How ultra-high-net-worth individuals can plan for their future


From special trusts to succession planning, here’s what you can do to safeguard the future, according to Stephen Davies, founder and CEO of Javelin Wealth Management

As people get older, inevitably they will start thinking about what comes next. That’s a good thing, since it’s no secret that mankind has not yet cracked the secret of immortality. However, it’s also the case that although we all know we’re not going to live forever, when it comes to financial planning, surprisingly, many people act as though they plan to.

For example, if you are reading this and you haven’t written a will, then you’re working on the basis that either you’re never going to breathe your last, or that, if you do, you’d much prefer ‘someone else’ to decide for you and your family what happens to everything you have spent a lifetime building. That ‘someone else’ is effectively the government, since the process of dividing up the assets of a person with no will falls under something called the law of intestacy, and it is this that determines who gets what. 

Not surprisingly, it’s often those that fail to plan that make the headlines. Take the family of the late LG Group chairman, Koo Bon-moo, after he passed away without a will in 2018. The lack of a clear distribution plan not only caused a significant rift in the family, and led to a long legal battle among family members, it also resulted in them having to pay a staggering US$543 million in inheritance taxes.

Job done?

A will can be a very simple document. You don’t have to hire an expensive lawyer to draw it up. It would be considered valid if you made a simple statement that you wanted your assets to be divided up between various beneficiaries. You then sign it and get your signature witnessed by two people over the age of 21 who are not beneficiaries of that will. 

If, however, your financial circumstances are more complex, then consulting an adviser or lawyer is a good place to start. They can give you advice on structuring your will to ensure that your assets are divided up in the way you want, and that those assets go to those you choose to give it to. This is even more important if you own a business, or have some properties or assets located in different countries.

Special trusts 

You may also feel that if you have younger children or family members with special needs, you’d want to make special provisions for them. Children under the age of 21 can’t inherit in their own name, so before they reach that age, any inheritance would be placed in trust until they reach the legal age of adulthood. However, 21 is still a young age to inherit anything: many may still be in full-time education or in the very early stages of a career, and may not have any idea about what to do with an unexpected inheritance. This could create its own problems and could also mean that money is used unwisely—how many 21 year olds actually need a Ferrari?

For the special needs beneficiaries, a special needs trust can be created to hold assets. A portion can be set aside to cover the expenses of a long-term care plan, including any treatments—all on top of safeguarding financial assets for their future. Notably, in the United States, this type of trust allows for assets to be managed and distributed in a way that ensures the well-being of the beneficiary, without jeopardising their eligibility for government assistance.

Changing digital landscapes

The rapid advancements in informational technology have also presented challenges for traditional estate planning. With our lives increasingly intertwined with the digital, a new branch of property has emerged that many label as “digital assets”. Whilst that could include things like cryptocurrencies, it also covers your digital presence: e-mails, personal cloud data backups, social networking accounts, domain names and a host of other digitally stored property. Whilst the tried and tested methods of estate planning have been efficient in the transfer of traditional physical property, estate planning, increasingly now, has to address the whole spectrum of such digital assets.

Consider the case of the late Gerald William Cotten, the CEO and founder of QuadrigaCX, a Canadian cryptocurrency exchange founded in 2013. Cotten died unexpectedly in 2018 after traveling to India. As a result, up to US$190 million in cryptocurrency couldn’t be retrieved, since only Cotten knew the password to his laptop, where the majority of keys to his cryptocurrency holdings were stored. Although Quadriga was later revealed to be a fraudulent Ponzi scheme, it nonetheless underscores the importance of having a plan in place for your digital assets, and a way for your family to access them. Despite the increase in laws aimed at resolving these issues, there is still uncertainty regarding the rights of executors, agents, guardians, and beneficiaries in relation to digital assets. The more you plan in advance for your digital assets, the more efficiently your fiduciaries will be able to administer them.

Cultural sensitivities and succession planning

When it comes to passing on the business you’ve built up, there are distinct cultural nuances to take note of, especially in Asia. Many people in Asia think it’s unlucky to think or talk about death. That can lead to avoiding discussion about planning for it, which means that when it happens (and it will) there is no plan, and the remaining family members have to spend time working it out. As we have noted with the family of the LG group Chairman, Koo Bon-moo, this almost guarantees family rancour.

Similarly, there are differences between national cultures: Japanese values differ from Chinese, and Chinese values from Indonesian. For example, Japanese entrepreneurs with daughters often have a preference for arranged marriages for them. This means that they can select ‘appropriate’ sons-in-law to lead the business. Those without daughters may go further, and formally adopt an adult male to lead the company, if their sons are not deemed up to the job. This underscores the Japanese adage for family businesses: “You can’t choose your sons, but you can choose your sons-in-law.” As such, having an advisor who is sensitive to the need for such cultural due diligence will go a long way in helping a family plan for the future.

Where’s your green folder?

Either way, the key thing is to have a plan, write it down and to make sure your family knows where it is. Some years before my father passed on, he showed me the green folder he’d put together which contained all the information we’d need to sort things out: his will, deeds to the house, bank and investment details, life insurance policies, et cetera. That green folder meant that while we were dealing with his loss, and doing our best to look after our mother at a very distressing time, the process of getting his estate sorted out was kept as simple and straightforward as possible. That’s because he had told us. We knew where everything was and what we were expected to do with it.

Get yourself a green folder. Your family will thank you for it.

Javelin Wealth Management