How does one articulate the core of a successful plan without evaluation emotions and values? These are the decisions of the heart. By clarifying your own feelings, values, and needs you can bring structure to the estate planning process and many other issues. Doing your emotional work first helps to minimize advisor bias in the estate planning process and provides a firm foundation for your decisions and template for your advisor team to use as a reference.

Developing a Family Financial Philosophy [FFP] mission statement is an extremely valuable tool for families to incorporate into their planning. The process of developing the FFP allows family units to confront questions they may have not discussed before. In the process, they may also discover conflicts they didn’t realize existed. The objective is to establish clarity and, as much as possible, a united statement of values and objectives for the family’s wealth and direction.

The FFP addresses three significant categories:

1. What does financial independence mean to you? This question has a different answer for each person. The goal is to quantify your definition of what financial independence is for you because it’s the most important number in planning. As you may be aware, the key to eliminating estate taxes is to separate you from a portion of your assets, as soon as possible and permanently. This can be a scary proposition for you. Some strategies that eliminate taxes on death also eliminate a Client’s financial independence - obviously, not a good idea. We first have to determine what your definition of financial independence is and whether you have achieved iit. This number becomes set.
2. What do you want for a Family Legacy? Sometimes a Client believes the objective is to reduce estate taxes as much as possible and leave the kids as much as possible. This may be the criteria for some, but not for all families. Some parents are concerned that leaving an excessive inheritance could ruin their children’s lives and so they limit the amount left to their kids. Once we determine a Client’s definition of financial independence and what is an appropriate Family Legacy, we can address the final issue of Social Capital.
3. What is your Social Capital Legacy? How do you want to dispose of the assets and income you and your heirs don’t get to keep? Do you prefer to default these monies to the IRS by paying taxes through poor estate planning? Or, given the option, do you prefer to direct those assets and income to causes held in high esteem that will fulfill your philanthropic urges?