Financial planning is not always straightforward. This especially true for high net worth individuals. Persons, who fall into this category may need to address issues that others do not. In this post we will focus on three things that people in this demographic should take into consideration.
First, it is necessary and important to create an estate plan, period. A study conducted by BMO InvestorLine in 2014 found that over the course of the next 20 years, approximately $1 trillion will be passed to others. Accordingly, drafting even a simple will is important.
Those, who have taken the time to create an estate plan should make sure that it is updated as needed. When such steps are not taken it is more likely that litigation will arise after that person's death causing harm to the estate as litigation can be very expensive.
Next, dual citizens of both Canada and the United States should be aware of the tax laws of both nations. Failing to file in the U.S. could lead to tax penalties. It could also expose trustees and executors to punitive and personal liabilities. The recently introduced Foreign Account Tax Compliance Act makes it even more likely that such an individual will be discovered.
Last, when a blended family is involved great care should be taken to make sure that a person's estate is distributed per his or her wishes. To achieve these goals the following may be used:
- Family Trusts
- Domestic Agreements
- Shareholders' Sale-Purchase Agreements
Where shareholders' sale-purchase agreements are concerned it is particularly important that they are funded.
Of course for most people it does not make sense to undertake complex estate planning on their own. Fortunately estate planning lawyers are available to assist with the planning aspect as well as any litigation that might arise.