A Black Swan Event and Your Estate Plan

A black swan event has been described as an event that is rare, difficult to predict and has the potential for far-reaching consequences. The term is used more often in financial management/trading and was made popular by Nassim Taleb ( writer, professor, risk analyst and trader) in his book The Black Swan: The Impact of the Highly Improbable.

The tragedy of Sept. 11 would be considered by many a black swan event. When such an event happens there is a collective gasp and then the hindsight…”yes, we should have known that such an event might occur!” But of course, by its very nature, a black swan event in rarely predictable.

Some uncommon events can be ‘modeled’ by economists and predictions can be made based on past events and use of statistics and risk analysis. But the reality is that complex modeling analysis is not precise enough, since it cannot include the black swan event. Take the example of a war as a black swan event; we may be able to predict with a given certainty that –given A, B and C happening – a war might break out, but not precisely the exact timing; nor the same causation or duration based on any prior war.

What does a black swan event have to do with Estate Planning Strategy? I have previously written that Estate Planning deals with the “What Ifs” of Life. As a simple example: One might argue that a sudden death in the family (or of a business partner) is a very personal “black swan” event; sudden death is impossible to predict and a sudden (unanticipated) death can have far-reaching consequences. No Estate Plan can predict the exact timing of such an event. Thus, it is imperative that a solid estate plan strategy includes the consistent review of your plan and adjustments to the plan to deal with the “What Ifs” of life (in this example a sudden unexpected death.)

Just as rebalancing is a key concept in portfolio management, the ‘rebalancing’ of an estate plan can help to deal with the foreseeable future; with life events and with possible ‘unforeseeable’ unexpected changes in your life. It can help a person deal with the “What Ifs” of Life.

“Working to Preserve Your Wealth and Protect Your Future…in a Constantly Changing World”

Please read my full disclaimer and “How I Can Help You”

Visit my website: http://www.attorneybarbaradalvano.weebly.com for infographics; more articles and my bio

 

Advertisements

Tags:

About Attorney Barbara Ann Dalvano

Attorney in Denver, Colorado with extensive practice experience in the areas of Estate Planning, Wills and Trusts, Business Succession Planning, Probate, Contract Law.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: