For high-net-worth individuals and families, thoughtful tax planning is not just a financial necessity — it’s a cornerstone of preserving wealth across generations. As estates grow in size and complexity, so do the legal and tax-related considerations. Without a tailored plan, even well-intentioned families may find themselves facing avoidable taxes, costly probate proceedings, or disputes over guardianship or conservatorship.
At the Law Offices of Ann Marshall Robbeloth, we understand that estate planning for high-net-worth individuals is about much more than reducing taxes. It’s about ensuring your assets are protected, your wishes are honored, and your loved ones are cared for. Our comprehensive approach includes the creation of Revocable and Irrevocable Trusts, Wills, Durable Powers of Attorney, and Advance Health Care Directives — all coordinated through family meetings and personalized counsel to fit your values and legacy.
In this article, we explore the key questions and strategies involved in high net worth tax planning, helping you understand how the right legal tools — combined with experienced guidance — can make all the difference.
What Is the Tax Strategy for High Net Worth Individuals?
High-net-worth individuals (HNWIs) face a unique set of financial challenges — and opportunities — when it comes to tax planning. As income and asset values increase, so does exposure to federal estate taxes, income taxes, capital gains taxes, and even gift taxes. An effective tax strategy is not only about reducing this burden; it’s about protecting wealth, maintaining control, and ensuring a smooth transfer of assets to the next generation.
At the Law Offices of Ann Marshall Robbeloth, we help clients build tax strategies that are integrated into a broader estate planning framework. Our approach is customized to reflect each client’s family structure, business interests, and philanthropic goals. Key components of high-net-worth tax strategies often include:
- Establishing Irrevocable Trusts – Move appreciating assets out of your taxable estate, while retaining flexibility and control through carefully drafted trust terms.
- Lifetime Gifting Strategies – Use the annual gift tax exclusion and lifetime exemption to reduce estate size while transferring wealth to heirs.
- Charitable Giving – Take advantage of charitable remainder trusts (CRTs), donor-advised funds, and direct donations to reduce income taxes and support causes you care about.
- Capital Gains and Investment Planning – Optimize timing and structure of investments to benefit from long-term capital gains rates.
- Business Succession Planning – Use family limited partnerships or other structures to reduce tax liability and prepare the next generation for leadership.
A successful tax strategy often includes regular family meetings to ensure that all key stakeholders understand the plan and are prepared to carry it forward. Our office frequently coordinates with financial advisors, CPAs, and trust administrators to ensure seamless implementation and compliance across all aspects of your estate.
Tax planning is not a one-time event — it’s an ongoing process that evolves with your life, your wealth, and the law. With the right legal guidance, you can minimize your tax exposure while building a legacy that reflects your values.
What Is Considered High Net Worth for Estate Planning?
The term “high net worth” doesn’t have a strict legal definition, but in the context of estate planning, it typically refers to individuals or families with $1 million or more in investable assets. However, from a tax planning perspective, the more relevant benchmark is the federal estate tax exemption, which determines whether your estate may be subject to significant taxation at death.
As of 2025, the federal estate tax exemption is expected to decrease to approximately $6 million per individual (down from $13.61 million in 2024). For married couples, that means a combined exemption of roughly $12 million. Any portion of your estate that exceeds this exemption could be taxed at a 40% federal estate tax rate. For families with significant real estate holdings, business interests, or investment portfolios, this threshold can be crossed more easily than many realize.
Even if your estate does not exceed the federal exemption, it’s still critical to engage in estate planning. In California, for example, there is no state estate tax, but the probate process can be time-consuming, expensive, and public. Without proper planning, your estate may be subject to court-supervised probate, leading to delays and increased costs.
In addition to estate taxes, high-net-worth families must also consider:
- Guardianship and Conservatorship – Who will manage your finances or care for your minor children or incapacitated loved ones if you’re unable?
- Elder Care Planning – How will long-term care be managed, and what legal tools are in place to support aging family members?
- Beneficiary Coordination – Are your trust and non-trust assets aligned to avoid conflict or unintended outcomes?
At the Law Offices of Ann Marshall Robbeloth, we ensure that your estate planning strategy addresses more than just taxes. We help clients preserve control, avoid court intervention, and communicate their wishes clearly — often through structured family meetings. Whether your estate is modest or complex, having a plan in place gives you and your family peace of mind.
What Are the Tax Loopholes for the Rich?
When people talk about “tax loopholes for the rich,” they’re usually referring to legitimate, IRS-approved strategies that high-net-worth individuals use to minimize their tax liabilities. These strategies aren’t about evading taxes—they’re about smart, legal tax planning that leverages the nuances of tax law to protect wealth.
Some of the most common tax strategies used by wealthy individuals include:
- Grantor Retained Annuity Trusts (GRATs): These trusts allow you to transfer future appreciation of assets to heirs while paying minimal gift tax upfront. GRATs are powerful tools for preserving family wealth across generations.
- Family Limited Partnerships (FLPs): FLPs enable families to transfer ownership interests in businesses or investment portfolios at discounted values, reducing gift and estate tax liabilities.
- Intentionally Defective Grantor Trusts (IDGTs): With IDGTs, you can “freeze” the value of your estate while the trust assets grow outside of it. The grantor pays income taxes on trust earnings, effectively allowing the trust to grow tax-free.
- Charitable Remainder Trusts (CRTs): CRTs provide income streams to the grantor or beneficiaries while reducing income taxes, and at the end, the remaining assets go to a charity of your choice.
- Dynasty Trusts: These trusts allow wealth to be passed down through multiple generations without incurring estate taxes at each generational transfer.
At the Law Offices of Ann Marshall Robbeloth, we specialize in helping clients establish and maintain these sophisticated trust structures. Our role as experienced trust administrators ensures compliance with tax laws while maximizing your benefits. We also coordinate family meetings to explain how these strategies fit into your overall estate plan and to prepare heirs for their roles.
Using these strategies effectively requires careful legal drafting and ongoing management. We work closely with your financial and tax advisors to tailor plans that align with your goals and comply with evolving tax regulations.
How to Avoid the 32% Tax Bracket
The 32% federal tax bracket in 2025 applies to individuals earning over $191,951 (single filers) and married couples filing jointly earning more than $383,901. Avoiding or minimizing income within this bracket can significantly reduce your overall tax liability.
Here are several strategies high-net-worth individuals use to manage their taxable income and stay below or reduce the impact of the 32% tax bracket:
- Maximize Tax-Deferred Retirement Contributions: Contributing to retirement plans such as 401(k)s, IRAs, and other qualified plans reduces your current taxable income while growing your investments tax-deferred.
- Charitable Giving: Donations to qualified charities can be deducted from your taxable income. Establishing donor-advised funds or charitable remainder trusts can further enhance these benefits.
- Income Deferral: Deferring bonuses, business income, or capital gains to future years can help smooth income and avoid bumping into higher tax brackets.
- Long-Term Capital Gains Planning: Since long-term capital gains are taxed at lower rates than ordinary income, focusing on long-term investments can help reduce taxable income.
- Use of Tax-Advantaged Accounts: Health Savings Accounts (HSAs), 529 education savings plans, and Flexible Spending Accounts (FSAs) provide tax benefits that reduce taxable income.
While completely avoiding the 32% bracket may not always be practical for high earners, these strategies can reduce taxable income within or above the bracket. At the Law Offices of Ann Marshall Robbeloth, we help clients tailor these approaches within their broader estate planning and tax strategies to maximize benefits.
We also recognize the importance of coordinating these efforts with family meetings and planning for potential future needs such as guardianship, conservatorship, and elder care—all vital parts of a comprehensive wealth and legacy plan.
How Do Rich People Reduce Taxable Income?
Wealthy individuals often use a combination of legal and strategic methods to reduce their taxable income, thereby preserving more of their wealth. These techniques go beyond simple deductions and involve sophisticated planning that integrates with broader estate planning goals.
Here are some common ways high-net-worth individuals reduce taxable income:
- Trust Income Shifting: By distributing income from trusts to beneficiaries who may be in lower tax brackets, families can reduce overall tax burdens. Effective trust management by a skilled trust administrator is critical for maximizing these benefits.
- Real Estate Depreciation: Owners of investment properties can deduct depreciation expenses, reducing taxable rental income. This can provide substantial tax sheltering for real estate investors.
- Business Deductions and Credits: Many wealthy individuals own or operate businesses, allowing them to deduct legitimate business expenses such as retirement plan contributions, health insurance premiums, and operational costs.
- Tax Loss Harvesting: Selling investments at a loss to offset gains in other areas of the portfolio helps minimize capital gains taxes.
- Investing in Qualified Opportunity Zones: This strategy allows investors to defer and potentially exclude capital gains by investing in designated economically distressed communities.
Reducing taxable income requires careful coordination, especially when multiple family members, trusts, and entities are involved. The Law Offices of Ann Marshall Robbeloth assists clients in navigating these strategies while preparing for future transitions through family meetings and ensuring legal safeguards such as guardianship and conservatorship provisions are in place if needed.
By combining income reduction tactics with comprehensive estate planning, you can better protect your assets today while securing your family’s financial future.
How Much Income Do You Need for the 37% Tax Bracket?
In 2025, the highest federal income tax bracket of 37% applies to individuals earning more than $609,350 and married couples filing jointly with incomes exceeding $731,200. For those in this bracket, tax planning becomes especially important to manage the impact of high marginal tax rates.
But it’s important to remember that the effective tax rate—the actual percentage of your income paid in taxes—can be even higher when factoring in:
- State income taxes (which vary by state, but can be significant in places like California)
- Net Investment Income Tax (NIIT): An additional 3.8% tax on investment income for high earners
- Medicare surtaxes on wages and self-employment income
To reduce taxable income and lessen the burden of the 37% tax bracket, many wealthy individuals utilize advanced tax and estate planning tools, such as:
- Spousal Lifetime Access Trusts (SLATs): These trusts allow one spouse to transfer assets out of the estate while still providing indirect access to those assets.
- Charitable Lead Trusts (CLTs): Providing income to charities for a set period, with the remainder going to heirs, reducing estate and gift taxes.
- Business Entity Restructuring: Using S-corporations, LLCs, or partnerships to optimize tax treatment of business income.
- Strategic Gifting: Transferring assets during lifetime to reduce estate size and future tax exposure.
Additionally, thoughtful planning around elder care, including powers of attorney and advance health care directives, along with clear guardianship and conservatorship arrangements, ensure your wealth is protected and your family is cared for even if incapacity occurs.
At the Law Offices of Ann Marshall Robbeloth, we guide clients through these complex decisions, helping to build tax-efficient estates that balance growth, protection, and legacy.
How We Help: Comprehensive Estate Planning and Tax Strategies
High net worth tax planning is more than just minimizing taxes — it’s about protecting your legacy, providing for your loved ones, and ensuring your wishes are clearly communicated and legally upheld. At the Law Offices of Ann Marshall Robbeloth, we combine deep legal expertise with personalized service to guide you through every step of this complex process.
Our comprehensive services include:
- Estate Planning tailored to your unique financial and family circumstances
- Establishing and managing Trusts, with skilled Trust Administrators ensuring compliance and effective administration
- Handling Guardianship and Conservatorship to protect vulnerable family members
- Planning for Elder Care needs and related legal arrangements
- Navigating the Probate process to minimize delays and costs
- Facilitating Family Meetings to foster clear communication and consensus
We understand that each family’s situation is different. That’s why we prioritize ongoing collaboration, adapting your plan as your life, assets, and the law evolve.
Take the Next Step
If you are ready to safeguard your wealth and plan confidently for the future, the Law Offices of Ann Marshall Robbeloth are here to help. Contact us today to schedule a consultation and start building a tax-smart, legally sound estate plan that reflects your values and goals.
