What Makes HNW Tax Planning Different
High-net-worth families face complexities that go far beyond annual tax filing. Estate tax exposure, multi-generational wealth transfer, charitable giving strategies, and asset protection all require sophisticated planning.
The goal isn't just compliance — it's preserving and transferring wealth across generations while minimizing tax erosion.
Estate Tax Planning
Federal Estate Tax
The federal estate tax exemption is $13.61 million per person in 2024 ($27.22 million for married couples). But the exemption is scheduled to sunset after 2025, potentially dropping to ~$7 million per person.
Strategy: If your estate exceeds the exemption, consider:
- Lifetime gifting — Use annual exclusion gifts ($18K per recipient in 2024) and lifetime exemption
- Irrevocable life insurance trusts (ILITs) — Remove life insurance proceeds from estate
- Family limited partnerships — Transfer assets at discounted values
- Grantor retained annuity trusts (GRATs) — Transfer appreciation tax-free
State Estate Taxes
Some states have their own estate or inheritance taxes with lower exemptions. If you live in or own property in one of these states, planning is critical.
Trust Administration
Types of Trusts
- Revocable living trusts — Avoid probate, maintain control during lifetime
- Irrevocable trusts — Remove assets from estate, protect from creditors
- Charitable remainder trusts (CRTs) — Generate income, benefit charity, reduce estate
- Charitable lead trusts (CLTs) — Benefit charity first, then family
- Dynasty trusts — Transfer wealth across multiple generations
Fiduciary Tax Returns
Trusts and estates are separate tax entities. They must file Form 1041 annually if they have ≥ $600 in gross income or a non-resident alien beneficiary.
Key considerations:
- Trusts reach the top tax bracket at just $15,200 of income (2024) — much faster than individuals
- Distributable net income (DNI) rules determine whether income is taxed to the trust or beneficiaries
- Capital gains are typically taxed at the trust level
Wealth Preservation Strategies
Asset Protection
- Domestic asset protection trusts (DAPTs) — Available in some states
- Family limited partnerships — Protect assets from creditors
- Umbrella insurance — Additional liability coverage
Charitable Giving
- Donor-advised funds (DAFs) — Immediate deduction, grant over time
- Private foundations — Control over charitable activities
- Charitable remainder trusts — Income for life, remainder to charity
- Qualified charitable distributions (QCDs) — From IRA after age 70½
Family Governance
Wealth transfer isn't just about taxes — it's about preparing the next generation. Consider:
- Family meetings and education
- Philanthropic involvement
- Succession planning for family businesses
Multi-Generational Planning
Transferring wealth across generations requires coordination:
- Estate planning — Wills, trusts, powers of attorney
- Gift planning — Annual exclusion gifts, 529 plans, direct payments
- Business succession — Transfer family business to next generation
- Insurance planning — Life insurance to pay estate taxes or equalize inheritances
Discretion and Trust
HNW families require absolute discretion. Alan has served as trusted personal tax advisor to approximately two dozen HNW families and family offices managing assets exceeding $100 million. These relationships span decades — a testament to absolute discretion, consistency, and alignment with his clients' financial legacies.
Next Steps
HNW tax planning requires ongoing counsel — not just annual filing. Alan provides discretionary, long-term tax counsel for families and family offices. He reviews your situation, coordinates with your estate attorney and financial advisor, and ensures your wealth is preserved and transferred according to your wishes.
