How rich people manage their worldwide assets: They start with these steps – expert

Very rich people often spend much time in more than one jurisdiction. This is partly so that they can get out of paying tax. Like the biggest multinationals, they skirt around legislation in order to avoid, rather than evade, tax. But, joining the ranks of tax exiles is not the only clever thing high net worth individuals do to boost their worldwide assets. As Christo Meyer underscores, they apply their minds to many facets of their financial dealings – from business exit strategy to philanthropy. Meyer sets out the key areas that you should be thinking about if you want to minimise liabilities. – Jackie Cameron

By Christo Meyer*

Do you have a PROPELLER?

During a recent lunch, a business associate* mentioned an old saying:

“When living in Africa, you need to have a propeller, that’s either an aircraft or a boat as you never know when things will change, and you will need it to leave.”*

In today’s world where economic and political uncertainty is a daily concern of millions of people in various countries, from a failing economy, changes in countries tax and monetary regulations to a concerning influx of asylum seekers, I realised that it is no longer only people living in Africa that needs a propeller. Nowadays most people will need a some sort of propeller or in our terms a Multi-Jurisdictional Asset Protection and Exit Strategy, that incorporate financial capital as well as human capital or in other words, the protection or exit of oneself, the protection or exit of one’s family, the protection or exit of one’s assets as well as the protection or exit of one’s business.

We live in a world where meeting people that have businesses, family or investments in multiple countries are a daily occurrence, the consequence is that there is a multitude of legislative and regulative rules impacting that persons personal estate. This creates a conundrum for any person exposed to multiple jurisdictions:

“The need to know what you don’t know.”

There isn’t a book or a manual that you can grab off the shelve telling you the what, where, and when as each parties circumstance are different and thus different rules, and strategies apply. Most individuals/families do not have the experience or reference to understand the complexities of an International Asset Protection and Exit Strategy.

Understanding international laws is no longer only a concern for multinational companies, with the ease at which people can live, invest and/or do business outside of their home countries, increased the importance of understanding how different laws affect their lives. Not to mention readily available second residency schemes, some with very onerous fine print, being marketed and sold as a mere product.

Therefor you need more than just a propeller you need a flight plan or route plan, to make sure you are you assets are protected as all times, that plan is called a Multi-Jurisdictional Asset Protection and Exit Strategy.

So what then is a Multi-Jurisdictional Asset Protection and Exit Strategy?

A Multi-Jurisdictional Strategy is a process of arranging (international tax planning), management (family office/asset management), protecting (asset protection) and disposing (estate planning) of one’s estate (situated in more than one country). So that one, one’s family and other beneficiaries may enjoy and continue to enjoy the maximum benefit from one’s estate, during one’s lifetime as well as after one’s death, no matter when death may occur.

A Multi-Jurisdictional Strategy should be viewed as an ongoing process that evolves as one’s needs, goals, and family change, as the laws change, and as new tools and techniques are developed or law and regulations change. It is a process of continually evolving structures, needs, growth, maintenance, and exit strategies.

Appropriate strategy requires professional thoroughness, which respects the financial capital as well as human capital of one and one’s family, during one’s lifetime and after one’s death.

Your goals should include the following:

  • Enjoyment of assets during one’s life;
  • A business exit strategy if one owns an interest in business directly or indirectly;
  • Business continuity planning if one’s own an interest in a business directly and intend to maintain such interest after death and/or disability;
  • Protection of the assets during one’s life;
  • Maximisation of charitable giving/philanthropy;
  • Planning for blended families;
  • Planning for special needs or disabled beneficiaries;
  • Planning for one’s care and the management of one’s assets if one becomes mentally incompetent or physically disabled;
  • Protection of the assets that one leaves to your heirs from creditors and/or deceitful people;
  • A plan of distribution that will leave one’s assets to whom one wants, when one wants, and with whatever conditions one wants;
  • Avoiding unnecessary administration processes and costs;
  • Saving the greatest amount of taxes and administration costs possibly – not only in one’s own estate but also in the estates of one’s heirs.

In summary, an appropriate strategy requires:

  • Flexibility;
  • Capital appreciation & income generation;
  • Protection against claims, insolvency & inflation;
  • The facilitation of the administration of the estate;
  • Business continuity planning if you own an interest in a business directly;
  • A business exit strategy if you own an interest in a business directly;
  • The provision of retirement capital & income;
  • Planning for your care and the management of your assets if you become mentally incompetent/physically disabled;
  • The minimisation of taxes in accordance with laws;
  • The minimisation of death taxes in accordance with laws;
  • The minimisation of administration costs/probate;
  • The provision of liquidity during specific events;
  • Protection of the assets that you leave to one’s heirs from creditors and/or deceitful people;
  • A plan of distribution that will leave your assets to whom you want, when you want, and with whatever conditions you want.

Once your initial strategy has been developed, it must be maintained. We recommend any strategy to be reviewed not less than every six months unless there are changes in your family, your intentions, or your financial situation. It is always easier and more cost effective to plan where an asset should be a house before the transaction, rather than moving that same asset into a correct part of the structure after the fact.

So the question in modern times are not only if you have a propeller, but if that propeller is the correct size and form that is linked to the correct flight or route plan, to ensure the protection of your human and financial capital at all times?

“the best time to plan is exactly that time you believe there is no need for planning”

  • Christo Meyer is a legal adviser. To make sure you have the correct propeller, are in need of a propeller or need your propeller linked to the correct flight or route plan contact me at [email protected].

*Saying given to me by @ArisAlexandrou

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