Substantial wealth is always under threat
Sophisticated wealth planning services are becoming ever more important in this rapidly changing world. Wealthy families have internationalised over the last decades. Often children or other family members live, study or marry in different jurisdictions. There is a growing number of divorces and second or even third marriages and the following generations often have an entirely different view on the wealth generated by the previous generation. In most countries privacy is also becoming more and more seldom, and an increasing number of governments are implementing austerity measures and scrutinizing the wealthy.
In brief, there are numerous situations in which your wealth, or part of it, may be jeopardized and, in the case of larger families, threats may even arise in different jurisdictions simultaneously. Unless you structure your family's assets properly, they will increase less, can disappear over time or be jeopardised by a wide variety of factors.
However, by putting suitable and regulation-compliant wealth planning structures in place most threats can be neutralised. Structuring wealth is therefore one of Greenpro Family Offices’ core activities and, one of the most important reasons why a wealthy family should use the services of a family office such as ours.
Three generations and your wealth has vanished
Wealth is often generated by only one generation. Research shows that without planning that wealth properly, it completely disappears over the next three generations on average. A transfer to the next generation due to an inheritance often entails that the wealth gets divided over several persons, which automatically results in less assets owned per person.
Taxes such as wealth tax, estate and inheritance tax and income tax can, for example, take quite a big bite out of your family's wealth. There are also regulatory and legal challenges and in certain countries increased political, religious and economic risks and instability to be taken into account. A good family office can assist you in minimising these risks and help you safeguard your assets for the next generation.
Potential threats to your wealth
Other potential threats to your family's wealth are, for example, assets being frozen on death, matrimonial disputes or disputes over the devolution of your estate. Among the non-financial reasons to implement wealth planning solutions are avoiding disputes over the control of the family business protecting your privacy, protecting your reputation or ensuring your family's safety. All issues which wealthy families should better consider sooner than later, but our practical experience shows that unfortunately these types of wealth planning issues are often addressed too late. Once again, People don’t plan to fail, They fail to plan!
Wealth planning structures
All these potential threats stress the need for your assets to be structured (as tax-efficiently as possible and at the right time) if you are a wealthy (international) family. The average wealth planning structure may consist of:
• An International business company acting as a (foreign) holding company for the family business
• A Trust to safe-keep, safeguard and transfer assets to the next generation
• A Foundation to be active in philanthropy
• Life insurance solutions to set aside wealth for specific family members
• A Professional investor fund to invest in a controlled and optimized manner
• Wills & prenuptial agreements to safeguard assets from family by marriage