Leaving a legacy, intergenerational wealth, or succession planning?

By Robyn Laubscher, Advice and Product Specialist, PSG Wealth

Whatever you call it – leaving a legacy, intergenerational wealth, or succession planning – these terms ultimately all refer to the transfer of your assets to your beneficiaries. This can be done in various ways and times, either while you are alive or once you have passed on, provided of course, that there is a plan in place to do so – that is, your estate plan.

Estate planning encompasses more than merely drafting a will. and it can be a powerful tool. Not only can it ensure that your loved ones are well looked after once you pass away, it can also ensure a smoother transition of intergenerational wealth. Estate planning encompasses more than merely drafting a will. Whilst a valid will is certainly one of the most important documents, an estate plan includes far more and can be incredibly impactful as part of a holistic family financial plan.

Completing an estate duty and liquidity plan will give you a clear picture of the financial impact your passing will have on your family and dependents. For example, it will give you a better understanding of whether any assets would need to be sold to generate liquidity to settle debt and other expenses like capital gains tax and help you to structure an estate to reduce estate duty. You might have a large estate in terms of value but with little or no liquidity. It is thus important to understand what assets will be available to create liquidity and provide for your family.

Whether your beneficiaries are tax residents or not will also have an impact on their inheritance. According to Statista, South African emigrants cumulatively amounted to roughly 915 000 individuals in 2020. The vast majority of these emigrants settled in the United Kingdom, followed by Australia and the United States. 

The trend towards family-focused financial planning

There has been a gradual move towards family financial planning. Structuring a financial plan around a family unit as a whole has numerous advantages:

• Beneficiaries have a clear understanding of the family’s financial situation, so having a family financial plan in place helps create a smooth transition for beneficiaries.
• Shared responsibility within the family can help minimise potential tension between family members in cases where disagreements regarding assets arise. Constant, open lines of communication ensure that assets are transferred to the next generation as intended.
• Assets can be structured in a way that is beneficial from a tax perspective, e.g. nomination of beneficiaries and ensuring they are updated and reconcile with the wishes in your will.

As with anything relating to your family, it is so important to obtain the correct bespoke advice to structure your family plan correctly. A financial adviser can assist with this process, and I implore you to partner with a financial adviser that both you and your family are comfortable with. A financial adviser can guide and assist you with difficult but important conversations with your family, to ensure that you have the most appropriate financial plan in place to have peace of mind not only for yourself, but for your loved ones as well.