Navigating Life’s Changes

Navigating Life’s Expected and Unexpected Changes

Life is replete with transitions—those that are anticipated and those not so. Building a family and creating plans for one’s legacy or experiencing an unwanted change – all of these junctures bring about individual opportunities and challenges, especially for the substantially wealthy.

It’s essential to create flexible financial plans that allow you to embrace change in all its forms. Trusted advisors can help guide you through these key life transitions with foresight and proactive planning. Since life rarely follows a script, thoughtful preparation is crucial to safeguarding your financial well-being.

Being prepared for such transitions is paramount. Creating a sound yet fluid financial plan will better equip you to handle whatever life throws at you. This guide describes common life transitions experienced by high-net-worth individuals and provides information about how you can navigate each phase through expert advice and thoughtful planning.

Be Prepared for What Life Brings: Anticipated and Unforeseen Transitions

Indeed, major life transitions of change such as retirement, the selling of a business, and the loss of a spouse arguably hold some of the largest changes one will ever go through. These changes are easily overwhelming, not only emotionally but even financially. Without a doubt, one of the best ways to lighten the impact of these changes is early and frequent preparation.

Preparation also means being on the same page as your family, and that means talking openly and honestly. Candid conversations about how your financial picture is going to change due to a life event can also save so much stress. The more your family is aware of the “big picture,” the better they will be equipped to handle such changes. Misunderstandings are reduced, and bonding in an area of life that most often feels overwhelmingly daunting is promoted.

Retirement: Rebuilding Your Future

Retiring is, for most, a long-awaited moment; it closes a chapter in your life marked by active work and opens another, heralded by self-actualization. Retirement, however, to high-net-worth individuals, does come along with some very unique challenges – the greatest of which is how to maintain your lifestyle without the same source of active income. While many individuals approach and prepare for retirement from a financial perspective, few are ever prepared for the change in lifestyle that retirement brings with it.

More importantly, retirement planning has to do with more than just the numbers themselves; it’s about how your wealth will support your lifestyle. “Do I want to downsize or relocate?” and “How will my wealth serve me in the next 20 to 30 years?” are key questions one wants to get insight into for entering retirement not just financially sound but fulfilled.

Actionable Tip:

Reflect heavily on what you want your retirement to look and feel like. It is best if you start this phase at least five years out. Consider the type of lifestyle you want to live, and position your portfolio to support it. This is a sure way to align your wealth strategy with your retirement vision to make sure that the next chapter in your life is devoted to what really matters.

The Sale of a Business: Turning Liquidity into Legacy

The sale of a business is one of those milestones that come expected for entrepreneurs and business owners or brought about by circumstances beyond one’s control.

In either case, transitioning from active manager of a business to the management of liquidity derived from its sale demands careful financial planning.

The success of navigating this transition lies in timely planning and reinvestment with due efficiency. That means well in advance of a sale, it’s critical to determine your tax liability, make sure your investment strategy is in alignment with your goals, and determine how new liquidity can be deployed to build lasting family legacy. Whether it’s value-aligned impact investing, an opportunity in family wealth-building, or real estate, the time when a business is sold is a time for stock-taking about long-term goals.

Actionable Tip:

Consider partnering with a wealth advisor well before the sale of a business to be better prepared to manage the windfall in a way that aligns with your values and goals. With a well-designed investment strategy, tax efficiency and growth can both be achieved, realizing the full potential of your business success.

Death of a Spouse: Worst-Case Scenario Planning

The passing of a spouse could count as the most overwhelming and destructive transitions a person may go through in life. It will bring emotional grief but also likely mean financial complexity, especially if one has high net worth that comes with accumulated multiple assets, properties, or investments.

It, therefore, follows that proactive estate planning is one of the prime factors in easing this burden. Discussions about financial planning can be well in advance, whereby the spouse left behind is prepared regarding changes in any respect. Major documents such as wills, trusts, and beneficiary designations are reviewed in advance of any loss to make the transition smoother and reduce administrative burdens at a grief-stricken juncture.

Actionable Tip:

Periodically review your estate plan with your financial advisor to ensure that wills, trusts, and powers of attorney remain updated and current. This helps ensure that your estate plan reflects your values and remains aligned with the dynamic legal requirements associated with life’s transitions.

Preparing for the Unexpected: Why Liquidity Counts

After all, life is full of contingencies, and any of the following can always happen with anyone: medical emergencies or sudden losses in the markets. One of the most important parameters concerning these contingencies is liquidity for immediate need.

Liquidity may be greatly needed during those periods when assets could be tied up- for example, in probate or transition in trusteeship. That provides the necessary financial support through those key periods. To that end, joint accounts or readily liquidated funds are assuring that your short-term needs are met without liquidation of important assets at some inopportune time.

Actionable Tip:

Put in place a liquidity strategy to underpin your overall financial plan with joint account structuring with a spouse or the allocation of liquid funds. Frame the balance that will provide you with accessible capital in downturns and find the right balance between investments for longer-term goals and short-term liquidity.

Keeping Your Financial Objectives Top of Mind: Revisiting Your Plan

Your financial goals change with the changes in life. Be it at the addition of a new member in the family, or moving into the next phase of life, the bottom line remains revisiting one’s financial plan to make sure it is always relevant to what presently is and will be needed in the future.

Beneficiary designations, estate plans, and investment holdings change throughout an individual’s life. Ongoing reviews of these elements allow for smoother passing of one’s wealth onto successive generations and may help minimize potential adversity later on.

Actionable Tip:

Set a recurring annual financial review in your calendar. This will help to keep your plans current if there are any life changes for you or your beneficiaries. Stay focused on your goals and in control of your financial future.

Staying in Touch with Your Inner Circle: Guardians, Trustees, and More

One of the most-overlooked aspects of financial planning involves keeping up with the constantly changing cast of characters who play a vital role in one’s financial life- for instance, guardians, trustees, or agents named in one’s estate plan.

Just as your circumstances are changing, so are theirs. A few words with them now may prevent problems later and ensure that those to whom you have given major responsibilities can continue to carry them out. The obvious objective of maintaining your network of contacts and keeping the lines of communication open is to help you avoid problems and make any transitions much easier.

Actionable Tip:

Periodically review the individuals who would be involved in estate planning and management of your wealth. Update your estate plan as changed circumstances dictate.