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Wealth Does Not Last: Why Estate Planning Strategies Are Essential for Wealth Preservation
- 14 May 2026
- Wills, Estates & Succession
- Louis van Vuren
Wealth does not last. Research indicates that approximately 70% of wealthy families lose their wealth by the second generation, increasing to 90% by the third generation. This is according to a 20-year study conducted by the Williams Group, a family wealth consultancy in the United States. The primary causes are unsurprising: a lack of proper planning, poor communication within families, and heirs who are ill-equipped to manage or preserve inherited wealth.
Many individuals dedicate significant time and effort to accumulating wealth, yet far less attention is given to protecting and preserving it. In addition, insufficient communication with family members about succession planning often results in confusion, mismanagement, or conflict after wealth is transferred.
Several key risk factors contribute to the erosion of wealth. Heirs who lack financial literacy or an understanding of how the wealth was created are often not equipped to manage it effectively. Without proper planning, this creates a high likelihood of wealth dissipation.
The transfer and investment of wealth inherently involve risks which, if not addressed through a comprehensive and holistic estate plan, can quickly erode value. These risks include taxation, estate administration costs, exposure to opportunistic or irresponsible beneficiaries, and investment-related risks.
Addressing these challenges begins with a clear understanding of the risks, followed by the development of a well-structured estate plan. Such a plan should map out a sustainable succession strategy for the transfer and protection of wealth across generations. Importantly, it must balance the wishes of the estate owner with tax considerations, which may sometimes conflict. Attempting to minimise tax at all costs can introduce unnecessary complexity, which in itself becomes a risk to effective wealth preservation.
Liquidity is another critical component—both within deceased estates and wealth protection structures. Without sufficient liquidity, assets may need to be sold under pressure to generate cash, potentially triggering unintended tax consequences, including income tax and capital gains tax.
An effective estate plan must also be both flexible and robust: flexible enough to adapt to changing circumstances, yet strong enough to withstand poor financial decisions or external pressures from beneficiaries.
A range of structures can be utilised, either independently or in combination, including trusts, companies, and other legal arrangements. Trusts, in particular, remain valuable tools despite increased scrutiny from tax authorities over recent decades. When used alongside companies, they can help safeguard wealth-generating businesses while maintaining operational flexibility and protecting long-term interests.
Despite their importance, many individuals still neglect proper planning, drafting, and execution of their wills. In a well-known Supreme Court of Appeal case, the judge remarked:
“It is a never-ending source of amazement that so many people rely on untrained advisors when preparing their wills, one of the most important documents they are ever likely to sign.”
Raubenheimer v Raubenheimer and Others [2012] ZASCA 97; 2012 (5) SA 290 (SCA)
A legally sound and practically executable will is a cornerstone of any effective estate plan. It should not be prepared hastily or in isolation, but rather form part of a broader, integrated financial strategy. Ultimately, a will is the culmination—not the starting point—of a well-considered estate plan.
To explore these estate planning strategies in greater depth, register for our upcoming webinar or access the recording on demand once available via the event page.