Estate Planning Strategies to Protect Your Wealth

Wealth isn’t just about what you earn—it’s about how well you protect and transfer it. For high-net-worth individuals, estate planning is essential to making sure your assets go where you intend, reducing tax burdens, and protecting your legacy for future generations. Without a plan, your wealth could be caught up in legal battles, excessive taxes, or unintended distributions.

Estate planning is more than just drafting a will. It involves structuring your financial affairs in a way that preserves your assets, provides for your loved ones, and allows for a smooth transition when the time comes.

If you’ve put off estate planning because it feels overwhelming, you’re not alone. But with the right approach, it becomes a powerful tool to safeguard everything you’ve built. This guide will walk you through the essential steps to securing your financial future. From planning for unexpected events to trusts and tax-saving strategies, a well-designed estate plan puts you in control.

Avoiding Probate

Probate is the legal process of validating a will and distributing assets under the supervision of the court. While it serves a purpose, probate can be time-consuming, costly and public.

Avoiding probate helps ensure that your loved ones have faster access to your assets while reducing the administrative burden during an already difficult time. Fortunately, there are several ways to bypass this process and make sure your assets are transferred smoothly.

Revocable Living Trust

When you transfer assets into a revocable trust, they’re no longer considered part of your probate estate. This means they can pass directly to your beneficiaries without court involvement. You maintain control of the trust during your lifetime and can amend or revoke it as needed. Upon your death, the trust becomes irrevocable and the trustee distributes the assets according to your instructions.

This streamlined process helps protect your privacy and reduces the risk of legal challenges. From a tax perspective, a revocable living trust is a disregarded entity and is treated as if you own the account directly.

Joint Ownership With Rights of Survivorship

When assets are held jointly, they automatically transfer to the surviving owner upon your death. This is common with real estate, bank accounts and certain types of investments. However, it’s important to understand that joint ownership grants equal access to the assets during your lifetime. This may not always align with your long-term estate planning goals.

Payable-on-Death (POD) or Transfer-on-Death (TOD)

The POD and TOD designations simplify the transfer of certain financial accounts. By naming beneficiaries on bank and investment accounts, you ensure these assets pass directly to the designated individuals without going through probate. This approach is easy to set up and provides an additional layer of protection for your heirs.

Beneficiary Designations on Life Insurance Policies and Retirement Accounts

The beneficiary designations on life insurance policies and retirement accounts ensure that these assets pass directly to the named individuals or trusts.  Note that there are specific rules regarding inherited retirement accounts and when the money must be withdrawn.

Planning for Incapacity

Estate planning isn’t just about what happens after you pass away. It’s also about being prepared in case you become incapacitated. Life is unpredictable, and a sudden illness or injury could leave you unable to make financial or medical decisions.

Without the right legal documents in place, your loved ones may have to go to court to obtain the authority to act on your behalf. This process can be stressful, expensive and time consuming. By taking a few steps, however, you can give your loved ones clear guidance and legal authority to care for you.

First, secure a durable power of attorney. This allows you to designate someone you trust (known as your agent) to manage your financial affairs if you become incapacitated. Your agent can handle tasks like paying bills, managing investments and making financial decisions. Because the power of attorney remains in effect even if you lose the ability to make decisions, it provides essential protection during periods of incapacity.

We also recommend creating a healthcare proxy or medical power of attorney. This document appoints someone to make medical decisions on your behalf if you’re unable to do so. This proxy is often paired with a living will, which outlines your preferences for medical treatment in situations where you can’t communicate your wishes. For example, you can specify whether you want to receive life-sustaining treatments, such as mechanical ventilation or feeding tubes, under certain conditions.

Tax Considerations

For high-net-worth individuals, taxes play a significant role in estate planning. Without proper planning, a substantial portion of your wealth could go to federal and state tax authorities instead of your heirs. Understanding how estate, gift and generation-skipping transfer taxes work can help you structure your plan in a way that reduces unnecessary tax burdens and preserves more of your assets for your beneficiaries.

Estate Tax

One of the biggest concerns in estate planning, the federal estate tax applies to the transfer of wealth after death. As of 2024, individuals can pass up to $13.61 million free of federal estate tax, with amounts above this threshold taxed at rates up to 40%. While this exemption is historically high, it is set to decrease in 2026 unless Congress acts to extend it.

State estate taxes can add another layer of taxation, depending on where you live. Some states have lower exemption amounts, meaning you could be subject to estate taxes at both the state and federal levels. If your net worth exceeds the exemption limit, proactive planning is essential to reduce the tax impact on your estate.

Gift Tax

This tax applies to transfers of wealth made during your lifetime. However, the IRS provides an annual exclusion that allows you to give a certain amount to each recipient without affecting your lifetime exemption. In 2024, the annual gift tax exclusion is $18,000 per recipient. Gifts that exceed this amount count against your lifetime estate and gift tax exemption. While giving large gifts may seem counterintuitive, strategic gifting can help reduce the size of your taxable estate over time, lowering potential estate tax liabilities.

Generation-Skipping Transfer Tax (GSTT)

The GSTT is designed to prevent individuals from avoiding estate taxes by transferring assets directly to grandchildren or other beneficiaries who are more than one generation removed. As with the estate tax, transfers under $13.61 million are not subject to the GSTT. However, any amount above the exemption is taxed at a flat 40% rate (in addition to the estate taxes that may be due as well). If your estate plan includes gifts or bequests to grandchildren or younger heirs, careful structuring can help you minimize or avoid this additional tax burden.

Strategies to Reduce Tax Liabilities

Reducing tax exposure is a key goal when crafting an estate plan. By using proven strategies, you can minimize estate, gift, and generation-skipping transfer taxes, allowing more of your wealth to pass to your loved ones.

Lifetime Gifting

The lifetime gifting strategy involves gradually transferring wealth to reduce the size of your taxable estate. By making annual gifts up to the IRS exclusion amount — $18,000 per person in 2024 — you can shift substantial assets over time without triggering gift taxes. Additionally, paying tuition or medical expenses directly on behalf of someone else is exempt from gift taxes and doesn’t count against your annual or lifetime exclusions.

For larger gifts, the goal is to transfer assets that are expected to substantially appreciate over time.  The benefit being that the growth will happen outside of your taxable estate.

Charitable Giving

Donating to qualified charities can reduce your taxable estate while also offering immediate income tax benefits. Some people use charitable remainder trusts (CRTs) or donor-advised funds (DAFs) to enhance their giving. A CRT provides income to you or your heirs for a set period, after which the remaining assets go to charity. A DAF allows you to make a charitable contribution, receive an immediate tax deduction, and distribute funds to charities over time, giving you flexibility and control.

Irrevocable Life Insurance Trust (IILT)

If life insurance plays a role in your estate plan, consider setting up an irrevocable life insurance trust (ILIT). Normally, life insurance proceeds are included in your taxable estate. Placing the policy in an ILIT removes those proceeds from your estate, potentially reducing estate taxes. Once the policy is transferred to the trust, it becomes a separate legal entity and the terms cannot be changed. However, this trade-off can be worthwhile if your estate is large enough to face significant tax exposure.  The life insurance can help give your heirs liquidity to cover a large tax bill for your estate.

Family Limited Partnership (FLP)

High-net-worth individuals may also benefit from creating a family limited partnership (FLP). This structure allows you to transfer ownership of business interests, real estate, or other assets to family members at a reduced taxable value. Because FLPs are often eligible for valuation discounts, you can gift a larger amount while using less of your lifetime exemption. At the same time, you can retain control over the assets by acting as the general partner, which provides an added layer of flexibility.

Regular Review and Updates

An estate plan is not a “set it and forget it” arrangement. Life changes, and your estate plan should reflect those changes. Major life events — such as marriage, divorce, the birth of a child, or the death of a loved one — can have a significant impact on your financial goals and the people you want to include in your plan. Without periodic reviews, you risk having outdated documents that no longer align with your current wishes.

Changes in tax laws can also affect your estate plan. For example, the current federal estate tax exemption is historically high. But it’s set to drop in 2026 unless Congress takes action. If your estate planning strategies rely on today’s exemption limits, you may need to revise your plan to account for future changes. Similarly, state tax laws can vary widely, so it’s important to stay informed about any updates that could impact your estate.

Reviewing your estate plan every few years, or after any major life event, can help ensure that it remains relevant and effective. This process doesn’t have to be time consuming, especially if you work with experienced professionals who can guide you through any necessary adjustments.

Estate planning is about more than just protecting your assets — it’s about protecting your legacy and providing for the people and causes that matter most to you. It might seem like a lot at first, but the peace of mind it brings is well worth the effort. With the right plan in place — and the right estate tax advisors to help you — you’ll know that your wealth is secure and your wishes will be honored.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.