Paul Tashima is a financial industry professional who is experienced with managing high net worth individuals’ estates. In the following article, Paul Tashima explores the strategies and considerations that pave the way for designing an enduring financial legacy that will stand the test of time.
In the realm of wealth management, few aspects hold as much significance as legacy planning. For high-net-worth families, it’s not just about securing financial prosperity for the present, but also about leaving a lasting impact for generations to come.
Data shows wealth transferred through 2045 is expected to reach $84.4 trillion. With so much money and assets changing hands, it’s only natural for many to feel scrambled by the notion. However, high net worth individuals (HNWIs) who want to make a lasting financial impact need to plan for this legacy — a feat that requires professional assistance.
From minimizing estate taxes to preserving wealth for generations to come, those in the upper echelon must carefully consider how they will take care of their family when they’re no longer walking the earth.
Paul Tashima Says That High Net Worth Individuals Face Unique Wealth Transfer Challenges
With great wealth comes great opportunity, but also distinctive challenges that only expert financial planners can overcome deftly and efficiently. Paul Tashima notes such hurdles include:
High net worth individuals’ portfolios include everything from philanthropic endeavors and real estate to businesses, investments, and beyond. Estate plans need to account for every convolution involved with managing and transferring such assets to heirs. Financial planners are well-versed in handling these intricacies, though, so that they can effectively guide HNWIs to the financial legacy they’ve dreamed about leaving.
People who own multiple businesses across different sectors, for instance, must ensure their estate plan facilitates the succession of the businesses to beneficiaries or finds ways to sell them while minimizing tax burdens. Paul Tashima explains that the same can be said for real estate holders, investors, and others owning higher-than-average wealth.
Portfolios aren’t just complex for the individual; they bring complexities into the entire family. As such, planners work to help decrease the high levels of stress that come with the transference of wealth, ensuring fair distribution, the understanding of potential conflicts, and succession planning.
Paul Tashima notes that the trick lies in keeping open communication and clear guidelines between the high net worth individual, the estate planner, and the rest of the family. Establishing these two factors gives the wealth transfer process the best chance at going smoothly.
Blended families often experience the most hardship. When individuals have children from numerous marriages, financial planners aim to address the dynamics of each member while distributing assets fairly between those involved. Paul Tashima explains that well-established professionals note how the mere existence of a thought-out estate plan is enough to abolish conflict at the time of transferal.
Major tax burdens tend to accompany significant wealth at the time of death, slashing much of the value that individuals worked so hard to build. So, estate planners aim to minimize liabilities to preserve as much money as possible.
Paul Tashima says that since every HNWI’s situation is different, professionals adopt bespoke strategic amalgamations, such as gifting, charitable planning, and trust utilization, to duck and dive between tax laws and maximize the wealth handed to future generations.
Bringing Intergenerational Continuity Plans to High Net Worth Families for Wealth Preservation
While countless individual strategies exist, the intergenerational continuity plan is the overarching wealth transference and preservation guideline covering everything on how the family’s wealth will be managed and supplied to future generations. Offering a detailed roadmap for dealing with and transferring the wealth, it’s completely customizable to allow for perfect alignment with any objectives.
Paul Tashima says that not only does this plan help retain assets, but it also guarantees the transfer of expertise, critical information, and knowledge to both advisors and relatives on a need-to-know basis. High net worth individuals should consider it the foundation of their legacy.
Minimizing Estate Taxes by Creating Tax-Efficient Transfer Plans
Within the intergenerational continuity plan, professionals put forth agreed-upon strategies to ensure that transfers are as tax efficient as possible. As alluded to earlier, they don’t take a one-size-fits-all approach. Instead, it’s a multi-dimensional affair, combining various techniques.
That said, there are two primary ways of transferring wealth — gifting while alive or leaving an inheritance upon death.
Paul Tashima notes that, as of 2023, individuals can transfer up to $12.92 million throughout their lifetime or upon death without being subject to federal estate or gift taxes. Dubbed a lifetime exemption, people can bypass taxes further (while avoiding using their exemption) by gifting as much as $17,000 per year.
However, this isn’t enough for many. Paul Tashima explains that many use upstream gifting and take advantage of at-the-time incentives to allow HNWIs to preserve their portfolio and provide peace of financial mind.
Expert estate planning stands as the linchpin in ensuring a seamless transition of wealth and a lasting financial legacy for future generations. By meticulously crafting a strategy tailored to your unique circumstances, you not only secure the present but leave an indelible mark on the financial landscape of your descendants. It is a testament to the foresight and care invested in preserving family prosperity for years to come.