How to keep your family business and wealth structure up-to-date
The political agenda over the last decade resulted in international anti-tax avoidance measures and global transparency initiatives. We expect and already experience that families face discussions with authorities, financial institutions and business partners about their legal set-up.
Therefore, be very critical about your current family set-up. Ask yourself:
- Does the structure match with the actual activities of the family members?
- What are the goals and rationales that the family structure serves?
- Am I able to explain the goals of various legal entities involved?
In our experience, financial institutions and authorities will sooner or later confront you with such questions. And they demand decent clarifications.
How to simply your family structure
It is important to keep and to continue your family infrastructure simple and distinct. Understandability and logic are key in this respect. Simplifying means reducing the amount of involved legal entities, jurisdictions, contractual arrangements, etc. as much as possible.
Key response for you is to review, simplify and modernise your family organisation continuously.
It also means that the combined functions and goals – like risk securitisation, liabilities, capital structure, future generation participation, taxation, finance aspects, etc. – of your infrastructure should be meaningful, logical and defendable. Given the various complicated rules involved, simplifying the structure does require a careful approach.
Benefiting from a simple structure
You benefit from a simple organisation in multiple ways. In part from mapping and minimising costs. Simplified structures downsize compliance requirements, overhead activities and consultancy involvement. A lean family wealth structure should also result in more efficient and effective internal management. Ultimately, it allows you to be more in control. This should help preventing that others take the 'initiative' in assessing the legal-set up of the family.
Stay up-to-date on regulatory developments
The enormous speed of newly and often more complicated introduced rules, regulations, guidelines, etc. impacts your family organisation even more. It has become crucial to gain access to both relevant and to-the-point information. At the moment, functions performed and economic substance represented at the level of each entity are key aspects of a modernised family structure. This should preserve the family reputation. Find more information on the latest developments about HNWI or subscribe to our mailing list.
Georges FrickAttorney at law, tax adviser Associate
Georges Frick is tax adviser and member of our tax practice group in Zurich. He specializes in Swiss and international taxation, particularly for (ultra) high net worth individuals, executives and entrepreneurs, and family offices. His expertise includes succession planning, private wealth structures as well as tax-efficient group and investment structures.T: +41 43 434 67 12 M: +41 79 535 50 76 E: Georges.Frick@loyensloeff.com