It is estimated that a 5% wealth tax on multimillionaires and billionaires in the G20 countries could
generate $1.5 trillion annually. A taxation system overhaul would significantly impact the private
wealth and tax advisory landscape.
Fiduciary advisors and tax practitioners must continually upskill themselves to assist families in
navigating the global succession challenges for family wealth.
Supporting families effectively means understanding their unique needs and circumstances, including
unravelling their definition of family, what wealth means to them, their values and their vision.
With the help of diligent advisors, families can make informed decisions and effectively brief their
teams to manage future changes.
Wealthy families often require international tax
expertise to navigate the complex tax codes.
A detailed handrail note for tax is essential
for families, trusts, businesses and individuals,
mainly when dealing with multiple jurisdictions
and complex wealth structures. This can assist
in developing quick and long-term investment,
succession and tax planning strategies.
Families can record their values, vision and
mission for the Family and Business Charter
with expert advisors’ aid to safeguard their
legacy’s generational continuity. Various
generational and enterprise families have
successfully used family and business charters
over many generations.
Furthermore, by capturing formal dispute
resolution strategies, future generations are
empowered and seated at the table. This
approach helps ensure that families can
continue to thrive for future generations.
Wealthy families have privileges and
responsibilities. Managing wealth purposefully
and responsibly involves focusing on
succession planning, asset diversification,
unique investment opportunities, family
office arrangements, inter-generational estate
planning, philanthropy, business strategies and
reporting.
Advisors should understand the family’s reasons
for choosing different jurisdictions and be
knowledgeable about various topics, such as
tax and fiduciary matters. This will help steer the
next generation towards sustainable solutions.
Depending on various factors, clients might
have multiple wills when dealing with specific
jurisdictions or worldwide assets. The different
wills must work harmoniously; one should not
override the other.
Staying compliant is crucial and the role of the
family tax advisor is constantly evolving due to
global themes and fear factors.
Multi-generational families are often admired
for their resilience in difficult times. However,
as new generations emerge, new and old
challenges may arise. These challenges can be
attributed to a lack of familiarity and shared
experiences among family members. To
overcome these challenges, embracing change,
fostering an innovation environment and
developing sustainable strategies are essential.
Analysing and mapping the stakeholder
network is crucial to comprehend a family’s
distinct values, missions and visions. A family
business may involve various individuals,
such as company representatives, CEOs,
CIOs, CFOs, shareholders, business owners
and professionals like directors, trustees,
accountants and lawyers working for the family
or the family enterprise.
By analysing the stakeholder and the network
of influencers, one gains valuable insights into
the complexities and nuances of different
dynamics that shape decisions which align or
misalign matters but put things in perspective.
Non-family board members, married-ins,
extended family members, family council
members, leaders, next-generation family
members and lawyers or representatives
for family members may play a vital role
in the stakeholder network and the client
engagement journey. Their influence should
not be underestimated.
Identify the gatekeepers of the family legacy
to help uncover gaps in the current landscape,
provide a better understanding of the
investment and succession philosophy and
capture the enterprising spirit needed to keep
the legacy alive.
Gaining insight into risk management, the
types of assets held, and the definition and
allocation of assets for succession is crucial.
Each family’s unique characteristics impact
their property and lifestyle management,
thus emphasising the importance of tailored
services and next-generation education.
Neglecting security risks, including personal
and cyber threats, must be explored. Social
media risks for families must be addressed, as
they significantly impact family dynamics and
wealth. It is imperative to analyse the effect of
these often-unspoken factors.
Managing and safeguarding accounting
knowledge, intergenerational knowledge
transfer, balance sheet optimisation, deal
structuring and financial optimisation are
crucial topics for families and advisors.
Understanding and managing businesses,
corporate structures, family governance
structures, legal entities and financial services
is vital. Seeking business advice is critical for
family-owned companies.
Families with substantial investments and business
expertise are not inexperienced. Most investors who
invest millions in a business have already earned millions
in that sector. This awareness changes service models and
outlooks, customising advisory solutions.
A Private Trust Company for a family acts as a gatekeeper
for wealth and provides trustee services, ensuring business
continuity. It consolidates complex family structures and
offers access to critical family decision-makers.
Choosing the appropriate estate planning structure is
essential. Trusts and companies are two common types,
each with advantages and disadvantages.
Trustees owe a fiduciary duty to the trust’s beneficiaries,
ensuring asset protection and ownership planning.
A protector can be appointed to perform certain functions
in a trust; it is crucial to comprehend the restrictions and
limitations that must be considered. Typically, a protector
oversees the trustee’s actions and ensures that the legal
and ethical aspects of the trust are maintained.
Families might be interested in impact investing,
which benefits society and the environment while
providing returns. This reflects a shift towards sustainable
outcomes across all activities rather than just focusing on
philanthropy.
To create a cohesive philanthropic strategy for a family,
one should prioritise open communication, engage
in meaningful discussions and incorporate diverse
viewpoints aligned with shared values. Consider creating
a separate family philanthropy plan or incorporating
the philanthropy framework into an existing Family and
Business Charter outlining governance principles.
Some families use strategies to empower and teach the
next generation by offering a ‘starter pack’. Depending on
the family’s wishes, the starter pack can create a feeling
of independence and empowerment. The family uses the
opportunity to talk about topics relevant to family wealth
and succession and tends to observe how the starter pack is
treated. This will coincide with an advisory planning session
and ongoing discussions.
Younger family members can be encouraged to engage in
legacy-building techniques by creating a junior or shadow
board or involving them in family philanthropy.
Families benefit greatly from a diverse and robust advisory
board, including family and non-family members. The
board can provide valuable insights and advice, with family
representatives equipped to oversee family governancerelated
matters.
Some families appoint a specific advisor for family members or
units to ensure fairness. The advisor acts as a communication
conduit and assists with important decisions and choices. The
fundamental relationship plays a critical role in maintaining
harmony in the family.
Advising wealthy families is an intricate and highly skilled
business. As South Africans continue to globalise their wealth,
business interests and families, their advisors must keep up
to date with myriad factors, including compliance, reporting,
taxation and estate planning.
