Anabella Murillo, Director Business Development, ZEDRA Miami explores some of the ways the past year’s events have changed succession planning trends for (U)HNW individuals and families from the LatAm region. She also explores some likely trends and priorities for 2021:
Succession planning is always difficult to talk about, and despite knowing it is essential, some families or individuals don’t always have the right plans in place. While it can be tempting to tackle succession planning ‘later’, the uncertainty resulting from the COVID-19 pandemic has meant that more families decided to get estate planning in order urgently, rather than delaying it further.
‘Over the past year, we saw some clients feel that they didn’t have adequate structures or vehicles in place for their wealth. The result was that we saw several HNWI and families look to set up estate planning and succession structures. Many of them wanted to do this very quickly so that a viable plan was in place in case of need. We think this trend is a direct result of the pandemic which brought the need for adequate structures further into focus,’ explains Anabella.
As well as ensuring they had the correct structures in place for succession planning, many families and their advisors have spent some time over the past year reviewing their structures, their set up and management.
As family wealth grows, new structures are set up for business, investment or estate planning purposes. While new vehicles are always incorporated and appropriately managed, as the number of structures grows, managing the entities in a streamlined way becomes more challenging. Families may look to professionalise the management of their structures and have an expert team to oversee this side of the family’s needs, alongside their advisors.
‘When a family’s structures are very complex – as if often the case for families from the LatAm region – working with a single service provider with complete oversight of a family’s structures, their business vehicles, investments and personal structures can bring significant benefits. We can help families professionalise and streamline the management and oversight of all their entities, rather than a family having to have these handled by different parties, which makes management and oversight complex and time-consuming,’ says Anabella.
UNHWI and families continue to seek advice on the best way to structure their assets for tax efficiency and wealth protection. With economic uncertainty, challenging business environments and political considerations, protecting wealth for the next generation is often a top priority.
Ensuring a family business is successfully passed from one generation to another is one part of the story. However, families from Central and South America are also thinking about ways to ensure that their assets are protected, perhaps in trusts or similar structures so that wealth can be safeguarded and passed on to future generations.
Meeting diverse needs
While wealthy families from the LatAm region are often close-knit units, individual family members may have very diverse needs. Complex, global structures for a variety of corporate, fund and private uses are increasingly the norm. Service providers with a strong track record, and ability to understand complex structures are crucial.