In this series, we’re helping you with your legacy and estate planning. In Part 1, we shared advice on how to create family and professional wealth management teams. In Part 2, we explained why family meetings are important, then shared tips on what to discuss and how to create a family mission statement. Here, in Part 3, we help you begin building a generational wealth management strategy and estate plan, using the foundation you laid in Parts 1 and 2.
What is the difference between wealth management planning and financial planning?
First, let’s look at why you need a wealth management strategy even if you have a financial plan. The simple answer is that they’re different things. A financial plan is concerned with your current financial state and achieving specific goals within your lifetime. For instance, a financial plan may address retirement, a dependent’s education, property purchases, saving and spending habits, and life insurance coverage.
Wealth management planning, on the other hand, is focused on growing, preserving and transferring wealth. It’s typically a concern for high-net-worth individuals and may involve investment and asset strategies, estate plans and the use of tools like trusts.
How do you construct a wealth management plan?
Creating a generational wealth management strategy involves deciding what assets you want to leave, to whom you want to leave them, and when and how you want to make the transfer. The first step, then, is getting a complete picture of your assets.
Make a list of your financial accounts and physical property, including any businesses owned. Include details on value, ownership/titling and where the asset is located. It can also be useful to keep a list of liabilities, including those where you’re a co-signer or guarantor. Keep both lists updated over time.
Next, consider your goals and objectives for the family wealth. Reviewing your family mission statement, with its focus on family financial values, can be helpful. Think about what you want to achieve. For instance, do you want to make a simple, direct transfer of assets equally to your children on your death? Do you want to gift it to them gradually during your lifetime? Do you want to maintain some form of control over the inheritance? Do you want part of your legacy to support a philanthropic vision?
When you can answer questions like these, the next step is usually to meet with your team of financial professionals who can develop recommendations for turning your wishes into an action plan. You might then invite the advisors to attend a family finance meeting to present the recommendations and answer questions. The team makes any desired revisions based on that input.
What should be part of your estate plan for wealth management?
As part of your estate plan, a wealth management strategy may include a variety of documents and tools depending on the specific needs and wishes of the wealth owner. The most common elements include those below.
- A will gives specific, legal instructions for how you want your assets distributed. This can also be a place to clarify and define relationships or address non-traditional needs. For instance, you can clearly state your wishes for stepchildren or spouses in the case of a remarriage or blended family or explain support for a beloved pet.
- Trusts allow you allocate assets on behalf of beneficiaries while retaining some level of control. Placing assets into a trust may remove them from the estate itself, which may assist with tax management for your heirs. Trusts also give you guidelines and guard rails around the wealth. For instance, it may require that an heir meets requirements — like reaching a specific age, graduating from college or having a job for a certain amount of time — before inheriting.
Learn more about different types of trusts:
- Foundations and endowments are structured ways to support charities or other causes for a longer term than simply making a one-time gift. For example, with a private foundation, you provide the initial funds and guide the direction during your lifetime, passing management to an heir on your death.
Learn more about these and other planned giving tools, like scholarships and charitable gift annuities.
In addition, these plans typically include documents that outline your wishes regarding who will take charge if you become incapacitated, such as a financial power of attorney and healthcare proxy. You may also choose to have a living will or medical directives, and leave instructions related to your funeral service, burial or cremation.
Share Your Plan
Once your estate plan and wealth management strategy are complete, make sure your family knows where to find important documents, including your list of assets and liabilities, life insurance policies, financial accounts, business papers, and home and vehicle titles. Similarly, make sure family members know who to contact when you pass away, including your financial advisor team.
Your Hancock Whitney experts can assist you with your estate and wealth management planning, as well as presenting the information at a family financial meeting. Contact us for a personal discussion.
“Wealth Management and Financial Planning: What’s the difference?” IMA Financial Services, posted March 1, 2023, https://www.imafs.org/wealth-management-and-financial-planning-whats-the-difference/, accessed May 25, 2023
“A Guide to Wealth Transfer Planning,” Nadia Ahmad, CEPF, SmartAsset, posted May 16, 2023, https://smartasset.com/estate-planning/a-guide-to-wealth-transfer-planning, accessed May 25, 2023
“Estate Planning Strategies: 5 Actions to Consider Now,” Mark Caskie, Wells Fargo Conversations, posted Aug. 9, 2022, https://conversations.wf.com/wealth-transfer-steps/, accessed May 25, 2023
“An All-in-One Wealth Transfer Checklist,” Fidelity Viewpoints, posted October 2022, https://www.fidelity.com/viewpoints/personal-finance/wealth-transfer-checklist, accessed May 25, 2023
The information, views, opinions, and positions expressed by the author(s), presenter(s), and/or presented in the article are those of the author or individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Hancock Whitney Bank. Hancock Whitney makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented.
This information is general in nature and is provided for educational purposes only. Information provided and statements made should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Hancock Whitney Bank encourages you to consult a professional for advice applicable to your specific situation.
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