Estate Planning Guide for US High-Net-Worth Individuals

Imagine spending a lifetime building up your wealth, only for nearly half of it to vanish after you’re gone.

That means your family – the very people at the centre of your motivation for building a fortune in the first place – don’t get to enjoy the full fruits of your success.

Instead, a massive chunk of your wealth disappears into the coffers of the government.

Well, that’s precisely what will happen without careful estate planning. If you’re a US citizen and your estate crosses the US federal tax threshold, up to 40% of your legacy could go to the IRS instead of your heirs.

As of 2025, the federal estate tax kicks in at US$13.99 million, and while most Americans are unaffected, those who are face a tax liability of potentially millions.

On top of that, a handful of US states have their own inheritance taxes, meaning the tax risk grows even greater. Millions of dollars are at stake for high-net-worth individuals (HWNIs).

Is there a solution? Yes. Get ahead of the problem.

With forward thinking and smart planning, you can shield your assets, reduce your tax burden and ensure more of your wealth ends up where it belongs – in the hands of the people you care about.

In this in-depth guide to estate planning, the Nomad Capitalist team has created an estate planning checklist and outlined some options to help reduce the potential tax burden.

Bear in mind that this article is not professional tax advice, and Nomad Capitalist always recommends consulting a tax advisor for professional help.

But we can help you prepare a strategy. Find out more here.  

What is Estate Planning? 

Estate planning is the process of arranging how your assets – such as property, investments and cash holdings – will be distributed after your death.

A well-structured plan helps ensure your loved ones are financially secure, while minimising the legal complications. 

Moreover, as you reach retirement, it gives you the peace of mind that your posthumous wishes will be carried out exactly as intended.

It can be complicated and time-consuming to get your affairs in order, though, especially if you plan to take advantage of options for reducing estate tax.

Our checklist should make the process a little less overwhelming.    

Estate Planning Checklist 

1. Create an Inventory of Your Assets

An inventory of your physical and non-physical assets will help your executor distribute them as per your wishes without delay.

When listing physical assets, don’t forget sentimental items that you might want to leave to a specific person. 

Non-physical assets include financial accounts, life insurance policies, business shares, intellectual property and digital assets. You’ll need to provide your executor with instructions for accessing these assets.

2. Choose Your Beneficiaries

Your beneficiaries are the individuals, businesses or trusts that you wish to receive your assets after your death. 

These will be outlined in your will, but oftentimes also in instructions associated with your financial accounts. 

Your life insurance provider will always ask for details of your beneficiaries, for example. Sometimes, these instructions will override what’s written in your will, so it’s important to keep them updated if your wishes change.

It’s recommended to list contingent beneficiaries who will receive your assets in the case of your primary beneficiaries dying and you forget to update your wishes. 

3. Create a Will 

Your will is an official document outlining how you would like your assets to be distributed after your death. It also details other wishes, such as your desired guardianship of your children. 

It’s recommended that you write a will as soon as you gain any significant assets. 

Although there are do-it-yourself methods, hiring an estate planning lawyer will ensure your will is comprehensive and compliant with local laws. 

If you die without writing a will, your assets could be distributed according to intestacy laws, which might not reflect your wishes.  

4. Other Estate Planning Documents

• A living will outlines your preferences when it comes to end-of-life care.
• A power of attorney document outlines who can make personal, financial, medical or legal decisions on your behalf if you become incapacitated. 
• A healthcare power of attorney document specifically outlines your desired wishes about healthcare, and these can be used in situations where you’re unable to communicate them for yourself. These can also be outlined in a living will. 
• Beneficiary designations outline who you wish to be the beneficiaries of specific assets, and these can override whatever is written in your will. 
• A HIPAA release form grants a specific person access to your medical records.
• A trust is a legal agreement that appoints a trustee to manage assets on your behalf and distribute them to your beneficiaries after your death. There are many types of trusts, and there can be tax savings associated with using these. You’ll learn more about these below.

5. Start Gifting Your Assets

Gifting assets is a popular strategy for high-net-worth individuals to lower their net worth and estate tax liability.

Your lifetime gifting exemption is linked to your estate tax exemption (US$13.99 million in 2025). If you make a reportable gift, both exemptions decrease. For example, if you made a US$1 million gift to your son, both exemptions would drop to US$12.99 million. 

However, as per the current rules, you can donate up to US$19,000 worth of assets per person per year without reporting it to the IRS. 

In this case, your lifetime exemptions would remain unchanged. So, it can pay off to start giving away your assets in smaller increments each year. 

It’s best to start early even if you don’t have much to give away, as all gifts donated within three years of your death will still be liable to estate tax.

How to Reduce Your Estate Tax

Marital Transfers

You’ll be given an unlimited deduction on transfers made to your spouse either before or after your death, provided they’re also a US citizen.

This is arguably a stopgap solution for keeping your wealth in the family while avoiding estate tax. Your spouse will eventually be taxed on their estate, including whatever they inherited from you (assuming they don’t remarry and pass it on to their new spouse).  

If your spouse isn’t a US citizen and you want to transfer assets to them, there may be some work involved to avoid a big estate tax bill. 

That’s because your estate tax exemption and lifetime gift tax exemption do NOT apply when transferring assets to a non-US spouse. 

Instead, you’re given a  US$190,000 exemption and must pay estate tax on all transfers above that amount. 

This is a unique situation where being married is not tax-advantageous, as the exemptions don’t apply when passing assets to a friend or partner who is not a non-US citizen. 

Many married couples get around this issue by transferring their assets using a Qualified Domestic Trust (QDOT). 

Alternatively, you can transfer up to US$190,000 worth of assets per year to them tax-free while you’re still alive.  

Gift Your Assets

As mentioned, it’s possible to reduce your estate tax liability by giving away assets.

You can make annual gifts of up to US$19,000 worth of assets to someone without reporting it and lowering your tax exemptions, although gifts made within three years of your death remain taxable.

All charity donations, made either before or after your death, are tax-free and won’t affect your tax exemptions. Indeed, you can also benefit from income tax deductions by donating money or assets to charity. 

Distribute Your Assets Using a Trust

A trust is a legal agreement that can protect your assets, ensure they’re distributed correctly and reduce your estate tax liability. 

Many different types of trust can be created based on the identity of your beneficiaries. There are family trusts, charitable remainder trusts and special needs trusts, for example.

However, the most important factor when estate planning is whether the trust is revocable or irrevocable. 

In a revocable trust, you maintain control of your assets after transferring them, but they remain part of your estate for tax purposes. 

In an irrevocable trust, you surrender control of your assets. 

You can’t change the initial terms of the agreement. However, assets in an irrevocable trust are no longer considered part of your estate. The trustee will pass on your assets as instructed after your death, and no estate tax will be due.

Gift tax rules still apply when transferring your assets into an irrevocable trust. 

We recommend transferring assets to an offshore trust because of the extra protections this can offer. There can also be tax benefits, although US citizens will still have to report offshore trusts to the IRS. 

We do not recommend ‘hiding’ your offshore assets from the taxman. This is illegal, and it’s almost impossible to get away with. 

We help our high-net-worth clients to legally protect their assets and reduce their taxes by making use of offshore avenues. Learn more here.

Move to Avoid Being Taxed at the State Level

Twelve US states plus the District of Columbia charge estate tax. Each has its own tax rates and exemption thresholds.

If you’re a resident of one of these, you’ll be taxed on your worldwide assets. If you’re a non-resident, you’ll be taxed on SITUS assets within that state.

Six US states charge inheritance tax, so if your beneficiaries are residents there, it may be worth exploring the benefits of moving.    

Own US SITUS Assets Via a Blocker Foreign Corporation

If you’re a non-US citizen, you could still owe estate tax to the United States if you own US SITUS Assets. This includes US real estate and US stocks, among other assets situated in the United States.

If you’re considered domiciled in the United States, the US$13.99 million estate tax exemption still applies, even as a non-US citizen. 

However, if you’re a non-US citizen domiciled outside the US, your exemption drops to just US$60,000. 

Either way, you can avoid US estate taxes by holding your assets within a foreign blocker corporation. 

If you owned US real estate through a British Virgin Islands company, for example, you’d only pass on the shares in the holding company to your heirs after your death. The property ownership wouldn’t change. 

In this case, you’d pay no estate tax because foreign shares aren’t considered US SITUS Assets and the British Virgin Islands is one of many jurisdictions that doesn’t charge estate tax. 

There are alternatives to blocker foreign corporations, such as an irrevocable trust, although this option is less popular due to the loss of control over your assets. 

Should You Renounce Your US Citizenship?

There are some cases where renouncing your US citizenship can eliminate your estate tax liability, but others where it may increase the amount of tax due. 

Yes, renouncing your US citizenship is the only way to ensure your estate isn’t reviewed for tax liability. 

If you’re extremely wealthy, it might seem like it’s the only way to protect your estate from the hands of the IRS, but that’s not necessarily true.   

For starters, if your estate includes US SITUS assets, these assets are still liable for estate tax in the United States, even if you’re a non-US citizen. 

Worse yet, if you’re a non-US citizen domiciled outside the US, your estate tax exemption drops from US$13.99 million to just US$60,000. 

And there’s more to consider if you qualified as a ‘covered expatriate’ after renouncing your US citizenship.

In this case, your US beneficiaries will face a 40% inheritance or gift tax under IRC Section 2801. This is a new law introduced in 2025, and it’s the only scenario where the recipient of a gift or inheritance is taxed at the federal level.

Covered expatriates are also liable to pay an exit tax after renouncing their US citizenship. 

So, it’s important to consider all the tax consequences before renouncing. 

While this would open the door to paying zero estate tax in a different country, the US government has other ways to claim its share of your estate. 

Estate Planning for US Persons: FAQs 

Get Started With Estate Planning

Optimists will always believe they have many years before they have to think about estate planning, but that won’t always be the case. 

The time to start organising your financial affairs, with your legacy in mind, should happen around retirement age at latest.

In fact, if you have significant assets and loved ones who you’d like to pass on as much as possible, the best time to start your estate planning is now.

Getting the right advice from the start can save you lots of time, effort and money. Rather than relying on local providers, it pays to have impartial advice from international experts with no specific allegiance to any one jurisdiction.

That’s just one of the reasons people choose Nomad Capitalist – we have direct experience across multiple jurisdictions and will help you weigh up the pros and cons of each. 

So, remove all the guesswork, skip past the gatekeepers and speed up the entire process by reaching out and letting us help you go where you’re treated best’.