Estate Planning

Estate planning is no longer just a matter of age. In today’s fast-moving world, it depends largely on lifestyle and personal organization. As an example, people of any age can decide that they no longer want the responsibility of operating a family company, or children may not want to take over at the head of the business. Or you may wish to clarify ownership issues within your family in contemplation of a prenuptial agreement. Finally, the changing shape of rules for estate duty and taxes has led many families to conduct a review of their position well in advance.

Asking the right questions - and delivering the right answers - means designing an appropriate estate matrix. Ten questions we ask for effective estate analysis

• movables v. real property, fixed – income securities and equities
• generational division of wealth share of estate owned by client, parents, children
• organisation of transfer and power of decision
• connection if any to family business
• real value v. taxable value
• individual v. joint ownership
• structured v. unstructured estate
• location of assets
• insured v. uninsured assets
• fiscal composition of family estate

We have extensive experience with trusts as vehicles for asset structuring. A trust can be a particularly effective way to ensure that assets remain with the family even in the event of disputes, and allows early planning for estate duty and wealth tax.

A trust is a common law structure under which a person referred to as the settlor transfers legal title to another person - individual or corporate entity - referred to as the trustee. The trustee holds the assets in the interest of the beneficiaries, who may be individuals including the settlor, corporate entities or charities. The assets of the trust are not included in the estate of either the trustee or the settlor, in the event of death or bankruptcy. Instead they are reserved to the beneficiaries. Modern trusts are extremely flexible and may invest in virtually all types of assets from land and art to shares, bonds, securities etc.

Some people may feel uncomfortable with the idea of transferring their assets to a trustee or have other reasons for preferring alternatives. We can oblige.

For clients in countries which do not recognise trusts or do not have a clearly defined position, alternatives include fiduciary contracts which can be an effective means of settling inheritance issues as long as the binding legal provisions applicable to inheritance are respected. Under a fiduciary contract, the client is not the legal owner of the assets on account, but may terminate the agreement at will, making it less final than a trust.

The stitching administratie kantoor is an arrangement under Dutch law for the separation of legal and beneficial ownership. It has particular appeal for clients wishing to pass on assets to the next generation while at the same time maintaining control during their lifetime.

There is also the foundation which is particularly popular with German clients, who feel more at home with this concept than with a trust. It enables you to set aside a portion of your assets with the assurance that it will go to your heirs or some other person you name on a given day. A private foundation can be used as an alternative to a pension or annuity arrangements or serve as a way to protect assets from certain types of risk. A foundation, which can also be structured as a vehicle to hold shares, has both legal and beneficial ownership and thus plays a role in wealth management similar to trusts.