Estate Planning for High Net-Worth Individuals in DC

Elevate Estate Planning for high-net-worth individuals in DC with Kevin C. Martin, Attorney at Law, PLLC. Call us so that we can plan your legacy together.


High Net-Worth Individuals and Washington DC Estate Planning

If you have worked hard to care for your family, it’s understandable you want to make sure they are provided for after you’re gone. This can be achieved with proper estate planning. However, estate planning can be challenging if you are a high-net-worth individual.

High net-worth individuals often worry they will be subject to excessive taxation. That’s why some of their financial goals typically include ways to protect their assets and minimize taxes.

This article will provide an overview of the key components for high-net-worth estate planning in the District of Columbia. It will also highlight the importance of unique planning strategies. Furthermore, we will discuss navigating legal and tax implications.

Estate planning is more than filling out forms. Attorneys at Kevin C. Martin, Attorney at Law, PLLC, can help you understand how the choices you make today may affect your and your loved ones’ future. Creating an estate plan is an entirely individualized process at our law firm. We have extensive experience in tailoring estate plans for high-net-worth families.

Understanding the Unique Estate Planning Needs of High Net-Worth Individuals in DC

First of all, it’s important to understand who is considered a high net-worth individual (HNWI). There is no official definition. Financial professionals typically consider a high-net-worth individual as someone who owns liquid assets valued at $1 to $5 million. Liquid assets include only money held in brokerage or bank accounts. These assets usually don’t include a primary residence.

When it comes to estate planning, high net-worth individuals have unique concerns, such as the following:

  • Minimizing estate taxes

  • Protecting assets

  • Ensuring smooth business succession planning

  • Preserving wealth for future generations

A one-size-fits-all approach is often not sufficient. Instead, it’s necessary to take into account their financial situation and long-term goals.

Our experienced estate planning attorneys at Kevin C. Martin, Attorney at Law, PLLC, help high-net-worth clients take advantage of various estate planning tools to achieve their goals. We also implement tax planning strategies to protect assets while minimizing their tax liability.

Key Components of Estate Planning for High Net-Worth Individuals

Trusts and Their Role in Estate Planning

Trusts play an important role in estate planning for high-net-worth individuals. Different types of trusts can provide mechanisms for distributing and managing assets according to the individual’s wishes. At the same time, trusts can offer benefits such as asset protection, privacy, and potential tax advantages.

One such trust is a revocable living trust. It allows individuals to transfer assets into the trust during their lifetime, and the trustee takes control of those assets. Upon their death, the assets can be distributed to beneficiaries without going through probate.

High-net-worth individuals also use another type of trust, the irrevocable life insurance trust. Life insurance benefits are transferred into an ILIT and can be excluded from taxable estate. Therefore, the grantor can ensure the funds are available to their beneficiaries without incurring estate taxes.

Working with a trust and estate administration attorney can help you identify the trusts most suitable to you and your financial goals.

Tax Planning and Minimizing Estate Taxes 

Tax planning is a crucial aspect of estate planning for High-net-worth individuals in DC. Minimizing estate taxes and maximizing wealth are top priorities. This involves understanding and utilizing the available exemptions and deductions to reduce the tax burden on their estates.

One effective tax planning strategy is gifting. By considering annual exclusion gifts and using the lifetime gift tax exemption, individuals can transfer assets to their beneficiaries while minimizing estate taxes. The District of Columbia doesn’t have a gift tax. But, the federal annual exclusion from gift tax is $17,000 in 2023 per recipient and $12.92 million over the course of your lifetime. Gifts below these amounts qualify for an exclusion from gift tax. Individuals can support family members and loved ones while reducing their taxable estate.

Charitable giving is also among estate tax planning strategies commonly used by high-net-worth individuals. By establishing charitable trusts or donating, individuals can support causes they are passionate about, but they can also benefit from tax deductions. Charitable giving reduces estate taxes and can lower income taxes during the individual’s lifetime.

Another example of advanced estate planning techniques can include grantor-retained annuity trusts (GRATs). GRATs allow individuals to transfer assets into an irrevocable trust to transfer assets to future generations with minimal gift tax liability, if any. The grantor will receive an annuity payment for a specified term, after which the assets will be passed down to the beneficiaries with no gift taxes.

Asset Protection and Management

Different strategies can be used to protect assets from potential threats, such as creditor claims, lawsuits, and other financial risks.

Family limited partnerships (FLPs) and limited liability companies (LLCs) can be employed for asset protection. 

FLPs and LLCs provide a certain level of asset protection. These strategies separate personal and business assets for liability purposes. High-worth individuals can limit their personal liability by transferring assets into these entities, shielding them from potential claims.

Navigating Legal and Tax Implications in DC

Understanding federal and DC estate tax laws is important for high-net-worth individuals. It ensures compliance and minimizes tax liabilities.

Federal estate tax is levied on estates valued at or above $12,92 million. In addition, DC imposes its own estate tax, which is levied on estates valued at or above $4.53 million in 2023. Moreover, the estate tax rate in DC is progressive. In other words, the rate goes up as the estate’s value and size increases. These taxes must be paid before your heirs can access their inheritance.

The federal estate tax exemption, changes in tax laws, and available deductions can affect your estate value. That’s why high-net-worth individuals should consider working with attorneys knowledgeable in DC and federal tax laws. They can develop strategies to minimize estate taxes while staying compliant.

Kevin Martin, Attorney at Law, PLLC Can Help

Estate planning for high-net-worth individuals can be overwhelming. It requires implementing tax planning, asset protection, and wealth management strategies while ensuring one’s wishes are respected.

If you are a high net-worth individual in need of effective strategies for estate planning, we may be able to assist you. Reach out to Kevin C. Martin, Attorney at Law, PLLC, and schedule a free consultation.

We are a DC-based estate planning law firm dedicated to helping our high-net-worth clients preserve what they have worked hard for. Our lawyers are committed to creating a comprehensive estate plan that fulfills your needs and achieves your goals.