Successful Succession Planning Whitepaper

Transcription

1 Successful Succession Planning Whitepaper Wednesday, November 12, pm 8.00pm Canadian High Commissioner s Official Residence, London 5.15pm 5.45pm 6.00pm Arrival with drinks Welcome from the High Commissioner Welcome and introduction from Vahe Vartanian, Founder & Managing Director, Global Family Office Community. 5 reasons why succession plans fail Amy Renkert-Thomas - Withers Consulting Group With so many things in life, execution is key and your estate plan is no different. It's important to understand that a succession plan goes above and beyond planning the estate and naming the successor, and the reasons a high proportion of succession plans fail. Amelia Renkert-Thomas knows the challenges first hand, as the former CEO of Ironrock, Inc., her family s 5 th generation manufacturing business, and as the granddaughter of the founder of Fisher Price Toys. She has also helped many families through transitions working as a family business consultant. Amelia will discuss the five pitfalls that have sunk many a plan. Understanding the UK inheritance tax system Neil Jones Canada Life For wealthy clients it is important to understand the UK inheritance tax system; who pays UK inheritance tax, when is inheritance tax payable, how much could the liability be and what can you do about it? During this presentation we will look at the UK inheritance tax system and ways in which a potential liability to inheritance tax can be reduced or provided for through the use of some familiar and unfamiliar trust-based solutions or life assurance products. This leads onto the other areas of estate planning including the benefits for UK residents holding investments in offshore products from providers based in tax efficient jurisdictions such as the Isle of Man. We will also consider the use of bespoke life funds for portfolios and discretionary investment fund managers, and the investor protection that is available. Best laid plans under attack Stephen Richards - Withers LLP So you understand the pitfalls, you've taken these on board and prepared a robust plan of action for the future, but as with all best laid plans, the outcome is often uncertain. Stephen Richards, partner at Withers, has a wealth of experience advising clients when succession disputes arise. Stephen will use examples to illustrate the legal considerations when preparing a succession plan, the role of the court of protection during someone s lifetime and post-death succession disputes. 7.00pm 8.00pm Drinks, canapés and networking with Canadian wine Close

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4 December 2014 Successful succession planning by Neil Jones There is no single solution to succession planning and intergenerational wealth transfer. A family or individual can use a range of solutions including a family office, either as a partnership or corporate structure, trusts and estate planning solutions including investments and bespoke life funds. By using a combination, flexibility can be maximised. Trusts offer families and individuals a number of benefits and planning opportunities: Confidentiality: There is no public record of trusts and a discretionary trust has no named beneficiaries so the trustees do not have to inform the beneficiaries of its existence. Flexibility: A discretionary trust allows the trustees to decide who should benefit and when the benefits should be made available to them. As the name suggests, they have discretion. Regulation: A trust is a non- trading entity and avoids the complexity of compliance with the FSMA2000. Corporate trustees: Rather than naming members of the family to manage the trust, professional trustees can be appointed to help avoid any family disputes. Protection: Assets held in a discretionary trust do not belong to the beneficiaries and are therefore protected from divorce settlements and bankruptcy. Packaged solutions are available including a gift and loan trust, a discounted gift trust and a flexible reversionary trust. Each has its own advantages and disadvantages and levels of access for the settlor on either a fixed or flexible basis. Gifting from surplus income This is an often overlooked exemption that allows an individual to gift money on a regular basis. The gifts must be from income, on a regular basis and be genuinely surplus, so that the gifting does not affect the donor s standard of living. The gifts are outside of the donor s estate immediately. It can also be used to fund a suitable life assurance policy held under trust, to provide a lump sum with which to pay any potential liability to UK inheritance tax. This is a common solution to the UK inheritance tax problem and can be used in preference to holding property in an offshore corporate structure, which is subject to the Annual Tax on Enveloped Dwellings regime. Investment solutions When investing money for a family office or trust, this should be done through a low tax environment, in a jurisdiction with a mature approach to financial services and strong

5 investor protection. Canada Life is one of the leading offshore providers and has three companies; one based in Ireland and two in the Isle of Man, with one of these offering an unrivalled level of policyholder protection, not available elsewhere. We also have agreements in place with over 150 discretionary investment managers and can work with companies to provide bespoke life fund solutions. About Canada Life Canada Life is part of The Great-West Life Assurance Company and a member of the Power Financial Corporation group of companies. With assets under administration of 442bn as at 30 June 2014, Great-West Life is the largest Canadian life and health insurance company, and has been given an AA rating from both Fitch and Standard & Poors, as at 1 December Canada Life International is the only offshore insurer to have maintained an overall 5- star AKG Annual Financial Strength Unit Linked Rating1 for eleven consecutive years. The 2013 AKG Offshore Profile & Financial Strength Report reaffirmed that CLI is a key player in the offshore investment market. - ENDS- Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Insurance and Pensions Authority. Canada Life International Assurance Limited is authorised and regulated by the Central Bank of Ireland.

6 Successful Succession: Best laid plans under attack I focussed on three ways in which families can avoid seeing the fruits of their hard labour, often over many years and even many generations, being attacked, broken up or dissipated in expensive litigation. Often a failure to deal with matters properly during someone s lifetime is the genesis of litigation after their death. Such litigation can not only have serious ramifications on that person s estate but their family s wider interests. While there are many potential factors to consider three particular areas to be aware of are: 1. Capacity issues It is critical to ensure that when transactions are being undertaken the person undertaking that transaction has the requisite capacity. This is a particularly acute problem in a person s elderly years. If capacity is in question then the entire transaction (be it transferring assets between structures, signing contracts, executing a will or power of attorney to name a few) could be open to challenge. In England and Wales there is a statutory presumption of capacity so someone is presumed to have capacity until the contrary is proved. A person s capacity is specific to (a) the task and (b) the time in question. 2. Adhering to the necessary legal formalities As any company would ensure that there is quorate for a meeting and the appropriate resolutions are properly documented so an individual transferring assets into trust or executing documents concerning the disposition of their estate, powers of attorney or directives concerning their health and welfare should ensure that it is documented in writing and properly witnessed. So often failures to observe formalities such as ensuring there are two witnesses to a will render the document invalid and lead to litigation and the person s wishes being nullified. 3. Considering those outside the family who may want to cause difficulties Often challenges by those outside the family are hardest to spot. Undoubtedly an ability to discuss potentially difficult areas is the best way to minimise the potential threat. Equally, ensuring that all financial transactions are recorded, and a record as to why certain decisions have been made, can assist in defeating challenges if they are forthcoming. If you need any advice, please contact: Stephen Richards stephen.richards@withersworldwide.com +44 (0) The information and comments contained herein are for the general information of the reader and are not intended as advice or opinions to be relied upon in relation to any particular circumstances. For particular application of the law to specific situations, the reader should seek professional advice. London Geneva Zurich Milan Padua New York New Haven Greenwich San Francisco Hong Kong Singapore BVI 12 November 2014