There are not many, but a few people are very practical about the system of law and money. They possess an enviably rare, internal compass that allows them not only to make sense of the unintelligibly intricate system, but have as well the quiet, practical ability to take care of their legal and financial planning.
Most people, however, feel as if they are at the center of a storm, that they are trapped on all sides in the chaotic midst of The Great Planning System. The following depiction perhaps illustrates this sense.
The Need for Order in Legal and Financial Planning
Given the welter of strategies, rules, laws, opinions, and providers of services and products, there is all the more reason to discover a mechanism that makes order, an organizing principle or baseline that identifies where you are in relation to the system and its multitude of alternatives and views. Such a baseline would provide an orderly method for analyzing your legal and financial options or consequences, and a basis upon which to make your present, or to time your future, legal and financial decisions.
Unfortunately, there is no “baseline” in legal and financial planning, at least not one that crosses the planning disciplines and allows you to make sense of your alternatives, let alone to measure the impact that one decision in a given legal or financial field has on another. Reading all, or at least several, books on planning gives you a sense of planning, and may even prove satisfactory in the event you accept or implement an author’s advice—or not.
A sampling: use credit to get ahead; don’t buy anything on credit; get a will; wills are bad, so get a trust; buy an annuity; put your money in an IRA or your employer’s 401(k), not annuities; buy whole life insurance for protection and savings; the purchase of whole life insurance is a scam; avoid selling stock with capital gains; sell stocks with losses and gains; purchase an index fund; exchange traded funds are superior to index funds; give to charity; create a charity; start a business; buy a business; form a limited liability company and transfer real estate into it; S corporations are better; and so on.
And just what are the effects of your planning decisions on your current or future resources? Or at what point does it make sense to change, amend, or undertaken an altogether different strategy? It is time consuming and frankly impossible to read every book, to search all articles, to expect all advisors to be on the same page or to notify or discuss with you and all other advisors changes in circumstances or the need for an amended or different strategy. It is unimaginable that they could quickly review where you were, where you are today, and what course your legal and financial planning should take because…there is neither a baseline nor a system to track changes and analyze alternatives.
Getting to “Baseline”
At its simplest, a baseline provides a starting point. It is a point of reference that establishes objectively what your personal legal and financial condition is in relation to the total legal and financial system—no matter who your advisors are or what their opinions or competencies may be, no matter the size of your wealth, no matter what your neighbor has or says. Based on your wealth and your personal data, a legal and financial baseline should give you and every advisor a simple, reliable, and consistent picture of where you are right now and indicate what you have for strengths and weaknesses. By inference, a baseline would likewise indicate your planning possibilities or impossibilities given your legal and financial wherewithal.
In truth, determining your legal and financial condition can be somewhat problematic because the legal and financial system is organic; it evolves by the nanosecond. Laws and rules change; products change; the market changes; people move, suffer injury or illness, or die; businesses start up and compete, profit or lose money, are merged with or acquired by competitors, or cease to exist; the government requires more resources, allocates or reallocates funds, or changes policies and enforcement emphases; or political unrest challenges existing authority or economics. And then there are wars, weather, terrorism, cycles of economic boom and bust, foreign trade wars or agreements that unsettle the status quo.
But then, your personal legal and financial condition is likewise not the same from one moment to the next. To you, it might seem to be more or less stable because you are so close to it. When times are good, you judge things to be in synch, very stable; when times are bad, you judge your situation to be precarious, insecure. You lose a job; get a new job or change jobs; lose benefits; get a raise; spend your savings to cover increased mortgage, insurance, gas, food, clothing, or other costs. Usually, it is easier to deal with and focus on than what occurs at larger, more remote levels. Nevertheless, what a baseline will do is to keep all things in perspective. It will gauge your legal and financial health no matter the state of the world or your personal life.
To devise an order and baseline out of the organic, seemingly unstable and unpredictable legal and financial system will require that we establish categories for analysis that incorporate what are or can be termed core fields or general disciplines within legal and financial planning. While the planning fields may be otherwise broken down—some authorities or practitioners may add, subtract, combine, break out, or rename one or more fields—in essence they involve the following:
□ Resource Management □ Estate Planning
□ Asset Protection □ Retirement Planning
□ Insurance Planning □ Tax Planning
□ Investment Planning □ Gift Planning
□ Business Planning □ Choice of Entity Planning
Summary
We have lots of measures in life that allow us to make judgments. Establishing a legal and financial baseline across multiple planning disciplines will serve to offset, if not eliminate, product and service confusion as well as economic waste.
