Inheritance Planning: The Experience of Wealthy People

What happens if you fail to take proper care of the assets you want to pass down to your descendants? Well, they will simply be lost. A certain amount will be eaten up by taxes, so it’s better to hire a competent financial advisor and choose a jurisdiction to keep your capital in where the inheritance tax rate is not very high. Second, the destination (and the bank) where you keep your assets must be safe enough. Of course, you should think of diversification, the main thing in asset protection. Finally, your heirs should be well-prepared to preserve and even increase the capital they will receive, so you need to think of giving them a proper education… Inheritance is an important topic, and if this is one of your current concerns, we strongly recommend reading articles written recently to get as much information as possible and make all the necessary arrangements.

Wealthy Individuals and Diversification

Wealthy people have their own hierarchy: we usually see the abbreviations HNWIs and UHNWIs that refer to high net worth individuals or ultra high net worth individuals. The first category owns assets that cost 1 million dollars and more, while the second one possesses a net wealth of at least 30 million US dollars.

However, these amounts do not mean that their bank account contains the mentioned amounts of money. Here is a list of assets that wealthy people invest in to diversify their capital as much as possible:

Bonds/shares
Real estate
Money kept in bank accounts
Equipment
Antiquities
Transport
Trademarks
Licenses
Precious metals
Yachts
Companies
Accounts Receivable

In 2023, there were more than 20 million HNWIs in the world, so the experience we can analyze is quite extensive.

Reasons for Meticulous Inheritance Planning

People who have a large capital want to make sure that the amount they want is transferred to the right person(s) to be disposed of in the way they want. The tax rate payable on the inherited assets should be optimized as much as possible, and the real cost of the property possessed should be evaluated.

Main reasons why inheritance management is essential:

Tax optimization. A correctly selected strategy means that the heirs will get the maximum amount possible and it will happen within the shortest amount of time practically attainable.
Cloudless financial future. It is clear enough that you should make an effort once to elaborate a good strategy to guarantee a bright future for your progeny.
No arguments between relatives. Lawsuits connected with inheritance are often notorious cases… However, they are easy to avoid if you make your will in a clear way.
Charity. Many wealthy people want to leave some more important heritage than just making their family members financially independent, so they often organize charitable projects to leave a particular share to people in need.
Protection from incapability. The testator may become incapable at some point in his or her life. In this case, he or she appoints a trusted person who will guarantee that his or her wishes will be complied with.
Protection of business/assets. There are different risks you should consider if you want to protect your wealth in a reliable way, such as bankruptcy, lawsuits, or sudden financial liabilities.

Inherited assets help heirs satisfy their needs for accommodation, medical services, education, and so on.

Inheritance Management: Possible Strategies

HNWIs usually employ complex and multilevel inheritance strategies to obtain the maximum possible level of protection. Each strategy is elaborated on a case-by-case basis as it depends on the wishes of a particular testator and the peculiarities of capital distribution.

Let’s look at the tasks that competent inheritance management will help you solve:

Prevention of family disputes
Keeping your wealth safe
Several layers of protection for your hard-earned capital
Satisfaction of beneficiaries’ needs
Tax optimization

Below are some strategies that are typically used to ensure that your money is safe.

Family Office

This is a unique solution that will help you manage inheritance assets on an individual basis. There are different types of family offices that are selected depending on the factors listed below:

Tasks that have the highest priority
Amount of capital
How complex the family structure is

Here is what you can choose:

Hybrid Family Office
Specialized Family Office
Generational Family Office
Virtual Family Office
Multi-Family Office
Single Family Office

Click on the above link to talk to an expert who will help you choose the most suitable structure for you.

The steps required to establish a family office are quite simple:

Design and structure elaboration
Conducting a feasibility study
Implementation
Control and monitoring

Trusts

Trusts are much more convenient than an ordinary will. This is the best solution used by prudent wealthy individuals who intend to pass their capital to their heirs and remain in the shadows at the same time.

Trusts are excellent tools that enable HNWIs to protect their assets in the most reliable way, use them for designated purposes, and manage the capital in the way they think fit.

You can set up a charitable, a revocable, or an irrevocable trust.

Not every jurisdiction is suitable for setting up a trust. However, you can take a close look at Belize and Nevis as these are the best destinations for trusts that each asset protection lawyer knows about. Here are the main benefits of establishing a trust:

Reliable protection from forced inheritance
Special terms of inheritance transfer
A high level of privacy

You can use the trust you formed to keep any kind of assets, tangible and intangible ones alike.

Other strategies used by wealthy people include business planning (a smooth business transition to heirs requires some arrangements as well), planning education for heirs (or they will not be able to properly manage your assets), and charity projects (these should be taken special care of). You can follow the above link to read more practical information about these strategies and take a look at how to handle legal aspects and plan taxes.

We strongly recommend that you ask any questions you may have: there are competent experts on the portal, and you can use the live chat during business hours to talk to them or any other means that are convenient to you. Inheritance planning is an important project, and there should be no errors here. Give your money a royal treatment!