No two wealth transfer processes are ever the same, and what makes a good strategy for one family will not be suitable for another. The ownership of property, distribution of assets, role of family members in businesses and involvement in any charitable causes, are not just factors that need to be considered. They also carry a lot of emotional significance for the people involved. Today, wealthy families also tend to be global, with assets, siblings and parents often spread across continents. In practical terms, this means dealing with different regulatory and tax regimes when it comes to wealth transfer and succession planning.

The power of wealth comes from the flexibility it gives families to choose the kind of lives they want. Flexibility allows for self-determination and is of central importance when it comes to designing strategies for transferring that wealth to the next generation.

Dynamic context 

By 2030, Wealth X predicts that wealthy individuals worth $5 million or more will transfer $15 trillion of wealth. This is an unprecedented redistribution of assets, with almost 550,000 individuals passing on an average of $28 million each. Over 85% of these wealthy people have made their fortunes themselves, as a result of years of hard work building companies.

The process is changing over time. It used to be that the majority of wealth transfers took place after the death of the asset holder, but recent decades have seen wealthy people aiming to pass on their wealth earlier in life. The benefits of this approach are that it allows the next generation to prepare for their new responsibility over a period of time. But it also allows them to tailor their wealth transfer to suit the distinct needs of their families. The concept of entrepreneurship is important to people who have built their own success, and increasingly wealthy people want to provide resources for their children in a way that encourages recipients to create their own success and live their choices with confidence.

This great wave of wealth transfer and succession will take place in a dynamic global environment. Recent years of economic and political uncertainty have triggered a trend towards asset allocation diversification, while changes to regulatory and tax environments have added further complexity to wealth management. For individuals that own property or assets all over the world, understanding this context is an important step in working out how best to transfer wealth.

But it is often the individual nature of the family itself and its assets that add the biggest layer of complexity to proceedings.

The value of a tailored approach

Flexibility means creating options for people to choose the best solution for their goals. Wealth transfer and succession are important as they lay the foundations for the future of families for decades to come. Some families want solutions that help them generate additional wealth in order to create a larger transfer later in life, such as dismantling a company in order to cover all beneficiaries or avoiding the sale of property in order to generate additional liquidity. This is why they need to answer questions rather than create more for the next generation so that they can live their choices with confidence.

For individuals who have spent the majority of their life building a company, passing it on is often more difficult than it first appears. If the process goes wrong, it can result in the splitting of a family business and a large-scale damage to wealth. The biggest cause of this is family members fighting for control of the business, but the reluctance of a long-term owner to fully relinquish control can also create dangerous uncertainty. If the wealth transfer strategy is flexible enough, it can adapt and change over time to help bring parties together. 

Wealth transfer and succession planning are only effective if they actively promote financial security and freedom. It is often a lack of flexibility that can lead to situations where wealthy individuals and their families find that their wealth is less secure and their options are more limited than they were at the start of the process. It is our job at Swiss Life Global Solutions to make sure this never happens, so our clients can lead self-determined lives governed by their own choices.

Talk to us today about how to protect families and their assets through tailored insurance solutions. 



Get in touch: Global Private Wealth