Building wealth is like building muscle – in the words of Mr. Ronnie Coleman, 8-time winner of the Mr. Olympia Title, “everybody wanna be a bodybuilder, but don’t nobody wanna lift no heavy […] weight!”
In other words, if you want to build muscle there are certain things that you are going to have to do:
You have to educate yourself on building muscle;
You have to monitor what you eat;
You have to lift some heavy weights;
You have to get enough sleep;
You have to drink water;
You have to obtain the right tools.
These items are the requirements for anyone who wants to be a body builder. Building muscle takes hard work, and it requires doing some things that you just don’t want to do (over and over and over again). But for some, the hard work and sacrifice are worth it because they are focused on the end-result – that strong, lean body that functions the way they want it to and looks the way they want it to look.
Similar rules apply when you want to build wealth:
You have to educate yourself on building wealth;
You have to monitor your spending;
You have to invest;
You have to save;
You have to develop additio0nal streams of income;
You have to obtain the right tools.
Estate Planning – a Tool for Building Wealth
One of the tools that everybody needs, but not everybody wants to obtain along the journey of building wealth is an estate plan. In an upcoming article I will discuss why people hesitate to do their estate planning, but for now, I’m just urging you to do it. It is critical for everyone who desires to build wealth to create some combination of a will, trust and other documents to help them organize the assets that they’ve acquired and strategically pass it on to the next generation.
I can already hear you – how can an estate plan help me to build wealth if I will be dead by the time it kicks in? I hear you, but let’s see if I can shift your mindset on that. Here are a few ways that creating your estate plan can help you build wealth:
Doing your estate planning forces you to look at your assets. When you do estate planning with a firm like mine, you will be sent on a guided mission to take an inventory of everything that you own and assign a value to it. For many people, unless they have worked with a financial advisor previously, this will be the first time that they take an honest look at all their finances all at once. It can be an eye-opening experience. Sometimes people realize that they own less than they thought they did, which prompts them to work a bit harder at building. However, in many cases, people learn that they own a lot more than they previously thought! I’ve had some clients learn when working with us that they were already millionaires and didn’t even realize it.
Going through this process often sparks a desire to build more. Some people complete their estate planning journey and realize that if something happened to them in the near future then they wouldn’t be leaving their loved ones as much as they thought they would’ve liked. Others learn that they need to increase their income now to prepare for potential long term care needs or other expenses that may come up later in life. Estate planning can serve as a signpost as to how you are doing financially and motivate you to shift your gears in how you approach your finances. Sometimes just investing the time and money to hire a professional can generate a new level of focus and attention on improving your financial health.
Estate planning can be a gateway toward being utilizing other financial services. Many people never considered hiring a professional to help them address a financial matter until they hired an attorney to help them with their estate plan. However, once they hire an attorney and got through this process, they start to be open to hiring other professionals who can help them grow their assets. In addition, your estate planning attorney will likely be able to refer you to other professionals who can help you to build wealth in a manner that you can enjoy while you are living. Most estate planning attorneys have close connections with financial advisors, CPAs, business consultants, life insurance agents, and other financial professionals that can help you further build out your financial plan.
When you do your estate plan you help create a culture of estate planning. After you go through the estate planning process and realize that you’ve survived, you just might tell someone else about it. Perhaps some of the people you tell would be your parents or other loved ones who would later include you or one of your children in their estate plan. Even if they don’t, when more people in your circle do their estate planning, your overall network becomes wealthier as a whole. If someone in your network passes away or becomes incapacitated, then there would be a plan in place to meet the needs that arise from that. This means that instead of seeing resources drain from your network, you will see resources grow. Imagine what would happen if instead of having to create a GoFundMe account when someone died, you actually received a check from their life insurance policy.