Table with wooden houses, calculator, magnifying glass with the word Estate planning. Property … [+]
Ultra-High Net Worth (UHNW) individuals, those individuals with a net worth over $5 million, are now more at risk than they have been in decades. The economic, environmental, social and political situations are, and will remain, uncertain. The federal estate tax reverts back to $5 million after 2025. States and the federal government are increasing income tax rates while inflation erodes accumulated wealth. If you are a UHNW individual, you should ask if your estate plan works in the face of these uncertainties.
Most estate plans are based on your needs and wants, primarily focusing on protecting assets and saving estate and income taxes. These estate plans assume that your estate planner can accurately predict that a specific course of action, such as funding a trust, will have the same result tomorrow as they will have today. Since tax laws are changing, the value of assets is varying from day to day; and, social and political turmoil are sending shock waves globally. Accurate predictions are harder and harder to come by. Assuming that what is true today will be true tomorrow is no longer a valid assumption. In these uncertain times, what you need is a plan that is tied closely to your goals and objectives, one that can be validated. In other words, a Strategic Estate Plan.
What is your Common Goal?
Your Common Goal is a Statement with which you and every other stakeholder including your family, your employees, your vendors and service providers, your customers and your community can agree.
Once you can clearly articulate your Common Goal, your strategic planner helps you define the objectives necessary to achieve your Goal.
What are your Objectives?
An Objective is a necessary aspect of your Common Goal, which is necessary to move you closer to achieving your Common Goal. There are some objectives that are explicit in the Common Goal, such as profiting from a great idea; and there are also implicit objectives, such as security, satisfaction and growth at the personal, group and organizational level. The Objective completes the statement “We achieve our goal of [Goal] by [Objective].”
What is your Strategy?
The Strategy is integral to achieve your Objective. It is an articulation of why you are doing something. There is, at any one time, only one strategy which is the best for achieving your Objective, though what is the best strategy may change due to changes in circumstances. The Strategy completes the following statement: “Only by using [the Strategy] can we achieve [the Objective].”
The underlying assumption that the Objective can only be achieved through this Strategy must be made explicit, then tested as to whether this is a valid assumption to make in the present circumstances. To determine if this is a valid assumption, answer the following questions:
What are your Tactics, Needs and Wants?
Tactics, Needs and Wants will determine which actions are required, and which are barred, to Implement the Strategy. If the Strategy can be considered, “The What of the Plan.” Tactics are, “the How of the Plan.” The Tactic is what completes this sentence: “We will take [the following actions] to implement a course of action, based on our [strategy] to achieve our [Objective].”
Underlying Assumptions of Any Course of Action
Like strategies, tactics have underlying assumptions; primarily, that this course of action is the best way to implement the strategy. This assumption can be based on your, or other people’s, needs and wants which may be unrelated to achieving your Objectives. These underlying assumptions, needs and wants, must be made explicit and examined to determine whether they are valid assumptions to make in the circumstances.
To validate these assumptions, ask:
By following these steps, you will have a clearly articulated Common Goal that everyone agrees upon; identified the objectives that are necessary to achieve your Common Goal; a valid strategy for achieving your objectives and a course of action — that is not based on what people feel they need or want— that is both realistic and achievable: that is the result of having a defined Strategic Estate Plan.