The Generation Game

Julia Millen spoke to Kevin Birtles, Managing Partner of PCC, about how the financial landscape has changed when it comes to succession planning

Managing investments, running the family business and general everyday matters often supersede any immediate concerns about succession and generational wealth, which often only comes to the fore when there’s a change of circumstance, an event, or a crisis – such as a marriage, birth, a death in the family, the sale of a business, a stock market crash or, if we look to more recent times; a global health crisis.

Kevin Birtles explains: “The global pandemic acted as a trigger, prompting clients to review their succession plans. It also made us all very aware of our own mortality.”

The change to tax transparency and heightened geopolitical uncertainty should prompt wealthy individuals to review their succession planning.

Wealth planning typically comes down to one thing – the desire to make sure as much of our wealth passes on to the next generation in the most tax efficient manner. Often this involves financial strategies in various jurisdictions that require a comprehensive and flexible wealth plan with a Will in place, to ensure assets are passed to beneficiaries easily with minimal inheritance tax liabilities. The more diverse and sizeable an individual’s assets, and the larger their global footprint, the more complex the picture.

When you start to discuss the finer details of succession planning, it can be extremely complicated and it’s perhaps the reason many people put it off until something specific happens.

For instance, in the case of a family business, the next generation may want to pursue different interests and not want to step into the shoes of their parents. Maybe they aren’t ready to take the helm, or their parents are reluctant to choose a successor - this can be for business reasons or the desire to maintain family harmony.

Kevin adds: “Increasingly, wealthy families are starting to consider drafting a constitution. While it may not be legally binding, it helps to establish key principles for family members, including the next generation. This should be undertaken when family members are working together and are guided by clear purpose and rationale - and not after conflicts arise where tensions run high and family members may be clouded by emotions.”

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