Legacy planning: What comes first?

Effective legacy planning does not begin with a will, trust, financial product or SARS liabilities. It begins with a clear understanding of the family, the individuals, responsibilities, intentions and obligations.

Families are rarely as simple as completing an asset and liability register. There may be minor children, ageing parents, previous marriages, family businesses, trusts, properties, investments, debt or extended family who require continuing support.

Then there are cultural, religious or philanthropic intentions or obligations that cannot be extracted by simply looking at the numbers.

The first planning question should therefore not be what documents are required, but rather: What is the family seeking to preserve, provide and carry forward for current and future generations?

Only once this question is interrogated and answered clearly and honestly can the appropriate administrative, fiduciary, legal and tax arrangements be considered.

What constitutes the family picture?

We look at five areas when compiling the family picture:

• People: Who are the individuals who lay the foundation of this family structure—direct beneficiaries and dependants, extended dependants and unrelated dependants?
• Intentions: What are the intentions, objectives and goals that meet the needs of the people in the picture, and what are their roles and responsibilities in achieving them?
• Assets and liabilities: Which movable and immovable property, investments, business interests, policies, retirement benefits, cash and debt are owned or controlled directly, or indirectly through companies and trusts?
• Tax, liquidity, continuity and compliance: How should the assets and liabilities be structured to meet the family’s intentions? Identifying potential liabilities, available cash, valuations and outstanding obligations helps provide for both short-term needs and long-term continuity.
• Documents and nominations: Deceased files, wills, trust deeds, shareholder agreements, beneficiary nominations, completed ownership transfers and other instructions help ensure that the structure achieves the family’s intentions.

Some questions worth asking

• Who depends on the family financially or practically?
• How is each significant asset owned?
• What happens to each asset or benefit on death?
• Do the will, trust, agreements and nominations support the same intentions?
• Is sufficient liquidity available without selling important assets?
• Who will administer the estate and manage continuing structures?
• Have the arrangements kept pace with changes in the family?

The Ilifa perspective

Legacy planning should bring the family’s circumstances, structures and intentions into one considered view before individual solutions are recommended.

By coordinating estate planning, trust administration, tax considerations and family thinking, families can identify gaps earlier and make decisions with greater clarity.

Begin a considered conversation

Every family’s circumstances, structures and intentions are different. Ilifa brings the relevant considerations together to help families move forward with greater clarity and comfort.