance and minimize transactional tax risks associated with these assets, while also focusing on asset protection. They coordinate with appraisers, review partnership agreements, and handle necessary state or international filings. This attention to detail helps prevent unexpected tax burdens or regulatory penalties.
A customized legal approach is vital for these unique asset classes. Estate planning attorneys work to understand the specific nature of each non-traditional asset and develop strategies that align with the owner’s wishes while complying with all applicable laws. This ensures a smooth and efficient transfer of all components of an estate.
Avoiding Pitfalls: Mistakes That High Net Worth Individuals Make
Even families with substantial wealth can encounter common errors in their estate planning. These oversights can lead to unintended consequences, including increased taxes, delays, and family disputes.
Here are some frequent mistakes:
- Outdated documents: Wills and trusts that are not reviewed and updated after significant life events, such as births, marriages, divorces, or changes in laws, may no longer reflect current wishes or legal requirements.
- Improper trust funding: If assets are not correctly retitled and transferred into a trust, they may still be subject to probate, defeating one of the primary purposes of establishing the trust.
- Inadequate liquidity planning: Estates may have significant assets but insufficient cash to cover estate taxes or administrative costs, potentially forcing a rushed sale of valuable property.
- Neglecting cross-border estate issues: For individuals with international property or assets, different countries have varying inheritance laws and tax regulations, which must be carefully considered.
- Failing to plan for digital assets: This includes online accounts, cryptocurrency keys, or intellectual property, which can create challenges for heirs if not properly addressed.
Estate planning attorneys proactively address these potential problems by creating tailored solutions. They help clients ensure all assets are properly accounted for and structured according to their wishes and legal requirements.
The importance of periodic reviews cannot be overstated. Scheduling reviews every two or three years, or after any major life event, helps ensure the estate plan remains current and effective. This proactive approach can prevent issues from escalating, help minimize estate taxes, and protect the legacy built over a lifetime.
Start Building a Stronger Plan for Your Estate Today
At the Law Office of David S. Schleiffarth, LLC, we help high-net-worth families in the St. Louis area protect what they have built. Whether you need guidance on estate taxes, business succession, charitable giving, or trust structures, we are ready to assist. Call 314-448-0527 or visit our Contact Us page to schedule a consultation. A well-crafted plan can reduce stress, minimize taxes, and ensure your legacy is passed on with care. Let’s take the next step together.