What is value-based planning of wealth

By Michael Potter, JD
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Expert Author Michael Potter, JD

Between 1980 and 2030 it is estimated that the largest transfer of wealth from one generation to another in the history of the world will take place when approximately $ 41 billion was transferred to the death of the greatest generation (those born between 1910 and 1935) and the 'Baby Boom' generation (born between 1945 and 1965) to their children and grandchildren. That's a lot of commas and zeros. This article examines the implications of planning that affects the generation who are now teenagers and young adults of middle age.

IS YOUR core values to be transferred

Studies of people who have inherited wealth did not earn have shown it can be a pen or destruction of its existence, according to the 'values', they have inherited from their parents. If such values ??and positive character values ??passed is likely to be reflected in the lives of children and adults and parents themselves. If not, you can understand why some families grandchildren will not remember much about their grandparents or what they represented.

A study shows that the last thing parents want their children to spend an inheritance of a new car, however, Orange County, California heirs wait an average of only 21 days after receiving an inheritance before buying a new vehicle. Additionally, when inherited wealth buys depreciating assets rather than those who appreciate the value, inherited wealth is depleted at the end of the second generation in just over 80% of the cases studied and has been entirely by the third generation.

It is a condition called Affluenza (the loss of wealth). But adults who as children earned their allocation of household chores or had part-time jobs increased to pay for their own bikes, clothes, cars or college tended to invest their assets in retirement savings, funds investment, entrepreneurship, home equity and income-producing real estate. What does this tell us

DADDY - WHERE core values ??come from

What Tom Brokaw veteran observer called the Greatest Generation literally saved the world for their sacrifices in World War II and Korea. After the war, they built careers and new businesses, having children and building homes in unprecedented numbers. His humility and appreciation for non-economic values ??in life is reflected in the paintings of 'American' classic Norman Rockwell. His children today are baby boomers who grew up in the 40, 50 and 60 and fought totalitarianism in the Cold War, Vietnam and Desert Storm, but with years of experience and are, because they are not faced financial statements struggles parents.

The most common mistake

All parents want their children to have the better than they did, and this is reflected in the examples which they live and the values ??they teach - or not to teach - their children and grandchildren. However, many planners buy into the myth that business assets, retirement and financial planning is only about transferring money instead of the quality of life and values. Instead of starting with what they want their children and grandchildren to represent and carry out, many bypass these issues entirely and focus instead on fortune and family. As a result, estate planning, retirement and financial planning focuses on the trust documents, notarized signature, coverage amounts and funding rather than how these useful tools implement the vision and goals of parents.

How to tell the planning

As a long time attorney working in the fields of estate planning, risk mitigation, wealth management and asset protection, I have seen clients (and professionals who have served them better) in a race to put their pen to paper instead of first discussing the client's priorities and values. Here is a protocol for a more favorable outcome

• Start with an exercise of thought and values ??equivalent to a quiet personal assessment what really matters. Honestly consider the example and the values ??transmitted to their children and what kind of manager who has been on what you have earned and invested so far. Write down the values, dreams and goals you want to import into the lives of their children - and yes, grandchildren. The end result should be your own personal Values ??and Vision. It should reflect what you and your children as adults are known to represent.

or below, is an exercise I like to call suddenly I died today and not to Say Goodbye. Although it may be uncomfortable, about 30 minutes to write down what is actually carried out in the next two years after his sudden death today versus what you hope or guess or think might happen. This is often a true revelation if you own a business, have investments, are paying for a home, have debts, children or plans for the future. Most believe he will die in old age, at home in bed, without pain, still in good condition, surrounded by my family loves and all our bills paid and our dreams attained.

These two steps can be done in any order. They are best done in private, but always in a relaxed, perhaps even in a family retreat in a complex environment if you want to include their children in writing to Family Values ??and Vision Statement. With these steps complete planners, professional can do a better job.

As a planner, I always like to have a context in which to help customers reduce their business and investment risks, strengthening financial and asset protection and heritage plan for themselves, their children, grandchildren and their favorite charities. For example, I like when the family of several generations, trusts contain incentives for the children or grandchildren to achieve educational goals, business ownership, contribute to science or the arts, participate in community improvement and the life of the church. Incentives can be in the form of matching funds for investments or retirement savings to their children or grandchildren to encourage them to be productive.

Update your estate and financial planning, reviewing your insurance and retirement plans, forming a family limited partnership for liability protection and carry out investment and business objectives, the formation of a trust of estate planning, investment holding companies and limited liability companies and ensure the financial results you expect are important steps. But it should always be based on a solid foundation to ensure its core values are reflected in planning documents and signing.