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Legacy planning – creating a lasting legacy

23 November 2021 Madelein Steenkamp CFP®, Legal Specialist at PSG Wealth

We all want to leave a legacy, but this is not always as easy and as straightforward as it seems. In the past year we have all witnessed how quickly circumstances can change, emphasising the importance of having your affairs in order.

Estate planning vs legacy planning – what’s the difference?

Estate planning refers to the preservation and protection of your assets during your lifetime and the planning and management of the transfer of your estate in the event of your death. Estate planning is more than just having a will. A comprehensive estate plan will not only look at your estate’s liquidity and the effect that estate duty and other estate expenses will have on your estate. It will also address the maintenance of your surviving spouse and ensure your children’s and other possible dependants’ maintenance and educational needs are looked after in the event of your death. Without a proper estate plan, you have no guarantee that your wishes will be carried out.

Legacy planning is a more extensive and holistic approach to estate planning and an opportunity to assign a meaningful value to the wealth you have created during your lifetime. Legacy planning and estate planning go hand-in-hand; estate planning focuses more on your assets, while legacy planning focuses on the intangible assets with a more holistic view of your estate, financial wellness, and the legacy you would like to leave behind.

A cross-generational plan
Your first concern may be to minimise estate duties and expenses to maximise your bequests to beneficiaries. However, your legacy is not just about increasing the financial wealth that you hope to pass on to future generations. While careful consideration should be given to your estate plan to ensure that your wishes as stipulated in your will can be carried out, legacy planning also entails the process of preparing your family for the wealth they will receive. This involves more than just financial education for the next generation; it also involves a cross-generational understanding of what wealth means to individual family members and to the family as a whole.

Successful legacy planning often hinges on having open and honest discussions with your family members and advisers, identifying your family’s values and objectives for your wealth, and developing a strategy that closely aligns with your goals. Legacy planning acknowledges that there is much more to what you leave behind than the things you own and the wealth you have accumulated. With proper planning, you can create a lasting legacy that spans generations.

The heritage of wealth
As with estate planning, legacy planning defines how your estate will be distributed to your loved ones after your death, but it goes a step further and also includes consideration to intangible assets that are pivotal to your legacy. These may include for example, philanthropy or the values and traditions that you live by.

Legacy planning is important as it can help you avoid family conflicts that originate over the division of your estate in the event of your death or the improper distribution of your wealth. It also gives you control over your own legacy and the values you wish to pass on to future generations. A qualified financial planner and/or fiduciary expert will be able to guide you and assist you with a comprehensive plan and strategy, addressing all elements, providing you with peace of mind that your legacy will be preserved for future generations.

Quick Polls

QUESTION

The second draft amendments to Regulation 28 will allow retirement funds to allocate up to 45% of their assets to SA infrastructure, with a further 10% for rest of Africa; but the equity & offshore caps remain unchanged. What are your thoughts on the proposal?

ANSWER

Infrastructure? You mean cash returns with higher risk!?!
Infrastructure cap is way too high
Offshore limit still needs to be raised
Who cares… Reg 28 does not apply to discretionary savings
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