A baseline that gauges the legal and financial system requires an organization to be manageable. I have earlier proposed that ten planning categories comprise a baseline in the process of developing a legal and financial planning—resource management, estate, asset protection, retirement, insurance, tax, investment, gift, business, and choice of entity planning. Let’s take a moment to review a description of what these planning disciplines are.
Planning Indicators.
Physicians and nurses use your vital signs, changes to your temperature, weight, or physical chemistry to determine your health. Economists employ a variety of data—jobless claims, durable goods orders, housing starts, new factory orders, personal income, the unemployment rate, producer prices, real gross domestic product, the consumer price index, or consumer confidence—to measure the strength or weakness of the economy. By separating out and measuring certain planning disciplines, you can likewise derive conclusions about your legal and financial strength and weakness. The following list of planning fields does not represent a descending order of priority. Other than knowing and understanding that financials (incorporated in Resource Management) are crucial to, and usually antecede, every planning decision, the planning emphasis described by a given planning field shifts based on individual priorities or needs. Briefly described, The Ten Planning Indicators or Disciplines concern:
Resource Management
The measure of your wealth (income, debt, credit, expenses, and assets) to cover needs and desires.
Estate Planning
The measure of your wealth upon incapacity or death.
Asset Protection
The measure of your wealth to present or future creditors, whether voluntary or involuntary by force of law.
Retirement Planning
The measure of your wealth following total or partial withdrawal from the active workforce through life expectancy.
Insurance Planning
The measure of your wealth subject to risks not offset, mitigated, or shifted to third-party guarantors in the areas of life, property, casualty, disability, health, long term care, business or profession.
Tax Planning
The measure of your wealth following application of tax laws (income, capital gain, estate, and gifts including charitable and non charitable transfers).
Investment Planning
The measure of your wealth obtained by the acquisition of tangible or intangible assets over time under terms of risk, or how much the return on an acquisition can change in the short or long term (volatility) and in the predictability of an acquisition’s results.
Gift Planning
The measure of your wealth during your lifetime following distribution to one or more charitable or non charitable beneficiaries.
Business Planning
The measure of your wealth as a result of privately held business structures or enterprises.
Choice of Entity Planning
The measure of your wealth following the selection of juridical (i.e., trust or business) entities you implement for personal or business planning purposes.
Alternative Views On Planning Disciplines
Some planners might take the position that there are more or fewer planning disciplines. For instance, it could be said that Incapacity Planning—the branch of Estate Planning having to do with your inability to control your property or person—should be separated from Estate Planning, just as Asset Protection Planning, formerly a subdiscipline of Estate Planning, has been separated. Indeed, in the coming years Incapacity Planning may be so separated and distinguished, possibly due to an ever increasingly powerful subsection of Estate Planning, namely Elderly Planning. For the time being, however, it is still considered part of Estate Planning. Choice of Entity Planning has been a significant component of Business Planning. Choice of Entity Planning involves the determination of whether to use one or another type of trust or business vehicle to achieve planning purposes. The reason for breaking Choice of Entity Planning apart from Business Planning is that there are aspects of entity planning that resemble active business less and passive administration more. Take trusts, for example. There are numerous types of trusts from which to choose, depending on the purpose for forming a trust. Besides this, trusts are not considered legal business entities (though they may in fact carry on business). Furthermore, business entities (corporations and partnerships, for instance) are frequently formed more for administrative, passive, or not highly or necessarily profitable purposes. Traditional business entities are strictly for-profit. Hence, it seems worthwhile to consider Choice of Entity Planning as a separate planning category. As a final example, while financial planning has sometimes concerned itself with Resource Management—that is, focusing on planning for income, debt, credit, and budget matters and ratios—most financial planning and all traditional legal planning have had very little to do with the matter. Financial planners have been more concerned with the sale of specific insurance or investment products (primarily publicly traded), and attorneys have had no training in the field at all. Yet Resource Management is the undeniably indispensable component. It is useless to speak of planning without an understanding or knowledge of resources and how an individual manages them. In fact, there can be no planning whatsoever without money (e.g., income, assets, or credit) or the desire for money or more money (e.g. in the form of income, debt, credit, or investment) or money’s worth (e.g., to be rid of debt, to have more assets).
The Point Of The Ten Planning Disciplines.
Whether there should be more or fewer planning categories, the point is that any breakdown or organization should indicate your present position in the legal and financial system, and the effect or impact that any legal or financial strategy you undertake will have on your legal and financial health across all planning disciplines. To date, there has not been an objective, quantitative method devised by which you could make sense of the legal and financial system as you face or make planning decisions, or by which you could measure results or make sense of where your wealth stands presently, let alone following a planning decision however minor or major. Most planning decisions you make are small, but they are cumulative and impact the long term dramatically. This means that it may take some time to change course and obtain more optimal planning results. To keep track of the effect of cumulative decisions, it is simple and beneficial to organize them by larger categories, by separating and grouping them into logical classes. Too many, and they encumber the system; too few, and lines get blurred and analyses become difficult to comprehend. The Ten Planning Disciplines indicate the state of your legal and financial health.
Conclusion.
By establishing a few general planning categories that make simple sense as to how the legal and financial system impacts your wealth, you will be able to analyze, quantify, and track its effects on your wealth. More specifically, the impact of your past legal or financial decisions is indicated and can be quantified by an analysis of your wealth in terms of The Ten Planning Disciplines. All legal or financial strategies—whether they are promoted as services or products, however specific or general—can thus be measured for their short- or long-term advantages or disadvantages on your wealth.
