By John Kennedy, Director and Regional Head: Claremont, Citadel
Money, wealth and your personal finances are often intensely emotive, personal and private topics, and it’s common to wish to avoid speaking about them – even with family members. But the reality is that leaving a legacy goes beyond simply planning a will. Instead, it begins with having discussions around wealth and sharing your financial principles with your loved ones while you are still alive.
Notably, by having regular conversations around wealth with your family in neutral settings throughout your life, rather than only when there is a crisis, you will often be able to avoid much of the friction, messiness and hurt feelings that often result from these conversations happening too late.
A key example of this would be the involvement of your children’s future spouses in family businesses or them inheriting or being involved with your money. The best time to have this discussion is years before your children meet their partners rather than waiting until after the wedding – in which case this principle may seem overly personal or come across in the wrong way. Another example would be if you wished your children to use any inheritance for a meaningful purpose such as funding their education rather than buying a lifestyle asset such as an expensive car.
On this point, many families have been extremely generous with donations throughout the COVID-19 crisis, and some are now looking to formalise this charitable or philanthropic giving as part of their legacy planning. If this is something you would like to accomplish, it is often useful to have conversations with your family about your ambitions and what this means to you personally.
By sharing your values and principles with your family at various intervals throughout your life, particularly regarding money, you may achieve more “buy-in” in terms of how you would like your wishes to be carried out. Additionally, you may be able to impart valuable financial lessons to those you may one day leave behind.
Bring your family closer to the money
Crucially, one conversation that is often overlooked is teaching children about wealth and bringing them closer to the money. This is not in rands and cents terms, but rather guidance in how to create wealth, what you did to earn money, what decisions were made, and the important bits of financial wisdom and advice that you may have learned along the way. This represents a particularly valuable legacy for children as they continue on their own career and life journeys.
But conversations around money are not only for the super-rich – in some cases, you may need to raise whether you in fact have enough for a comfortable retirement or whether you will need some support in order to manage expectations.
Likewise, if you are able to leave an inheritance or legacy, it would be wise to discuss with your family who your beneficiaries may be and how you may wish any inheritance to be used or if you have any goals for your wealth. In many cases, families learn of their loved one’s financial wishes for the first time when sitting down with the executor – who may even be a complete stranger. Managing expectations, opening channels of communication, and laying out your financial principles is key to avoiding causing any additional distress, hurt or confusion when your family will already be feeling emotionally fragile.
Finally, it is important not to leave out the granular, nitty-gritty details when discussing your money with your family. Again, this is not in terms of exact rands and cents amounts, but rather, if you pass, preventing your family from having to fly blind in terms of who they should speak to, and where they can find your financial information. Don’t forget details such as your subscriptions and passwords, for instance, should you have any accounts or social media accounts that will need to be closed.
Having these conversations may seem difficult or uncomfortable at first, but they do get easier with time. And notably, by taking a pragmatic approach, you will be able to spare your families a great deal of emotional pain and confusion, as well as ensure that your legacy is carried out and protected in the way you would wish.
John Kennedy is the Director and Regional Head at Claremont, Citadel
PERSONAL FINANCE