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Financial Planning. Tax Planning. Legacy Planning. Estate Planning - How many plans do I need?!

Posted on: June 5th, 2018
Posted by:  The Life and Legacy Planning Group

Most folks have at least heard of an estate plan. But few people realize that a simple will is not enough to prepare for your future. In fact, a combination of plans - financial, tax, legacy, and estate - are vital to your financial well-being and protection of your assets and family. All of these plans are closely linked, affecting one another but also serving different purposes.
 
Different Plans for Life Success
Contrary to popular belief, in order to get to where you want to go in life you need multiple plans, each intended for a specific area of your life.
 
Financial plan: The purpose of a financial plan is to grow your wealth. It defines your monetary goals and objectives, determines what choices you need to make to achieve them, and creates a checklist so that you can meet those goals. Financial plans focus on sustaining your cash flow so that you are able to live the life that you want. Your financial plan may also involve saving for short and long-term goals. In addition to investments and insurance, you may also take advantage of benefits from your employer, including retirement fund contribution matching and group life insurance. Through a financial plan, you can also put together the necessary foundation so that your family is financially prepared in the event of an emergency.
 
Tax plan: Tax planning is analyzing your financial situation through a tax lens. Specifically, the purpose of tax planning is to make sure you are taking advantage of all opportunities to minimize your taxes. For example, you may contribute to retirement plans or decide to sell or buy certain investments as part of your tax plan. Not surprisingly, tax planning and financial planning are closely intertwined. This is because taxes play a large part of many people’s annual expenses.
 
Estate plan: Estate planning is the process of arranging your legal affairs so people you trust are authorized to make decisions for you when you can’t and so that your assets are distributed to the beneficiaries you choose upon your death. Generally, an estate plan includes several legal strategies that protect your wealth and loved ones. It will also ensure that someone you trust can help you if you can’t make your own decisions. This is one of the most important plans a person can create to ensure their final property and health care wishes are followed and that the loved ones left behind are provided for in their absence.
 
Legacy plan: A legacy plan is just what it sounds like -- a plan to proactively create and take control of the legacy that you will leave behind. Legacy planning can be a part of estate planning, or it can go beyond an estate plan. In any event, a proactive plan is necessary to help you accomplish this. Without a legacy plan, you may drift through your life reacting to circumstances as they arise without intentionally thinking about them. You may also miss opportunities to share meaningful lessons or values with your loved ones. A legacy plan enables you to consciously shape how you will be remembered after you die. This could include charitable giving, sharing family history, as well as conveying moral and spiritual values.
 
Bringing it All Together

It is important to have several advisors to help you properly craft your financial, tax, legacy, and estate plans for your life and beyond. A team of advisors is necessary to bring all of these different aspects together. An attorney’s role is to create and oversee the legal structure that serves as the vessel through which your plans achieve your goals, and to provide appropriate estate planning, tax and legacy advice. A wealth or financial advisor’s role is to handle the financial planning aspects to make sure you are on track to meet your financial goals. An accountant, working with your attorney, integrates tax planning through careful analysis of the latest tax laws applicable to your particular situation. Your clergy or spiritual advisor can help in crafting your legacy plan.

In short, not only should you have all of these plans, but you should also consult with professionals to help you create and execute them successfully.


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