Posted on: 24th April 2025

Wealth Transfer: How to Prepare the Next Generation

A quiet shift is happening in families across South Africa. As older generations pass down their wealth, many wonder: Will the next generation be ready to manage it?

Even the largest fortunes can fade within a few generations without proper planning. But with the right steps, you can give your children – and their children – the tools to protect and grow what you've built.

Here's how to prepare the next generation for a successful wealth transfer.

Start with a Solid Estate Plan

Think of an estate plan as a roadmap for your assets after you're gone. It ensures your wishes are clear and your loved ones are cared for.

At the very least, you should have:

• A legally valid will

• A trust, such as an inter vivos trust, to

  manage assets

  during and after your lifetime

• Powers of attorney for both financial and medical decisions

In South Africa, a trust can be especially useful. It can help you manage and protect assets, minimise tax, and even simplify the transfer of offshore wealth .

But remember: your estate plan isn't something you "set and forget." Review it regularly, especially after major life events like marriages, births, or business changes.

Teach Financial Literacy Early

One of the biggest reasons wealth doesn't last? The next generation simply doesn't know how to manage it.

Only around 51% of South Africans are financially literate. That means half the population could be making big financial decisions without properly understanding things like budgeting, investing, or tax planning.

Start small – teach your children the value of money from a young age. As they grow, involve them in family financial discussions. Talk about savings goals, show them how investments work, and explain why you've made the choices you have.

Some families even set up financial "boot camps" or mentoring sessions with trusted advisers. The goal isn't to overwhelm – it's to empower.

Talk About It – Openly and Often

Money can be a tricky subject, especially in families. But keeping quiet can lead to confusion, arguments, or even legal battles later on.

Hold regular family meetings to talk about your vision for the future. Explain how your estate plan works and who's involved in managing it. Be honest about what you hope your wealth will achieve – whether it's supporting the next generation , funding education, or giving back to the community.

These conversations help build trust and give younger family members a sense of responsibility. They'll understand the "why" behind the plan, not just the "how."

Align Wealth with Family Values

Wealth transfer isn't just about money – it's about legacy.

Sit down as a family and talk about your shared values. What matters most to you? Education? Entrepreneurship? Philanthropy? Once you're clear on your purpose, you can build a plan around it.

Some families even create a family charter – a document that outlines your vision, values, and governance principles. This can guide decisions and keep everyone aligned, especially as the family grows and changes.

When wealth serves a bigger purpose, it's more likely to last.

Diversify, Don't Concentrate

South African families often have a lot of their wealth tied up in local property or businesses. That's fine – but it can also be risky.

A diversified investment portfolio spreads your risk. This might include local and offshore assets, equities, bonds, and even alternative investments. The right mix depends on your goals, timeline, and risk tolerance – which is why expert advice is key.

Think long-term. Diversification helps protect your family's future, no matter what the economy does.

Plan for Business Succession

If you run a family business, passing it on isn't always straightforward.

Start thinking early about who will take over – and be open-minded. Sometimes, the best successor is a child; other times, it's a trusted manager or external professional.

Whatever the case, create a clear succession plan. Document roles, responsibilities, timelines, and training plans. This gives everyone clarity and avoids misunderstandings later.

A strong succession plan keeps the business – and the family relationships – intact.

Work with the Right Advisers

Even the best plans need expert input. A good team of advisers can help you make smart decisions, avoid legal pitfalls, and optimise tax.

Your team might include:

• A financial planner

• A lawyer (especially one familiar with South African estate law)

• A tax adviser

• A trustee or wealth manager

They'll help tailor your wealth transfer strategy to your family's unique needs – and keep it up to date as laws and circumstances change.

Final Thoughts: Start Now, Think Long-Term

Wealth transfer isn't a one-time event. It's a long-term journey combining planning, education, and communication.

By taking action now, you're not just passing on money. You're passing on knowledge, values, and a legacy your family can build on for generations to come.

So, start the conversation. Get the plan in place. And prepare your heirs not just to inherit – but to lead.