Unlocking Success: Legacy, Estate Planning, and Wealth Management Insights

How to start saving money

I recently encountered a dynamic young woman who has established a thriving school in a picturesque farm setting in the countryside. As a young graduate she had the opportunity to spend a few years in Europe honing her skills. On her return home, her experience was appealing to an expat family who were exploring schooling options for their children while in South Africa.

From small beginnings in a rented classroom in a preschool near her home, more and more enquiries and enrolments came. This expedited the need for a more established location and required her to look to expand. She describes how on a random afternoon she was drawn by a “for sale” sign perched on the side of the road for what she discovered was the perfect premises to establish her school.

Already seeing the potential and growth she was experiencing, her parents shared her vision and were able to assist with the initial capital through what they considered her “early inheritance”, thus setting her on the path to what is becoming a marvellous success story to watch. Being able to support the talents and worthy pursuits of our children, thereby placing them on the road to success in life, is an aspiration we can all achieve. It starts with having a well thought out financial and legacy plan yourself.

When embarking on the exercise of arranging your financial affairs, a good starting point is addressing your legacy and estate planning. If we use the analogy of building a house, one’s legacy and estate planning can be likened to building a strong foundation that can sufficiently support subsequent financial arrangements.

Legacy planning, on one hand, is a more encompassing process where you consider what you leave behind to heirs and loved ones, taking into consideration your possessions and - of greatest importance to most people - the values and life lessons you wish to impart, helping generations that follow navigate their lives.

Estate planning, one may say, is a more objective process that has been described as considering “the arrangement, management and securement and disposition” of each asset to ensure that these assets are fully enjoyed during and after the life of the asset owner and those they love. It is a process where we consider the tax implications of having sizeable wealth and assessing the liquidity requirements of distributing those assets as you would wish. Legacy and estate planning is the bedrock of your wealth arrangements. Let’s consider some scenarios:

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Business ownership and succession

A family business or an equity stake in an entrepreneurial venture owned with others often represents a substantial portion of one’s asset base. There are two important considerations here. The first is how you own the shares in the business: should you own the shares in your personal capacity or through a structure such as a trust, which can outlive you and ensure smooth succession? The second consideration, particularly if your co-owners are not family members, is how you ensure that your family is indeed able to extract and then protect the most value from the business you worked so hard to build and grow. Your business succession arrangements should therefore be well integrated with the legacy and estate planning arrangements you make for your family’s well being.

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Asset protection

It may be important to you to protect your assets against legal action, creditors, divorces and subsequent marriages, avoidable taxes and protecting vulnerable heirs against those who prey on the wealthy.

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Special circumstances

Addressing this area of wealth management also affords you the opportunity to make arrangements for special circumstances you may find yourself in. Consider a mature couple who enter into a second or third marriage, already having accumulated a degree of wealth and having children from the previous relationships. A conversation around the ideal marital regime and appropriate structures that will protect and ensure equitable sharing of assets could be the basis of loving and harmonious family relations well into the future.

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Investment growth

Planning your estate also helps you identify those assets that have the greatest potential to grow over time, such as listed investments. Accumulating wealth is wonderful, but one equally needs to ensure that you don’t simultaneously perpetuate an issue such as costs and taxes that could have been avoided.

A well thought out financial plan with solid legacy and estate planning strategies can indeed be the gift that keeps on giving to your loved ones and can change the financial trajectory of your lives into perpetuity. It is important that those with wealth or those coming into wealth address this area of their financial planning by approaching a Certified Financial Planner (CFP) and regularly revisiting these arrangements to suit their changing circumstances.

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Palesa Dube, CFP, is a Director and Wealth Manager at Wealth Creed. She is a practising member of the Financial Planning Institute of Southern Africa and is the Financial Planner of the Year 2022.