In this era of unprecedented wealth accumulation, long-term, strategic estate planning has become essential for high-net-worth (HNW) families aiming to secure intergenerational wealth transfer effectively and sustainably.
This is the view of Godwin Magosha, a Fiduciary Specialist at Private Clients by Old Mutual Wealth, who explains that “an estate or wealth transfer plan helps HNW families navigate the multi-jurisdictional estate duty and tax challenges they frequently face and ensures their wealth is retained within the family following death,” says Godwin Magosha, Fiduciary Specialist at Private Clients by Old Mutual Wealth.
Estate planning is a specialised focus within the broader financial planning process, with significant overlaps in steps like data gathering, financial needs analyses, implementation, and ongoing monitoring – all aimed at achieving holistic, goal-oriented, and risk-appropriate wealth management outcomes. “The nature and structure of the estate plan must align with the family’s wealth transfer and legacy goals, informed through the close, trusted relationship between the financial planner and client,” Magosha adds.
Business succession, trusts, and wills are key considerations for HNW clients. Magosha notes that wealth transfer plans are typically documented in a will, which may or may not include a living or testamentary trust. “The wealth transfer plan must be fine-tuned for in-country estate and tax laws, and the documents and structures it contains should be subject to frequent review to ensure they remain fit for purpose under the applicable jurisdiction,” he says.
Assuming that South Africa’s estate duty and income tax laws will remain unchanged introduces significant risks. “Changes in local laws could undermine your wealth transfer plan and potentially divert a large portion of your wealth to taxes and duties,” Magosha warns. He highlights similar risks around assumptions about the future domicile of family members and other beneficiaries stipulated in trusts and wills.
The impact of changes in legislation on estate planning was recently demonstrated in the United Kingdom, where thousands of farmers marched to Parliament Square in London to protest proposed changes to inheritance tax on agricultural land. The policy aims to end existing relief for agricultural land from April 2026, imposing a 20% tax on farms valued over GPB1 million. Under the change, children of multi-generational farming families could face significant tax bills upon their parents’ deaths, potentially forcing the liquidation of farm assets to cover costs.
It is therefore important that financial advisors must keep pace with changing legislations to ensure that their clients’ estate plans are not out of step with the changes in legislation. This process involves recalculating all duties and taxes payable under the new tax legislation. If the changes result in higher taxes, amendments to the will should be considered to minimise the tax burden and maximise the wealth transferred to heirs.
“Your wealth transfer plan requires careful thought and the expertise of a seasoned financial planner who will consider both your goals and the tax implications of your will’s provisions. The planner will calculate the potential taxes due if you were to die today, allowing you to reflect on whether the net wealth to be transferred aligns with your goals,” Magosha says, before commenting on the role of trusts in long-term wealth preservation.
“Trusts have been extensively used in the South African estate planning context; but recent changes to income tax laws mean that capital gains and income distributed to non-resident trust beneficiaries are taxed at a 45% marginal rate,” Magosha explains. While this does not render trusts unviable, it is important to explore estate planning alternatives if heirs or beneficiaries are likely to relocate abroad.
Best practice in HNW estate planning requires financial advisers to conduct regular reviews, benchmarking business succession plans, wills, and trusts against the in-force regulatory landscape to ensure compliance with current legislation. Close attention should be given to any changes in the client’s personal circumstances or wishes, including any life-changing decisions made by heirs or beneficiaries.
HNW individuals must further ensure that their trust instruments or wills are flexible enough to adapt to legislative changes, enabling trustees to protect beneficiaries from unfavourable tax positions. Options include living trusts, testamentary trusts, and use of sinking funds. “Your financial planning team can advise whether your wealth transfer plan remains appropriate or if amendments are necessary due to legislative changes,” Magosha concludes.