A financial legacy involves more than generational wealth that is passed down through the generations.
September is Heritage and National Wills Month and the spotlight once again falls on the importance of financial planning and legacy. Although one does not like to think about death, it is a time to reflect on one’s financial legacy and its influence on loved ones. However, it is a process that must receive continuous attention.
“Although legacy is about more than the money you leave behind, it is important to provide for your loved ones to give them stability and opportunity when you are no longer around,” says Thys van Zyl, CEO of Everest Wealth, a private investment and wealth management company.
“Intergenerational wealth is often the result of sound values and management strategies when it comes to money matters. However, it is just as important to impart financial literacy, values and good spending habits, which include, among other things, being able to invest for long-term goals, education and taking out life insurance to ease uncertainty and financial pressure.”
A financial legacy can open doors for the next generations, especially if values and wisdom are also passed on. “It is important to equip the next generation with the necessary knowledge in order to be able to build on this financial legacy to also benefit future generations.”
According to Van Zyl, it is important for those who want to leave a financial legacy behind to understand the importance of financial planning and ensure that it is passed on to the next generations. “This involves starting to build your financial legacy early by setting clear goals, including developing an investment strategy, protecting your assets, saving enough for retirement and doing estate planning and having a will in place.”
A will is important to determine or regulate your legacy. Dying without a will can cause huge problems for those you leave behind, including family disputes, expensive lawsuits and unnecessary waste of money.
“Administering deceased estates takes months if there are no major and unexpected snags. However, without a will it can take years before your loved ones get what they deserve as your estate is then settled in terms of the Intestate Succession Act to determine how your assets should be divided between heirs.”
When you have a will in place, you can nominate an executor and therefore decide who will be responsible for the administration of your estate. “A testamentary trust will help protect minor children or the elderly as you can name the trustees who must look after them and manage their financial affairs when you are no longer around.”
A large percentage of South Africans do not have a valid will in place and this results in loved ones not only having to process emotional trauma upon the death of a loved one but also face financial trauma. “Working hard all your life to leave a legacy for your loved ones can have far-reaching consequences due to the absence of a will.”