The third phase: Focus, involves planning. In business, planning is a management process that involves defining goals for a future direction and determining the mission and resources to achieve those targets. Planning always has a purpose. The purpose may be to achieve certain goals. Planning increases the efficiency of an organization and reduces the risks. It uses maximum efficiency with the available time and resources.
Planning for a family has similar characteristics as any business. It is about efficiencies and purpose. The Focus Phase takes your objectives that you established in the Vision phase and uses them as a target for the plan. What makes your family plan different than a business plan is that we use God’s agenda and purpose. The purpose with the plan is to focus our energy on God’s plan for our marriage, our children, and our resources.
A Christian is called to Biblical Stewardship. Stewardship is generally recognized as the acceptance or assignment of responsibility to shepherd and safeguard the valuables of others. For the Christian that means to shepherd and safeguard all that God has gifted us. That would include our spouse, our children and our resources.
There are four parts to this phase.
1. The first is to develop a rough draft.
This may take one month or as much as six months to complete. There are three techniques that summarize all of the strategies that we use in creating the plan. All are used to maximize efficiencies and use strategies that reduce massive amounts of taxes.
When complete, the plan dramatically increases the estate value, the amount available for the children and the amount available for gifting.
- The first technique is compression planning. There are many effective ways to minimize the size of estate assets through Compression Planning. Depending on the asset, how the title is held and the percentage of ownership, these discounts can go as high as 70%, meaning a $1,000,000 asset could be reduced in value for estate tax purposes to as little as $300,000.
- The second technique that involves most of the strategies used is charitable planning. Unfortunately, this area of estate planning is the most under-utilized of the three. Yet, in our opinion, it is the most powerful for several reasons. Because few wealthy people and their advisors are intimately familiar with these very powerful planning tools and the many and varied applications in the estate planning process, they routinely overlook these tools in their planning considerations. Additionally, the wealthy and their advisors tend to carry a negative bias against charitable planning that prevents them from objectively evaluating the use of these powerful planning tools and techniques in their overall plan.
- The third technique is leverage planning. There are a number of methods and strategies that can be used to leverage your wealth that can produce substantially greater results when effectively used in the estate planning process. Unfortunately, we have found that quite often both the client and his other advisors often have major misunderstandings as to the nature and effective use of these various leveraging techniques and tools and, consequently, they carry a strong but unnecessary negative bias against them. As a result, they often avoid them all together which greatly diminishes the effective leverage of the estate’s financial capacity.
2. The second part of the Focus phase is collaboration.
It is ongoing review with all of a family’s advisors. This team approach results in a more dynamic and complete plan. It is helpful if all advisors on the team are Christian so that everyone shares the same biblical objectives and understanding. When this is the case, we are all praying for a plan that meets your objectives and is also in line with God’s objectives. If an advisor is not sophisticated enough to successfully implement this type of planning, we agree to change to one that is.
3. The third part of the Focus phase is to present the finished plan to you.
There is still time to change or revise if you notice something that you have issues with that you didn’t see before. Remember, this is your plan. Our goal is to create a plan that satisfies all of your objectives with the most sophisticated strategies available. The end product will reflect massive tax savings and a dramatically increased impact on the Kingdom through how you have given to your kids and how you have given to Kingdom causes.
4. The final step of this phase is the Second Family Meeting.
In this meeting, we share the completed plan with the family. This is the time to discuss every detail of your objectives and the tools used to satisfy them. Since the First Family Meeting was the soft side of planning, this family meeting is dedicated to the hard facts that satisfy all that was discussed in the previous family meeting. It is important that the entire family be present for this meeting. It is both a graphic illustration of the plan as well as a forum for discussion and clarification.
“Every faculty you have, your power of thinking or of moving your limbs from moment to moment, is given you by God. If you devoted every moment of your whole life exclusively to His service, you could not give Him anything that was not in a sense His own already.”
– C. S. Lewis, Mere Christianity