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Category Life Insurance

Leaving a lasting legacy

22 July 2020 Capital Legacy

This past Saturday, 18 July, was Mandela Day, and it is celebrated each year on Mandela's birthday. The United Nations officially declared it as such in November 2009.
As the Father of our Nation, he has truly left a legacy and set an example we can all aspire to.

Lasting legacies don’t just happen by chance.
The reality is, we all leave a legacy whether we like it or not – the question is, what legacy are you leaving behind? Lasting legacies don’t just happen by chance – they require a plan, purpose and intent.

You don’t have to be rich or famous to leave a lasting legacy, but you do need to be smart. According to statistics, 70% of families lose their wealth by the second generation and 90% by the third. This phenomenon is partly due to poor estate planning.

So how do you avoid being a statistic?
Alex Simeonides, CEO of leading Wills and Estate Administration company, Capital Legacy, says many people think estate planning sounds like a lot of hard work, but this isn’t necessarily the case. “At Capital Legacy, we always refer to the golden thread of Estate Planning. We believe your Will should not just be a document you draft once, it should be a document that reflects your changing circumstances as your Estate and your aspirations for the legacy you want to leave, evolve and grow. I’ve often emphasised that when you’re speaking to your financial advisor about your life insurance, you should be drafting your Will at the same time. You need a vision for your legacy and a clear plan to secure it – this is what your Will and succession planning does. We help nearly 6 000 clients every month make this seemingly onerous task, simple.”

Many people work hard to accumulate wealth all their lives in the hope of securing their family’s future for when they pass away one day. This will be their legacy. The problem is that many people fail to put a plan in place to ensure that this wealth is used wisely and for the purpose it was intended.

Nearly 75% of South Africans pass away without a Will!
“Shockingly, nearly 75% of South Africans pass away without a valid or up to date Will in place,” says Simeonides.

The impact of passing away without a Will can have devastating consequences for your family – never mind the legacy you are hoping to leave behind. In many cases, without a Will, inheritances can take years to pass to your dependants. Families can lose their homes and lifestyles as bank accounts are frozen, or the estate administration process is halted due to exorbitant fees not being paid.

“Securing your legacy is not as hard as it may seem. We built our business on making it easier for South Africans to do so. Even our strapline says: leave a legacy,” quips Simeonides.
By taking the time to draft your Will and making sure it remains up to date and relevant, you force yourself to continually think about the legacy you want to leave behind. It becomes more than just a document – it forms part of a plan – a succession plan.

What’s your plan?
A succession plan takes a holistic approach to your financial situation addressing concerns that would otherwise not be included such as making sure your Estate is passed on in a tax-efficient manner, finding a balance between retaining enough capital on which to retire and leaving enough for your heirs. It should also include a thorough look at establishing the most efficient and viable trusts and making provision for your pets or material objects that have sentimental value (i.e. holiday cottage, or that William Kentridge etching). In many cases, you will also need to be explicit about your charitable or philanthropic goals and how your wishes regarding them should be executed. “A simple example would be that many people would like to be organ donors, but don’t realise that this selfless act is something they can include in their Wills; making provision to touch a life beyond their own and beyond the here and now,” shares Simeonides.

Succession planning also provides solutions to the challenges families face when their members are scattered across the globe. You need to consider where the assets are and where the beneficiaries live as well as the regulations, tax regimes, and jurisdictions that apply accordingly (known as situs taxes).

So, as we go into Mandela Day inspired by this great man and contemplating our legacies, remember that we all end up leaving an impact on our immediate worlds – our family, our partners and our children. We may not all achieve global recognition but ensuring we have planned for the future certainly creates a platform for the next generation.

 

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Many legacy RAs allow an insurer to take up to 30% of the accumulated capital upon early exit. “This is just one of countless examples of shocking product design that is 100% engineered by insurers to extract punitive fees from clients...".

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