Managing financial and non-financial assets, preservation of wealth, succession planning and wealth transition, tax compliance and efficiency, retirement planning remain some of the many key objectives of High Net worth Individuals (HNWI) and family businesses. Recent developments such as the Covid-19 pandemic, rapid changes in international tax rules etc. has raised the importance of these subjects. Without careful planning and stewardship, a hardearned fortune can easily be dissipated within a generation or two. This is so well-recognized that it inspired a proverb "Shirtsleeves to shirtsleeves in three generations" which describes the propensity of family-owned enterprises to fail by the time the founder's grandchildren have taken charge. According to the Family Firm Institute, only about 30% of family businesses survive into the second generation, 12% are viable into the third generation, and only about 3% of all family businesses operate into the fourth generation or beyond.

In this article, we have highlighted some key issues that HNWIs should be paying attention to. The concluding part of the article focuses on stay awake issues for family businesses in order to mitigate the shirtsleeves to shirtsleeves in three generations syndrome.

Establish an effective wealth transfer mechanism – It is the wish of most HNWIs to see that the wealth that have been acquired over the years are transferred to the right person, at the right time and in an effective and efficient manner. As much as these objectives are on the minds of HNWIs, it is usually not top priority. In some instances an event (which may be internal or external) are triggers for conversations around wealth transfer. For instance, the recent covid-19 pandemic has forced people to either establish a succession plan or review existing ones. Establishing an effective wealth transfer mechanism will involve taking a holistic look at your circumstances and plans and determine which of the options or a combination of options is more likely to yield the desired outcome. Some of the options available include Wills, Deed of Gifts, Trusts etc.

A carefully planned wealth transfer structure provides a lot of benefits. They include ensuring that there are no ambiguity about your intentions, your assets can be easily and quickly transferred to your beneficiaries, minimizes expenses and fees that may be payable during property transfers etc. The process can be complex, but rewarding. For instance, the nature of an individual's asset and size, the extent of their footprints globally could determine the complexities that will be involved.

Keep abreast of tax obligations and changes in tax laws – It is not uncommon to see HNWIs have investments across multiple jurisdictions. These may create multiple tax foot prints for them and keeping up with the compliance obligations can be quite onerous. HNWIs must continually review their portfolio and work with a reputable advisor to determine the compliance obligations and take necessary steps to ensure that they are discharged. They must also have mechanisms in place to ensure that changes in the tax laws and their implications are being evaluated on an ongoing basis. Most often, the penalty for failure to discharge your tax responsibilities are usually steep. There are also tax reporting legislation such as the Common Reporting Standards and Foreign Account Tax Compliance Act which are aimed at increasing the global transparency of tax reporting.

Retirement planning – HNWIs require a holistic approach to retirement planning. Those who became HNWIs by working, such as CEOs and other highly paid professionals, sometimes face a loss of income when they decide to call it quits. For those who became rich from investing, basically, there's no distinction between working years and retirement years. These individuals are likely to continue doing what has worked for them, with age being an irrelevant factor.

You probably have lifestyle goals and are concerned about how it is going to play out in your retirement. One efficient way to go about planning for retirement is to list down your expenses. This includes everything from personal and corporate debts to membership fees, donations, and insurance to medical expenses and gifts. Next, spend some time thinking about what your retirement lifestyle will look like, and how you plan to spend your retirement days. This includes travel, spending time with family etc. Based on how you plan to spend your time, your wealth advisor will be able to help you create a customized plan suitable to your desired lifestyle and financial standing.

Lastly, assess your monthly retirement income. Know your income sources – passive income from real estate holdings or other assets, your investments (equities, bonds, etc.), social security, pension funds, cash accounts, etc. Determine an estimate of the amount of money you require to accomplish your retirement dreams. Seek help from your wealth advisor to formulate a customized plan to optimize your investment performance such that it will enable you to match your requirements during retirement.

Set up a clear hierarchy in the family business – The Patriarch/Matriarch should set up a structure that can help avoid many of the most common sources of conflict experienced by family-run businesses. Disagreements over who should be responsible for what part of the business can derail the family business and if you do not establish these roles swiftly, it could portend danger in the future.

Everyone within the business needs to know exactly what they are responsible for and where they fall in the business hierarchy. Establishing key roles and responsibilities right can help you get organized and avoid disruption.

"Wealth and succession planning requires careful planning. It enables family businesses to continue thriving for generations thereby improving the welfare of the family members. The process can often be complex and the support of an experienced adviser should be sought to help navigate these challenges so that the desired outcomes will be realized."

Prepare the next-generation leaders – A great way to prepare your next-generation leader is to allow them to experience working for another company. That can give them new experiences, help them develop and enhance their skillset and increase their credibility in the eyes of those inside and outside the family business. In addition to experience working with other companies, training and education programs are critical elements of preparing successors for both ownership and leadership succession. Most companies start out as family businesses, but those that master the challenges inherent in this form of ownership can grow into successful enterprises that can survive across generations. Companies that implement effective planning and governance will ensure the success of their business and help preserve wealth for future family leaders.

Source talents outside of the family – Experts from outside the family can provide a greater depth of knowledge and experience, resulting in better decision-making. These experts can offer an objective look at the business. For example, board members can provide valuable insights to help you re-evaluate the business plan and prioritize areas that need improvement. This approach to family business governance has proven to be effective for a healthy, long-lived family business that will remain true to its mission and family values.

Build human and intellectual capital – Preservation of long-term family wealth is a question of human behavior. It is a matter of building the family's human and intellectual capital. The growth of family's financial capital is an effect of excellent human and intellectual capital. A family's greatest asset is its family members. Adequate time must therefore be devoted to these assets. Some of the strategies to achieve this is by ensuring that every family member's basic requirements for food, shelter, and clothing are met, ensure that every family member understands the highest educational limit possible for that member, the workings of the family governance system and his role in it, provide a means for the collection and dissemination of the accumulated knowledge of all family members etc.


Wealth and succession planning requires careful planning. It enables family businesses to continue thriving for generations thereby improving the welfare of the family members. The process can often be complex and the support of an experienced adviser should be sought to help navigate these challenges so that the desired outcomes will be realized.

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.