People often wonder what makes successful people successful. Well, one of the traits that most very successful people have is the ability to make and execute a plan of action while also staying flexible enough to adjust when the time comes. In our personal lives, just as in the management of a business, it takes a combination of plans, all working together, to achieve the desired outcome. While a business will divide its plans into groups such as marketing, tax, operations, banking, financial, etc., it is also important to have multiple plans for our personal lives. These plans include financial, tax, legacy, and estate plans. Making sure all of these plans work together efficiently and effectively is called Wealth Management.
Different Plans for Life Success
In order to get to where we want to go in life we need multiple plans, each intended for a specific area of our lives.
Financial plan: The purpose of a financial plan is to grow your wealth. It defines your goals and objectives, determines what choices you need to make to achieve them, and creates a checklist so that you can meet your goals. Financial plans focus on sustaining your cash flow so that you are able to live the life that you want. Your financial plan may also involve planning for short-term and long-term goals. In addition to investments and insurance, you may also take advantage of any benefits from your employer, including retirement fund contribution matching and group life insurance. Through a financial plan, you can also put together the necessary foundation so that your family is financially prepared in the event of an emergency.
Tax plan: Tax planning is analyzing your financial situation through a tax lens. Specifically, the purpose of tax planning is to make sure you are properly positioned to take advantage of all opportunities to minimize your tax bill. For example, you may contribute to retirement plans or decide to sell or buy certain investments as part of your tax plan. Not surprisingly, tax planning and financial planning are closely intertwined. This is because taxes play a large part of many people’s annual expenses.
Estate plan: Estate planning is the process of arranging your legal affairs so people you trust are authorized to make decisions for you when you can’t and so that your assets are distributed to the beneficiaries you choose upon your death. Generally, an estate plan includes several legal strategies that protect your wealth and loved ones. It will also ensure that someone you trust can help you if you can’t make your own decisions. This is one of the most important plans a person can create to ensure their final property and health care wishes are followed and that the loved ones left behind are provided for in their absence.
Legacy plan: A legacy plan is just what it sounds like — a plan to proactively create and take control of the legacy that you will leave behind. Legacies are built over a lifetime and a well executed plan can help you protect it for generations. Without a legacy plan, you may drift
through your life reacting to circumstances as they arise without intentionally thinking about them. You may also miss opportunities to share meaningful lessons or values with your loved ones. A legacy plan enables you to consciously shape how you will be remembered after you die. This could include charitable giving, sharing family history, as well as conveying moral and spiritual values.
Bringing it All Together
It is important to have several advisors to help you properly craft your financial, tax, legacy, and estate plans for your life and beyond. An attorney’s role is to create and oversee the legal structure that serves as the vessel through which your plans achieve your goals. A wealth or financial advisor’s role is to handle the financial planning aspects to make sure you are on track to meet your goals. An accountant integrates tax planning through careful analysis of the latest tax laws applicable to your particular situation. Your clergy or spiritual advisor can provide you help in crafting your legacy plan. In short, not only should you have all of these plans, but you should also consult with professionals to ensure that each plan is working efficiently with the others to properly manage your wealth, both financial and personal.