As many as 67% of High Net Worth individuals cite succession and inheritance issues
as a risk to wealth creation and preservation. Despite all the recent high profile publicity
regarding disputed estates, very few families have bothered to seek meaningful advice about
how to leave their assets in a fair and equitable and tax efficient manner.
Astonishingly records indicate that within two generations up to 80% of inherited wealth will be
dissipated by either taxation or social impact.
Yet almost all the emotional pain and financial loss could (with advanced planning) be avoided.
In the past, only the wealthy have used trusts to protect their assets and provide for certainty for
succession. More recently the cost of establishing trusts has fallen to an affordable level, so that
even people with modest wealth can protect their bloodline succession.
Many individuals recall drafting a will years before, putting it in a “safe place”, and then sitting
back and breathing a sigh of relief that it has been dealt with. Having a will is one thing; having a
suitable and updated and meaningful will is quite another.
Many individuals have free “testamentary disposition”, which means they can leave their assets to
Whomever they wish on their death. However, “forced heirship” provisions can apply to some
estates and this should be factored in.
Likewise, religious beliefs may also play a part in the succession of an individual’s
estate, such as the application of Sharia law to Islamic testators.
The introduction of the EU Succession Regulation provides many individuals with the opportunity to
avoid forced heirship provisions applying to their estate. Wills should be reviewed to ensure that
they consider the application of forced heirship.
These factors should be considered in advance and accounted for as part of the individual’s
succession planning to avoid unexpected challenges.
A client was referred to us recently as she thought she was going to inherit a substantial property in
Spain, but instead was informed that under Spanish law the bulk of the property would be passed to
her husband’s sons. The local “abrigado” had failed to notify her of her rights under EU succession
law.
Having appropriate advice for drafting wills and trusts is the essential building block of
succession planning and wealth preservation.
If you have an existing will that is more than 2 years old, chances are it is out of date.
It costs nothing to obtain a second opinion, so for new wills or old do contact us.
