transformational growth gen wealth protection iii
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#GENERATIONALWEALTHPROTECTION We started this series by looking at the different ways to create Generational Wealth. In this Episode we will focus on some measures that you can take to protect the wealth of the family enterprise once created. Many families would like to pass their wealth down to their children. In turn, their hope is that their children will be successful and can pass wealth down to the next generation, and so on. What structures do you have in place to protect your wealth from one generation to the next? Hope this helps.TRANSCRIPT
TRANSFORMATIONAL GROWTH
“It is health that is the real
wealth not pieces of gold and
silver.”
- Mahatma Gandhi
The gratification of wealth is not
found in mere possession or in
lavish expenditure, but in its
wise application.
- Miguel de Cervantes
In the Next Episode
We finalize the Generational wealth Protection compo-nent.
Sneak preview;
The last four steps on Cre-ating a Comprehensive Wealth Plan with all the risks associated with it.
‘Transformation literally means going beyond your form.’ Wayne Dyer
Generational Wealth Protection
W e started this series by looking at the different ways
to create Generational Wealth. In this Episode we will
focus on some measures that you can take to protect the wealth
of the family enterprise once created.
Many families would like to pass their wealth down to their chil-
dren. In turn, their hope is that their children will be successful
and can pass wealth down to the next generation, and so on. Un-
fortunately, along the way, each transfer between generations
gives the government the opportunity to levy and collect estate
and or gift taxes, (depending on country) diminishing what’s actu-
ally left. That is institutional. There is equally the scenario where
the one generation just depletes all what was handed down with-
out any fore thought of the next and subsequent generations. It is
therefore, my objective to attempt to start guiding you on how
you can start maximizing and securing your family’s wealth for
subsequent generations to come.
EPISODE 03 May 2016
By Mbi Mbapeh - My Reflections on Africa’s Transformational Growth
Generational Wealth Protection Tools
Family Trust
M any of the wealthiest families often use a method for transfer-
ring wealth that permits the accumulation and distribution of
assets to multiple generations with the least amount of taxes and other
uncontrolled losses. This involves the use of “Family Trusts.” These trusts
enable families to benefit multiple generations with a single transfer of
property, and to make distributions to descendants for their needs.
There are no limits in some countries to the amount of property/assets
that could be left in trust for the benefit of multiple generations of family
members. Ultra-affluent families have used trusts to avoid the transfer
taxes that would otherwise apply when property was transferred down
successive generations. Many of the great family fortunes have been
passed down intact, over long periods of time, in this manner. But in oth-
er countries, this transfer has been regulated to take away the ability to
pass unlimited wealth to successive generations without tax consequenc-
es. In these countries, certain exemptions apply. Although this is the case
in these countries, careful planning must be made to ensure transfers fall
within the exemption. family Trusts are designed to take advantage of
this exemption.
Life Insurance
I t is difficult to predict if any assets will continue to appreciate over a
long period of time, therefore, a life insurance policy is often a better
funding vehicle for generational wealth transfer. The reason for this is the
leverage that a life insurance death benefit has relative to the premiums
that are paid over the lifetime of the first generation family member. The
death benefit is often a significant multiple over the total premiums paid.
In some countries, tax is only levied on premiums paid. The perpetuity
transfer rule is set from the onset and this could form part of the Trust
arrangement.
Without boring you with all the technicalities, in a simple structure, a Life
insurance policy is purchased through the Trust that would benefit your
family for multiple generations. A multigenerational Dynasty Trust is cre-
ated, and a donation is made each year to the trust in an amount that
would cover the life insurance that is purchased by the Trust.
Which Kind of Families do This?
The Family Trusts and the quest to
build a dynasty, can benefit all sorts
of families, not just the wealthy, par-
ticularly if their goals include:
A desire to provide for multiple
generations of family members;
An interest in protecting accumu-
lated assets from estate and gen-
eration skipping transfer taxes;
A concern about protecting accu-
mulated wealth from creditors
and ex-spouses; and
A desire to ensure the transfer of
family values to successive gener-
ations in the form of incentive
provisions
- DeRoss Financial Planning Group
Make Your Growth and Transformation Intentional - Mbi Mbapeh
Anyone who wants to sell you overnight success or wealth is not interested in your success; they are interested in your money. - Bo Bennett
In this episode, I would recommend the
following book by Roger Hamilton;
WINK
It is an extremely simple read but very
profound. It deals with the journey of
wealth creation. Please share your
thoughts with us or share your readings
with us as well.
Saving or Investing?
Everyone wants to be the genius
investor who takes a small bun-
dle of cash and transforms it into
a fortune. Unfortunately it's pret-
ty difficult to do that.
On a general note, there is a
better way for most people. Con-
sistent saving over time is much
more likely to pay off than com-
plicated investments or strate-
gies such as timing the market.
Risk-the-farm investing strate-
gies have a high probability of
failure, but saving always wins.
You can achieve your financial
goals by following a basic get-
rich-slowly scheme: save a lot
and let compound interest do the
heavy lifting over time.
While saving and investing go
together, accumulating money
through savings is the main
mechanism that makes investing
work.
An average saver will do better
than a great investor who
doesn't save.
Regular saving is only half the
battle. Investors need time for
compounding to work on their
money. Compounding occurs
when the earnings of an asset
are reinvested and then generate
their own earnings, creating a
snowball effect.
Courtesy of Bankrate.com—
Money Makeover.
Networking is an essential part of building wealth - Armstrong Williams
Creating A Comprehensive Generational Wealth Plan
M aximizing your wealth is not just about creating an invest-
ment plan, an insurance plan, a tax plan, a retirement plan
or an estate plan. These are just components that form part of a com-
prehensive wealth protection plan. A comprehensive wealth plan should
involve exploring all areas of your personal, family and business life that
have a financial impact on your wealth. A comprehensive wealth plan
should simplify your complex financial reality by creating a simple path
for you to follow through a single point of contact to achieve your gen-
erational wealth goals. Key to this process is having one central point
for the coordination of all the Advisors/professional who will help you
put the plan together. We have found components for these 8 steps
helpful some of which is courtesy of Assante Family Enterprise Advisors;
Visualization of your Desired Future
To be able to achieve this, your Wealth Coach will meet with you to get
to know you intimately by taking time to get to know your true fears,
challenges, advantages, excitements, opportunities, lifetime goals and
aspirations for you, your family and legacy. This meeting should result
in your Coach creating a summary report outlining the steps you should
take next to fulfill your life’s dreams.
Analyzing Your Current Reality
You could find this boring but it is a vital step in the wealth planning
process to ensure your Coach has a full understanding of all your finan-
cial resources so he can create your personal plan. This involves ex-
ploring all the areas of your personal, family and business life that have
a financial impact on your wealth. At the end of this phase, a high level
projection of your net wealth and sufficiency of financial resources to
help you meet your lifestyle and financial objectives.
Achieving Freedom in the Financial Compart-ment of your Wealth
People don’t become wealthy
by accident. Becoming rich in
the process of attaining a
wealthy status, takes serious
willpower and long-term vi-
sion. You have to be able to
keep your eye on the prize of
financial freedom, be willing
to sacrifice your present
wants for the sake of your
future and develop good hab-
its to win.
We will look at this in a bit
more details in future edi-
tions.
Contact Us
Give us a call for more infor-
mation about our services
and products
EndlessLife In-
vestment (Pty) Ltd.
No. 3 Linksfeild Road, Dunvegan,
Edenvale, Johannesburg 1906
RSA
+(27) 11 454-1393
Visit us on the web at www.endlesslifeinvestment.com
#eterprisedev
Generational Wealth Plan Continued
Commit to Building Your Wealth Plan
At this stage, nothing can be achieved without the full commitment of
the owner of the plan. Armed with the strategic model on how your
plan will be created with all professional inputs included, the owner has
to commit to allowing access for the teams and to a form of payment.
This can be up front or you implement the plan with their office and
pay over the execution period.
Transform Your Wealth
The preparation of your wealth plan is where the hard work begins.
Your Coach’s team and your own team of advisors should be prepared
to work closely together to analyze a variety of possible wealth preser-
vation and tax planning strategies across multiple generations to pro-
tect and enhance your wealth.
Conclusion
For the purpose of this episode, note that going through this process is
like going through a very undesirable surgical process. True to type,
humans treat anything related to their family, finances, business as
personal and shifting that paradigm to a place where you can fully
open—up to a team of people that you do not know is always the chal-
lenge. This is even more true for people with a light asset base who
should be rather looking at how to consolidate and grow what they
have.
In the next episode, we will finish off with the last four steps in your
Generational wealth Protection process.
EndlessLife Investment (Pty) Ltd. your Partner in Innovative Enterprise Development