Category Life Insurance

Leave a lasting legacy during uncertain times

16 September 2020 Roy McMurchie, Head of PPS Fiduciary Services
Roy McMurchie, Head of PPS Fiduciary Services

Roy McMurchie, Head of PPS Fiduciary Services

The impact of COVID-19 continues to touch every aspect of billions of lives around the world, affecting both their health and livelihood.

During these times of uncertainty, many people are turning their minds to the future, and what it may hold for their families and loved ones. At the forefront are people seeking to ensure that their financial and legal affairs are in order, to ensure their loved ones are secure, and are provided for as intended.

Ensure proper wealth transfer
An essential part of the financial and estate planning process is ensuring that you leave a lasting legacy in the form of an inheritance to benefit your children, grandchildren and potentially your great grandchildren.

The concept of intergenerational wealth transfer is the process of creating, managing and preserving your wealth for your beneficiaries to assist them with support towards their desired lifestyle. Furthermore, it creates the opportunity for your beneficiaries to continue to flourish when you are gone and offers the comfort of financial stability.

Unsuccessful intergenerational wealth transfer can cause financial strain and emotional hardships for the beneficiaries. There is a strong possibility that it will cause a loss of income in future and lead to liquidation of your assets.

In order to ensure that your wealth benefits future generations of your family, you need to take a far more considered approach and implement an intergenerational wealth transfer strategy.

Start with the end in mind
The first step is to establish a financial plan, draft a will and undertake a carefully considered estate plan. Your financial plan is critical in mapping out your financial journey and the best way to get there.

By drafting a will, you can be assured that your beneficiaries reap the rewards of your life's work and that it will be distributed and managed according to your wishes.

Estate planning ensures that your inheritance will be managed and fulfilled according to your wishes. By embarking on this process, you will also be able to ascertain whether or not your chosen heirs are prepared to take over this responsibility.

Predetermine your family’s future financial needs
In your planning, try to envisage what the future generations may need financial help with and align those needs to your inventory of financial and other assets. These are some of the key considerations you will cover in this process:

Family responsibilities
• Your marital regime, including your marital status and nuptial contract, has an impact on your estate plan. For example, how to treat an accrual claim in favour of or against the estate as well as managing maintenance claims.
• Careful consideration must be given to unpacking the objectives and goals of your beneficiaries and linking that to the role that you play from a maintenance perspective. A good example of this is funding their education.
• The ages of the beneficiaries also play a crucial role. The inheritance of a minor (under 18 years old) should be placed in a testamentary trust or umbrella beneficiary trust. One should consider whether the capital and/or income is released when the minor reaches the age of majority or at a specific age thereafter.? In the absence of provision for the creation of the trust, the inheritance is paid to the guardian’s fund and released to the beneficiary at the age of 18 years.
• Special bequests, allocating a certain item of property as a gift in your will, needs to be considered against your specific or personal assets.
• An inter vivos trust or mortis cause trust needs to be considered given the personal circumstances of your beneficiaries. Specific considerations should include choosing a successor trustee who will act as your representative, any restrictions on the discretion of successor trustees, and the ultimate disposition of trust assets.

Financial position
• Your current liabilities during your lifetime and those after you have passed away. Some examples include income tax, capital gains tax, dividend tax, estate duty, executor’s fees, loan accounts, etc.
• The liquidity in the estate needs to address the smooth and effective transfer of assets to the beneficiaries.
• If you hold offshore assets, you need to consider whether to draft a separate foreign will to deal with these assets in the event of your death or whether to include these in your local will.
• Determine whether your beneficiaries are of the means to take ownership of the property and cover the subsequent maintenance costs involved.

Business needs
• As a business owner, there are an array of different options available to meet your needs. Finding the right one hinges on the formation of your company (sole proprietor, partnership, closed corporation, company or incorporation), among other things.
• It is also critical to make provision in terms of your business needs, such as key-man insurance and contingent liability insurance.
• When it comes to a family business, succession planning is essential and may reduce the angst of deciding who will inherit the family business. Not only will this result in the company’s wealth being preserved but also results in a smoother transition of ownership and management.

Secure your family’s future today
Leave a lasting legacy by planning your inheritance during your lifetime can help provide peace of mind in uncertain times. Consider seeking advice from a reputable financial adviser to ensure that you have considered everything necessary when it comes to preparing future financial needs.

Quick Polls


The intention with lockdown was to delay or flatten the Covid-19 infection curve and give both the private and public healthcare sectors time to prepare for the inevitable onslaught. Did the strategy work?


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