Family Wealth: An Introduction

If you have accumulated wealth, it is important to protect it. If you take steps to protect your assets, a significant amount of your wealth will not end up in wrong hands. By putting the right wealth transfer strategies in place you can protect your heirs and make sure your wishes are respected.

Every member of a business-owning family should be concerned about the following statistics:

  • Only 30% of all family-owned businesses survive into the second generation.
  • Only 12% make it to the third generation.
  • Only 3% of all family businesses continue to operate at the fourth generation level and beyond.
  • Further studies show that only 25% of senior family business owners have completed any Estate Planning other than writing a Will even though 81 % say they want the business to stay in the family.
  • In fact, a recent poll revealed that: 72% of family-owned businesses have no formal business continuation plan. 6. 47% of family business owners have not taken any Estate Planning steps at all.
  • Only 7% have hired professionals to help deal with the family relationship issues involved in planning forthe continuation of the business.
  • The Family Wealth Transfer Plan is best suited to those individuals who have worked diligently over the years to save and now have enough funds set aside to begin creating a family legacy. It is also suited to individuals who have completed the wealth accumulation phase of their lives and are now preparing to benefit from properly planned asset accumulation.

    These individuals may want to accomplish one or more things such as:

  • Leaving funds to children and/or grandchildren
  • Reducing taxes on investment income
  • Lowering current taxable income
  • Retaining complete control of assets
  • Avoiding costly probate fees
  • Simplifying estate transfer or Minimizing the risk of contesting of Will.
  • There are many individuals who have surplus cash flow invested in fixed deposit or mutual funds. And while they do not need this money today, they are hesitant to pass it on to their heirs just yet since they do not know what may happen in the future.

    Aside providing asset protection for children, the use of Trust will allow you to set parameters regarding the management of those assets whilst also providing and protecting your family members and others. For individuals who own businesses, an appropriate wealth transfer plan will blend personal, financial and tax considerations into a comprehensive family wealth transfer plan and business succession plan that preserves a family’s wealth for the individual and his or her heirs.

    An effective plan will meet your objectives, whether those objectives are to increase the benefits of ownership and assets, distribute assets to family members or charities, appoint capable estate managers as Executors and Trustees, reducing taxes, probate and administrative costs, and/or ensure the estate’s liquidity and stability.

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