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The High Five of Estate Planning for the Wealthy

06 December 2018 Stonehage Fleming
Layve Rabinowitz, Director and Head of the Family Office division at Stonehage Fleming in South Africa

Layve Rabinowitz, Director and Head of the Family Office division at Stonehage Fleming in South Africa

Stonehage Fleming Research Report highlights key concerns of wealthy families

With the end of year in sight, the imminent festive season provides a timely opportunity to confront existing apprehensions and proactively plan for a smoother, less stressful year ahead. According to the latest research report from international family office Stonehage Fleming, the top three risks to long-term family wealth are family disputes or break-ups, lack of planning and the failure to engage the next generation.

The “Four Pillars of Capital: The Next Chapter” report was compiled over the course of 2018, through interviews and surveys conducted with some 150 multigenerational families around the world, including South Africa.

With these concerns in mind, Stonehage Fleming has identified five C’s for estate planning that may help alleviate anxiety and afford greater peace of mind as we roll into 2019.

Communicate
• Is your family informed about your wealth? Do they know where all your assets are, how to access them and who to speak to about those assets?
If not, consider documenting this on your own or with the help of a professional firm. Plan a discussion to talk through your South African and any global structures with your family, including the next generation, so that everyone understands where your accumulated assets sit and how to deal with those assets responsibly. Ensure that this same discussion takes place on a regular, ongoing basis so that all parties are kept up to speed.

Stay Current
• Have you recently had your Will reviewed to ensure that it is complete, up to date and reflects any changes in your circumstances, asset base and tax legislation?
Similarly, an annual or bi-annual discussion with an independent adviser will help you to remain on top of any macro-changes that may impact your wealth decisions.

Be Consistent
• Does your Will synchronise with any Trust Deeds, Letters of Wishes and your strategic succession plan?
A Will is only one of several documents that raise their heads upon death. Ensure that all your affairs are aligned, or else you may one day leave behind a costly financial and legal state for your family to sort out.

Use Common Sense
• Have you sufficiently de-risked your asset base by diversifying outside of the borders of South Africa, across asset classes and individual holdings in a strategic manner?
Investing on a global basis is important, as it reduces volatility and risk and improves risk adjusted performance in the long term. With South Africa contributing less than 1% to the global economy, it makes sense to diversify wealth internationally, due to the better investment opportunities that exist at a global level.

Commit
• Have you got sufficient support and administration structures in place so that when you do go back to work at the end of your holiday, you are still able to drive your resolutions forward?
Layve Rabinowitz, Director and Head of the Family Office division at Stonehage Fleming in South Africa, says:
“We strongly recommend that you do not allow your 2019 Resolutions to slip to 2020. Failure to effectively communicate the details of your existing wealth with direct family and/or support network can cause emotional turmoil for everyone concerned, in life as well as in death.

“The latest Four Pillars Research Report revealed that client families view the alignment between generations on the purpose and use of family wealth as essential; however to achieve this, ongoing communication and greater transparency are both required.”

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