If there's anything I am chiefly aware of, especially as I get older, it's my mortality. I've noticed lately that acquaintances and friends are starting to have heart attacks; struggling with diabetic issues; getting cancer; or simply dealing with aches and pains. Fortunately for me, I'm in the last category. I almost feel guilty, sometimes, that I'm doing as well as I am.
Another thing I've noticed, over the past year particularly, is that many of my friends (and some of my extended family) are dealing with poor financial planning. A large part of it can be attributed to fiscal illiteracy, and another large part of it can be traced to poor spending habits. This may sound unfair, but Americans have defiantly, and almost proudly, proven over and over that we clearly don't care to think things through when it comes to planning for retirement. Nobody wants to address it, but cultural bias or not, this is the sad truth.
Many of those that do follow the rules and prepare for retirement run out of their money far before they run out of life. This very thing happened to my grandparents. They worked blue collar jobs, saved 20% of their earnings, bought life insurance policies, paid off their home, and lived frugally all through their golden years, and still died penniless. Like a lingering cloud of smoke, it's all gone now. They outlived the plan, yet they did exactly as they were told by professionals who didn't necessarily know better themselves. That's a scary thing, isn't it? Who are you supposed to trust?
When you go deeper still and get educated on what is required to not only make your money outlive you, but to benefit generations far beyond your own (along with any missions you feel driven to support), your mind will swim in a seemingly endless barrage of legalese and best accounting practices. It's overwhelming and easy to pass on for another day. As my father once said, "Just last week I was 17, then on Sunday I was 45, and today I'm 74. Where did the time go?"
Fortunately, I was pointed towards a great article addressing these very large concerns, and I agree with its summations. Bullet points to follow.
According to the writer, here are the 7 issues you must attend to, should you have significant wealth and are planning on giving it to heirs after you pass away:
1) Use Trusts - Provisions should be crafted with the descendant in mind.
2) Use Customized clauses - No boilerplate is allowed here, and they must determine distribution events.
3) Create a Family Office - Consider your wealth transfer based on a business model.
4) Create Governance Documents - Operating agreements become a framework for the family business.
5) Rear the next generation early - Don't wait to bring youth into the business. Educate them early.
6) Focus on Philanthropy - Make charitable giving a large component of the Family plan.
7) A cohesive team is a must - Vetting your financial team and bringing in the best counsel will enforce a plan that couldn't exist without them.
I've found the last point is the most important point.
Over the years, I've discovered that collecting a "world class team of professionals" is a very difficult proposition. Going further, and actually finding a team that would champion our desired family plan had proven virtually impossible, but it can be done and MUST be done. I ended up spending 7 years searching for our own perfect team of business professionals that had both the experience and business acumen I expected and deserved.
You shouldn't settle for anything or anyone less, even if it takes you 7 years as well....and this is why you must start now. Hence, the point of this article and why you should read its valuable contents today.
You can read the full article here.