Planning a legacy to benefit generations to come

A well-planned legacy is one of the most meaningful gifts you can leave to your heirs. It is an intentional act to shape the future and ensure that the values, resources and wisdom cultivated throughout a lifetime continue to benefit generations to come. Legacy planning is not limited to financial matters – it is a holistic process that weaves together family, tradition and personal principles.

When it comes to the financial aspect, we frequently use phrases such as ‘leaving a legacy’, ‘intergenerational wealth transfer’ and ‘succession planning’ when referring to the transfer of assets to beneficiaries. This can be done in various ways and at different times – while you are alive and even after you have passed away – provided there is a plan in place to do so, namely your estate plan.

The Difference Between Estate Planning and Legacy Planning

Estate planning refers to growing and protecting your assets over your lifetime and encompasses how those assets are managed and transferred after you pass away. This includes ensuring that there is enough liquidity in your estate to settle debts (such as outstanding mortgage loans) and to cover estate expenses (like executor’s fees and estate duty).

It also entails planning for the maintenance needs of your surviving partner, spouse or children, as well as the transfer of wealth from one generation to the next. Without a proper estate plan, you have no guarantee that your wishes will be carried out or fulfilled.

Your estate plan should not be static. As your circumstances change and your assets grow, your needs and priorities will also shift. It is therefore imperative that your estate plan caters for your changing needs and goals, and that you regularly review it – not only with your financial adviser, but also with the next generation who will become the beneficiaries of your wealth.

This ensures that your plan aligns not only with their future goals, but also with your values and priorities. Legacy planning plays a crucial role in making this possible.

Legacy planning delves a level deeper than estate planning. While estate planning focuses on valuables, legacy planning focuses on values. More than simply the transfer of money and property, legacy planning is about transferring wisdom and priorities, while offering guidance and support to those who follow in our footsteps.

This is important in every family, but it is perhaps more significant in family businesses, such as farming enterprises and philanthropic endeavours.

Financial Education

The most valuable legacy we can leave future generations is a financial education to equip them with the skills to build a foundation for responsible money management. Here are a few guidelines for conversations with different age groups.

Pre-schoolers

• Identifying needs vs. wants: Explain the difference between things children need (for example food and shelter) and things they want (such as toys or treats).
• Saving and spending: Use a piggy bank to demonstrate the concept of saving money for a future purchase, like a toy or a trip.

Young children and pre-teens

• Setting savings goals: Help children set simple savings goals, such as saving for a birthday gift or a special outing.
• Delayed gratification: Explain the concept of waiting for a reward after saving or completing a task.

Teenagers

• Budgeting and financial planning: Introduce more complex budgeting tools and help teens develop a financial plan for their future.
• Saving for the future: Discuss the importance of saving for tertiary education, a car, or other long-term goals.
• Understanding debt: Explain the basics of interest, credit cards and the consequences of borrowing money.
• Basic investing: Introduce the concept of investing and the power of compound interest.

Young adults

• Financial responsibility: Emphasise the importance of financial responsibility, including managing debt, saving for retirement and making informed financial decisions.
• Earning money: Explain that money is earned and that financial decisions are crucial for building a secure future.
• Budgeting and money management: Demonstrate how to budget, save and invest in a way that supports financial goals.

Conclusion

Leaving a legacy is about making choices today that will help others tomorrow. The sooner we impart valuable financial lessons to future generations the better, and it is never too late to model and adopt healthy financial habits – not only for our own sake, but also for the benefit of future generations.

Your actions now can echo far into the future, shaping lives and inspiring hope for years ahead.

Frequently Asked Questions

What is the primary focus of legacy planning?

Legacy planning is a holistic process focused on transferring wisdom and priorities, providing guidance and support, and ensuring that values, resources, and wisdom benefit generations to come, beyond just financial matters.

How does legacy planning differ from estate planning?

Estate planning primarily focuses on growing, protecting, and transferring assets after death, ensuring liquidity and covering expenses. Legacy planning, however, delves deeper, focusing on transferring values, wisdom, and providing ongoing guidance, not just valuables.

Why is it important to regularly review your estate plan?

Regular review of an estate plan is imperative because needs and priorities shift as circumstances and assets change. It ensures the plan aligns with both the current goals of the planner and the future goals and values of the beneficiaries.

What are some key financial education guidelines for pre-schoolers?

Key guidelines for pre-schoolers include explaining the difference between needs and wants, and demonstrating saving and spending using a piggy bank for future purchases.

How can financial education for teenagers incorporate concepts like debt and investing?

For teenagers, financial education can introduce budgeting tools, discuss saving for long-term goals like tertiary education or a car, explain the basics of interest, credit cards, and the consequences of borrowing, and introduce basic investing and compound interest.

What financial responsibilities are important for young adults?

For young adults, it is important to emphasise financial responsibility, including managing debt, saving for retirement, making informed financial decisions, understanding that money is earned, and learning to budget, save, and invest to support financial goals.

What is the most valuable legacy one can leave future generations?

The most valuable legacy is a financial education that equips them with the skills to build a foundation for responsible money management, enabling them to make informed choices and contribute to a secure future.