Estate Planning for Generational Wealth

'Only put off until tomorrow what you are willing to die having left undone.' These are the words that so many have failed to abide by, leaving their years of accumulated wealth to pass into the wrong hands or their loved ones without adequate protection. Avoiding these regrets and being able to preserve your family's wealth for generations to come requires a strategic approach that can be best achieved through proper estate planning.

Estate planning is defined as the process of determining how one's assets will be preserved, managed, and distributed after death. It is the key to securing the financial well-being of your loved ones and with a little foresight and creative thinking, you can ensure that your legacy transcends time like a piece of art. Let us explore three estate planning tips to sketch your family's financial security on a more durable canvas.

Take account of assets and manage your wealth: The first step in estate planning usually involves taking an account of all of one's assets. Assuming you are doing this early, it will also let you know where you are relative to where they want to be in achieving your financial and lifestyle goals and what you would like to bequeath to your family. With this clarity, one can make the changes necessary to get to the desired goals. Some of the adjustments will include reassessing your investment portfolio to optimise the level of risk and return; structuring retirement investments to reduce longevity risks; ensuring that you have the right level of insurance, among others. For instance, insurance policies that do not offer adequate coverage can eat into your wealth and leave you and your family unprotected. Be smart about your needs and seek advice on which policies and protection are best suited for you and your family.

Make provisions to ensure wealth is bequeathed to loved ones and preserved: While you manage your wealth to ensure that you have a financial legacy to pass on to your family, you also must ensure that provisions are made to distribute this wealth to the people and organisations you care about. Such provisions include creating a will, and/or establishing a trust. These will give you a say in how your assets are distributed after your passing and help to guide how it is used to preserve your wealth.

Will: A will is a legal document that coordinates the distribution of your assets after death and can appoint guardians for minor children. It is key for successful estate planning and everyone over the age of 18 should have one. This is one of the inexpensive estate planning documents and it helps to prevent disagreements over your inheritance among your heirs. It must be signed, dated, and witnessed by two non-related individuals.

Trust: A trust is a legal fiduciary arrangement that allows you to have your assets held and managed by a third party. Its main purpose is to protect the interests of the beneficiaries. Trusts allow you to set parameters for how and when your assets will be used and distributed during and after your lifetime. For example, you can set up a trust that specifies that funds can only be used to finance your heirs' education, purchase a home, fund retirement accounts, or entrepreneurial pursuits, etc. This helps to prevent or reduce misuse of your resources and increase the likelihood that the wealth will last for multiple generations. There may also be potential tax benefits from the creation of trusts. Speak to your attorney and your tax advisor to learn more about these benefits.

Regularly update your estate plan: Life is dynamic, and circumstances change over time. It is vital to review and update your estate plan regularly to reflect any changes in your financial situation, family dynamics, or legal regulations. Births, deaths, marriages, divorces, or significant acquisitions should prompt a review of your estate plan to ensure its accuracy and alignment with your goals. This includes updating wills, adjusting insurance policy beneficiaries, when necessary, etc. By being proactive and adaptable, you can maintain the effectiveness of your estate plan and ensure its relevance for the next generation.

Nadine Thomas, assistant vice-president – Private Wealth, NCB Capital Markets Limited

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