The start of a new year is always a time for reflection, especially for individuals who have built significant wealth. High-net-worth and ultra-high-net-worth individuals (HNWIs and UHNWIs) understand that wealth management is not just about accumulating assets—it's about securing, preserving, and strategically passing down those assets to future generations.
For UHNWIs, 'getting your affairs in order' should go beyond a mere New Year's resolution; it's the foundation for long-term success and stability.
As Benjamin Franklin famously said, "Nothing is certain except death and taxes." Yet with expert advice and professional planning, UHNWIs and their families can effectively and legally mitigate the impact of both, achieving security and flexibility no matter what the future holds. In our latest article, we explore the essential elements that should form part of every ultra-high-net-worth individual's estate and wealth management plan in 2025.
The Value of Trusts and Asset Protection Structures
For UHNWIs, a professionally established trust is an indispensable tool for asset protection, tax efficiency, and succession planning. Trusts can ensure your assets are managed according to specific wishes while safeguarding them from unforeseen claims, personal liability, and other risks.
A corporate and trust services provider, such as Sentient International, offers not only the technical expertise needed to establish trusts but also the fiduciary commitment to manage them in alignment with your long-term objectives. Whether it's a family trust, charitable trust, or a more complex structure such as a Private Trust Company, these structures can offer flexibility whilst providing much-needed protection.
Ringfencing Wealth with Strategic Asset Segregation
Ringfencing is a key concept in asset protection and involves isolating high-value assets within a structure that is designed to reduce risk exposure. For UHNWIs, this could mean segregating real estate, business holdings, yachts, or other high-value assets within individual trusts or corporate entities to ensure they remain insulated from potential liabilities in other areas of the owner's financial life.
By protecting your assets through smart structuring that incorporates ringfencing, you can have greater peace of mind, knowing that your wealth is protected against both known and unforeseen risks. There are various types of entities that can be effective in ringfencing, including:
Special Purpose Vehicles – SPVs, also referred to as Special Purpose Entities (SPEs), are often created to hold specific assets and liabilities separate from those of the primary business or owner. Often used in investment and financing activities, SPVs can help manage risk by isolating certain assets.
Trusts – Trusts are a long-established tool in asset protection and estate planning and are commonly used in family wealth management, where assets are isolated from personal liabilities.
Companies – Traditional corporate structures can also be effective in ringfencing when set up with specific asset protection in mind. By strategically structuring a company's operations, high-value assets can be held separately, reducing the risk of loss from business liabilities.
Protected Cell Companies – A PCC is a corporate structure that allows assets and liabilities to be divided into "cells," each of which is legally distinct from the others. PCCs are particularly popular in the Isle of Man and Malta, providing a flexible yet robust way to ringfence different lines of business or asset classes within one overall structure.
Corporate and trust service providers play an essential role in setting up such structures as they have the expertise and experience to ensure that any structure established provides optimal protection while ensuring compliance with relevant legal and regulatory requirements.
Succession Planning: Transferring Wealth and Values
Effectively transferring wealth is a priority for most UHNWIs, but transferring values and ensuring continuity of family legacies is equally important. This is where comprehensive succession planning comes in. Establishing a family governance framework, creating inheritance guidelines, and educating the next generation are all integral parts of an effective succession plan.
A trust or corporate structure can be central to achieving these aims. For instance, creating a structure with terms that incentivise the next generation, stipulating, for example, that certain educational or professional milestones be achieved before heirs access their inheritance, can help to foster a sense of purpose and responsibility in younger family members.
It is, therefore, important to work closely with a professional service provider to develop a succession plan that is not only financially sound but also aligned with your family's values and legacy goals. From creating Private Trust Companies to establishing trusts, they will be able to offer tailored solutions that ensure the continuity of wealth and values across generations.
Tax Planning and Compliance
One of the primary concerns for UHNWIs and family offices is tax efficiency. Effective tax planning not only helps preserve wealth but also ensures that it remains available to the family instead of being lost through unnecessary taxation.
Working with the appropriate professional advisor and an established corporate services provider will enable you to develop and set up a tax-efficient structure whilst helping you navigate the complex regulatory landscape across multiple jurisdictions. Whether through the use of trusts, corporate structures, or foundations, whilst it is important to identify and capitalise on tax planning opportunities, it is even more crucial to ensure compliance with international standards.
Digital Legacy: Securing Online and Intellectual Assets
We are all living in an ever-growing digital world where a substantial portion of wealth exists in online platforms, intellectual property, and digital assets. Having a clear plan for managing these assets after your passing is therefore vital. From securing access to digital assets to handling online payment accounts or social media profiles, it is crucial to make sure that your digital assets are managed effectively and are seamlessly integrated into your broader estate plans.
Family Communication: Bridging the Generational Gap
Communication among families is often overlooked in legacy planning, yet it is essential for preventing misunderstandings or disputes that can arise over inheritance and asset distribution. Establishing open communication channels between you and your family members while you are still alive can ensure that everyone understands their roles, responsibilities, and the reasoning behind your wealth transfer plan.
Where applicable, consider regular family meetings with your family office/trustees where legacy goals can be discussed and expectations managed. This approach can strengthen family bonds and provide clarity, ensuring that all members share a unified vision for the future of your family's wealth.
Make 2025 the Year You Safeguard Your Legacy
At Sentient International, we know the value of establishing a robust plan for wealth preservation, asset protection, and succession. We specialise in establishing and managing bespoke corporate and trust structures designed to meet the unique needs of our clients, providing them with the tools to secure, protect, and strategically pass on their wealth across generations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
