Every January, we are inundated with reminders about resolutions for the new year to make your life better. They may be related to physically transforming to a better you, creating better balance in your life or a financial-related resolution.
The problem with that last category is that the information is generally aimed at a mass audience and speaks about budgeting tips or how to put aside more savings. While well-intentioned for their intended audience, they do not really apply to a high-net-worth ("HNW") individual.
Piggybacking off the New Year, “New You” trend, we have put together a list of resolutions for HNW individuals and families. It’s important to recognize that even though financial success is often accompanied by a sense of security, it is crucial to continuously refine planning to ensure long-term prosperity.
Review and Assess
Start the year by conducting a thorough review of your entire financial portfolio. Work with your advisors to assess the current state of your assets, liabilities, and investments. This evaluation can uncover opportunities for optimization and identify potential risks, allowing for strategic adjustments to maximize returns and minimize tax implications.
And do not forget to include a review of your life insurance portfolio as part of this annual assessment. This review will help determine if policies are performing as intended as well as ensuring they fit into an overall planning structure. For example, if a policy is intended to cover a particular liability (be it tax or business-related), this review will confirm the death benefit is adequate to meet the need and that the policy has the correct beneficiaries and structure.
Diversify, Diversify, Diversify
Most successful people have a relatively diversified portfolio, but it is important to regularly check the allocation to ensure it aligns with current financial objectives and risk tolerances. If not, then changes can be made to help balance the portfolio adequately.
One part of a portfolio that often goes overlooked is life insurance. While generally viewed as a tool to provide liquidity, life insurance is increasingly being viewed as its own asset class that can add both value and diversification to a wealth transfer portfolio.
Check on Your Estate
Wealthy individuals and families must prioritize comprehensive estate planning to safeguard their assets and facilitate the smooth transfer of wealth to future generations. Regularly update wills, trusts, and beneficiary designations to reflect changing circumstances. Engage in conversations with family members about wealth transfer strategies, philanthropic goals, and the preservation of family values. Check that your current life insurance portfolio is sufficient and correctly structured to provide the intended liquidity as part of your estate transfer plan.
Watch Out for Taxes
Nobody wants to pay more taxes than they absolutely must. That’s why it is important to speak to your advisors about any changes to tax laws or regulations that may impact your tax situation and proactively work to limit your potential exposure. This applies to longer-term taxes, such as capital gains and estate taxes, as well as shorter-term taxes, such as income tax.
This is especially true now with the looming sunsetting of certain provisions of the Tax Cuts and Jobs Act of 2017, including the rolling back of current estate and gift tax exemption amounts.
Manage Your Risk
We spoke about ensuring that your life insurance portfolio is aligned with your needs and planning, but you should also regularly assess other forms of insurance as well. HNW individuals and families often have unique risks that require specialized coverage, so ensure that your insurance policies adequately protect your assets and consider additional coverage where necessary.
Success brings the opportunity to make a positive impact on society. Develop or revisit a philanthropic plan aligned with your values and goals. Whether through charitable donations, foundations, or impact investing, integrating social responsibility into your financial plan can create a legacy and contribute to meaningful change.
Resolve to Check Your Plan
Planning is so incredibly important, but for HNW individuals and families, it is not a one-time act. You and your advisors need to consistently monitor your planning to ensure your plan is on the right track and necessary adjustments can be made.
These planning resolutions can form the backbone of a regular ongoing assessment that ensures the peace of mind you felt when you initially created and implemented your plan.
At Robin Glen, we use our expertise in income and estate tax, private capital, and insurance analysis and design to create unique solutions that deliver impactful results for our clients and advisor partners.
As your life and the world changes, we are there every step of the way to ensure your planning evolves to always support you, your family, and your business.