Wealth is seldom created with only one generation in mind. For many families, the intention is not merely to accumulate assets during one’s lifetime, but to preserve, protect and ultimately transfer that wealth in a manner that benefits future generations. While estate planning remains central to this process, effective generational wealth planning goes beyond drafting a valid will. It requires careful thought, structured communication, appropriate legal mechanisms and, where appropriate, the involvement of those who are likely to inherit or benefit from the wealth being created.
In our experience, generational wealth planning is often most effective when adult children and other key family members are included in the process. This does not mean disclosing every detail of one’s financial affairs, nor does it mean relinquishing control over one’s assets. Rather, it means creating a framework in which the next generation understands the family’s broader financial architecture, the intentions behind the plan, and the responsibilities that come with receiving wealth.
The need for this type of planning has become increasingly important as family structures have become more complex. Blended families, second marriages, unmarried life partnerships, children living abroad, offshore assets and intergenerational businesses can all add layers of complexity to an estate plan. Notably, where family members are spread across different jurisdictions, estate planning can become even more complex. Offshore assets may require separate consideration, and in some cases, a foreign will may be needed to deal with assets situated outside South Africa. Further, jurisdictional issues can create delays in estate administration, additional costs, and unintended tax consequences, particularly where heirs or beneficiaries are tax residents of other countries.
A valid and up-to-date will remains one of the most important tools in any estate plan – although a will on its own may not be sufficient to ensure that wealth is transferred efficiently or equitably. Where there are multiple heirs, family trusts, business interests, offshore assets, dependants with different financial needs, or beneficiaries who are not yet financially mature, a more comprehensive plan is likely to be required. In these circumstances, generational wealth planning can help ensure that one’s intentions are clearly documented, legally executable and practically workable.
The appointment of an executor is a critical decision in the context of one’s estate plan, bearing in mind that an executor must not only have the necessary fiduciary and administrative expertise to wind up the estate but should also have the ability to navigate family dynamics with sensitivity and professionalism. The same applies to the appointment of trustees. Where a trust forms part of the estate plan, trustees will be responsible for managing trust assets in accordance with the trust deed and in the best interests of the beneficiaries. They will also become the point of contact through which beneficiaries engage regarding their trust benefits, which makes their independence, competence and interpersonal judgement especially important.
Planning for incapacity is another important part of generational wealth planning, particularly where adult children live abroad or where elderly parents are concerned about becoming physically or mentally vulnerable. A general power of attorney can be useful where a person is physically unable to attend to their affairs but remains mentally capable. However, it is important to remember that a power of attorney falls away when the person granting it loses mental capacity. For this reason, families should consider incapacity planning well before it becomes urgent, including the possible use of trusts, curatorship, administration orders, healthcare directives and carefully documented family decision-making protocols.
From a retirement planning perspective, one of the greatest gifts that parents can give their adult children is the reassurance that their own financial future has been properly planned for. Many adult children worry about whether their parents have sufficient retirement capital, whether future healthcare costs have been budgeted for, and whether assisted living or frail care needs have been considered. Generational planning can help provide clarity on these issues without compromising the dignity or financial independence of the older generation.
Retirement fund benefits in the context of estate planning require particular care. In South Africa, funds held in approved retirement funds do not automatically fall into one’s deceased estate and are not distributed in terms of one’s will. Instead, they are dealt with in terms of Section 37C of the Pension Funds Act, which requires the fund trustees to identify dependants and nominees and to allocate the benefit in a manner they consider fair and equitable. This means that, while beneficiary nominations are important, they are not binding on the trustees and serve primarily as a guide to the member’s wishes.
This is an area where many people misunderstand the planning implications. If the intention is for specific heirs to inherit retirement fund capital, it may be necessary to consider whether and when those funds should be transferred into a living annuity structure. Unlike pre-retirement fund benefits, a living annuity allows the annuitant to nominate beneficiaries who can generally elect to receive the benefit as a lump sum, transfer it to a living annuity in their own name, or use a combination of these options. The tax treatment will depend on the option chosen, and the nomination form should be kept up to date to avoid delays, uncertainty or unnecessary estate administration costs.
Many clients also wish to transfer some of their wealth to their children or grandchildren during their lifetime – which can be a meaningful way of helping the next generation with education costs, a deposit on a first home, business funding or investment capital. However, lifetime giving should never be considered in isolation. Donations tax, estate equalisation, retirement adequacy, liquidity and the expectations of other heirs must all be taken into account. SARS currently provides an annual donations tax exemption for natural persons, with donations above the exempt amount generally subject to donations tax at 20% up to R30 million and 25% above that threshold. The annual exemption for natural persons increased to R150 000 in the 2026/2027 tax year, making this an important figure to consider in any lifetime giving strategy.
Another area that is often overlooked is the transfer of knowledge – keeping in mind that generational wealth planning is not only about transferring assets, but also about transferring values, financial discipline and decision-making frameworks. From experience, we know that families that speak openly about money, within appropriate boundaries, are often better equipped to preserve wealth over time. This may include educating younger generations about investments, trusts, tax, debt, risk protection, philanthropy and the responsibilities that come with stewardship.
Ultimately, generational wealth planning is not about controlling the next generation from beyond the grave. It is about creating clarity, reducing uncertainty, preserving family relationships and ensuring that the wealth one has worked hard to build is transferred with intention. Done properly, it can help prevent disputes, reduce administrative delays, minimise unnecessary tax leakage and provide heirs with a deeper understanding of both the assets they may receive and the values that underpin them.
Wealth that is transferred without context can easily become a burden, a source of conflict or an opportunity lost. But wealth that is transferred with structure, communication and purpose has the potential to become something far more enduring. Generational wealth planning allows families to move beyond the mechanics of inheritance and towards the thoughtful stewardship of legacy — ensuring that what has been built over a lifetime is not only preserved, but understood, respected and carried forward with care.
Have a wonderful day.
Sue
