6-minute read
If you are reading this, there's a good chance that you made a fortune. Great news. But, now it's time to define the role of wealth in your life - irrespective of which stage of your life you are in. Whether you have already set plans in motion, or are yet to do so, here's our seven-step guide:
DEFINE YOUR NEEDS. It may sound obvious, but you should have a clear priority of needs. 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 goals and help you to move forward with purpose.
DO AN INVENTORY OF YOUR ASSETS. A clear map of all your assets will help you to find the route of wealth planning to take. 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.
SELECT YOUR TEAM OF EXPERTS. Your private banker is rarely a legal expert in wealth, tax, and estate planning. The same applies most probably for your corporate counsel. So, make sure to look for experts in their field who have international expertise and experience. If your assets are in several jurisdictions, you may also need to obtain local legal and tax advice. As a minimum, you should have a legal and tax expert for each jurisdiction. You may also want to retain other experts such as coaches and strategists, and if complex international project management is not your business, you may want to hire an expert in this field.
UNDERSTAND. Whatever wealth planning tool you want to use, make sure that you understand it in detail. To sign a trust deed or life insurance policy without knowing what's in it precisely can be a decision you may regret. Let your advisors and providers map out the structure and explain every detail; it's their job, and by the way, a good test of their empathy for your needs. Only when you are confident with every aspect of the tools and documentation move on in the process.
DIVERSIFY. No doubt, you already diversify your investments and have an eye on counterparty concentration risks in your portfolio. So why should you want to buy a life insurance policy or trust from your custodian bank? Because it's convenient? It will only be advantageous for the bank since it will make it more difficult for you to leave them for another custodian. You may also want to diversify with tools such as trusts, partnerships, holding companies, and life insurance policies for different assets. After all, we all know what happens if we put all our eggs in one basket.
KEEP IMPLEMENTATION SIMPLE. It may sound obvious, but simple works, while complicated remains complicated throughout the entire life-cycle. If your needs are clearly defined from the outset, you should maintain a strong focus on your wealth planning strategy. With that in mind, clear and straightforward dispositions will be understood when enforcement is due. Most of the professionals involved in prior stages may not be around anymore, and thus you want to make sure that those who are in charge then implement your decisions and wishes correctly. Simplicity will help in those circumstances.
CONSIDER THE WORK AS IN PROGRESS. Life is full of events, and that's why you should see wealth planning as a work in progress. With the above-outlined steps, you should have a set-up in place that gives you peace of mind, covers your most essential needs, and is ready for straightforward execution. Make sure to schedule stress testing, in particular, when things develop and change over time. You should then assess whether you need to adapt your set-up or implement further measures. You can think in scenarios, and if there is one that worries you, then you should act.
If you are asking who is writing this? We are Centro LAW, a Zurich based boutique private wealth law firm. We support global wealth owners, entrepreneurs, and their families in all private wealth matters. Just contact us to schedule a free, non-binding consultation to learn more about how we enable wealth owners by defining the purpose of wealth in their life.