This is the sixth installment in our “Smart Financial Moves” series, exploring essential financial strategies for high-income individuals looking to build wealth efficiently.
In Chapter 5, we covered Insurance and Protection. This week, we focus on Estate and Family Planning.
Estate planning often feels like a “later” task. It’s not exciting, doesn’t generate returns, and makes you confront mortality and family dynamics.
But estate planning isn’t about death it’s about clarity and protection so you can live confidently, knowing your family is secure.
Done right, it removes uncertainty and conflict, preserving your wealth.
We work with estate planning attorneys and other professionals, but our role is advisory.
We help clients understand options, coordinate planning, and ensure everything aligns with their broader financial strategy.
Table of Contents
Must-Have Components
Many ask where to start with estate planning. For those in their 30s and 40s, especially with growing families and networks, certain components are essential.
The Foundation: Your Will
A will serves two purposes as you build a family: designating guardians for minor children and outlining asset distribution, crucial for blended families or unmarried couples.
Most avoid creating wills due to mortality fears, but it provides clear directives, removing guesswork during difficult times.
I always emphasize naming backup guardians. Your primary choice may be unavailable when needed, and having alternatives prevents disputes or court decisions you might not agree with.
Controlling Medical Decisions
Healthcare proxies, also known as advance directives, appoint someone to make medical decisions if you become incapacitated. These documents include your preferences around life support and life care.
You want to stipulate your wishes and put certain people in control of making decisions in your absence.
The Often-Overlooked Essential
A Power of Attorney (POA) is critical but often overlooked. This grants someone authority to manage your finances if you’re incapacitated, essential for investment management, bill paying, and dealing with real estate.
Without this document, your family faces significant challenges accessing accounts or managing financial obligations during a crisis. It’s an essential protection that costs very little to implement.
Revocable Living Trusts
For those with significant assets thinking about avoiding probate, a revocable living trust is an interesting thing to explore. It helps avoid probate and keeps basically all of your affairs private.
It’s useful for managing assets during incapacity or death and makes things a lot smoother down the line, keeping them out of court.
The Modern Challenge
Here’s something that’s increasingly relevant, and I can tell you, no one is thinking about it: digital assets. How do you deal with crypto wallets?
If you have a lot of Bitcoin (I mean, a lot of young people, if they were early adopters, they’ve got significant holdings), how do you handle that? What do you do with that?
My firm now has an institutional custodial relationship with BitGo, which is the largest custodian with multi-sig for things like Bitcoin.
It allows better planning and protection, and obviously, it’s the safest way to store Bitcoin. We’re doing that with a lot of our higher net worth clients who have considerable amounts of crypto.
Navigating Family Conversations
The challenge isn’t drafting documents; it’s having family conversations. We get involved in that a lot. Discussions about inheritance and end-of-life wishes are emotionally charged and can lead to conflict.
Framing the Conversation
The key is your approach. I think framing the conversation as an act of love and responsibility helps. Start with something like: “We should discuss this because I care deeply about the family, and I want to make things easier for you and your siblings down the line.”
This shifts from personal judgment to responsible planning. It’s about preventing surprises and friction. Having us as an intermediary or neutral party helps take the emotion out of the conversation.
Right Level of Transparency
Sometimes being transparent, but not overly detailed, is helpful. You don’t have to share account balances and map out what’s in each account.
If you think in terms of buckets, not necessarily mathematically equal, these conversations can be uncomfortable, so they bring up sensitive topics.
The goal is preventing surprises by fielding questions and having an open dialogue, not acting like a dictator. This makes the conversation more comfortable for families.
Wealth Transfer Strategies
For efficient wealth transfer, here are strategies I use most often with clients.
Annual Gifting
You can gift $18,000 per recipient per person annually without eating up your lifetime exemption. Over that amount starts to chip away at your lifetime exemption of $13.61 million as of 2024, but there’s no tax owed; a gift return must be filed.
When it’s most effective: reducing a taxable estate over time. For high-net-worth families, using some of this lifetime exemption helps kids buy houses and pay for education.
Example: a couple with $30 million in net worth gives $18,000 to each of their three kids and five grandkids; that’s $300,000 a year out of their estate with no taxes.
Grantor Retained Annuity Trusts (GRATs)
A GRAT is where you put appreciating assets like stock or business interest into a trust. You receive an annuity payment back over a set number of years (two to five years).
Any growth above the IRS hurdle rate (about 4.6% for 2024) passes to beneficiaries tax-free.
When it’s most efficient: when you expect significant asset appreciation. Pre-IPO stock, private equity, or founder shares could be great ways to pass wealth down tax-free. Also, during periods of high interest rate volatility, because GRATs can be reset and redeployed at different points.
Example: contribute $5 million of company stock to a three-year GRAT, assets grow at 10%, but the hurdle rate is 5%. That excess growth could be $800,000 passing tax-free to beneficiaries.
Custodial Roth IRAs
Kids need earned income (W-2 or 1099, not gifts or allowances). You can contribute the lesser of $7,000 or the child’s earned income.
This teaches kids financial concepts and is great for kids with part-time jobs because compounding over long periods is powerful.
These Roth assets are going to compound free of tax to astronomical levels. If your 16-year-old kid makes $6,000 in the summer, you can fund the Roth IRA for $6,000; it will grow at market rates of 7-8% annually and could be worth $100K by the time they’re 40, all tax-free.
We advise some clients that they can add their kids to their payroll. There are ways to very above board do this and get money into these Roth assets.
Teaching Financial Stewardship
I teach my kids and work with them. It’s never too young to start.
Starting Early with Real Money
We started with physical “banks” in their rooms (really a lock box where they have the key) to organize bills and coins. We used real money to make the lessons tangible.
Age-Appropriate Progression
As they’ve gotten older, we’ve layered in more structure: opening actual savings accounts (Chase First Savings and Capital One have good options), encouraging them to track spending, and talking openly about prices.
My 14-year-old works as a teacher’s assistant on Sundays for a small stipend, and we’ve had great conversations about what to do with that money, how much to spend, how much to save, and what it means to have earnings tied to effort.
Making It Real
Julie and I acknowledge the real cost of things: food at the grocery store, sneakers they want, and how inflation affects everyday choices. That awareness builds early habits.
We have them purchase things for themselves. That trip to Disney, everything they purchased was with their own money. They learn to earn, save, and spend.
Ultimately, I’m focused on helping them understand trade-offs, values, and long-term thinking. These things will translate into being “good” because they’ll have the right principles.
Update Your Estate Plan
Estate plans aren’t “set and forget.” At a minimum, I recommend reviewing an estate plan every 3-5 years. But certain life events absolutely require a revision.
Immediate Revision Triggers
- Getting married or divorced
- Having children (or grandchildren)
- Buying or selling a business
- Significant changes in net worth or assets
- Moving to a different state
- Death or incapacity of someone named in your documents (executor, trustee, guardian, etc.)
- Major changes in tax law (especially estate tax thresholds)
Regular Maintenance
Even if none of those events happen, accounts change over time, so it’s smart to revisit beneficiary designations regularly. As kids age, many clients want to update guardianship, trust provisions, or set up inheritance structures that align with their current values and risk tolerance.
The Integration Piece
Estate planning should support your wealth-building strategy. When we work with families on comprehensive planning, estate planning creates the foundation that makes everything else work better.
Think of it as creating clarity and confidence. When you know your family is protected and your wishes are documented, you can pursue growth opportunities with peace of mind. You can take calculated risks in business or investments because you’ve already addressed the fundamental protection issues.
Estate planning works alongside insurance and tax strategies to create comprehensive protection that enables growth in other areas of your portfolio.
The goal isn’t to perfect your estate planning. It’s to get it right enough that it protects your family and preserves your wealth without creating unnecessary complexity or cost.
Check out other chapters in my Smart Financial Moves Series here.