Last updated: February 20 2008

Planning Must be Strategic for Estate Plans to Work

By Evelyn Jacks, President
The Knowledge Bureau

If happiness is a by-product of achievement, then planning for one of lifeís most important transitionsófrom economic activity in the workplace to ìeconomic inactivityî in retirementócan provide tremendous peace of mind. It can also result in the satisfaction of knowing your lifetime of work will not only fund your lifestyle, but provide an opportunity to transfer your lifeís workóboth wealth and wisdomófrom one generation to the next.

This is, in large part, the key to opening the discussion around retirement income planning for many boomers. Often the soft issuesóthe difference between wants and needsóare the most difficult to approach in the discussion around finances in the last third of life. Busy, full lives are not often conducive to discussions about how to tap into the capital thatís been accumulated or what we leave behind.

That of course has always been the reason behind financial planning: to ensure there are enough resources available to meet personal needs and goalsóno matter what lifecycle you find yourself inóand then, if possible, to preserve and pass on a legacy. When you add tax efficiency to that planning mix (which very few do, by the way) you have the recipe for a ìgourmetî retirement.

At the beginning of a retirement period clients are more concerned about the former issueówill I have enough to retire? However, as people move through this lifecycle towards the end of retirementódeathóthe legacy issue becomes more important.

Legacy planning requires gazing beyond the grave, culminating with an understanding of how existing wealth will crystallize, on an after-tax basis for the use of survivors and more importantly, the family wealth stewards.

Therefore a process that helps to identify the structure of stewardship for the transition of wealth from one generation to another is the starting point in a discussion about estate planning. Only then can the right roadmap be crafted for the completion of the journey from a life of work, to lifeís work, to a lifeís legacy.

Simply put, there are three prerequisites for successful tax and financial planning that transitions underlying capital from a retirement income plan to an effective estate plan:

  • A structure for identifying issues of concern
  • A formal strategic plan for financial results
  • A process for real wealth management: after tax, inflation-adjusted, cost-controlled

Such a process should also deliver, as required, in regular and pre-defined time periods:

  • Ongoing evaluation of the structure by the stewards of the plan
  • Annual measurement and evaluation of net worth

In short, for boomers, itís really not about retirement. . .itís all about transitioning from economic activity to a healthy and active lifestyle and an intact financial legacy. Tax and financial advisors need to understand this. For these reasons, we are focusing The Knowledge Bureauís annual Distinguished Advisor Conference on how to tap into this most important planning period for the most affluent, highly educated and socially-engaged generation of pre-retirees in our history.

Transitioning: The Path to Reciprocity is the issue; a deep understanding of the triggers that motivate boomers to come to the table for planning will enable the tax and financial advisor to quarterback the successful transition of both wealth and wisdom.

The Knowledge Bureau is also pleased to present the Retirement Income Specialist Designation Program by self study which provides designated training in real wealth management focused on tax efficient retirement income planning.