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Securing and growing your legacy is too significant to leave to chance

According to Alan Weiss’s best-seller, Your Legacy is Now, each day we create the next page in our lives. “But the question becomes who is writing it and what’s being written. Is someone else creating our legacy? Or are we, ourselves, simply writing the same page repeatedly? Or do we leave it blank?”.

Securing your legacy

The idea of creating your legacy every day by the choices you make is inspiring. It makes us consider ideas and opportunities with less complacency. This theme of “taking action” must then also apply to securing the legacy we create.

The Master of the High Court estimates that up to 70% of working South African’s do not have a Will. Just recently, I asked my friends at a social event “who has a will?”. Even though they all understood the importance of having a Will, I was astonished that only two out of 10 did. Several of my clients have a Will, but they are not always updated, and the process that will occur on their death has not always been communicated with their families.   

What to consider when securing your legacy

1. Make sure your Will is updated.
   • To avoid family feuds or dying intestate, it is important to make sure your Will is updated. It is not a once-off event and needs to be updated every time you have significant changes in your financial circumstances such as getting married, buying a house, retiring, having children, parents passing away and changing jobs.
   • If you have offshore assets, ensure a Will covers them in the necessary jurisdiction as your South African Will does not necessarily cover these.
   • Do not forget the “soft stuff” such as a philanthropic venture you are involved in, organ donation and whether you want to be cremated or buried. 
2. Make sure debt is covered and settled.
   • Not only do debt repayments put an enormous strain on cash flow in your living years, but unsettled debt is also the quickest way of wiping out your legacy. Are these covered through a life cover policy or do you have a plan of settling them at your death?
3. The effect of Tax.

• Death and taxes – the only two sure things in life. Structure your estate optimally and with consideration. 
• Death benefit is regarded as a capital gains event and your estate will therefore be liable to capital gains tax (CGT) before any gains are distributed to your dependents. There is a capital gain exclusion of R300 000 in the year of death and any assets bequeathed to your surviving spouse are also free from CGT, as are any bequests made to approved public benefit organisations.
• The proceeds of life assurance policies, benefits from retirement funds and money housed in living annuities are all exempt from CGT. That is why it is important to update your beneficiaries on these products and within your Will.

4. Appoint an Executor

• To ensure emotions are kept out of the decision-making process,   a reputable entity such as a trust/insurance company, bank or lawyer should be appointed as executor of your estate. If you want to add a family member, consider adding them as a co-executor.
• When setting up your Will, consider what assets could be kept outside of your estate so that it will not attract executor’s fees.

Growing your legacy

Building and growing a legacy are two separate but related steps. The pivotal question for all of us is: how do we want to be remembered? Building our legacy is therefore about   the choices we make and the meaning we create. Growing our legacy is about how wise we are with our resources in ensuring our investments are well-positioned for maximum growth.

Most people make the mistake of planning for their passing   in isolation from what they want to building while. They do not conduct  a complete financial analysis for death, disability, critical illness, retirement and growing their financial portfolio by investing.

What to consider when growing your legacy

1. Planning
   • Each individual is different and accelerating your wealth requires a niche and highly personalised boutique proposition. An analysis of your financial status needs to be done, and a financial plan developed that is aligned to your financial and lifestyle objectives. 
   • Retirement is a crucial element of a financial plan. The rule of thumb is to save a minimum of 15% of your monthly income for your whole working life, which averages 40 years.
2. Diversification
   • It is never a good idea to concentrate your money or assets in one opportunity, but rather to diversify to reduce risk. Too much property may leave very little liquidity in your portfolio; too much cash means you are not beating inflation. 
   • An excellent way to diversify is through offshore investing. A portfolio that includes offshore, holds stocks and securities that are not limited to South Africa. 

Like a road map, a fully comprehensive financial plan that includes your estate plan and Will becomes the foundation for establishing and implementing your legacy.

It is essential to walk the path with professionals. Consult with an expert who can assist you navigate the investment landscape.   A wealth manager can help ensure your portfolio is structured in a well-diversified manner, and the funds’ allocation is optimal to meet your long-term goals.

By Werner Rossouw, Wealth Manager at PPS

Kindly note that this article does not constitute financial advice; the information provided is purely informational. In terms of the Financial Advisory and Intermediary Services Act, an FSP should not provide advice to investors without an appropriate risk analysis and thorough examination of a client’s particular financial situation.

The information, opinions and any communication from PPS Insurance, whether written, oral or implied are expressed in good faith and not intended as investment advice, neither do they constitute an offer or solicitation in any manner. PPS is a licensed Insurer and authorised FSP (FSP 1044).

About PPS

PPS boasts in excess of 150 000 members who enjoy access to a comprehensive suite of financial and healthcare products that are specifically tailored to meet the needs of graduate professionals.

PPS is the largest South African company of its kind, exclusively for graduate professionals, that still embraces an ethos of mutuality, which means that it exists solely for the benefit of its members. Thus, PPS members with qualifying products from PPS Insurance, PPS Investments, PPS Short-Term Insurance and Profmed share in the profits of PPS Insurance, PPS Investments, PPS Short-Term Insurance and PPS Healthcare Administrators via annual allocations to the unique PPS Profit-Share Account. PPS membership provides access to the following tried, tested and trusted products and services: PPS Life Insurance, PPS Short-Term Insurance, PPS Financial Advisory, PPS Investments and Profmed Medical Scheme. Visit www.pps.co.za for more information.  PPS is a Licensed Insurer and Financial Services Provider.