Legacy in Ruins. The Fragility of Land inheritances.
Navigating the Challenges of Estate Planning for Future Generations
Friends,
Two weeks ago, a client of mine who is close associate of a former respected and influential figure approached me to share a deeply distressing experience their family has endured.
As they contemplate the next chapter of their lives, they reflect on the legacy left by their father, a patriarch who was very powerful, and influential in the Education sector (once a Chancellor of the great University of Makerere) who passed away less than five years ago.
This man was a wealthy individual, particularly known for his extensive real estate holdings, which included nearly 80 acres on Mityana Road, about 40 acres in Mukono, and numerous other property developments.
Courtesy photo.
Like many of his generation, he invested heavily in real estate, but unfortunately, he left behind a weak executable Will and appointed ineffectual estate administrators (per the discussion). In just a few years, his once vast estate has been dissipated by those eager to earn on his hard work.
The division of land among his children was intended to be a blessing for each child to have a starting point, but it quickly turned into a curse as half of them sold their lands quickly to Land agents. What was once a single, expansive land is now fragmented, sold off to various developers.
The person I spoke with was grappling with the reality that the estate their father had built was nearly gone, with little to show for the proceeds from the sales. They pondered the purpose of acquiring wealth if it could not be preserved for future generations.
Our conversation turned to estate planning and the potential use of irrevocable trusts, managed by trustees and lawyers, to ensure the longevity of an estate.
This story is not unique; it is a common narrative for many families who inherit substantial real estate assets. Within a decade, the majority of such inheritances are squandered. It's time to reconsider how we invest for future generations. While acquiring and banking land is not inherently wrong, the structure of the will, the administration, and the rules governing the estate are crucial.
I am not an expert in estate planning, but I have witnessed the pain it causes. Many families see their legacies and histories vanish within a few years of a patriarch's passing. Few families can celebrate a decade after such a loss with their wealth intact. There are better ways to protect and preserve wealth for future generations, yet these methods are often overlooked.
Financial planning should consider the long term, and wealthy individuals typically do think about their descendants. However, without proper controls and systems in place, their efforts may be in vain. It is essential to prepare heirs mentally and financially, to establish trust, and to set clear rules for estate administrators to prevent misuse of assets.
Wealthy individuals often think about future generations, but unfortunately, they sometimes fail to implement the necessary controls and systems that would ensure lasting peace and prosperity for their descendants. How have you prepared your children, both mentally and financially, to responsibly manage the resources you've worked so hard to accumulate? What level of trust have you established, and what rules have you put in place for the administrators of your estate to prevent the misuse of your assets long after you're gone?
As I continue my journey in financial awareness, I encounter the sorrow of those who have quickly sold the land they inherited, with no plans for development or long-term strategy. For those of us with children, we must consider how we are preparing our wealth to last for generations. Will we become the generation that squanders our parents' legacies?
I do not claim to have all the answers, but in my journey to promote financial awareness, I have witnessed the anguish that comes with such responsibility. It is heart-wrenching to speak with people who have inherited, for example, 10 acres of land, only to find them, a year later, desperately seeking to sell it off without any plan for development or long-term investment.
I am eager to hear from those who have successfully navigated these challenges. How have you prepared your children? What foundations have you built? What structures, systems, and controls have you implemented to ensure that the estates of hardworking individuals are not misused?
The most important issue in my view, is not leaving assets to future generations but rather preparing the future generations to manage whatever assets are available.
One thing we realized is that even if families may be held together by the patriarch or matriarch, at the time of passing of the head of the family, the social fabric tends to disintegrate. When the glue that keeps them together fades, and therefore they have no more motivation to keep working together. That in itself does not support the further existence of the estate as one entity. So to begin with, after having been together through a patriarch the family should also be interested in continuing to work together , each members needs subjected to family objectives.. However, apparently that is not the case.
In many cases the testator may decide to try and separate /break down the estate even before they pass. That's a more pragmatic way. If the beneficiaries are going to waste it, so be it.
But even better is to set up testamentary trust where the second generation are only trustees because they should have made it anyway. Sometimes the third generation are also mere trustees and it's only the fourth generation that stands to benefit from an estate. This can be put in place and would help to sustain the estate.
Thanks for sharing this Alex.
- This is as true as you have written.
We keep witnessing this and many times we miss the lessons and it's in the lessons that we can find ways to prepare better.
Someone once said, don't prepare wealth for your children, prepare your children for wealth and this ideally calls for intentional parenting.
Every family has a blueprint on how they were raised.
What comes on top as a question even before we think of inheritance is the value system?
- A will most times acts as reactive way of doing things. Why should people get to know what they are going to do with the wealth after I am gone. Why not start educating or involving children early. It starts with talks at the dinner table about wealth, how to get it, manage it, etc. But today, children only know that my father or mother is rich but don't know about the process of wealth acquisition. They were never in the conversation through out their life. Today a child doesn't know the A, B, C's of financial education. Some don't know what an Asset or Liability is.
It is written that a wise man lives and inheritance for his children's children. I want to believe that an inheritance comes with a heritage as well. This means that heritage comprises of family values, systems, etc. In fact if a child can grow to know how to fish on their own, manage the fish, etc. We will have done well. Children today don't have to grow up with the entitlement of my father has this or that. That's their father's wealth and they should know everything their father did to get there and and that the values should be passed on, values of hardwork, sacrifice, dedication, management of wealth, acquisition, etc.
People are being left wealth but not being left with the education on how to get it. The education on how to get it stands, it can be passed on from generation to generation whether money is there or not.
Children have to be taught about personal responsibility and how it is key to achieving anything. Besides physical assets, those spiritual and emotional assets stand tall.
These are my few cents. The focus should be on heritage(values, virtues, systems, etc) not only inheritance(land, money, assets, etc.)