Searching for an Estate Planning Attorney Who is Experienced in Working with High-Net-Worth Families? Here are Four Questions You Should Ask
I had a conversation with a family friend the other day about how to identify a local estate planning attorney in their area. This friend is an accountant and one of his clients is “high net worth”, and they wanted someone experienced enough to tackle their situation.
What is High-Net-Worth?
When I think of high-net-worth planning, I think of more than the basic estate planning documents (will, powers of attorneys, and healthcare directives) and think more toward avoiding or mitigating an estate tax at death. Currently, each person gets an exemption on all assets up to $12.06M. If you’re married, this is $24.12M across both spouses. Anything above that amount, will be taxed at a steep 40%. For many families worth $25 million or more, this will result in your estate paying many millions in taxes, possibly unnecessarily.
Questions to Ask Potential Attorneys
There are many estate planning attorneys out there yet how do you identify the right one for your situation?
To help facilitate the identification of the right attorney, below are four questions which will tell you a lot about their ability to handle more complex planning:
- How big is your largest net worth client?
- What is your average net worth clientele?
- How many clients do you have above $10/15M?
- Have you ever utilized a corporate structure for larger net worth clients (i.e., established entities for Estate Planning purposes)? A few local attorneys I work with in Indianapolis do this frequently to take advantage of discounts available in combination with gifting.
In summary, the sheer number and values will tell you a lot. If their average client is $5/6M then they don’t have experience with advanced planning because they don’t need to. The corporate question will show their sophistication with tax planning, as you are able to take advantage of certain discounts (lack of marketability, lack of control, minority share, and/or future interest), which allow you to make family gifts/transfers at a discount to market value.
Should You Act Now?
I believe the time to act is now. Two reasons:
- Asset values are suppressed so one can get more assets out of their estate, and allow the growth and recovery to happen with the next generation (i.e., it’s out of the parents’ estate).
- And more importantly, the current $12.06M exemption is set to halve (indexed for inflation) on 1/1/2026. It is temporary based on the Tax Cuts & Jobs Act enacted in 2017.
If you’re not sure where to start your estate planning attorney search, consider your city’s Estate Planning Council. These members are dedicated to learning more about the profession, and tend to stay up to date on planning ideas. That has at least been my experience as part of the Estate Planning Council of Indianapolis where I am a member.
I would also recommend you work with a wealth advisor that is well versed in helping families like yours. Once the estate plan is executed, the advisor will need to help facilitate annual transfers especially if traditional stocks and bonds are part of the gifting strategy. I am well versed in this area, so if you would like a second opinion, please reach out. My direct email is Alex@perkinswa.com.