What Is Your Legacy? The Human Side Of Money presented by Client Care
Part of our work with clients includes planning what happens with their wealth once they are not around anymore. This is often referred to as their legacy. We find that most of the discussion around this subject revolves around taxes, such as estate duty and CGT, with a view to minimising these. The less the tax man takes, the more there is left for our beneficiaries.
If we start this planning early on, much can be done to ensure that the maximum of one’s left-over wealth transitions into the hands of those we want to benefit from our lifetime of work and investing. While this tax-based focus is the traditional way of looking at legacy, at Client Care, we understand that there is also another way to view this part of one’s planning.
We know that people are living longer, which has become a serious consideration when doing financial planning. Making sure one has enough to take care of future healthcare and potential care costs is a must. Despite this, many clients we work with still have more than they need. We can “ring fence” the wealth they need for their future life, and the balance is left to their heirs and/or beneficiaries.
A consequence of living longer also means that our children and their families end up receiving their inheritance much later in life, even once they are at retirement age. It means that there is the possibility that they may go through unnecessary hardship at a time in their life when they could have used a bit of financial aid.
This can be seen as giving with a warm heart rather than a cold hand. I am not talking about giving them an easy ride, which can lead to irresponsible behaviour. The aid could come in various forms, such as paying for grandkids’ education or helping settle long-term debt through the help of a “friendly” loan.
Instead of hoping that an inheritance is spent wisely after we pass, we can create another form of “legacy” by creating memories and experiences that will last a lifetime. Taking the whole family on the trip of a lifetime or buying a holiday home which everyone can use while raising your grandkids can mean more than a wad of cash much later in life.
The Best Life
One often focuses on building wealth and then holding on to it. Most advisers won’t tell you to spend more money as this may correlate with what they earn. By having a real personal financial plan, the decisions around how and when we spend our money become easier and allows us to live the best life we can with those who mean the most to us.
Dirk Groeneveld, Certified Financial Planner.