Handling misconceptions about legacy planning

Legacy planning is a strategic and holistic approach to preserving and passing down one’s values, traditions, and assets to future generations. It involves thoughtful consideration of both financial and non-financial aspects, including family history, personal values, philanthropic goals, and business succession. Through estate planning tools such as wills, trusts, and other carefully designed structures, individuals can ensure the orderly transfer of their wealth while minimising taxes and legal complexities.

However, legacy planning goes beyond wealth transfer—it encompasses the transmission of intangible assets like wisdom, memories, and cultural heritage. It involves engaging family members in meaningful conversations, documenting family stories and values, and establishing structures to maintain continuity across generations. Ultimately, legacy planning aims to create a lasting legacy that reflects the individual’s values, strengthens family bonds, and leaves a positive impact on future generations.

Many hard-working entrepreneurs and professionals often do not prioritise legacy planning.

This lack of prioritisation is often rooted in harmful mindsets about planning for a future time when they may not be physically present. However, a flawed perception of planning for the future does more harm than good, preventing families from gaining the full benefit of time and structure.

Without a clear plan in place, uncertainty arises around the distribution of assets and the realisation of personal intentions. This uncertainty often breeds disputes among family members, potentially resulting in costly legal battles and emotional strain. Inadequate planning may also lead to unintended tax implications, reducing the value of the estate and leaving heirs with hefty tax burdens. The absence of a documented legacy framework means relinquishing control over the distribution of assets and decisions regarding one’s legacy, potentially leading to outcomes different from the individual’s wishes. Financial hardships may also ensue for heirs who face unexpected expenses or insufficient provisions, straining familial relationships and thwarting the intended purpose of passing on wealth.

Neglecting legacy planning can have significant implications in practical terms. However, it is possible to prevent these issues by taking a proactive approach to the subject. This approach provides individuals and their heirs with several benefits. It offers clarity and control over the distribution of assets, as well as the ability to realise personal intentions. This minimises the potential for disputes and uncertainty among family members.

In addition, strategic tax planning can help reduce tax liabilities, thereby preserving the estate’s value for heirs. A documented legacy plan will enable individuals to make informed decisions about their legacy, ensuring that their wishes are carried out according to their intentions. Such a plan allows individuals to pass on not just financial wealth but also values, wisdom, and guidance to future generations, fostering familial cohesion and a sense of identity.

Below are common misconceptions about legacy planning:

‘It is a death wish’

One of the most prevalent misbeliefs is the notion that legacy planning equates to embracing one’s mortality. Understandably, contemplating end-of-life matters can evoke discomfort. However, legacy planning isn’t about inviting demise; rather, it’s about ensuring your desires, values, and assets endure beyond your lifetime, leaving a meaningful impact on future generations.

A legacy plan is an opportunity to minimise the impact of change, third-party influences and questionable intentions on one’s family. Denying the unpredictability of life does not make it any less so. A better approach is to create a system that provides some level of stability in uncertainty.

Most importantly, it is a sign of unending love to secure the future of loved ones’ future while ensuring peace and order in one’s absence.

‘It is too complex’

Complexity often serves as a barrier, deterring individuals from embarking on the journey of legacy planning. While it’s true that legacy planning could involve navigating various legal and financial intricacies, the guidance of experienced professionals can help demystify the process. By breaking down complex concepts into manageable steps and tailoring strategies to individual circumstances, advisors empower clients to make informed decisions that align with their objectives. It is advisable to start small, focusing on simple actions that make the biggest impact.

‘It is only for the old or wealthy’

Another common misconception is the belief that legacy planning is reserved for the elderly or the exceptionally affluent. Age and wealth are not prerequisites for engaging in legacy planning; instead, it’s about having clarity regarding your wishes and intentions for the future.

Regardless of age or financial status, unforeseen circumstances can arise, making it imperative to have a plan in place to safeguard your legacy. Moreover, legacy planning isn’t solely about distributing wealth—it encompasses preserving family values, fostering generational connections, and leaving a lasting legacy of wisdom and guidance.

Bear in mind that it is never too early to have a plan. An early start increases the chances of using to one’s advantage and minimising the need for ‘damage control’.

With the prevalence of family implosion and the loss of value from unplanned estates, it is critical for legacy planning to be made a front-burner issue. The seemingly daunting journey is easily simplified when more families seek guidance from experienced professionals who deeply understand the family’s goals and history.

This forms the foundation for providing personalised advice tailored to individual circumstances. Working with a trusted advisor, such as a family wealth advisor, lawyer or financial planner can provide individuals with the support and expertise needed to navigate the intricacies of legacy planning confidently.

Ojenike is a Family Wealth Advisor at the Meristem Family Office.