It is all but impossible to predict what will happen to our families into the future. In a family's lifetime, they are likely to experience at least one and more likely, four or five unexpected challenges. Bring money into this equation and it can complicate things considerably.
While it may be difficult to predict what might happen, putting the right asset protection provisions in place early may help families to avoid some of the potential pitfalls as these situations arise.
Family businesses, large or small, need to effectively deal with multiple family relationships and challenges. This, combined with business matters and increasing societal issues for the future generations, make it necessary to be well prepared in order to protect the family's assets.
Peter Pagonis, Deloitte's Family and Individual Wealth National leader works with family businesses and knows just how vital it is for them to have a plan.
"Asset protection for families, whether large or small, is an important aspect of preserving wealth and private businesses.
Families need to make sure they have the right structure in place to protect those assets in case they are attacked in some way in the future."
A session at Private Wealth Network's (PWN) recent Families' Masterclass presented five rules for the protection of family wealth:
Plan early and plan often within your family. Late planning often backfires. Asset protection and tax and estate planning don't always mix. Communicate early and often about money, family, finance and succession between generations. For successful asset protection the emotion has to be removed. Use an expert and an independent advisor to assist implement rules 1-4. Short term plans involve implementing some type of structure and legal documentation. With a range of structures available to family businesses depending on the circumstances, financial agreements are a secure option at an individual level.
Have the conversation
If time is on your side, then having conversations within the family are an important aspect of making long-term plans.
These conversations should revolve around a vision, plan, and agenda for the family, leading to making the best decision - and again implementing a structure and financial agreement according to the family discussions.
Actually starting the conversation with a family member and broaching difficult topics such as death, divorce, even an unplanned pregnancy, or organising a prenuptial...