We see wealth planning as the sum of arrangements to grow, preserve, protect, and transfer wealth. It comes along with legal, financial, and tax planning, but in our modest opinion, the human element for everyone involved deserves at least equal recognition. The entire process around wealth planning strategies is about you and your loved ones' future and should give peace of mind to everyone.
If you are an entrepreneur, business leader, artist, investor, or athlete, you will have a strategy in place to navigate the challenges in your business. And if you invest, you should be familiar with strategic and tactical asset allocation. But when it comes to wealth planning, all too often, wealth owners do not tackle the topic with individualized wealth planning strategies. And if things become turbulent, you'll be right in the eye of the storm and events will take over control. So let's have a look at how you can develop your wealth planning strategy in a few steps.
Starting with a clear map of all your assets will help you find the route of wealth planning. Along with the detailed catalog, you should assess which assets you want to allocate to which goal. And by thinking in scenarios, you can already stress-test if your goals are achievable with the type of assets you own. It's your wealth, and you're best qualified for this. You can then, later on in the process, have your allocation challenged by an expert. With the inventory, you also prepare for discussions with the professionals when you're ready.
How to define individualized wealth planning strategies?
This is not rocket science and there's no standard approach. Just start with where you are and assess what's in place and could potentially contribute to your plan. No plan is also a plan if you are comfortable with letting things just happen. However, you should be aware of what it means for you and your successors and heirs in detail. In all other cases, evaluate which areas you may need to enhance the current situation and where you may need specialist advice. Get to a conclusion on where you stand in regards to your wealth planning strategy: the strengths, and weaknesses, implications, and assumed outcomes. Then discuss your situation with your advisor.
What's essential for you?
You may want to secure your estate, protect your assets, maintain control and flexibility, save taxes, and be ready for moving residence whenever things change. No matter how many needs you have, make sure you are clear on your three top goals. This will automatically separate the must-have from the nice-to-have and help you to move forward with purpose.
In this part of the discussion with your professional advisor, consider your values, circumstances, and time horizon and the potential impact on your business and family situation. When do you want to hand over business leadership? Where you want to live? How should your income stream look like? Who should benefit from your wealth? How should it be distributed? Is your situation merely domestic, or do you have cross-border elements to consider? How flexible do you need to be in your arrangements? Consider forced heirship rules if applicable, tax implications, financial needs, and the nature of your assets.
You may want to involve your family members for their opinion since they will be the primary beneficiaries of your legacy. Wealth planning is a results game, and heirs and successors will not appreciate the best intention if not delivering positive outcomes. At this stage, there's no need to jump to conclusions regarding the tools or solutions to implement. What you want to obtain is a clear perspective of your underlying motivations and needs.
Define objectives with an end in mind
The discussion with your advisor needs to have an end in mind. How do the target inheritance planning, financial planning, and wealth structures need to look like? You should have a clear distinction between business and private wealth and its destiny. Furthermore, you should define what the wealth planning strategy needs to achieve for you during your lifetime and for your successors and heirs after it. Consider also the what-ifs along the journey as things may change and that's why you already need to consider alternatives.
To keep things simple and effective you should define a core wealth planning arrangement that should remain stable and align with your wants and pressures. For instance, you can then integrate satellite arrangements that allow for more flexibility over time. You could do this with a will and irrevocable trust, ensuring that your loved ones are on the safe side and integrate a life insurance policy and a revocable trust that adapts to changing circumstances.
Monitor performance and adapt
It's crucial to check your wealth planning strategy regularly. Changes in the area of family, assets, and external factors such as regulation and laws can have a substantial impact. If you followed the above-outlined steps, your core wealth planning strategy should not be affected dramatically, but your satellite arrangements may need adjustment. Again, discuss the what-ifs with your advisor and test your policy against them. Always take a comprehensive approach to review things. With that, your wealth planning arrangement should weather life events and changing circumstances. And if you involve the beneficiaries of your strategy in the discussion, they may also enjoy peace of mind knowing what the future will hold for them.
To sum up
You are in control of the wealth planning process, and delegating it to experts and advisors will not lead to individualized results. Neither will standard products and services. Look for trusted advisors focusing on your interests and make sure they understand your situation, needs, and objectives. By laying the groundwork and following a structured approach, your wealth planning arrangement should weather life events and changing circumstances.
If you involve your family in the discussion, they may also enjoy peace of mind. Wealth planning is also a human process, and a structured approach involving the relevant parties creates an environment of ease and trust. Technical considerations are essential but should not prevail in wealth planning strategies. Select your advisors carefully and don't let them jump to conclusions since you are not after quick wins but a reliable result. When to start all of this? Quite simple: Now it is better than next week.