As you’re likely aware, we’re currently experiencing significant economic upheavals. From the collapse of the crypto market to the volatile nature of the stock market, along with rising interest rates, declining home values, and soaring inflation, it’s a tumultuous time that can leave you feeling uneasy. However, taking proactive steps can help safeguard your financial well-being amidst these challenges.
During periods of economic change, such as the Great Depression, the last Great Recession, or even the recent pandemic, some individuals thrive financially, while others face substantial losses. Regardless of your family’s past financial experiences, there are valuable lessons to be learned, empowering you to shape the future you desire for yourself and your loved ones.
To seize control of your financial destiny, it’s essential to act now. Here are four actionable steps you can take immediately to reshape your family’s future and navigate economic fluctuations with greater stability.
Moreover, whether you’re planning to pass on wealth or anticipate inheriting it, having a solid estate plan in place is paramount to mitigating potential losses. Waiting to initiate the estate planning conversation can lead to significant disruptions, resulting in more than just financial setbacks. Whether your assets are modest or substantial, gaining clarity on your current and future financial circumstances is crucial to avoid costly complications down the line.
01 – Get into conversation and connection
The first step to ensure your family benefits from the current and coming economic shifts, regardless of what happens, is to get into conversation and connection with the people you depend on, the people who depend on you, or who you will depend on, if something happens to you or your assets.
With the economic realities that are upon us, we can no longer go it alone, expecting everything to just work out because the stock market is on the rise and there’s plenty of savings cushion in the bank. Instead, this is the time to bring your family together and talk about what there is, where it is, and how it’s being managed (and will be managed) in the event there is a black swan event, such as the pandemic or a major stock-market crash.
If you are afraid to have these conversations because you think your family might not do well with knowing what you have, because you think they can’t handle knowing what you have (or don’t have), or because there has been upset in the past when talking about family financial resources, that’s a sign that it’s more important than ever to get into conversation and connection as soon as possible.
If you’ve attempted to have these conversations with your loved ones in the past and it hasn’t gone well, reach out and ask for our help. We’ve got processes and systems in place to support you to have these delicate conversations with your parents, kids, or siblings, with far more ease than you trying to do everything all on your own.
And if you don’t have living parents, kids, siblings, or a spouse, it’s even more important that you start these conversations. You can begin by identifying who you need to have these conversations with. We work with many single people and unmarried couples to help them navigate and talk about what can be a confusing and uncertain future, and we can help you, too.
If talking about assets and the allocation of family resources is easy for your family, that’s great—it’s time to take it to the next level by following the rest of the steps outlined here. Once you get into conversation with the right people based on your family dynamics, the next step is to get comfortable enough to “open the kimono.” This involves creating an inventory that lists all of the assets you own, where they are located, and how the people you love can find them in the event you become unable to share those details yourself.
02 – Open the kimono: Create your “Family Wealth Inventory”
Whether you’ve created a formal set of estate planning documents already or not, it’s time to create (or update) an inventory of your assets. In our experience, most estate plans don’t do a very good job of keeping assets organized. When a loved one becomes incapacitated or dies, this is actually one of the biggest sources of expense, heartache, and pain—no one knows what there is, where it is, or how to find it.
One of the greatest gifts you can give the people you love is an inventory and it’s something we create for all of our clients as part of their estate plan. We will not only create this inventory for you, but we have systems to keep it consistently updated year in and year out, as your life, assets, and the law change over time.
During a major economic shift, creating, updating and revising your Family Wealth Inventory is critical, and doing that with the people you love is your number-one mission. As we see it, family wealth isn’t just about your financial wealth, it’s about your whole family wealth, including your intellectual, spiritual, and human assets. In fact, these non-financial, intangible assets are usually what we all care about most, and yet they are so often overlooked in estate planning.
One of the best ways to maximize your family’s intellectual, spiritual, and human assets is for your loved ones to get into relationship around your family’s financial resources. Begin by creating (or updating) your inventory, and sharing it with your loved ones, so you can discuss how to best allocate (or re-allocate) those resources. Having this conversation can help ensure your family’s intellectual, spiritual, and human wealth continues to grow, even as we move through these uncertain economic times.
03 – Consider reallocating your resources
After completing your inventory—a comprehensive overview of all your assets—and assessing your family’s needs irrespective of economic conditions, you might opt to reevaluate how your resources are allocated. This could involve various strategies, such as investing in multigenerational housing to accommodate both your children and aging parents while preserving privacy. Alternatively, you may seize the opportunity to establish the homestead you’ve long envisioned or embark on launching your dream business alongside your loved ones.
Our role is to assist you in evaluating whether your current resource allocation aligns with your short and long-term objectives. Subsequently, we can guide you in reallocating your resources to better align with your goals or connect you with trusted professionals who can offer further assistance. Avoiding a thorough examination of your family’s resources due to fear or avoidance can be detrimental. In times of change, it’s crucial to assess your assets proactively, envision the future you wish to create, and intentionally reallocate resources accordingly.
Those who take proactive steps to reassess and reallocate their resources will thrive in evolving circumstances, while those who fail to do so may find themselves wishing they had taken action sooner.
04 – Update your plan
Once you look at what you have, where it is, and how you want it allocated, the next issue to decide on is who would take care of it all if you cannot. Leaving the management of your affairs to chance or to out-of-date estate planning documents is the worst thing you can do for yourself and those you love.
In an upcoming article, we’ll cover the Great Wealth Transfer that’s happening, detailing how between $30 and $80 trillion of wealth will be transferred between the generations over the next few decades, and how you can best prepare for that transfer.
In the meantime, start by updating the estate planning you already have in place to handle your assets in the event of your incapacity or death. If you don’t have any plan at all, the state has one for you, and it almost certainly isn’t what you would want to have happen. And if you do have an estate plan in place, it’s likely out of date, or possibly wasn’t even created properly to begin with.
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