Secure Your Wealth and Build a Strong Financial Future
Planning for the future is critical for all of us, but this is particularly true if you’ve built significant wealth. High net worth financial planning can help you plot a strong course forward for yourself and your family and allow you to enjoy the peace of mind and security that comes with preparation.
If you are a high net worth (HNW) individual, you’ll have different considerations to take into account as you plan. Your financial plan can often come with added nuance and complexity, too. When there’s a lot on the line, it’s smart to begin HNW financial planning early on to secure your wealth for the long run.
High Net Worth Financial Planning: When to Start
At some point in your financial journey, it may be time to ask for help putting together a comprehensive financial plan. Often, the earlier you start, the better. The more money you accumulate, the more intricate the considerations and the more robust the opportunities.
Just like there are many roads to increasing your net worth—building a business, rising up the ranks, receiving an inheritance, or being particularly savings-savvy—there are many different ways that high net worth financial planning can help you maximize your assets even further. Partnering with a professional financial advisor can help you protect and preserve your wealth to serve your current and future goals.
Challenges HNW Financial Planning Can Solve
Every financial situation is different, and everyone’s goals for the future vary. However, there are common challenges that high net worth individuals face as they’re trying to reach their financial goals:
Optimizing Tax Opportunities
One of the biggest downsides of having significant wealth is the significant tax burden that accompanies it. Proper financial planning can help you reduce your tax liability and keep your taxes from eating into your gains.
Reducing tax liability is smart for anyone with high net worth, but particularly for those who hold appreciated stocks in taxable brokerage accounts, receive large blocks of stock options, or take sizable profits out of a business. Employing effective tax strategies like spreading funds out across a mix of tax-deferred vs. tax-free investments and planning a smart strategy for drawing down funds once you reach retirement age, can go a long way toward protecting your wealth.
Transferring Family Wealth
One of the motivators of accruing wealth is the chance to pass it on to future generations. Giving your children and grandchildren the opportunity to enjoy a secure financial future is a wonderful gift. Whether you’re hoping to transfer that wealth after you pass away or gift money during your lifetime, high net worth financial planning can help you reach that goal effectively.
There are opportunities to gift some of your assets tax-free while you’re living. As of 2022:
- As an individual, you can gift up to $16,000 per year and up to $32,000 if you’re married.
- That same threshold applies to giving funds directly to an educational fund, like a 529 plan. These plans also let you give up to five years of tax-free gifts at once, which can lead to tax advantages.
If you’re looking to transfer wealth when you pass, consider incorporating a trust into your financial strategy. That one move can help avoid probate delays and ensure your money is distributed according to your wishes.
There are, of course, plenty of circumstances that can complicate matters—all the more reason to have a careful financial plan. If you have large debts, are in a rocky marital relationship, or have children who aren’t as fiscally responsible as you’d hope, these factors can influence your decision-making.
Giving Back
Giving back to charitable causes is a meaningful way to put your wealth to good use. Giving to a variety of philanthropic organizations can not only increase your impact, but also offer you greater flexibility.
For example, consider setting up a donor advised fund (DAV). It’s a smart way to manage your giving, but also gives you a chance to avoid paying taxes on asset gains. To get that benefit, transfer your assets to a donor advised fund before you sell them, then donate the proceeds. This way, the charity receives the gross sum, instead of the net after tax.
Owning a Business
Running a successful business takes a serious amount of time, energy, and effort. Juggling so many responsibilities can make it seem daunting to also tackle personal finances. However, because business ownership creates a lot of complexities, it’s critical to have a financial plan securely in place.
If your net worth is tied up in your business’s value, you may feel more secure. Many believe there’s more control in concentrating wealth in the business, but that sense of security may be more precarious than you think. Diversifying your assets into a mix of stocks, bonds, and other investments can be an aspect of HNW financial planning that goes a long way in reducing your risk.
How Can High Net Worth Financial Planning Help Me?
No matter where you are in your financial life, if you’re a high net worth individual, you will no doubt benefit from well-executed high net worth financial planning. An expert partner can help you answer key questions like: “Have I taken all the steps I need to protect the assets I’ve spent a lifetime building?” “Is my portfolio really optimized to reduce risk and minimize taxes?” “Am I doing all I can to meet my financial goals?”
Take the next step on your monetary journey—start the high net worth financial planning process today.
Illuminated Advisors is the original creator of the content shared herein. I have been granted a license in perpetuity to publish this article on my website’s blog and share its contents on social media platforms. I have no right to distribute the articles, or any other content provided to me, or my Firm, by Illuminated Advisors in a printed or otherwise non-digital format. I am not permitted to use the content provided to me or my firm by Illuminated Advisors in videos, audio publications, or in books of any kind.
