Everyone should have an estate plan no matter what his or her level of worth.
An estate plan determines how assets are distributed upon death. Not having an estate plan is in fact having one as the determination of who gets what is being made by the government and might not be in accord with the wishes of person.
Death will trigger a transfer of assets whether professionally planned for or not.
Estate plans need to be updated regularly to address changes such as those that occur in the lives of people determining the estate plans and the tax environment. When it comes to the rich and super-rich, the requirement to stay current becomes a more pressing concern.
According to Pat Rufolo, Chairman of the Private Client Services Group, McElroy, Deutsch, Mulvaney & Carpenter, LLP, “Because of the way the very wealthy have structured their business interests, especially when different international jurisdictions are involved, means they’re going to consistently need to be tweaking their financial and estate plans. New laws and regulations are always popping up providing obstacles and opportunities. Only being on top of the situation are these very wealthy families going to ensured their wishes are carried out at death.”
Although updating estate plans is for the great majority of the rich and super-rich the smart course of action, it is not done by many of them. “Almost nine out of ten highly accomplished business owners have estate plans that are more than five years old,” says John Bowen, founder of AESNation.
“While they are likely to be missing out on ways to maximize their wealth, they may also end up with their wealth being distributed in ways that don't reflect their current wishes.”
It is not only successful business owners who fail to regularly upgrade their estate plans, a percentage of the super-rich similarly have outdated plans.
“Looking across a series of studies, about one in four family offices report the estate plans for the exceptionally wealthy families are more than five years old, “explains Angelo Robles, founder and CEO of the Family Office Association.
“At the same time, there’s the general consensus that estate plans more than a couple of years old should always be reviewed and adjusted as needed.”
A potentially severe mistake some of the rich and super-rich make is failing to ensure that their estate plans are current. It is a mistake that is easily rectified.
