Estate planning for high-net-worth individuals

Five essential estate planning tips

Preparing a will can be a difficult and emotionally challenging process, but it may be the most important document you'll ever create. For high-net-worth individuals and families, estate planning takes on an extra degree of significance and complexity.

This article will walk you through five of the most important aspects you should consider when making plans for your own estate. By approaching estate planning thoughtfully and strategically, you can help protect your assets and your family and create meaningful and long-lasting legacies.

1. Talk to the professionals

As your wealth increases, estate planning becomes more complicated, requiring the balancing of everything from beneficiary expectations to liquid and non-liquid assets, business concerns, tax considerations, trust formation, superannuation, insurance and more.

By working with professionals such as estate lawyers and trusted accountants you can build a full picture of what your estate contains at that time, and create practical and legally sound strategies to ensure that when the time comes, your assets will be distributed in accordance with your wishes.

2. Create a comprehensive will

It perhaps goes without saying, but a well-crafted will forms the cornerstone of effective estate planning. Your will is the fundamental legal statement of your intentions, so it's vital that the document is precise, detailed and up to date.

It can be helpful to set up annual reviews of your will with an estate lawyer. This way you can make sure the document reflects changes in your own assets, as well as any births, marriages, divorces and other major life events that may alter how you wish to distribute your wealth.

3. Protect your beneficiaries with smart structures

Good estate planning considers both what your beneficiaries will receive and how they'll receive it. The personal circumstances of your intended beneficiaries matter when choosing the best approach. For example, this could involve staged distributions for young beneficiaries, protective structures for those in high-risk situations, or specialised arrangements for family members with disabilities or financial management challenges.

4. Take advantage of testamentary trusts

Most wills appoint an executor who ensures that assets are distributed in accordance with the wishes expressed in the will. However, for people managing large estates with diverse business interests and multiple beneficiaries, distribution may not be so simple. That's where a testamentary trust could be useful.

A testamentary trust is an arrangement that some or all of the estate's assets are placed into a trust, to be overseen by a trustee. The will sets out the terms of the trust and powers of the trustee. The trustee then manages and invests the assets in the trust and distributes them in accordance with the terms specified in the will.

5. Involve family in your estate planning

Including your family in estate planning discussions will often lead to better outcomes. While these conversations can be difficult, early involvement can help ensure your wishes are understood and supported.

Creating a common understanding can be particularly important when assets are moving outside the family (i.e. for charitable giving) or when you're planning on putting in place a testamentary trust or staged distribution. Having honest discussions can prevent misunderstandings and disputes while also offering your children and loved ones an opportunity to maintain your family legacy.