Understanding these key issues helps families protect their wealth, maintain continuity, and safeguard their businesses. Below are the highlights of the webinar:
Understanding Probate: Probate is the legal process by which a deceased person's assets and liabilities are managed. It is typically a court-driven process that varies by jurisdiction, with the primary goal of proving ownership and ensuring the proper distribution of the estate.
When Probate Applies: Not all assets are subject to probate. Families often simplify their affairs to minimize the estate, ensuring that key assets, like family businesses, are not included in the probate process. This is often achieved by transferring ownership of shares to trusts or foundations before the death of the asset holder.
Risks of Unstructured Estates: For families who do not engage in structuring, probate can become a complex, time-consuming, and costly process, particularly when assets are held across multiple jurisdictions. Without proper planning, this process can span years and incur significant expenses.
The Role of Wills: While a will provides some direction, it does not eliminate the need for probate. Multiple wills may be necessary if assets are spread across different countries, and they must be carefully coordinated to avoid legal conflicts.
Tax Implications: Unstructured estates may face inheritance taxes of up to 40% of their value. Structured entities like trusts and foundations can help reduce these tax liabilities, offering significant savings while still adhering to tax obligations.
Impact on Family Business Continuity: When shares of a family business are passed through probate, new individuals, potentially with no business experience or interest, might become involved. This can disrupt business continuity, lead to disputes, and threaten the stability and future of the business.
Benefits of Trusts and Foundations: Establishing a trust or foundation can significantly streamline the wealth transfer process. These structures remove assets from the probate process, ensuring uninterrupted management and succession, and protecting the family business from potential disruptions caused by inheritance disputes.
Starting the Structuring Process Early: Setting up structures such as trusts or foundations requires careful consideration, family discussions, and legal advice. Starting early allows families to map out their vision and ensure that all family members are aligned, which is crucial for the long-term success of wealth preservation strategies.
Family Governance: It’s important to have a family constitution or governance document, which, although not legally binding, serves as a powerful guide for trustees and family members. This document ensures that the family's vision and values are upheld across generations and can play a significant role in dispute resolution.
Global Coordination in Estate Planning: For families with assets spread across multiple jurisdictions, global coordination is essential. Having a structured plan that is recognized and respected in all relevant legal systems can greatly reduce complications during probate.
Cost Considerations: Setting up and maintaining structures like trusts and foundations involves costs, but these are often offset by the savings in taxes and probate expenses. The initial investment in structuring is generally more efficient than dealing with unstructured estate administration after death.
Watch the full webinar to learn how strategic wealth structuring can secure your family's future.