Download Protect your legacy FOR YOUR LOVED ONES

FINANCIAL PLANNING
Protect your legacy
for your loved ones
Lesego Monareng
Financial Planner,
Private Wealth Management
At its core, estate planning is about the legacy that you leave behind. Will
that legacy be one of conflict, confusion and cost, or a process that positively
extends the impact of your life? You don’t have to plan to fail your family;
you just have to fail to plan.
The two main principles to consider when planning your legacy are:
1. Wealth protection of goals
An unexpected event such as death means a loss of income, which can be
a heavy financial burden on your dependants.
This potential loss of income can be covered by a risk policy.
You and your financial planner must discuss the amount of risk cover you need
to ensure that the gap between your assets, liabilities and future expenses
are well covered. This is particularly crucial where you are the breadwinner
or have minor dependants.
It is important to review this regularly as your life and circumstances change.
2. Estate Planning
Estate planning is an integral part of any good financial plan. We all want
to leave a lasting legacy to protect our loved ones and inspire the younger
generation to reach even higher.
Your financial planner can
assist you with these difficult
discussions to protect
your WEALTH.
Inherited wealth can be a burden if it was not carefully planned. Good
planning will empower you and your future generations to preserve your wealth.
It involves making plans for the transfer of your estate after death. Your net
estate will include your personal assets, business assets and all other investment
assets (excl. retirement assets) less all liabilities, taxes and any other valid
financial claims. A good estate plan will provide adequate guidance on
the management of your assets upon your death.
This process will also reduce estate costs you may not have considered.
Ongoing planning for the liquidity needs of an estate and the management
of immovable property is another essential element. In the case of minors
inheriting immovable property, the maintenance, rental income and other
matters have to be discussed.
It is important to identify expenses such as income tax, capital gains tax,
executor’s fees and claims upon death. Personal estates that are valued
in excess of the estate duty abatement (R3.5 million for individuals and
R7 million between spouses) will have significant estate duty taxes. These
costs can compromise the preservation of your wealth for the next generation.
Your assets and investments will grow over time exceeding debt and future
financial commitments and reducing your need for risk cover. The ultimate
goal of financial planning is to reach financial independence where you
can live from your assets. See diagram below.
Your financial planner can assist you with these difficult discussions to create,
protect and transfer your wealth.
[ DEBT & FINANCIAL COMMITMENTS ]
Benjamin Franklin said: “In this world nothing can be said to be certain,
except death and taxes.” These certainties are part of life. Nobody likes to
think that they will eventually die, but it is important to plan for this event.
Dealing with the death of a loved one is hard enough. Not knowing what
to do with someone’s finances after the person has passed away puts an
additional burden on a grieving family.
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PWM CONNECT: 2015