Purpose, passion and planning
Incorporating ‘purposeful planning’ into the wealth equation
Picasso once said, “Our goals can only be reached through a vehicle of a plan in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.”
So, while the quality of the plan itself is critical and will ultimately determine how effective you are in achieving your goals, the artist’s insight also recognizes the importance of intangible aspects—the underlying values and objectives that give meaning to the plan. This is at the core of purposeful planning.
There are various forms of planning when dealing with wealth, Ms. Azoulay says. For the most part, individuals focus primarily on investment, tax, estate, insurance and financial planning. They are guided by professionals with expertise in these different areas. For individuals like Eli, purposeful planning can help to diminish any fears and concerns as he readies the next generation for wealth.
“Most of the time, people are led down a path of “technical” considerations such as tax minimization, asset growth and protection. These considerations often become the end goals,” Ms. Azoulay notes. Studies have shown, however, that wealth owners like Eli care substantially more about the impact of their wealth on their families and their community, living according to their values, meeting life goals and avoiding conflict among family, she adds.
“Purposeful planning starts with a ‘purposeful mindset’. For individuals like Eli, this mindset is about first articulating your most important objectives. This could start with an articulation of values, and expression of hopes and dreams for oneself and for one’s family.”
Estate planning
Start by thinking about what is most important to you and your family
- What is the purpose of your wealth and how will it be used to support those things that are most important to you?
- When you transfer your wealth to your heirs, think about it as more than just a transfer of assets. Think about the emotional and wisdom legacy that could be passed along with it that leaves long lasting messages of love, guidance and memories for your heirs.
- When doing your estate plan, put yourself in the shoes of your beneficiaries and think about what they would value most and how they would want to be treated as beneficiaries of long-term trusts.
- Retain Advisors who understand purposeful planning and the process involved in structuring your wealth transfer in a way that reflects and articulates your purpose and meaning and is not just focused on being technically sound and tax efficient.
Financial planning
Start by exploring and articulating your life goals
- Are you trying to grow your wealth? If so, for what purpose?
- Are you currently deploying your wealth in a way that is aligned with your values?
- How will your wealth be used to fulfill those goals and what are the options?
- What cashflow do you need?
- How long do you want to stay involved in the family business and what are the motivating factors for this?
- Determine what expenditures enhance your life - ie. travel, spending on others, eating out with friends. Build this into your cashflow needs.
Succession to the family business and shareholder agreements
This is one of the most challenging areas that families face.
- In most cases, tax and legal Advisors get involved early in the process and the focus is mainly around tax minimization, appropriate retention or transfer of control and funding of the payments from the succeeding generation to the parents, if applicable.
- Purposeful planning involves developing first the “core values” that the family collectively agrees to. For example, shares must only be owned by lineal descendants of the matriarch and patriarch; or not all owners of the business need to be actively employed in the business. This process can involve several family meetings.
- Does the purpose of succession go beyond the financial aspects of the business, such as a sense of loyalty to customers, employees and the community?
- Once the values are articulated, then plans involving succession and shareholder agreements can be implemented that align with these core values.
“Purposeful planning has the potential to be much more meaningful and satisfying for all who are impacted by it,” Ms. Azoulay says. “It takes time, much introspection and communication and, most importantly, getting the right kind of Advisors involved who understand the concept and processes that are needed.”