By Confidente Reporter
ONE of the challenges wealthy individuals face in their lifetime is ensuring that their children are ready to inherit and sustain wealth for future generations.
Lucas Kotze, Head FNB Namibia Trust Services, says the responsibility that comes with inheriting wealth, and leading the family to grow and preserve it, can easily overwhelm anyone that isn’t adequately prepared. “High-net worth individuals shouldn’t wait until their children finish school to start teaching them about the principles of wealth management. A solid foundation of good money management should be instilled at a very young age and gradually developed as the children grow up,” says Kotze.
He has identified key factors that individuals should consider ensuring that their children are ready for their inheritance:
• Communication – having an open communication rule with children about the financial affairs of the family leads to better understanding and trust. However, sensitive information should be withheld until heirs are mature enough to handle it.
• Professional advice – solely taking on the responsibility to equip your children with all the skills and tools necessary to manage wealth is not recommended. “Professional assistance can be beneficial and we are seeing this at FNB Namibia where there is an increase in clients who have started utilising our products and services,” says Lucas.
• Family values and vision – growing and sustaining generational wealth becomes a challenge if family goals and values conflict. It is essential that the family shares the same vision and values about the management of money. Heirs should understand these principles and be able to pass them on to future generations.
• Financial responsibility – heirs should be acquainted with the principle of sound financial management early in life. Parents can encourage this by giving children monthly allowances, incentives for outstanding performance and encourage saving toward long-term objectives.
• Estate planning – talking to heirs about estate planning helps them know what to expect in the unfortunate event that you pass away. This is also an opportunity to expand more on their inheritance and critical decisions you have taken.
“Equipping children with the necessary wealth management skills at an early age places them in a better position to succeed at managing and preserving the legacy left behind,” Kotze emphasised.
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