Gilly Kennedy-Smith, Mourant
With an increasing number of women managing the family wealth or founding businesses, it’s vital to consciously evaluate the support required to cater for clients' needs holistically, as wealth is created, preserved and transitioned to the next generation.
According to Boston Consulting Group, women now control over a third of the world's wealth. This echoes our experience at Mourant in recent years, where our private wealth team have seen an increase in ultra-high net worth (UHNW) women becoming involved in the decision-making around managing the family wealth, including the transfer of wealth to the next generation.
Key takeaways of matriarchs managing family wealth
In the experience of our professional advisers, the following factors are worth considering when working with matriarchs to manage their wealth:
- The surviving spouse, who is most often the wife, is often overlooked in succession and wealth planning. There may be a tax efficient reason to gift assets to a surviving spouse following the first death, and it's important to consider how each half of a couple look to benefit their families and when they would choose to do so. The original generator of wealth may look to hold onto the money and only transfer it on their death, while their spouse may look to pass on money during their lifetime and see the fruits of that transfer benefit their children during their own lifetime. This can impact how a structure works and affects the planning involved.
- Women holding wealth are a growing sector of the market. How they interact with the principal's advisers can impact how a carefully thought-out succession plan may be implemented following that principal passing away.
- ESG means different things to different people, and 'governance' should never be overlooked, even if there are currently no issues. How the next generation interacts with each other and their ability to work together can result in either success or failure of any planning. It is often one key individual that draws a family together and unifies them, so while governance should evolve and adapt, it should be carefully considered how decisions are made and how the 'family ethics' can be upheld once that person may no longer be around to guide the family.
- In the early generations of wealth, problems may not arise or even be something the family can envisage happening as they are all striving for a shared goal. In two generations there may be some family members working in the business, while others are not involved in future wealth generation, which can create tension. It is the job of experienced legal advisers to provide advice on practical governance strategies, assess the stress points seen in practice and anticipate what could happen in the family in the coming generations. Those stress factors and the individual family dynamics may impact the details of the structure being put in place to benefit future generations of the family. Being open to considering the need to stress test and futureproof structures is imperative, as they will be there for generations to come.
- Corporate structures for private clients with global families can be useful, as every country knows how to tax a corporate structure and the compliance and administration costs can be lower as a result.
- Mirroring structures at home and abroad, with independent advisers for each, can be a good way to provide for the family in accordance with the family's beliefs while also allowing for some flexibility.
Considering the insights above, it is important to be flexible to ensure legal professionals are inclusive to everyone's needs, and cater for female family business leaders, entrepreneurs, and the next generation. By supporting each other, collaborating, and providing education through a trusted adviser network, we can help realise the ambitions and wealth objectives of women within the family business.