Building a meaningful legacy for clients

As South Africa prepares for one of the largest intergenerational wealth transfers in history, legacy planning has become an increasingly important part of the advice conversation. Yet, effective legacy planning extends far beyond drafting a will or deciding who inherits specific assets. Coreen van der Merwe, Director at Sovereign Trust SA, unpacks some important considerations.

How does Sovereign Trust define effective legacy planning in today’s environment? 

Effective legacy planning is about far more than the distribution of wealth upon death. It’s a holistic process that seeks to preserve and protect a family’s objectives, values, and financial resources, ensuring they are transferred in a structured and meaningful way to future generations. At its core, legacy planning is about creating a lasting framework that provides continuity, protects assets from unnecessary risks, and supports future generations in achieving their own goals and aspirations. It extends beyond financial considerations to incorporate family governance, succession planning, and the preservation that have shaped a family’s wealth over time.

By taking a proactive and tailored approach, individuals can ensure their legacy is not simply measured by the assets they leave behind, but by the lasting impact those assets have on the people and causes that matter most to them. It will also create a framework that preserves wealth and provides greater certainty and flexibility for future generations.

What are the most common mistakes South Africans make when preparing their estates, and how can financial advisers help clients avoid them? 

Effective estate planning requires ongoing review and careful coordination of a client’s assets, liabilities, beneficiary nominations and broader legacy objectives. The earlier the planning process begins, the greater the opportunity to implement structures that provide both asset protection and an efficient transfer of wealth to future generations. Clients don’t tend to check in after setting up a structure – a health check, like servicing your car once a year, is important. A key consideration is ensuring that dependants and beneficiaries have access to appropriate structures that can support them without having to wait for the often-lengthy process of winding up an estate.

One of the most common misconceptions we encounter is when clients request the same structure as a friend, family member, or colleague. A structure that works exceptionally well for one person could be ineffective or even detrimental for another. Successful estate planning requires a bespoke approach, ensuring that each solution is tailored to the client’s specific circumstances, objectives, and legacy aspirations, rather than simply replicating a structure that was designed for someone else’s needs. 

How can advisers facilitate conversations around legacy planning, particularly when clients are reluctant to discuss topics such as death, succession and wealth transfer?

Advisers need to shift the focus away from death and towards the future clients hope to create for their families. Rather than starting with estate distribution, discussions can centre on family goals, business continuity, charitable aspirations, and the legacy clients wish to leave behind.

While it can be a difficult topic, most clients recognise the importance of planning for the unexpected. Life is unpredictable, and taking the time to put appropriate arrangements in place can provide peace of mind that the wealth they have worked hard to build will benefit their loved ones in the way they intended.

One of the most valuable questions an adviser can ask is: What would happen to your wealth if something unexpected were to happen tomorrow? Many clients have not fully considered the practical implications. The administration of an estate can take a significant amount of time, and access to funds may become challenging for dependants and beneficiaries during this period, depending on the structures and planning already in place. This is why it’s important to explore the various planning solutions available.  

With significant wealth expected to transfer between generations over the coming decades, what considerations should families and advisers keep in mind?

Early planning provides valuable time to structure assets appropriately, clarify intentions, and ensure that future generations are prepared for the responsibilities that may accompany the transfer of wealth. Open communication is equally important, and where appropriate, all relevant parties should understand the planning arrangements in place. This can help facilitate smoother decision-making, improve transparency, and support the long-term success of the structure.

Legacy planning should not be viewed as a one-time exercise. Wills, trusts, beneficiary nominations, and business succession arrangements should be reviewed regularly to ensure they remain aligned with evolving family circumstances, legislative changes, and financial objectives. A holistic approach is essential. Financial advisers should work closely with fiduciary, legal, and tax professionals to ensure that all aspects of a client’s wealth-transfer strategy are coordinated and aligned with the family’s broader goals. By bringing together the right expertise, families can create a robust and flexible framework that not only preserves wealth but also supports their long-term legacy aspirations.

What role do trusts, life insurance and other estate-planning tools play in creating a legacy plan? 

These tools can all play an important role in a well-structured legacy plan. The most effective legacy strategies typically combine a range of structures and solutions that work together to protect assets, facilitate the efficient transfer of wealth, provide liquidity when needed, and ensure that a client’s wishes can be implemented as intended. For South African residents, it’s particularly important to take a holistic view of wealth, as they are generally subject to tax on their worldwide assets. This means that both local and offshore holdings should be reviewed as part of the planning process. Careful consideration should be given to how assets are owned and structured to ensure they align with the individual’s broader estate, succession, and legacy objectives.