High net worth has different definitions depending on who is using the term. For self-made wealth, the thresholds that trigger asset protection concerns may differ from inherited wealth. Financial institutions, wealth managers, and legal professionals each use different benchmarks. Understanding where you fall helps determine what level of planning is appropriate and when asset protection becomes relevant for those who have built their own wealth.
Common Definitions
The financial industry uses several tiers to categorize wealth.
High net worth typically means one million dollars or more in liquid or investable assets, excluding the primary residence. Very high net worth generally starts at five million dollars in investable assets. Ultra-high net worth begins around thirty million dollars. Mass affluent describes those with one hundred thousand to one million dollars.
The SEC defines accredited investors as having either one million dollars in net worth excluding the primary residence, or annual income of two hundred thousand dollars individually or three hundred thousand dollars with a spouse for the past two years with expectation of continuation. This legal threshold determines eligibility for certain investment opportunities.
Private banking thresholds vary by institution but most require one to five million dollars minimum. Family offices typically serve clients with twenty-five million dollars or more.
These definitions focus on liquid and investable assets. They often exclude primary residences, business equity that is not readily marketable, and sometimes retirement accounts. The distinction between inherited and non-inherited wealth is not usually part of the definition itself, but it matters significantly for asset protection planning.
Why Non-Inherited Wealth Faces Different Risks
Self-made wealth has characteristics that create different protection needs than inherited wealth.
Non-inherited wealth is often tied to business ownership or professional practice. It may be concentrated in illiquid assets like business equity or real estate. The person who built it typically has ongoing liability exposure from the activities that created the wealth. And they are less likely to already have trust structures in place.
Business owners face operational liabilities daily. Professionals like physicians, attorneys, and real estate developers face malpractice and professional liability. Real estate investors face premises liability. Active wealth builders are actively creating risk through the same activities that build their net worth.
Inherited wealth arrives differently. The assets often already sit in trust structures established by the prior generation. The recipient typically has no liability connected to the assets themselves. Professional management and family governance may already exist. Protection structures are often already in place.
The implication is that self-made wealth often needs asset protection earlier in the accumulation process. You cannot wait until the wealth is complete to protect it because the activities creating the wealth also create the exposure.
When Asset Protection Becomes Relevant
The decision to implement asset protection is not purely about hitting a net worth number. Liability exposure matters as much as the size of your estate.
A physician with five hundred thousand dollars in assets may need protection more urgently than a retiree with two million dollars. The physician faces malpractice exposure every day. The retiree faces minimal liability. A business owner with modest current net worth but significant operational risk may benefit from protection structures that would be unnecessary for someone with higher net worth but no liability exposure.
As practical thresholds, five hundred thousand dollars or more in assets beyond retirement accounts and home equity makes asset protection worth considering. At one million dollars, there is a strong case for formal planning. At two million dollars and above, asset protection should be part of comprehensive financial planning. For business owners and professionals, liability exposure may justify planning regardless of current net worth.
Certain events trigger the need for protection planning beyond net worth thresholds. Starting or expanding a business increases exposure. Entering a high-liability profession creates ongoing risk. Acquiring rental real estate adds premises liability. A significant liquidity event like a business sale, inheritance, or legal settlement creates assets worth protecting. Marriage raises questions about protecting assets from potential divorce.
Strategies by Wealth Level
Different wealth levels call for different approaches.
Between five hundred thousand and one million dollars, the focus should be on maximizing retirement account contributions since these accounts are generally creditor protected. Proper liability insurance including umbrella policies provides the first layer of defense. Basic LLC structures for business activities and real estate separate personal assets from business risk. A DAPT may be appropriate if liability exposure is significant.
Between one million and five million dollars, formal asset protection planning becomes clearly cost-effective. A DAPT can protect liquid assets. LLC and family limited partnership structures work for business interests and real estate. Planning should coordinate asset protection with estate planning. A private family trust company is typically premature at this level given the administrative requirements.
Above five million dollars, comprehensive planning integrates asset protection with estate and tax planning. A DAPT combined with dynasty trust features protects assets across generations. Wyoming’s private family trust company structure provides family control without outside institutional trustees. Multiple entity structures may be appropriate. Offshore options become relevant for some situations.
At the ultra-high net worth level of twenty-five million dollars and above, family office level planning applies. Multi-jurisdictional structures may be warranted. Sophisticated trust arrangements address both domestic and international considerations. Full integration of asset protection, estate, tax, and business succession planning is essential.
Common Mistakes Self-Made Wealth Builders Make
Several patterns undermine protection for those building their own wealth.
Waiting too long is the most common mistake. Building wealth without protecting it leaves everything exposed. The thinking that asset protection can wait until there is more to protect ignores that the activities creating wealth also create liability.
Focusing only on business success without protecting personal assets is equally problematic. A valuable business provides no protection if personal assets remain exposed. Assuming a business entity alone provides sufficient protection misunderstands how liability works.
Underestimating liability exposure leads to inadequate planning. The fact that you have never been sued does not predict the future. One lawsuit can threaten everything you have built.
Over-relying on insurance creates false confidence. Insurance has limits, exclusions, and coverage disputes. Insurance companies have financial incentives to deny claims. Asset protection provides a backup when insurance fails or proves insufficient.
Conflating net worth with protected net worth may be the most dangerous mistake. High net worth on paper means nothing if most assets are exposed to creditors. The goal is protected net worth, not just accumulated net worth.
Building Protection as You Build Wealth
The right approach integrates protection with wealth building from an early stage.
Use LLCs for business activities and real estate from the start. Maintain adequate liability insurance at all stages. Establish a DAPT when liquid assets justify the cost, typically around five hundred thousand dollars or more. Update planning as net worth grows and circumstances change.
Wyoming offers particular advantages for wealth builders. Its single-member LLC charging order protection is stronger than most states. The private family trust company structure provides family control as wealth grows. No state income tax applies to trust income. The DAPT statute offers a two-year waiting period that can be shortened to one hundred twenty days through creditor notice.
For guidance on Wyoming asset protection structures appropriate for your wealth level, consider consulting Mark Pierce and Matt Meuli at Wyoming Asset Protection Attorney.