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Clients using liquidity for new business ventures rather than investment portfolios

Date: 03 Feb 2016

Bumblebee Design

Edward Stone, partner at Berkeley Law, also says UHNWIs are increasingly seeking to retain control over their business when planning succession. 

 What interesting cases of succession planning have you been dealing with?

We are advising an UHNWi on the transfer of his controlling shareholding in a multinational business into a private trust company structure. The structure is designed to enable the client to retain control of the business whilst allowing for the distribution of dividends amongst family members. The client will then gradually hand over control to selected family members whilst retaining influence. The difficulty faced by the client is deciding which family members should ultimately assume control and in particular whether including step-children will enhance or destroy family unity.

What should UHNWIs be aware of when transferring a business to their children?

UHNW’s need to ensure they fully appreciate all the implications of letting go and that they are genuinely ready to allow the next generation to take up the reins so that control is not transferred on paper but retained in practice. Where the business is being transferred to several children, there needs to be a clear determination of what role each child is going to have going forward as they may each want to do things differently and make their own changes.

What trends do you see in the industry you can tell us about?

Clients are increasingly looking to maintain control, whether of their actual businesses or the fruits of their businesses and looking for structures which combine an element of control with long term succession planning. Also clients are more frequently looking to use at least part of their wealth in new business ventures rather than classic investment portfolios.

What do you wish to add?

Any wealth planning structure needs to be flexible to allow it to adapt to any future family, regulatory or fiscal changes.