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Want to leave a financial legacy? Here’s how

Leaving a financial legacy can help you secure intergenerational wealth – but you will need a well-considered plan. We examine how to lock in value for your family.

18 January 2024 · Fiona Zerbst

Want to leave a financial legacy? Here’s how

Everyone dreams of leaving a financial legacy for their loved ones – but what does this look like, and how achievable is it?

We explore the steps you can take to ensure financial stability for future generations.

Tip: Build your wealth by investing in your future. Find out more about saving and investing.

Why plan your financial legacy?

Legacy planning is a modern approach to estate planning that allows you to take a comprehensive look at what you would like to leave your loved ones.

This covers not only material possessions, but also your values and aspirations for your family, says Claire Klassen, a consumer financial education specialist at Momentum Metropolitan Holdings. 

While estate planning aims to ensure that your family will be well taken care of in the event of your death, Klassen explains, a financial legacy "is about achieving something significant, which involves ensuring that your assets, business ethics, and financial philosophy are passed on to your legatees”.

Klassen notes there are significant advantages to leaving a financial legacy. “Your family will have financial stability and, if you’re a business owner, your business could help to secure jobs and bolster the economy.”

The benefits of consulting an adviser

The best way to secure your financial legacy is to work with an accredited financial adviser, says Nirev Desai, head of sales at PSG Wealth. 

“Wealth doesn’t fall out of the sky,” Desai says. “Most people create intergenerational wealth by using earnings from employment and entrepreneurship according to a well-considered, executable financial plan.” 

Desai notes further, “Behavioural coaching, alongside planning for events such as divorce or starting a business, can ensure your savings are not depleted and your future financial outcomes are assured.”

Klassen recommends working with a financial adviser who specialises in creating and protecting wealth, or an estate-planning law firm with the necessary qualifications and authority.

“Recent developments in the FIC [Financial Intelligence Centre] Act for the prevention of money laundering highlight the need for intermediaries who form trusts to meet compliance requirements, even if they’re advising a family or individual on how to set up a trust,” she notes.

Strategies for leaving a legacy

Desai says you can only start thinking about leaving a legacy once you’ve taken care of your own lifetime financial needs. 

“Some clients want to leave a legacy, but don’t have the commitment to make the necessary provisions for this,” he says.

“Ensure your holistic plan covers your lifetime financial needs first; then ensure that those around you have similar plans, so their dependency doesn’t compromise your savings.”

Desai and Klassen recommend the following strategies:

  • Discuss family burdens, to ensure they are proactively and productively addressed. Examples include “black tax”, which refers to financial support of family by black professionals, and the “sandwich generation” - i.e., those who care for both ageing parents and children.
  • Ensure your children become financially independent at a reasonable age, and start building their wealth journeys.
  • Discuss financial values with your beneficiaries, and what it means to be a custodian of wealth for future generations, so that value is not destroyed in their lifetime.
  • Understand investment fads and the impact they may have on intergenerational wealth. Property syndications were popular in the past, and cryptocurrency is enticing to the younger generation, but it’s useful to educate family members about the risks of certain investments. Stress the need to prioritise enduring, reliable investment strategies.
  • Draw up a concise, valid, and unambiguous will, to ensure your finances are clear when you’re no longer around.

“Leaving a financial legacy will ensure that future generations – which includes the youth of our country – will have something better to look forward to,” Klassen concludes.

Tip: Use a budget calculator to map out your monthly income and expenses. Be sure to include a savings portion.

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