Entrepreneurs and high-net-worth investors, like everyone else, must at some point face up to one of life's immutable rules: you can't take it with you.
They can, though, by putting in place the right structures and proper controls, ensure a smooth transfer of material assets and investment philosophies to the next generation and make things much easier for their heirs and business successors.
'There are three simple steps - plan early, plan comprehensively and review regularly,' said Geneva-based Rodney Allen, head of wealth structuring, international, for Barclays Wealth. 'The primary factor is to make sure the family is taken care of and to get an efficient structure organised early on in order to minimise taxation.'
He noted that in common situations, such as when a patriarch or matriarch held a significant stake in a family-run business, certain decisions were bound to arise. Typically, these concern the extent of the settlor's continuing involvement, the aspirations and competencies of family members in terms of managing assets, tax regulations in different jurisdictions, and the need to maintain flexibility.
'In simplest form, there are two building blocks when planning for families - the trust structure and companies - and we normally use a combination,' Mr Allen said. 'Every trust is different. It is a flexible instrument which can be modified to suit the family and beneficiaries' needs, and structured to give anywhere from 0.5 per cent to 100 per cent control.'
When advising clients, he said, it was often necessary to point out that allowing the trustee more control made it easier to protect assets from possible legal challenges while accomplishing longer-term goals. Depending on their priorities and relevant tax considerations, settlors can use options like a 'STAR' trust under Cayman Islands rules or a closely held private trust company.
The former structure let them retain maximum control of continuing business decisions. It also gives the beneficiary no enforceable rights against the trustee or trust property. With the latter, instead of appointing an institution as trustee, the family forms its own company to fulfil that function. The settlor, family members and selected advisers can be on the board of directors and directly influence day-to-day administration of the trust.