Sponsored Content
BUSINESS NEWS - Recent studies have shown that for every 100 family businesses in South Africa, 60% remains active in the second generation, 30% in the third generation and only 10% in the fourth generation.
Family Businesses
A common question is why family businesses fail to protect their business and capital throughout generations.
The 3 main reasons for this are:
- Assuming that “business runs in the family “ - the fact that one or both parents were good and successful at running a business, does not necessarily mean that the next generation will be successful in running the business. We use the term quite often in business: “ 1st the jockey and then the deal “, and by that we mean that you first must identify the right and suitable candidate for doing any transaction in the business world, before doing the actual deal.
- The second biggest reason is mixing professional and personal matters – these should be kept separate in business
- Lastly poor communication frequently contributes to the failure of protecting business and wealth in generations
How then can you be successful in protecting your family business for future generations?
- Put proper structures in place early on – if it is a company, ensure that you establish a board of directors with independent board members as well.
- Pay market related salaries for all positions
- Form appropriate polices regrading any new appointments and establish the criteria for positions and appointments
- At a minimum, hold biannual meetings with all related family members, ensuring regular communication
Financial Planning
When it comes to generational wealth planning, your starting point should be to ask yourself the following to establish a planning framework:
- Determine your purpose – for what or whom would you like to have your wealth or assets protected?
- Who will act as the managers of your assets in the future?
- In what form or shape would you like to have your assets preserved in the future?
- Establish a time frame – How long would you like to have your assets to keep on growing in the future?
If you have the answers to these questions, it is easier toe set up an appropriate strategy to protect your wealth over generations. There are several options available in the investment landscape. We would like to highlight the following three.
- A living annuity – Individual beneficiaries as well as a trust can be nominated as a beneficiary. The capital is distributed to the beneficiaries when the owner of the living annuity passes away.
- A tax-free savings plan – Capital can grow tax free for generations if a beneficiary is nominated for such an investment.
- Local or offshore endowment polices- As with local endowment policies, beneficiaries can be nominated to ensure a smooth transfer of wealth. Offshore endowment policies often have major benefits with regards to offshore estate taxes.
- Our team assess and plan for clients with a holistic approach to a client’s needs and goals and specialize in investment and financial planning.
"The secret to getting ahead is getting started" — Mark Twain
Our office details in the Garden Route:
PSG Mossel Bay Diaz PSG George Central
Sioux Building Dynarc House, 2nd Floor
16 Sioux Street 31 Courtenay Street
Mossel Bay George
https://www.psg.co.za/mosselbaydiaz
https://advisers.psg.co.za/branch-office/outeniqua
