Protecting the Long-Term Needs and Goals of High Net Worth Families

Families play a pivotal role in the lives of many members of the affluent market. Loved ones can be the foundation that helped high net worth individuals become successful. The next of kin motivate people to wake up early every day and work late into the night to ensure their family members have the financial support they need. However, while many high net worth individuals seek out ways to secure and manage their wealth, too often, these individuals do not seek out the guidance they need for protecting the long-term needs and goals of their entire families.

According to the U.S. Trust 2016 Insights on Wealth and Worth, a publication based on a nationwide survey of nearly 700 high net worth individuals, the wealthy primarily sought planning advice focused mainly on one technical aspect of planning, such as tax and estate planning or measuring their investment portfolio performance. While these are important aspects of long-term wealth management, the survey also found that one-third of respondents failed to discuss other aims they considered fundamentally more important, such as identifying the long-term needs and goals of their families.

Financial planners working with high net worth individuals should dedicate some time to highlight ways these clients can optimize their planning to help protect the goals and needs of their loved ones.

Minimizing estate taxes

Many super-affluent clients have been successful in saving up a nest egg to provide a comfortable legacy for their surviving family members. However, estate taxes can carve out a sizable chunk of an inheritance and leave loved ones with substantially less money than they would have gotten without the tax. In addition, much of a family’s wealth can be tied up in their house and property, and estate taxes can also threaten the financial stability of a family’s homestead.

Thankfully, a properly structured high net worth insurance portfolio overcomes many of the problems that arise when estate taxes endanger a familial inheritance, potentially saving hundreds of thousands or even millions of dollars. A robust insurance portfolio allows ultra-wealthy families to more effectively orchestrate the transfer of assets from one generation to the next without having to worry about taxes cutting out a portion of the savings.

Life insurance planning can help high net worth individuals avoid estate taxes.Life insurance planning can help high net worth individuals avoid estate taxes.

Securing the family business

Often, a family-run company has been one of the main contributors to a family’s wealth. Whether it’s a string of restaurants, a manufacturing enterprise or a software startup, these businesses serve as the primary font of producing new revenue and savings for a family. Because they act as the main source of income, the loss of a family-owned operation could be devastating in the event of an untimely death.

“Life insurance policies can be used to fund a buy/sell agreement for a business.”

If someone unexpectedly passes away and is no longer able to run the family business, the surviving members might be forced to sell the company. Thankfully, with the right high net worth life insurance policies in place, they can fund a buy/sell agreement that allows for the seamless transfer of the business, according to 360 Financial Literary. By having the right instruments in place to avoid any gaps in operation, high net worth families can eliminate the doubt and uncertainty that would arise otherwise. In addition, proceeds from the life insurance policy are typically paid out shortly after death, allowing any buy/sell transactions to settle quickly.

Paying for long-term care

Helping loved ones during rough times is one of the defining aspects of being a family. It’s one of the reasons we all work so hard to build up our savings and wealth. When a family member becomes ill due to old age, an accident or some other factor, it’s important to have the right insurance plans in place that help cover the high costs associated with end-of-life care. Including long-term care insurance options with the rest of a client’s insurance portfolio ensures these individuals have a plan in place to guarantee the well-being and health of their family members.

Financial planners who choose to build a relationship with Highland Capital Brokerage gain access to our advanced market and underwriting expertise.

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Highland Capital Brokerage

Highland Capital Brokerage is committed to developing client-focused relationships with financial advisors using our core competencies of life insurance, annuities, and long-term care. We distinguish ourselves by providing point-of-sale support, advanced marketing, and creative estate and business planning techniques.
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