Politics has complicated legacy planning for clients


Legacy and succession planning for clients is more important today than ever, according to Simon Gorbutt, director of wealth structuring solutions at Lombard International.

He said this is because the UK is facing waves of socio-economic and political change.

Speaking to FTAdviser Mr Gorbutt said: "It has always been a good idea to think of the growth of one’s wealth and where it will end up, but today there are a series of factors in play that make that complicated; geo-political events, [the] UK’s relationship with the EU, domestic politics and the rise of nationalist tendencies.

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"All of those things can have an effect on a client’s sentiment and can have a direct or indirect effect on taxation."

Longer life expectancy and higher property prices mean that the amount of intergenerational wealth transfer that is set to take place over the next 30 years presents a big opportunity to advisers.

But Mr Gorbutt said it was surprising that a high number of people in the UK did not have a will and not all clients had a solid wealth plan in place.

He suggested that legacy and succession planning needed to be a multi-faceted approach, with a focus on how wealth should be passed on, timeliness and a consideration of softer issues, such as family conflict and generational attitudes towards investments. 

It is also becoming increasingly common for advisers’ clients to have assets held across different tax jurisdictions, which means cross border queries are likely to crop up more often, he added.

According to Mr Gorbutt one of the immediate considerations for advisers is to look at the structuring and planning intended for the UK and to consider how well that will fit abroad.

He said: "For example, in the UK we have a great affinity with trusts. It is a great way to separate legal and beneficial ownership and there are some tax advantages associated with it.

"But what happens to those trust structures when clients move abroad?

"The UK is a common law based jurisdiction. Clients moving to Spain, Italy or France will be entering a civil law environment and those countries can view trusts differently."

He continued: "That’s not to say that existing planning needs to be unwound entirely, but maybe there are other things that can be done - a combination of other solutions."

When looking at the impact of tax on succession planning, Mr Gorbutt said advisers should consider how the rates and basis of taxation differ from country to country. Clients might even be subject to more than one tax regime at once, he added.

Advisers should also evaluate the complexities surrounding clients who move from country to country, as exit charges can apply.

Mr Gorbutt said: "It is important to be alive to that sort of issue.

"The other thing to watch out for are the unknown unknowns; things that could have a material effect, but are perhaps invisible to clients or their advisers."