HNWI Legal Strategies in California for High-Net-Worth Individuals in Real Estate Investment and Wealth Preservation

High-net-worth individuals (HNWI) are increasingly investing in a maturing real estate market. HNWI legal strategies in California for high-net-worth individuals continue to evolve. The state’s commercial and investment landscape is rapidly changing to accommodate increased activity and heightened regulatory demands. Business owners, private investors, and family offices need a forward-looking legal strategy to protect capital and preserve long-term flexibility.

In California, issues may focus on the Silicon Valley and Sand Hill Road submarkets in Menlo Park, or the ultra-high-end residential real estate markets around Beverly Hills’ Trousdale Estates neighborhood and The Bird Streets neighborhood in West Hollywood.

We may also work with wealthy individuals and families focused on tech-fueled liquidity events in San Francisco, especially around the South of Market (SoMa) and Embarcadero neighborhoods, or luxury developments and real estate investment on the coast in Newport Coast, Crystal Cove, and Dana Point in Orange County, among other markets.

About Us

Scheer Law Group, LLP (SLG), is a multi-attorney law firm that represents lenders, mortgage brokers, business owners, and investors across California. SLG’s Orange County office and locations throughout California provide high-quality representation to clients in creditor bankruptcy, real estate litigation, real estate transactions, and business law.

The firm’s experienced team of legal professionals is dedicated to serving clients with superior service, strategic legal advice, and comprehensive support to help clients navigate California’s complex commercial and financial legal environments.

Entity Structuring Strategies for Asset Protection

HNW investors commonly use layered entities to protect real estate assets and minimize liability. Asset segregation becomes viable through the use of limited liability companies (LLC), limited partnerships (LP), and series that protect valuable portfolios from litigation risks and creditor exposure.

California law is strict about entity formation and maintenance requirements, including operating agreements, management structures, and other corporate formalities. Effective entity planning is one way to keep commercial real estate assets separate from unrelated business risk, lender disputes, and claims arising out of commercial litigation or property disputes.

California Risk Mitigation for High-Value Transactions

California’s commercial real estate market is a highly regulated industry with complex zoning, environmental laws, and stringent disclosure obligations. Transaction risk for HN investors often arises from incomplete due diligence, ambiguous contracts, or unclear title research.

A California commercial real estate lawyer can help investors protect their negotiating position, prevent long-term liabilities, and ensure regulatory compliance. These attorneys are skilled in acquisition and disposition agreements, the structuring of joint ventures, reviewing liens and titles, negotiating and drafting leases, and operating agreement review and drafting, as well as investor and lender compliance.

All commercial and investment agreements should be professionally prepared and carefully reviewed to avoid disputes that could result in costly or prolonged litigation.

Tax-Planning and Wealth Preservation Strategies

A 2025 wealth and asset-allocation study of high-net-worth investors finds that HNWIs average 17% of their portfolios in real estate. The 2025 analysis illustrates that HNWIs allocate 47% to public equities, 15% to private companies, 17% to real estate, and 8% to alternatives, while cash/bonds or other financial products make up the remaining percentage, which confirms real estate as an essential asset category.

California’s tax environment can be challenging for high-net-worth investors. Legal and tax strategies may include:

• Using 1031 exchanges to defer capital gains on commercial properties
• Opportunity Zone investing
• Portfolio rebalancing in different entities
• Family succession planning through business entities
• Segregating assets to maximize depreciation

Attorneys play a critical role in forming the transactional structures that facilitate tax planning. Although lawyers do not give tax advice, the goal is to structure transactions and entities that support long-term wealth preservation and growth. As such, the law firm and tax advisors can work closely with each other and the client to ensure that all aspects of a real estate transaction or investment strategy meet regulatory requirements.

Avoiding Litigation

High-net-worth investors are frequently more vulnerable to lender disputes, construction claims, partnership disputes, title defects, and regulatory compliance issues. A successful litigation prevention plan includes:

• Complete contractual safeguards
• Modernized reporting and compliance systems
• Clearly stated provisions for resolving disputes
• Early evaluation of possible claims

When disagreements do occur, knowledgeable attorneys can help clients navigate real estate litigation tactics that reduce business interruption, maintain value, and effectively settle disputes.

HNW Investors Should Hire a Commercial Real Estate Lawyer

Businesses and investors benefit from working with experienced counsel from a California commercial real estate attorney who understands the real estate and wealth preservation needs of HNWI investors. A commercial real estate lawyer can guide investors through entity selection, contract negotiation, regulatory compliance, and risk mitigation. Professional guidance is critical to protecting portfolio value and ensuring that real estate transactions are clear and well-drafted.

FAQs

What Is a High-Net-Worth Individual in California?

In California, a high-net-worth individual (HNWI) is usually considered to be someone with investible assets of at least $1 million, excluding their primary residence. However, when it comes to the commercial markets in California, this definition is generally higher because the asset values and investment thresholds are different.

Many banks and financial advisors in California define their clients as high-net-worth when they have $5 million or more in capital.

What Is the Strategy for High-Net-Worth Individuals?

HNWI planning generally centers around asset protection, tax-efficient structuring, and wealth preservation for the long term. This can involve layered business entities, diversified real estate, risk-managed transactions and integrated legal, and financial and operational planning.

In California, strategic entity formation, compliance management, and well-structured commercial real estate transactions are important tools for capital preservation and sustainable portfolio growth.

How Do I Deal With HNI Clients?

HNWI service must be executed with accuracy and discretion and with a sophistication to meet the needs of these clients and their transactions. An advisor should be able to offer guidance and transaction or investment solutions, including up-front and ongoing risk assessment, customized transaction or investment advice, and advice on how to meet or explain regulatory requirements.

What Is the 5-by-5 Rule in Estate Planning?

The 5-by-5 rule is a withdrawal provision commonly found in some trusts that permits the beneficiary to take out the greater of $5,000 or 5% of the trust’s value each year. It keeps the trust from being a general power of appointment and thus preserves asset-protection features, but still provides some limited access to the funds. It is a common component of advanced estate-planning techniques for high-net-worth individuals.

Contact Scheer Law Group, LLP, Today

For your legal and financial needs, hire a commercial real estate lawyer at Scheer Law Group, LLP. We can help you protect your assets and claims. Contact us today for a consultation.