Passing on wealth to children is not always a given
31 January 2020
- Contact Abigail Tipton
- Senior Relationship Manager
- [email protected]
- +41 22 888 06 25
Succession planning is one of the key topics in the private wealth industry, and the emphasis tends to be on inheritance, heirship and smooth transition of wealth to the next generation.
For many clients, however, wealth structuring takes on a very different angle: what happens if they don’t want to pass on their wealth to their children, or children don’t want their wealth?
Rationale
In our experience, not passing on wealth to children can be a totally normal and very satisfactory situation for everyone in a family. For example, for some affluent families, it was perhaps never the plan to pass on wealth to children. Alternatively, a child might have received a set amount of wealth from a parent or parents during their lifetime but will receive nothing thereafter. Some families decide together that children aren’t the right beneficiaries for a family’s wealth.
Forced heirship can also play a part. In countries where male heirs are likely to inherit the majority of a family’s wealth in line with local laws, parents might decide to set up structures which deliberately cut out sons but include daughters instead. We have clients who set up a trust for their offshore assets, and the beneficiaries are exclusively a daughter or daughters. The aim of this isn’t to cut out sons or other male heirs but might be to make the inheritance more equal between children.
Structuring wealth: a deeply personal experience
Although we don’t need to know a client’s motivations for who inherits their wealth, a client will often share their reasons in the course of a working relationship. Wealth is deeply personal and setting up structures for passing it on can feel very intimate. As a service provider, we are exceptionally professional, but we work very hard to go one step further. We look to build a long-term relationship in which a client feels comfortable sharing their motivations and desires. When we have an understanding of what is driving a client’s experiences and wishes, we are better positioned to be able to provide the best service.
Structuring
Whatever a wealthy client or family plans for their wealth in the future, planning and structuring is still vital. Trusts remain a favoured structure that allows wealth to be passed on to beneficiaries as requested by an individual. If not their children, this might include other loved ones, friends, charities, institutions and other parties. Philanthropic structures such as foundations are also popular entities for those who don’t pass on wealth to their children.
