Practicing with Private Wealth Clients
By Matthew S. Dana, Esq, CPA, LLM
At DWL, we work with many high-net-worth individuals including:
15
$100+ Million Clients
16
$50–100 Million Clients
74
$20–50 Million
5
CEOs of Publicly Traded Companies
5
Large Farmers in Yuma and Casa Grande
3
Owners of Professional Sports Franchises
AND Countless Doctors, CPAs, Financial Planners and other Professionals
”Over the years we have implemented plans for our high net worth clients that will save their families hundreds of millions of dollars in Estate Taxes when they die using the most cutting edge strategies available – we also have many strategies that will save business owners millions of dollars in capital gains when they sell their company in the future.
MATT DANAJD, LLM, CPA, CLU
We help with:
- Family Limited Partnerships
- Intentionally Defective Grantor Trust
- Stand Alone Generation Skipping Trusts
- Charitable Lead Trusts/ Charitable Remainder Trusts
- Installment Sales to Defective Trusts
- Private Family Foundations
- Family Office Consulting
Navigating the Nuances of High Net Worth Clients and the Value of Experience
Over the last 38 years of practicing in the Estate Planning arena, I have grown with my clients, intellectually as well as financially. And the only attorney that would discount the value of experience would be a young attorney that doesn’t have it. I know for me, I have evolved philosophically about Estate Planning as my clients have grown financially. I have often said that I have not practiced Estate Planning, I have “lived Estate Planning”. I can say with absolute 100% surety that there is a huge difference in how you practice for an every day Estate Plan versus planning an Estate Plan for a high net worth client. Keep reading to see what’s different.
Here’s a list of a few of the things that are quite different for clients with a greater net worth. The key question here for whoever you are talking to is their tax training. It all starts with Tax courses taken, (and this is where having an LLM, which is a Masters of Law in tax, is crucial) and ends with other credentials like being a CPA, or MBA, etc. is important. Most of the attorneys that practice Estate Planning have very little tax training and experience.
How is Estate Planning different for clients with greater net worth?
The key question here for whoever you are talking to is their tax training. It all starts with Tax courses taken, (and this is where having an LLM, which is a Masters of Law in tax, is crucial) and ends with other credentials like being a CPA, or MBA, etc. is important. Most of the attorneys that practice Estate Planning have very little tax training and experience.
1. Estate and Gift Tax is a huge issue.
Remember, with a $12 million plus Exemption a married couple doesn’t face this issue unless they are north of $24 million. Now, take a client that is north of $50 million or a $100 million, Estate and Gift Tax is king. I promise you that attorneys that don’t practice regularly with these higher net worth clients aren’t aware of these strategies. The old saying holds true “they don’t know what they don’t know”!
2. Trusts are more likely to be in existence much longer.
“Multi-generational” Generation Skipping Trusts. This is one of the most complex topics in all of Estate Planning. The average attorney would have a difficult time explaining it, let alone knowing the rules. But, simply put, with GST Planning (“Generation Skipping Tax”), once a Trust is free of Estate Taxes to the client, it is free of Estate Taxes for the next 500 years or more as the kids, grand kids, and great grand kids use the financial benefits of the Trust without having the Estate Tax Liability when they die.
”Matt & Todd, Thank you both for explaining and making our family feel so good about where we are. Very professional and well done!!…. I got a bit choked up there because as you said Matt, we are truly blessed and it’s hard for me to look at my family and explain what that means to us…..Thanks again!… P.S. Todd, you really have done a wonderful job with all of this!!!
JIMCEO of a Publicly Traded Company
3. Capital Gains Savings Strategies become more important.
These clients tend to be business owners, or CEO’s of publicly traded companies, etc. They have huge capital gains issues when they go to sell and diversify these shares in the future. Most of these strategies have some form of a charitable component. A thorough understanding of Private Foundations, Charitable Remainder Trusts and Charitable Lead Trusts are crucial.
4. Coordination with other advisors is crucial.
Practicing at this level is a definite “team approach”. Input from the clients CPA (Income Tax Advisor), Financial Advisor, Life Insurance Professional, Trust Officer or Financial Planner. So many of the complex issues can be solved only with combining different strategies and perspectives. The competition between the Estate Tax and Capital Gains Taxes as well as Income Tax strategies and solutions have to be carefully coordinated. What may be beneficial from an Estate Tax stand point could be a huge mistake from an Income Tax standpoint.
5. More time spent upfront in discussion and design.
In regular Estate Planning, more time is spent drafting documents then in discussion and understanding and design. Practicing at a higher level involves much more time, maybe 3 or 4 times more in the discussion and understanding and the coordination of the many strategies then in the actual drafting of the document. That is why we go thru a “design phase” with our clients prior to drafting any documents.
