SUMMARY
While life is uncertain, wealth planning doesn’t need to be. It is important to plan now, or make adjustments to existing plans if needed, rather than wait until a significant life event happens.
If a clear wealth and succession plan does not exist, there is no better time to implement one that balances emotions and fiscal optimization to ensure an effective and meaningful wealth transfer to the next generation.
One can predict with certainty that wealth threatening events will happen during one’s lifetime but not what events and when. How can one prepare for events we know will happen but not when and how?
Comprehensive planning
The key to successful long term investing is having a comprehensive plan and sticking to it rather than reacting to each wealth threat as it comes along. Prior planning is a far better option that takes emotion out of the decision making during turbulent times.
We can decide today what percentage of our current assets can be set aside as liquidity for financial shocks, wealth generation for retirement, and what can already now be set aside for our legacy. Legacy assets can be placed in a wealth structuring vehicle like a discretionary trust with professional asset management, thus taking away the emotional stress of decision making during turbulent times. A professional asset manager will have the discipline to stay invested.
Wealth taxes are frequently proposed and can be a moving target. Fiscal rules in your tax residency jurisdiction could also change at short notice. Therefore, anxieties about higher wealth taxes need to be addressed, and expert outside counsel sought to meet the burden of changed reporting obligations.
Wealth creators - whether entrepreneurs, professionals, or investors - can focus on innovation and growth when their wealth plan is in place and their legacy is secure.
Clear plans, should the unforeseen happen, including naming a successor to carry over the mantle must also be in place. Terms regarding incapacity may need to be changed, added, or updated. Additionally, insurance related structuring is important.
Insurance
Aside from protecting individuals and businesses from risks, insurance has progressively taken on a wealth management aspect. It can be often prove crucial in successful wealth transfer and can serve as an adaptable tool for protecting business assets, family, partners and key employees from an unexpected death or critical illness.
Insurance could also help diversify your pool of assets, as it is a non-correlated asset that is complementary to your global asset allocation. It can also provide liquidity for the next generation; mitigate legal challenges from creditors; and third-party claims as well as enable you to take advantage of the still relatively low interest rate environment to inexpensively finance premium payments.
Wealth check-ups
Like health check-ups, it is important to have regular wealth check-ups. Wealth planning is a dynamic ongoing process impacted by market conditions, updates to fiscal regulations or life changes. Regular reviews help ensure strategies remain resilient and effective and enable wealth creators to adapt. Consider incorporating family meetings into your check-up to foster open communication, align goals and provide education on future wealth responsibilities.
Putting structures in place must be accompanied by an understanding of the aspirations of, and instilling an ethic in, the next generation by family leaders. The resultant wealth and succession plans could reflect family values and aspirations more than ever, incorporating business needs, philanthropic, or core investment activities with potentially better yields for the future.
There is no time like the present to put a wealth plan in place, and we are here to support you.
To discuss wealth planning, succession strategies and investment opportunities, please contact us.
