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Video: Leaving a family legacy

Sep 16, 2018

Most parents want their children to be more financially secure than they were and to live their lives without financial stress.

Many parents see their retirement fund as a way to leave their children an inheritance. The reality unfortunately, is that due to underfunding of retirement or simply the fact that we are living longer than we expected, there is usually not even enough money to fund a parent in retirement let alone leave a financial legacy.

So, if you want to leave a legacy, why not start an investment account for your children to receive in your will or give to them when they are adults.

You could open a tax-free savings account in your own name but you would be limited to a maximum contribution of R33 000 a year and a lifetime limit of R500 000 which you would have to divide between your children. There would also possibly be estate duty or donations tax if you gave the proceeds.

You could open the tax-free savings account in your child’s name. The child would qualify for the R33 000 per annum allowance and maximum lifetime contribution of R500 000, so it is not restricted to your allowance. No estate duty would be payable as the account is already in your child’s name. Your child could also contribute to the fund as long as total contributions don’t exceed R33 000 a year. The downside is that at the age of 18 your child could access those funds.

An endowment policy is not as tax efficient as a TFSA, but there is no restriction on the contributions. You can make your child a beneficiary on the fund so the proceeds are paid directly to them and not via the estate.

Remember: your retirement fund is not an inheritance.


  1. I will definitely look into that retirement annuity for my child

    Thanks Maya you guide and information to some of us is everything.

  2. Can you you please post about balloon or residual value, I am about to buy my first car and I have been saving for a deposit.

    • I do write a lot on car finance. There is one rule you must never break…NEVER, EVER, EVER take on a residual or balloon payment. Rather save a bigger deposit

  3. I have open my little sister a tax free savings account she is only 12 years and I’m hoping to give her the account when she turns 18,
    My daughter is 2 years when I opened two accounts trust account and tfsa account for her.

    I want to do more but I don’t know how

    • You are doing a lot already. I would also recommend you start putting money away for your daughter’s education. That can be done through a unit trust or TFSA

  4. You could also consider starting a retirement annuity for your children. You would contribute as and when you can afford to. When they turn 18 they have the option to continue the contributions, or at any stage when they start their first job. Even if they didn’t continue the contributions, compounded growth until they reach 55 means a great legacy as well as a nice top up to their own retirement savings.

    • That is also a good option. Even if your child doesn’t get the income deduction benefit, the money is untouchable until their retirement


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Maya Fisher-French author of Money Questions Answered

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