High-net-worth families enjoy a sense of financial security in Houston, Texas. High-income families have financial confidence and own various types of assets. Some high-value assets include collectibles, jewelry, businesses, yachts and properties. There are estate planning issues for people with a high net worth.
Estate planning issues
Families need estate plans, but more assets complicate matters. Estate planning, probate and guardianships present higher stakes for high-income families. Families with a high net worth want to transfer their complex assets to their heirs. In 2021, there was no estate tax for an estate worth up to $11.7 million. High-income families usually have more than $11.7 million. As of 2021, the government levies a flat 40% tax on high-value net worth. Depending on the state, other taxes can reduce an estate. Sometimes, high-income people pay state and inheritance taxes.
Maintaining a comfortable lifestyle
High-income families can protect their net worth during estate planning. Not all wealth is in the bank. Most assets are illiquid. Assets that are illiquid include real estate plots, employed businesses, jewelry and shares. Liquidating assets smartly requires money management skills. A family can liquidate assets to maintain its lifestyle, invest in retirement and buy things it wants.
Families with a high net worth need ways to protect their wealth. Individuals take risks to grow their wealth, which can have a poor outcome at any time. High-income families tend to build wealth with aggressive risky investments. High-income families may use instruments such as cryptocurrencies and direct equity. Any economic, political or global event can cost high-income families a fortune. They should stay vigilant because any event can lead to debt and poor credit scores.
Estate planning is complex for higher-income families and requires an estate planner. The division of high-value assets can cause arguments between family members. Common assets for families with a high net worth include businesses, luxury cars, antiques and vacation homes. Having a conversation with the family can help everyone understand the estate plan. Sometimes, heirs can even say what they would want from the estate.