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How to support clients with complex succession planning

How to support clients with complex succession planning

By Joanna Bodell, Managing Director, ZEDRA Isle of Man

When it comes to managing wealth handover, both HNW families and their advisors are juggling multiple balls in the air. Where estate planning used to be focussed mainly on succession planning and wealth protection, today, tax considerations, substance, confidentiality, compliance, transparency and risk management are all equally important.

Generally speaking, today’s wealthy families and individuals may have different income streams and more diverse assets than twenty years ago. At the same time, it’s also likely that families have more global ties with investments, businesses and residences spread across the globe. Modern families have also changed, and blended families or extended families are also more common. As regulations, legislation and the international business environment evolves alongside all these trends, wealth management is arguably more complex than ever before.

Structuring wealth today is challenging because there are so many moving parts to consider. A family with relatively simple structuring needs might have a complex family situation, and estate planning could be a highly sensitive topic. Alternatively, for another client, family sensitivities might not be an issue, but the family’s estate might be very complex with multiple structures, investments, holdings and assets.

Estate and succession planning is so complex today that it can feel overwhelming, especially for families approaching it for the first time. I think it can be helpful to remember that with time, patience and the right team providing guidance and advice, a workable solution can always be found. Any perceived complexity in structuring can me magnified many times over in the event of the client dying without a proper plan in place.

Succession and estate planning

Raising the topic of succession and estate planning within a family might be challenging, but many wealthy families are looking to set up structures if they haven’t already done so.

Over the course of the past year, many wealthy families and their advisors have performed a kind of personal ‘due diligence’ and looked at what – if any – structures they have in place. Many people naturally put off estate planning, but over the past year, wealthy families may have started to feel uncomfortable not having anything in place, and we’ve seen clients move quite quickly to formalise plans with their advisors. Peace of mind and protecting wealth for future generations tend to be at the heart of these discussions.

Wealthy families are also looking at using succession planning as a tool to provide transparency and clarity for family members about what will happen in the future. Particularly if there is a family business, deciding who will take it over (be that a family member, if leadership will be taken up by an external party or if the firm will be sold) at a time where the family can potentially discuss the situation and air their thoughts, can be useful. Alternatively, a client may push ahead and set up structures without consulting family.

Simply put, there is no right or wrong approach. What works for one family will not work for another. As a service provider, we keep a totally open mind and adapt our workflows and expertise to meet the needs of each client and their preferred way of approaching succession planning.

Meeting client objectives

Our clients remain at the centre of everything we do, and they are the focus of the way we approach the relationship. We are sensitive to the potential difficulties of estate and succession planning, particularly when there are large or complex family structures. We work alongside advisors to use our experience and expertise to ensure a client’s objectives are achieved.

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