Planning for High Net Worth Individuals
Presenters : Hugo van Zyl , Mathys Briers-Louw
Overview
Wealth should not be trapped in one jurisdiction. HNWI in ZAR or USD, or should it be a weighted basket of currencies?
As Gary Player always said, there are four pillars of investment. Should we not say wealth should be spread over multiple jurisdictions?
Risk vs. reward, or should one include calculated risk silo's in the wealth preservation game? Can one afford to ignore crypto, digital assets, and wallets, or should one err on the side of conservatism? Keep the known, tried, and tested?
Should conscience and morality play a distinct role in wealth and succession planning?
What is the role of tax? Is it a consequence, or is tax efficiency the leading factor in decision-making?
To trust or not to trust? Using a trust or foundation, or neither? What is the best vehicle to use to ensure a peaceful and cash-flush succession plan, taking into account that it appears as if most tax jurisdictions are attacking trusts? Or was this just a perception while the OECD and world morality bullied smoke and mirror structures (read trust structures) into compliance and transparency?
And finally, for South African HNWI : the dreaded phrase: Excon restrictions?
Video Content
Succession planning // intergenerational transition // International efficiency
1. A heightened sense of purpose and legacy. Do we hand over wealth creation or only the management of the cash-generating businesses? To the family or the outsiders
- Identify key stakeholders: not only family but also employees and management of family business
- The 4th and 5th generation need not be wealth consumers; they can and wish to add to the family wealth
- The founders need to hand over control and management, be it to a management team or multiple next-generational family teams, knowing that their financial and other needs in old age will be taken care of.
2. Stay abreast of tax reform, Excon and global transparency rules
- HNWI often wish to share their wealth, i.e., it is not about gathering and piling up; it may be more rewarding to share (i) wealth; (ii) opportunities; or (iii) to share only income, protecting the corpus of the trust or family wealth long before the opportunity arises to pass wealth onto a next generation.
3. Navigating the Diaspora, tax residency, digital nomadism, overall mobility and sibling rivalry
- Family constitution
- Risk: cyberattacks, family scandals, brand name protection, human trafficking and hostage risk; multiple spouses and several core families of various ages
4. Global expansion: opportunity or challenge
5. Appropriate business structures vs. tax efficiency, or should it be best tax efficiency within an appropriate structure?
6. Risk vs. reward: does this remain a valid test in the modern investment era?
Competencies developed in this video
1. Understand the issues facing an advisor, the tax accountant, and the family office administrator of a HNWI or business/wealthy family.
- Advisors need to understand the life phase of the HNWI (as an individual) and as part of a wealthy or business family
- Wealth creation or wealth protection phase? The individual could be in creation phase, but the family may be in a mature, stable stage where wealth creation and fair distribution of wealth are the key factors. How to manage the conflict?
2. From a SA perspective, obtain a more global perspective on tax issues, disclosure rules and the opportunities that await us
3. See the diaspora family in context; South African rules may deal with the source of the wealth rules, yet SA rules and tax regime no longer dictate the game plan.
4. Appreciate why HNWI can't rely on one advisory team only. Advising the HNWI, or business family, to ensure growth and a smooth transition to the next generation