12 Aug The #1 Mistake Private Equity Executives Make in Estate Planning—And How to Avoid It

Let me paint a scenario for you.

You’ve spent your career rising through the ranks of private equity. You’ve closed deals, multiplied investor capital, accumulated carried interest, equity, and deferred comp structures. You’ve built serious wealth.

But here’s the question no one in your office — or your inner circle — is asking:

If you die tomorrow… will your spouse and children know how to handle it all?

The truth is, they probably won’t.
And the ugly reality? Most estate plans written for people like you aren’t worth the paper they’re printed on.

Why?

Because the #1 mistake private equity executives make is this:

They treat estate planning like a checklist item—and they hire lawyers who don’t understand how their wealth actually works.

That mistake can cost your family millions.  And worst of all—it can leave your wife and kids staring at a stack of fund agreements, trust documents, and IRS letters wondering:
“What do we do now?”

A Word of Warning: Complexity Without Clarity Is a Ticking Time Bomb

As a PE executive, your wealth isn’t simple.

It lives in capital commitments, K-1s, side letters, fund carry, deferred comp, co-investment vehicles, and bespoke liquidity events.

Yet most estate plans drafted for professionals like you treat your wealth like it’s made up of bank accounts and a 401(k). They’re generic. Cookie-cutter. Blind to the nuances that define your financial world.

Here’s what that means:

• Carried interest left to your spouse or kids could be taxed into oblivion—when it could have been gifted or frozen years earlier.
• Deferred comp could become inaccessible, or worse—create unexpected income tax events post-mortem.
• Lack of clarity around fund interests and co-investment rights could spark conflict among heirs.
• Your estate may lack the liquidity to pay taxes, forcing asset sales at inopportune times.

This is the quiet disaster waiting to unfold in most PE households.
And unless you fix it, your loved ones may pay the price long after you’re gone.

Estate Planning Is NOT One-Size-Fits-All

Let’s get one thing straight: the guy who built a W-2-based estate plan for your dentist friend or golf buddy is not qualified to protect what you’ve built.

Private equity wealth requires a very specific playbook.

You need an attorney who understands:

• The structure and timing of carry payouts and how to move them into trusts before they appreciate
• The IRS implications of gifting illiquid fund interests—and how to freeze their value using GRATs, IDGTs, and FLPs
• How to create generation-skipping trusts that shield your wealth from estate tax for your children’s children
• How to integrate your family limited partnerships, trust structures, and entity holdings into a cohesive estate plan
• How to ensure your spouse and trustee can access and actually manage what you leave behind

This isn’t about documents. This is about multi-generational strategy.

Your Wealth Can Build a Legacy—or a Legal Nightmare

Let’s bring it back to you.

You’ve spent your life solving complex problems, delivering returns, building something extraordinary. But if you don’t apply that same level of foresight to your estate plan, your family could inherit:

• A tangled mess of tax obligations
• Frozen or inaccessible assets
• Court battles between heirs
• IRS audits triggered by poor documentation
• And worst of all… the feeling that you left them unprepared

And yes—your family will remember how you left things, not just what you left.

Imagine your wife scrambling to understand fund agreements.
Imagine your children arguing over who gets what—and how.
Imagine your partners fielding calls from your estate’s attorney because no one knows how to unwind your interests.

This is the cost of working with the wrong advisor.

How to Avoid It—and Protect Everything You’ve Built

Here’s what smart private equity executives do instead:

• They hire a legal team that understands carried interest, fund structures, and high-stakes tax strategy
• They create legal structures that allow heirs to inherit, manage, and grow the family wealth without conflict or confusion
• They coordinate their estate plan with their fund documents, business interests, and tax team
• And most importantly—they don’t leave their family guessing

You’ve Built It. Now Protect It.

At Garza Business & Estate Law, we don’t serve everyone.

We work with a select number of high-net-worth families and private equity executives each year—those who understand that estate planning is not a formality. It’s a strategy.

We help you:

• Build structures that grow and protect your legacy
• Eliminate tax exposure and unnecessary risk
• Ensure your wealth passes with clarity, control, and purpose

If you’re ready to work with legal advisors who speak your language and understand the complexity of your assets, apply to work with us here: