The guide considers a broad range of topics with a common theme of how family wealth, business or otherwise, is looked after and managed through the hands of different generations, musing on the principles and influences which are likely to play a part in the approaches taken.
It is an interesting read and would be time well spent (about one long cup of tea should be enough time) by any family member with assets or wealth likely to be multi-generational. It is particularly interesting to see how far things have come in a relatively short space of time, in that the guide does not have a focus on absolute wealth protection or promote an insular and protectionist view of wealth.
Rather, it gives genuine consideration to the meanings of stewardship and responsibility, recognises the likelihood of different individuals or generations having different motivations and outlooks, and reflects on societal perceptions and how family wealth interacts with the state (or states, with many families becoming increasingly multi-jurisdictional).
Reading it brought to mind a recent court decision which I read, regarding the May Trust in Jersey.
The case concerned the sanctioning, by the Jersey Royal Court, of a proposed distribution by a Jersey resident trust of £75m, being some 50% or thereabouts of the total trust wealth, to a beneficiary who intended to use the money to make charitable donations.
The curious feature was that the charity intended to be benefitted was capable of being benefitted by the trustees directly and the request by the beneficiary that the money be initially distributed to them was in order that they could intentionally create a liability to UK tax, then using partial gift aid elections such as to achieve an effective tax rate of 25% on the distribution.
The purpose being that, in addition to the charitable intention of the would be donor, they considered that deliberately incurring a 25% UK tax bill would put funds in the hands of the state, enabling the state to provide wider social benefit.
The case itself focussed on whether the payment to a beneficiary simply to enable the deliberate incursion of an avoidable tax bill could be said to be for that beneficiary’s benefit (it could, found the court) but the wider implications of how the wealth of a private family trust might be used is very thought provoking.
It brings us neatly back to STEP’s new guide and what might be gained from reading it. The answer, in my opinion, is very simply that when considering family wealth and making plans for the future, it’s good to talk. Conversation amongst family members will enable everyone’s views to be taken into account and increases the likelihood of buy-in by the various generations involved. Conversation with advisors will allow those family motivations to be conveyed with a view to any structures put in place to be accommodating of them and the recording of any intentions and ambitions at the time of creation of those structures.
Not many of us will face decisions over £150m trust funds, but most of us will experience family succession of one kind or another and approaching that with open and honest dialogue is to be encouraged.
The next steps
If you’d like to discuss the issues outlined in this blog please contact Graham Boar on g.boar@uhy-uk.com or your usual UHY adviser.
