Rest of Life and Beyond Planning

Early in 2013, I did an article on estate planning to demonstrate that, as with all financial plans, an estate plan is merely organized common sense. Simple strategic rules (10 in this case) govern. Failure generally comes from the inability to recognize or accept them.

The hidden agenda within the article is that an estate plan that deals only with end of life asset transfers can be disastrously incomplete. I propose instead that a better plan is not an “Estate Plan” but rather is a “Rest of Life and Beyond Plan.” It starts now regardless of age and ends when the estate is eventually settled.

One rule in the ten is, “There is small advantage to being the richest person in the cemetery.” This rule implies that end of life planning is too little. Other of the rules support the idea of “in life,” planning and emphasize that the priorities and limits are different at different parts of your life.

Another idea is to recognize that you are a steward for any asset you will not consume in your lifetime. Not quite a trust relationship but somewhere close.

The stewardship approach implies that a parent might want to manage some assets in ways that suit their heir’s objectives. Cash flow and ease of management matter at 75 and require a certain kind of asset, growth matters at 45. If a parent owns assets very much in excess of their need for living, it could be wise to manage investment risk derived from the profiles of the children rather than on the profile of the parent.

Global family financial planning is important because every asset must eventually dissipate. There are exactly three ways that they do so.

  1. You can consume it during your life. Lifestyle.
  2. You can give it to or leave it to someone else. Legacies and gifts.
  3. You can lose it.

The strategic vision is simple. If you don’t lose it, you can spend it, or hold it for security and eventually give it to someone else.

Most people think they can avoid the lose option by way of a clever estate distribution plan. They will discover, generally too late, that they could have lost much less by better organizing their affairs along the way.

The Rest of Life and Beyond Plan begins early. Each decision has a short-term effect and every short-term effect eventually becomes part of a long-term result. Good choices work better. The sooner people realize that they are able to influence their financial outcome, (control is a dream,) the sooner or more easily they can achieve the goals they value. It will be easier if they know in advance the road most people travel.

A financial adviser can show you the likely path and optional ways to meet your goals with the resources available. Forewarned matters.

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Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. Contact: don@moneyfyi.com  

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