Estate planning & wealth structuring for modern families

HNW and UHNW families have different circumstances, assets, needs and objectives, meaning plans need to be structured in a way that is specific and highly personalised to each family.

In an interview in June 2023, Jamey explained to eprivateclient the guidance and support ZEDRA provides to HNW and UHNW families with wealth structuring and estate planning strategies. Jamey sets up and administer trusts, foundations, family investment companies, partnerships, legal vehicles to support wealth structuring, probate (estate administration), wills, and lasting powers of attorney.

What generally motivates a family to do an estate plan for the first time or to update an existing plan is a desire to combine peace of mind with a thoughtful and durable plan for the future. Not having one’s affairs in order or having loose ends in an existing plan tends to weigh on people’s minds.

Whilst people in their 30s, 40s, 50s, or even 60s, are not generally thinking too much about their own mortality, it was still important to prepare for the inevitable but also for a wide range of changing circumstances such as divorces, family conflict and their related hidden risks.

The Covid-19 pandemic had seen a change in the mindset of clients and the uncertainty around it had prompted people to engage in conversations about their affairs – with more urgency than in the past. They wanted to know their loved ones would be looked after, if need be.

The pandemic – especially early on – was deeply unsettling and resulted in a renewed focus on planning for potentially unpleasant scenarios.

Similarly, they wanted assurances that their assets could be managed in the future through a trust or a lasting power of attorney if they fell seriously ill or became impaired.

Once someone decides to do an estate plan, in order to ensure a successful process, we encourage transparency with an adviser.

It can be difficult for people who value their privacy, but being transparent about your current circumstances and future goals is an effective way to ensure you and your family will develop a plan that’s aligned with your objectives.

Transparency gives us the ability to provide informed guidance and to make sure the bespoke structure we’re recommending is efficient and provides optimal benefits to the family.

These trusted conversations help us avoid putting a plan into motion that could be inadvertently detrimental to a family member or the broader family unit. This can come into play if, for example, a family member is suffering from an addiction.

In order to support multigenerational wealth and estate planning, it’s important to have the right structuring to sustain and grow a family’s wealth for current and future generations.

For example, it is vital that trusts are flexible and can address a range of issues. Trusts can provide for children or special needs family members. Trusts can also hold wealth until children are mature enough to manage the responsibility themselves.

A trust can be set up in a way that the assets can only be used by the children to set up a business or buy a property. And a trust can also address family dynamics such as multiple marriages and/or stepfamilies.

At the same time fiduciary vehicles can also be beneficial. As wealth is passed down through generations, it can be diluted as more family tree branches are created.

A fiduciary vehicle – which can be a trust, company, foundation, or partnership – can address dilution concerns and preserve family wealth through the generations. Professional advisors can manage the asset for the benefit of the family members.

Family investment companies can also be beneficial as they are created purely to manage the private wealth of a family. The company shareholders are family members, and the directors are usually also family members, but can also be outside advisers who can offer independent perspectives.

Family investment companies offer a lot of benefits. They can allow for customised share classes and voting powers to give various family members differentiated rights to income and capital. They also restrict the transfer of shares outside the family and can provide governance in line with the family’s agreed upon principles.

Recent headlines of high-profile families involved in estate disputes highlight that communication is really important because it can prevent disharmony from taking root in the first place.

Effective, intentional communication can promote trust and family cohesion. It’s every bit as important as putting the right estate plan structure in place.

Communication goes beyond just seeking harmony, as families can prosper in both material and emotional ways if transparency and trust is established. Effective communication and leadership can build purpose and pride and can strengthen a family’s bond.

Effective communication within a family can also help to protect a family’s wealth as it helps give family leaders an opportunity to invite their children into the process of goal setting – and they can provide clarity around values.

They can also take steps to educate and prepare the next generation for the responsibilities that come with wealth. And they can also put proper governance in place to address stumbling blocks and potential future conflicts.

You can find the full original article on eprivateclient’s website here.