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Building a Sophisticated Estate Plan: Why Basic Strategies May Not Be Enough for High-Net-Worth Families

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If you’re like many people of considerable means, much of your financial focus is on building and protecting your wealth. It’s easy to tell yourself that estate planning is important — but you’ll get around to it eventually.

For high-net-worth individuals and families, however, estate planning is far more complex than for the average person. It takes time and thoughtful reflection to craft a plan that will serve your family’s needs for generations to come.

The Importance of a Nuanced Estate Plan

Here are some of the key reasons basic estate planning strategies aren’t sufficient if you have a very high net worth:

You May Have to Account for Estate Tax

In 2025, the federal estate tax filing threshold is $13.99 million. Most people leave behind far less, so for the majority of people, there’s no need to plan to offset the federal estate tax. But for families that reside in the District of Columbia or one of the twelve states that still have a state estate or inheritance tax, the threshold is often significantly lower.

An estate planning attorney who doesn’t work with people of means may be unfamiliar with the best strategies for minimizing federal estate taxes and state estate taxes, and preserving wealth for the next generation.  There are so many possible strategies that families with taxable estates might use.  Some of the more common tools include:

  • Domestic Asset Protection Trust 
  • Spousal Limited Access Trust
  • Family Limited Partnership
  • Limited Liability Company
  • Defined Benefit Pension Plan
  • Irrevocable Defective Grantor Trust
  • Self-Cancelling Installment Note
  • Private Annuity
  • Tax Exempt Trust
  • Net-Net-Net Lease
  • Grantor Retained Annuity Trust
  • Qualified Personal Residence Trust
  • Private Foundation
  • Supporting Organization
  • Deferred Payment Contract
  • Life Insurance
  • IRA Strip Out
  • Split LI Ownership
  • Irrevocable Life Insurance Trust
  • Family Bank Trust 
  • Health Education Exemption Trust

 

You Likely Have People Counting on You

It’s wise for anyone to have a power of attorney and a plan in case they become incapacitated. However, if you have a high net worth, you may own businesses or serve on the boards of multiple companies. You may also have properties that need to be managed.

Any solid estate plan must contain detailed (and up-to-date) steps outlining how to proceed if you’re suddenly unable to manage your own affairs.

Avoiding Probate Is of Prime Importance

Probate can be messy, complex, and costly. This is doubly true if you have considerable assets. Your attorney can help you employ tools like living trusts to protect your family and keep your assets out of probate.

Your Assets Are Diverse 

The average person’s estate plan includes a home, bank account, and investment portfolios. However, if your net worth is high enough, your assets are likely spread across many different classes. Your estate plan may need to account for assets like the following:

  • Businesses and business interests
  • Real estate
  • Stocks
  • Mutual funds and ETFs
  • Private equity
  • Retirement Plans (like IRAs, 401(k)s and Roth IRAs)
  • Cryptocurrency
  • Patents, copyrights and other intellectual property
  • Gold and other precious metals
  • Fine art
  • Jewelry
  • Cash
  • Life Insurance
  • Annuities
  • Promissory Notes and Mortgages

A comprehensive estate plan will protect all of your assets and preserve as much as possible for the next generation.

Work With a High-Net-Worth Estate Planning Attorney

To create a sophisticated estate plan, you need ample time and an estate planning attorney familiar with the needs of high-net-worth families. Boyd & Boyd, P.C. is committed to helping families like yours. Contact us online or call us at (508) 444-9688 today to discuss how we can help you achieve your goals.

FAQ

Why Do I Need High-Net-Worth Estate Planning Services?

Just because a firm focuses on estate planning doesn’t mean its lawyers are familiar with the planning needs of high-asset families. The right attorney will understand which strategies to use to lower your tax burden and preserve your wealth.

How Often Should I Update My Estate Plan?

As a general rule of thumb, you should review your estate plan every six months and revisit your estate plan with your attorney annually. Some form of update is common every three to five years, as well as after significant life events. Ensuring that your estate plan reflects your current needs and wishes is just as important as creating one in the first place.

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You might think that family inheritances are simple matters. Perhaps the estate left by a parent is split evenly between the children at the time of the parent’s death. However, it’s not always that straightforward, and the increasing presence of blended and complex families in today’s society can make estate planning more complex.

Even if the parents appear to have appropriate wills and trusts, children are frequently disinherited. What causes this to occur? Absent a specific arrangement to the contrary, if the assets of a married couple transfer directly to the surviving spouse, that spouse is free to leave both their own assets as well as the assets of the deceased spouse to whomever they choose, or even unintentionally to others. Therefore, it is possible to disinherit children, whether unintentionally or not.

Find out more below about what a contract to plan is and how it might be used in your estate planning. Then learn about other options for protecting heirs in complex family situations, including trusts.

Understanding the Contract to Plan

This tool is literally a contract regarding estate planning. A couple enters into this agreement when they plan for their estate together and want to create some provision for what might happen if one of them were to pass away and the other remarried.

Specifically, the Contract to Plan lays out what percentage the children of the marriage are guaranteed to receive of any future estate. This percentage must be addressed even if the surviving spouse remarries and changes his or her will or estate plans to include a second spouse and/or other children or stepchildren.

Contract to Plan – Hypothetical Examples

Let’s look at an example to understand better how the contract to plan might be used. Bill and Carol had three kids and had been married for more than forty years. Their estate consisted of their house, IRAs, and a couple of investments. In their wills, they bequeathed everything to one another and, upon their second passing, to their children equally. Bill remarried a few years after Carol passed away. Bill sold his house and bought a new one under joint tenancy with his new wife. Soon after, Bill changed the beneficiary of his IRA to his new spouse. When Bill passed away a few years later, his new wife received all of Bill’s assets. Bill’s previous will did not apply to property held in joint tenancy or with designated beneficiaries. Several years later, the new wife died, and her assets, which included what Bill left to her, went to her family and not to Bill and Carol’s children.

Here is another example: John and Sarah each had children from prior marriages. They created an estate plan that left assets equally to the children of their blended family after the death of the second of them. For many years, they lived near all of their children. Several years later, John passed away. After John’s death, Sarah decided to move far away from the children to live in a part of the country where she used to work. As time went on, Sarah needed more assistance due to mild dementia. Although the children encouraged Sarah to return to live closer to them so they could help her, she chose to move to a continuing care community. Over the years, Sarah became close to her cleaning lady. As Sarah’s dementia became worse, the cleaning lady convinced Sarah to hire herself and her husband to be Sarah’s “caretakers.” Unbeknownst to the children, they convinced Sarah to visit a lawyer and change her estate plan to leave them a large portion of the estate. As a result, when Sarah died, most of the estate went to the cleaning lady and her husband and not to the children of Sarah and John, as was intended. If you’re navigating family inheritance discussions and considering new career opportunities simultaneously, utilizing a professional resume template can help streamline your job search process.

A separate agreement called the “Contract to Plan” can be used to deal with the issue of a surviving spouse modifying the estate plan or, at the very least, preventing the intentional or accidental disinheritance of the children of the first to pass away. This document can be helpful for couples who are not just in a second marriage but who also have children in common but are worried that the survivor will remarry and leave the majority of their estate to a new spouse or a third party. The Contract to Plan, unlike a revocable trust, may provide couples with greater flexibility and greater assurance that all of the children will be entitled to at least a portion of the survivor’s estate.

Some Benefits of a Contract to Plan

You might wonder why a couple would include a Contract to Plan in their estate planning when they could use something like a trust to safeguard assets for their children. Couples who have a net worth of $200,000 or more should usually create an estate plan using a revocable trust to facilitate the transfer of assets, but supplement the trust in order to protect their testamentary intent with a Contract to Plan.

A Contract to Plan allows for the protection of the children’s interests while also supporting flexibility for the surviving spouse. They are allowed to update their estate plans in the future to fit new family dynamics or needs, as long as the original percentage of inheritance is kept.

The benefit of this legal document is that it is not only enforceable but also urges the parties concerned to act in accordance with the contract. Spouses may be less inclined to try to evade their duties after signing a Contract to Plan. In this way, the Contract to Plan gives families the required flexibility in addition to the moral and legal obligation to prevent disinheriting the children of a deceased spouse.

My attorney never mentioned the Contract to Plan

Unfortunately, many attorneys in Massachusetts are not yet familiar with the Contract to Plan. That is probably because the Uniform Probate Code, the law that codified the technique, is a relatively new law in Massachusetts, and the Contract to Plan is a somewhat non-traditional planning technique. Nevertheless, the Contract to Plan can play a vital role in protecting the ultimate beneficiaries of your estate. And use of this technique can benefit not only those couples with children from prior marriages but also couples in their only marriage.

Couples should still use a revocable living trust to avoid probate and for other reasons (like asset protection and income and estate tax reduction), and the Contract to Plan merely complements such planning.

It is important to note that the Agreement may exclude certain assets. The Contract to Plan can be drafted to exclude specified property or to limit its scope to the value of the property to be controlled by the agreement, and it can even exclude charitable gifts if desired.

Also, contracts, unlike a Will, can provide that mere destruction of the contract does not void the contract but that it can be revoked only by a document signed by both spouses.

Multiple copies of the contract can be signed and provided to each side of the family (perhaps in a sealed envelope) so that the children will know that they have enforceable rights upon the death of the surviving spouse.

Get Help With Complex Estate Matters

As you can see, estate matters and contracts to plan can become complex, and you may need to consider a variety of factors when planning. Contact the Law Offices of Boyd & Boyd, P.C. to find out how we can help streamline these processes and protect your interests now and in the future.

Filed Under: Estate Planning

Download Forms – Please Tell Us About Yourself

Below are the available form downloads that will be immediately available after submitting your information below.

2017 – The Tax Cuts & Jobs Act – Highlights

This 2 page overview by the Conference Committee provides a summary of the important changes implemented by the Tax Cuts & Jobs Act passed late in 2017. Check our Seminar Page to find our Seminar reviewing the important points of this law.

Click here to download form

Beacon Issue 2 – Estate Administration

What should you do when someone you love dies? This issue of the Beacon reviews the estate and trust settlement process and gives you a list of the things you should gather if you are a successor trustee or an executor/personal representative.

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Estate Planning Seminars – Spring 2015

Here is our Spring 2015 Seminar Schedule. Please join us for an informative session on what has changed and what techniques you should be adding to your estate plan.

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IRS Form 8938 – Statement of Foreign Assets

If you prepare Income Tax Returns, the IRS requires the taxpayer to disclose foreign accounts. This package includes Form 8938, which must be filed with the Income Tax Return. You will find elswhere on this page background on the filing requirement, a “Do I Need to File” page and the form instructions.

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Massachusetts Health Care Proxy

This is a free Massachusetts Health Care Proxy. It can be used by anyone who spends time in Massahusetts. This document appoints an agent to make medical decisions if you are unable to make medical decisions for yourself. It is easy to complete. You type or print your name and address, then the name and address of the agent you are appointing. You should then list the successor or alternate agent (in case your first choice isn’t available). Next, find two witnesses. The witnesses should not be your agent or successor. Sign and date the back of the form where indicated in front of the two witnesses and have the witnesses sign and print their address. Finally, have your agent sign the form accepting the appointment as your health care agent. You may give a copy to your agent, alternate and your primary care physician. It is also a good idea to bring a copy to the hospital with you any time you have in-patient or out-patient surgery. It is advisable that you discuss your wishes with your agent before you fill in the form. Let your agent know your thoughts on the kind of care you desire and be sure that your agent is comfortable in acting as your agent.

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Personal Family Informaion Worksheet

We ask anyone coming in for a consultation to prepare this fomr ahead of time. This is a great form for reviewing your estate size and division.

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Special Needs Planning

This important overview is the perfect starting point for parents and grandparents of those with special needs. The complex regulations surrounding eligibility for state and federal programs make proper planning in this arena a must. Leaving a “Special Needs” heir assets without proper planning can have a devasting impact. Yet too many have chosen to omit “Special Needs” heirs – potentially creating just as many problems if and when government funded programs are discontinued.

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Statement of Foreign Assets – Info & Instructions

If you prepare Income Tax Returns, the IRS requires the taxpayer to disclose foreign accounts. This package includes background on the filing requirement, a “Do I Need to File” page and the form instructions. You will find elswhere on this page Form 8938, which must be file with the Income Tax Return.

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The Beacon – Issue 12 – New Tax law

On December 17, 2010 a new law was signed that makes major changes to Estate and Gift Tax Law. This issue of the Beacon gives a summary of some of the more important changes.

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The Beacon – Issue 10 – Spring 2010

 In this issue: Estate Taxes are repealed in 2010. Many pre-existing plans have problems because of repeal. You will learn what to look for and what to do. Also – declaring a “Homestead” on Trust owned property is now possible in Massachusetts. An article on page 2 gives an overview of this important development. Discussion of the planning needs brought about by the Health Care Reform legislation and the expiration of the Bush era tax cuts can also be found in this issue.

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The Beacon – Issue 11 – Choosing a Trustee

When setting up a trust one of the more important decisions you must make is “Who will be the Trustee?” This issue of the Beacon gives some insight on the considerations for when a corporate trustee should be used instead of a family member.

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The Beacon – Issue 15 – Massachusetts Uniform Trust Code

On July 8, 2012 Massachusetts adopted the Uniform Trust Code. This new law codifies Trust law in the Commonwealth of Massachusetts. The new Code gives families the opportunity to take advantage of several new changes which can make they trusts more flexible. This issue of our newsletter gives you the highlights of the law and the opportunities that now exist.

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The Beacon – Issue 18 – Will Your Estate Plan Go Over the Fiscal Cliff?

The end of 2012 presents families with a once in a lifetime opportunity to avoid death tax. This issue of the Beacon discusses an important technique which allows a client to retain control of assets, get a stepped-up basis and eliminate significant estate taxes! Everyone with an estate over $1 million should read this issue!!

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The Beacon – Issue 19 – ATRA & Making State Estate Taxes Optional

With the passage of the American Taxpayer Relief Act, we are entering a new era of estate planning. This issue of The Beacon describes some of the changes in the law and the significant impact the law will have on your estate plan.

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The Beacon – Issue 20 – Capital Gains Avoidance

Under current income tax environment, planning for the method and the timing of capital gains recognition is more important than ever. There are several techniques that should be considered to minimize the negative tax impact of capital gains.

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The Beacon – Issue 26 – Top 30 Tax Planning Ideas

The Internal Revenue Code is so complex it is virtually impossible for the average taxpayer to understand let alone find ways to minimize taxes. This issue of the Beacon will give you what we feel are the top 30 ideas to plan for lower taxes.

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The Beacon – Issue 4 – A Trust for Your IRA, 401(k), 403(b) or other Qualified Plan

IRAs may represent the largest single asset your loved ones will inherit! But are your IRAs & company retirement plans properly protected? If not, your family could lose millions! This article explains how a new type of trust can: (1) Help protect your loved ones from losing your IRAs and company retirement plans to a divorce, lawsuit, creditors, or government claims! (2) Prevent your beneficiaries with poor money-management skills, or who are easily influenced by others, from blowing it all! (3) Assure that your beneficiaries take advantage of the maximum income tax “stretchout” and allow your IRA to compound income tax-free, possibly for generations (4) Pass your IRAs and company plans from your children to your grandchildren, estate tax-free!

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The Beacon – Issue 5

This is the January 2008 edition of our newsletter. Entitled “Increase Your Income, Decrease Your Taxes with Charitable Remainder Annuity Trusts” the article explains the basics of CRT planning and how you can benefit from a CRT – even if you are not planning to leave assets to charity!

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The Beacon – Issue 6 – Personal Asset Trust

Add more protection & flexibilty to your Living Trust by adding The Unique “Personal Asset Trust™”. Instead of receiving their inheritance directly, each of your beneficiaries may instead receive their inheritance in a special trust, which springs out of your Living Trust. This continuing “Personal Asset Trust™” (or “PAT”) can be controlled by each beneficiary in such a manner as to virtually give him or her all of the same rights as ownership, without the liability exposures ownership brings.

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The Beacon – Issue 7 – 2008 Estate Planning Year in Review

New Techniques Give Wealth Creation Opportunities in a Down Economy. This issue focuses on four techniques that can result in a substantial increase in the amount of wealth inherited by your heirs.

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The Beacon – Issue 8 – Beneficiary Taxed Trusts

In this issue of the Beacon we discuss an extremely important technique that many plans are missing! The Beneficiary Taxed Trust gives huge opportunities to transfer wealth and avoid taxes. If you reside in a state that has no estate tax, but own real estate in another state that does have an estate tax, then this trust is often the perfect answer. For example, estate of Florida residents who own real estate in Massachusetts become subject to the MA estate tax. We have designed a special type of Beneficiary Taxed Trust that avoids the MA Estate Tax – savings families tens of thousands, sometime hundreds of thousands of dollars. Call us at (508) 775-7800 and download this Beacon to learn more.

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The Beacon – Issue 9 – Thanksgiving 2009

This issue of the Beacon covers a myriad of important issues. Our trademarked “Massachusetts Estate Tax Avoidance Trust” is discussed. The article on our Irrevocable Life Insurance Trust discusses how life insurance proceeds can be protected from taxes and creditors and still be used by your spouse and children. Also discussed: choice of domicile, ways of gifting and how you can protect an inheritance before you receive it.

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The Beacon for Advisors – Issue 1 – Carryover Basis in MA

Under a proposed directive, Massachusetts Department of Revenue has announced that, for 2010 deaths, carryover basis is mandatory in Massachusetts for resident decedents (and the personalty and realty located in Massachusetts of non-resident decedents). Executors and their advisors now have until January 17, 2012 to file Form 8939 to allocate an increase in basis to a decedent’s assets. By filing a US Form 706, and thus failing to “opt-out” of Federal Estate Taxes for 2010 decedents, heirs will take a “stepped up” basis for Federal purposes, but an inherited basis without benefit of the permissible allocation of increased basis for Massachusetts Capital Gains Tax purposes.

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