Securing the legacy of our youth

Among them, 12.3% could be classified as orphans, having lost one or both parents. The structure of families is varied: 45% of children live with their mother only, 4.2% with their father only, and only approximately one third live with both parents according to a General Household survey report released by Statistics South Africa in 2023.

In the light of so many single parent households, it’s essential that we as parents do not leave our children’s legacy to fate, but rather have clear plans in place for the chance that we pass away whilst they are still young – a scenario that happens more often than you realise.

Capital Legacy believes strongly in widespread financial and legal literacy among adults: having a valid will, nominating preferred guardians, establishing testamentary trusts, and ensuring sufficient estate liquidity are key pillars of protecting our vulnerable children.

Here are 3 things parents should know when planning for their children’s future:

1. Why every parent needs a will

Drafting your Last Will and Testament is the logical starting point. Without a legally valid will, the deceased’s assets are handled according to intestate succession laws. If minor children are involved, authority over their inheritance transfers to the Guardian’s Fund, administered via the Master of the High Court. This central fund is meant to protect funds of minors and persons lacking legal competence and capacity, yet, the fund has significant limitations:

• Backlogs and delays are commonplace, it’s widely reported that, in recent years, R17m was stolen from the Fund, compounding distribution delays.
  
• Massive unclaimed capital.
  
• Administrative sluggishness: Payments are made only after application procedures.
  
• Forfeiture: If funds remain unclaimed for 30 years, they revert to the state.

Contrast this with a testamentary trust, which can be established in your will to ensure that your children’s inheritance is professionally managed and accessed only for their benefit - think school fees, food and accommodation, medical expenses, or later disbursements, while providing the flexibility you choose.

2. The power of Testamentary Trusts

Children under 18 cannot directly inherit vast sums due to risks of mismanagement and manipulation. A testamentary trust, set up within a will, empowers a trustee, often a trusted adult or professional fiduciary, to manage the inheritance responsibly until beneficiaries are of an age you prescribe (e.g., 21 or 25). Advantages include:

• Protection from unscrupulous or unprepared guardians.
  
• Flexibility to adjust disbursements to education costs, housing, or healthcare.
  
• Avoidance of the Guardian’s Fund, with its delays and risk of theft.

3. The importance of liquidity in your estate

A will and testamentary trust are only part of the strategy. Without sufficient liquidity, cash or cash equivalents, your estate could suffer:

• Debts and taxes may consume assets, leaving little or nothing for beneficiaries.
  
• Legal and executor's fees can significantly reduce available funds.
  
• Funeral costs and medical bills seldom have dedicated funds, draining what could have supported surviving children.

Deenisha Nadesan, executive director – estates, Capital Legacy, reflects: “It’s devastating to see families grapple with loss and then face an estate devoid of proper planning. Minor children end up caught in drawn-out legal processes; sometimes homes must be sold just to settle administrative costs or debts. We need to educate people on solutions available, from the power of a simple will to testamentary trusts. Planning for the unthinkable isn’t pessimistic, it’s responsible.” These words echo the stories too often hidden behind administrative statistics: households broken apart, inheritances mismanaged, and futures forced into uncertainty.

More financial education is needed

Despite these stark realities, financial and legal awareness remains low. The fact that nearly a third of the population are minors and 70% of South Africans pass away without a will in place, underscores the urgency of proactive planning. In such a setting, family structure vulnerabilities highlight the need for legal preparedness.

Call to action

Every parent with dependents should ask themselves:

• Do I have a legally valid will?
  
• Have I nominated a preferred guardian I fully trust?
  
• Have I included a testamentary trust to protect and manage funds for minors?
  
• Have I ensured liquidity to cover estate costs and debts?

The alternative - relying on the Guardian’s Fund - leaves children vulnerable to slow processes, fraud, and potential forfeiture.

A shared responsibility

Educating South African parents on fiduciary readiness, estate planning, and wills is vital. When children are protected by foresight and legal preparedness, we strengthen communities and safeguard future generations.

Capital Legacy has been actively pushing this message and helping educate South Africans since 2012 through media partnerships, hosting training workshops for financial advisors and rallying behind the LSSA’s National Wills Week every September (which has now expanded to Capital Legacy’s Wills Month).

“Our mission is to make the loss of a loved one easier. Let us transform the tragedy of unplanned estates into a legacy of care, empowerment, and security for our children by continuing to join forces and spread this message," Nadesan concludes.