6 Keys to Comprehensive Personal Wealth Planning, Part 1

Key Takeaways:

  1. Accumulating wealth for retirement needs.

  2. Doing appropriate income tax planning.

  3. Planning for the distribution of the estate.

  4. Avoiding guardianships.

  5. Preparing for long-term health care costs.

  6. Protecting assets.


This article is the first in a series designed to help you and your advisor implement appropriate financial, estate and asset protection planning, regardless of your age, assets or income.

Personal and Wealth Planning Needs: 6 Keys

Everyone, regardless of their age, health, marital status, assets and income, should understand the six key planning needs for protecting themselves against personal, legal, tax and financial issues.

1. Accumulating Wealth for Retirement Needs

We all retire at some point in time. Retirement is when wealth accumulation normally tapers off and we begin to consume our accumulated assets in order to fund our retirement needs. Never overlook the importance of retirement income planning because, if ignored, retirement, aging and income cash-flow needs can significantly erode your wealth. Life insurance statistics show that a 50-year-old now has at least an even chance of living to 110!

Assuming an average retirement age between age 60 and 65, many of you realistically face the prospect of living 30 to 40 years AFTER your working life (i.e. wealth accumulation phase) has ended. In estate planning, we often talk about preserving wealth and passing it on to the next generation. But given the demographics of aging, inflation, health care needs, etc., it is easy to have your wealth run out before you do.

2. Appropriate Tax Planning Should Always Be Considered

You face a multitude of state and federal taxes (along with income tax issues and wealth transfer tax issues), which must be addressed at each stage of life as well as at each stage of the planning process.

3. At Some Point We All Die

It is critical that you have appropriate estate planning documents in place, including wills, trusts, appropriate beneficiary designations, guardian designations and more.

4. Avoiding Guardianships

Unfortunately, because of age, accident or illness, we all face the prospect of being unable to take care of our own finances or to make our own health care decisions. Therefore, proper documents need to be put in place NOW to allow someone else to make appropriate decisions on our behalf.

5. Long-Term Health Care Costs

Because of health and aging, everyone faces the prospect of financing long-term health care needs, including the possibility of assisted living and full skilled-care living. These costs can be financially devastating if they are not planned for.

6. Asset Protection Planning

Everyone should be concerned about protecting their wealth from divorcing spouses, lawsuits, family problems, business problems, taxes, creditors and predators that can ruin your long-term financial health. Failure to address any of these needs can result in significant financial loss and the accompanying emotional, psychological and family issues that all too often accompany the onslaught of life’s problems.

We can’t fight the aging process. We can’t prevent the unexpected events that impact our quality of life. However, proper planning and documentation can go a long way toward creating peace of mind when we have put in place the appropriate planning for financial, legal, tax and healthcare issues that are bound to occur during your lifetime.

Getting started

Regardless of your age, health, assets and income, everyone needs a well-drafted “financial durable power of attorney” and an appropriate advanced medical directive. Advanced medical directives normally include healthcare powers of attorney, living wills and more. If you are unable to attend to your financial, personal care or health care matters because of age, accident or illness, no one can make these decisions for you unless the decision making has been specifically designated in writing. 

Financial durable powers of attorney cover assets, income and dealings with other financial matters and government agencies. Advanced medical directives deal with personal care and medical issues, including surgery, placement, medication, assisted living, full skilled-care decisions and end-of-life decisions.

If you do not have these documents in place, unfortunately these decisions will have to be made under a court-supervised process known as a “guardian of the person” (for personal care and medical issue decisions) or a “guardian of the estate” (for financial matters). Guardianships are expensive, personally intrusive and perhaps the worst way to manage any of the decision-making processes.

The proceedings can be very traumatic and expensive. Guardianships of an estate or the person are easy to avoid if the appropriate documents are put in place.


A final word of caution: Be careful about using simple, generic estate planning forms. Simple forms often ignore many of the issues that will have to be made throughout the course of your lifetime. Many of the decisions that may be critically important to your family need to be specifically designated in the documents. Take the time to get your affairs in order while you are still in your prime health and income producing years. You’ll be glad you did.

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.


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