Knowledge Hub

Wealth Structuring: Why Asset Governance Matters

Wealth Structuring: Why Asset Governance Matters

Jun 10, 2024Offshore Structures- 3 min

Understanding Good Governance

Effective asset governance is crucial for maintaining clarity and control over one's financial portfolio. Assets that are well-governed are easily identifiable and have up-to-date, reliable records of transactions and asset values. This often involves appointing a professional third party to manage and monitor assets, which may include maintaining an asset register and regular reporting to establish a centralized record.

Such centralization eases the administrative burden for investors and, importantly, for their heirs in the event of an untimely passing. Good asset governance typically incorporates professional wealth structuring, which serves to protect assets from potential contamination and enhances confidentiality.

Investors managing international assets must be particularly vigilant, ensuring they have appropriate legal and tax advice to manage assets in taxable jurisdictions effectively. This is essential for avoiding unnecessary or unexpected tax implications and ensuring that all matters are handled correctly.

The Risks of Poor Governance

Inadequate governance can lead to several risks that may severely impact an investor's portfolio:

  • Improper Asset and Liability Management: This can create cash flow problems and result in unaccounted-for assets or liabilities.

  • Asset Contamination and Erosion: In the event of litigation or other asset-related issues, poorly structured governance can lead to significant financial loss.

  • Complex Administration: For investors and family members, especially after an untimely passing, managing stand-alone assets or liabilities can become a burdensome task.

  • Excessive Taxation: Particularly with international assets, lack of proper management can lead to unnecessary tax burdens.

  • Delays in Asset Liquidation: Without accessible and proper paperwork, selling or realizing assets can be delayed, potentially missing critical financial opportunities.

The Value of Structured Asset Governance

Good governance in asset acquisition and management is pivotal for mitigating long-term risks associated with unstructured wealth. Efficient governance and proper structuring not only aid in wealth preservation but also facilitate growth. Starting with the centralization of wealth records is a sensible first step towards establishing robust governance.

For a comprehensive approach to asset governance, speak with your Relationship Manager about our wealth advisory support services.

Are you seeking private market opportunities?

Join our digital investment platform for exclusive
private market opportunities

Create an account

About The Family Office

Since 2004, The Family Office has been the wealth manager of choice for more than 500 ultra-high-net worth families and individuals, helping them preserve and grow their wealth through customized solutions in diversified alternatives and more. Schedule a call with our financial experts and learn more about our wealth management process.

Keep reading