The Definition of Estate Planning™ is helpful because it gives you a target of what you want to consider in your planning. The next problem that most people have in their planning is to prioritize the various issues. That’s a key element of legal counselling. How do you do that?
Think of it this way, in order of importance:
1. The most important person in your estate plan is you. Your goals, your life’s experience, your stories and your values have to be considered first. That’s the first layer of blocks in the pyramid.
2. Next comes the people you care about. Who are they? What are their talents and weaknesses? What are their special needs? Can they handle money? Are your personal experiences, your stories, important to them? That’s the second layer of brick in the pyramid.
3. The third layer of brick would be preserving your wealth. Attorneys spend a lot of time figuring out ways to preserve and protect your wealth. It’s what we are mostly trained to do.
4. The fourth layer is to consider strategies to expand wealth. For this, it’s important to include the counselling of your financial and other advisors in your planning.
5. The final layer is saving taxes. In many ways, this is the easiest piece in the puzzle, but often the piece that clients, lawyers and other professionals start out thinking is the first consideration. It may be extremely important, but the appropriate tax strategy should be based on an understanding of the first 4 layers. Otherwise, it won’t be meaningful to you in the context of your plan.
I can tell you from personal experience that the easiest place to start is in saving taxes; but that type of planning is upside down in my view. No decisions about the tax structure of your plan should be made without considering you and your loved ones first.