Protecting and Growing Family Wealth in a Dynamic Global World

Wealth, estate, and succession planning is difficult at the best of times. But this is compounded in the current global environment, with added complexities resulting from continuous in-country regulatory changes.

With ease of doing business, and investments internationally, high net worth individuals and family empires, have found it easier expand their global footprint. These global go-getters a encouraged by the cross-border investment opportunities, which also provides a level of risk mitigations from single country exposure.

Notwithstanding the desire to build a vast international empire, it is imperative that the empire builders recognise the importance and need to ensure that they have considered the estate impact on each beneficiary of the estate. The complexities when investing across border, and exposure to multiple jurisdictions, requires careful planning and strategizing. Furthermore, the one size fits all concept given by many family wealth offices and investment advisors, may not be the perfect fit for each any every family investment portfolio and model.

One must bear in mind, that estate planning and structuring begins with a knowledgeable understanding of the rules of the jurisdiction in which one is investing and acquiring assets. It is imperative that this knowledge and understanding is gained before there is any outlay of capital into any foreign country. It will be appreciated that there are times when opportunities present themselves, but it is imperative that investors do not act in an impulsive manner.

  1. Legal systems

The laws and regulations, and the interpretation thereof are vastly different within each country. Furthermore, the way each country administers and regulates assets of the deceased after death, may differ significantly. By understanding the differences, evaluating the risks, and planning to mitigate, will ensure a seamless, and pain free transfer of wealth between generations.

Some countries have hybrid legal systems, with civil and common law characteristics, while other countries have only one of either common law or civil law systems. Based on these judicial frameworj systems, and the application thereof on deceased estates, is how countries and their jurisdictions consider the process of succession.

In certain jurisdictions, there is the possibility of in-country rules, possibly in the form of attribution or formulas which must be adhered to. This could be a in the form of a minimum value or percentage of the estate would be attributable to the children. If these rules are not complied with, the testator’s wishes may be overruled, or only a portion administered in the manner so required by the testator.

Furthermore, the spousal rules within which jurisdiction must be understood and complied with. The testator must have understood the requirements of the country or jurisdiction wherein they have chosen as their ultimate matrimonial regime, and that other foreign jurisdictions may not necessarily recognise some of the accrual dispensations.

2. Consider multiple wills

It may be a requirement to have a separate will for the country in which one is ordinarily resident, and one will which deals with assets in foreign jurisdictions. It may not be necessary to have a will in each jurisdiction that one has assets.

Furthermore, cognisance must be taken of the presentation of the will due to the different interpretations within jurisdictions. It may be recommended to have all wills to be reviewed by in-country experts, to ensure relevance within these jurisdictions and the impact there of.

Notwithstanding the above, one must be aware that countries have signed double estate duty agreements. It is advisable to discuss the implications thereof with an experienced global wealth specialist.

3. Administration costs

It is imperative that when one considers expanding into foreign jurisdictions, one procures the services of experience and knowledgeable experts within each country. 

Furthermore, it is vitally important that one reviews their international structures annually, to ensure relevance and potential risks, with any potential regulatory or law changes. This may be further exacerbated if any family members have decided to relocate or emigrated.

When one is considering wealth structuring, these are some of the things to consider:

  1. Entry, doing business and exit model within each country;
  2. Proposed tax changes in the next 12 to 24 months
  3. Ensuring that the structures implemented are scalable and agile for future growth and possible changes
  4. Ease of entry into a country, such as visa requirements, and transport
  5. Mechanisms which cater for sudden unforeseen changes
  6. Continued administration costs, annually, as well as on exit requirements
  7. Is tax efficient, operationally as well as when one ever decides to exit a country

Where an investment is inaccessible in an estate in a foreign country, it may require that the spouse or family beneficiaries or representatives so authorised, may have to consult with estate administrators which may contribute further administrative burdens.

Notwithstanding the ever-changing macro, micro and socio-economic environments that we all are expected to navigate on the international level, with the right systems and structures, supported by the best equipped executive wealth management team, individuals and families can implement ideal wealth and investment models, which is conducive to making money, scalable and agile for continuous growth, and tax efficient, as well as allowing a seamless transition to future generations.

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