Friday September 24 is Heritage Day, and for many South Africans, this is an appropriate time to reflect on the assets they have accumulated over the years, and possibly generations. In these uncertain times, it is important to reassess the value of your assets and determine how best to leave a legacy.
Sadly, for many individuals and family businesses, the Covid-19 pandemic and recent civil unrest have forced assets to be written off, property sold, and businesses closed. Many people have been forced to make difficult decisions, such as delaying retirement or cutting back on what can be bequeathed to their spouse and children.
Here’s a checklist to help you take care of your dependents while you’re still here for them, and to help you build and maintain your legacy.
- Make a budget: Your home may have changed radically since the closing. Children who left home to work may be back in the family nest. Do you know where your money goes? Reassessing your budget will help you plan for the future.
- Reduce debt: Examine your various credit obligations and interest rates. Pay off outstanding debts as soon as possible and avoid assuming new obligations.
- Check your insurance: Vehicle accidents, exploding geysers, and unexpected health problems are unfortunately common occurrences. Make sure you have adequate coverage to suit your changing needs. Get comparative quotes – Many insurers offer favorable rates for seniors. Make sure you have lifetime coverage that meets the needs of your dependents if you are unable to do so.
- Update your will: If you already have a will, check that its instructions still apply. If you don’t have a will, write one as soon as possible. This is the only way to control who will benefit from your wealth and in what proportion.
- Reevaluate your retirement: As a general rule of thumb, your pension should provide 75% of the monthly income you received while working. The main asset classes to understand when investing are the money market, bonds, listed properties, and stocks.
- Protect family businesses: Descendants must learn that their focus should be on wealth management, rather than obtaining asset ownership. Family businesses often require specialized structures to establish boundaries between ownership, business management, and the family.
- Donate wisely: If handled properly, donations will not only benefit others, but will also support your tax and financial planning at the same time. Please note that when donating money, it must be to an approved public benefit organization and within the allowed annual threshold.
- Instill healthy habits: In addition to leaving tangible assets, being a strong role model, spending quality time together, and establishing family traditions are part of a strong legacy.
Money is a gift, and when managed well, it can transform not only the lives of your own children, but generations to come as well. However, this does not happen by accident. You have to plan if you want to accumulate and transition to wealth.
Heritage Day is a reminder to put your affairs in order. You have the peace of mind of knowing that your hard-earned assets are being managed and protected for the maximum benefit of your loved ones.
Shafeeka Anthony is Marketing Manager at JustMoney.