Matthew Lester: The legacy of a rotten Dad

On the day Jess was born I was back at work by 11am and legless by lunchtime. I never attended anti-natal classes or changed a single nappy.

And after four years I moved on.

So I didn’t participate in the private school experience other than to pay the bills. I taught Jess how to fish, drive a boat and a V8, and run a bar till with one hand while making lethal cocktails with the other.

Jess accepts this. She says ‘ I can’t blame my Dad, he wasn’t even there!’

It’s a good thing I only had one child. Although some say if you live in lower Albany in the eastern cape you can never be sure.

Jess has moved on and lives with her two small boys in a small flat in Boksburg. She can’t visit me as all that remains habitable of our family home is a 70 square meter outbuilding following the never-ending view saga. But that’s another story.

We meet when I pass through OR Thambo international and remember good times on the beach with the dogs.

So now comes the question ‘what do I leave as a legacy to Jess one day?

Some say you can’t beat private school education for your grandchildren. But I’m not dead yet. And if I live to national life expectancy of 76 (if you survive to 60, that is) I’m going to need every penny. Jess will be lucky if she doesn’t inherit me and the dogs. So private school in Grahamstown, like failure, is not an option.

We could try the now popular American way of the ‘6 parent family.’ That’s get one big house and have 3 generations occupy the place. Nkandla is model project in this regard and JZ is so ahead of his time that he is ahead of himself. But I’m the type of Dad who hoped that his daughter would only have sex when I’m dead. So putting up with the in-law scene is just not going to happen.

If I write a one-liner will that leaves everything to Jess then estate duty enters the game on my life insurance if the estate exceeds R3,5 million. Like so many South Africans I’m not to keen on that after being a taxpayer for so many years.

The inter-spouse estate duty exemption is pretty nifty. I just have to find someone with whom I can say I have a permanent relationship and the bequest is estate duty free. With some imagination and careful wording of my will this could even include my friend Burt the plumber. But it cannot include Jess unless we move to Bathurst. And I am not that desperate yet

Anyway if I was to die now and Jess got the lot I am sure she would attract more Klingons than Commander Spock. It would all soon be wasted.

Any lawyer would advise me to change my will to create a testamentary trust that will preserve my estate until Jess is 50 and the Klingons mysteriously disappear. But that won’t get rid of the estate duty and it will just attract more Klingons wanting hefty fees for administering the trust.

Some say a trust will save Jess if she ever gets divorced. My experience is that family trusts are high on the list for the real cause of divorces.

But lets look at this problem another way.

Lets look into the future. South Africans don’t like doing that. As one eastern cape farmer put it to me ‘Ek kyk ver maar ek sien fokol.’ ( Im looking forward but I see Jack sh$t).

If I do live another 20 years Jess will be well into her 40’s before she inherits. She may even be a glamorous granny. By then we could have wealth taxes and capital transfer tax.  Certainly the loopholes currently available on trusts should be closed by then.

In another twenty years Jess will be facing the same problem as me. How will she ever be able to afford to retire? The problem will be even worse as life expectancy is increasing by 2,5 years per generation and women live longer than men. So Jess’s life expectancy is 83.

Now if I change my line of thinking and slowly feed my retirement plan over the next 10 years a new solution emerges.

  • Contributions to retirement funds are tax deductible. Ok retirement reforms have been delayed a bit, but the tax benefits are still there.
  • If I live to great age I won’t land on Jess. And that should be worth a great deal.
  • So long as the inheritance remains in the retirement fund nobody can touch it except me and Jess, after 55.
  • The growth in the underlying investment can continue tax free, even from dividend tax.
  • There is no estate duty on retirement fund benefits.
  • And, even better, the executor of my estate wont get a healthy tariff for collecting an investment and including it in the liquidation and distribution account.

So, as my Dad put it ‘ he who dies with R1 wins.’

Just leave enough money around to pay for the undertaker and the wake. Tell your family to walk right past the executor and into the offices of the retirement fund.

Now that’s what I call a gift to last.

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