CAPITAL HORIZONS HAS SIMPLIFIED ITS APPROACH TO THIS PART OF THE PROCESS AND BROKEN IT DOWN INTO FOUR DISTINCT PHASES
- Understanding your Family Vision and its Risk Appetite
- Appreciate the lifestyle requirements of the family and manage competing interests
- Define investment portfolio and distribution milestones
- Optimise investments with respects to their tax and regulatory implications
- What are your current assets/liabilities?
- How are they structured?
- What is the amount of investable income you are willing to allocate?
- Age of beneficiaries?
- How long are the beneficiaries from retirement?
- Would you focus on income generation or capital appreciation or a balance?
- What is the approximate loss over a one year period that you would consider acceptable?
- Safe investments do not usually outperform inflation rates and tend towards a decrease in purchasing power.
- What currencies will you require your income in?
- Very often, the amount of money available for investment competes with other interests.
- g. If the family decided to buy a jet, it is millions of dollars which will not be available as investable income.
The trustee has also important milestones and dilemmas to consider, e.g. building sufficient income to ensure that tuition fees for a college education are available for the next generation; but what to do in case the family member turns rogue and decides to go against the family’s interests?
Our view as trustees is more precise and focused to the family’s needs.
REAL LIFE SITUATION
In Hong Kong this is exactly what happened to the family of Sun Hung Ken Properties Ltd (a multibillion dollar conglomerate) who held their shareholding in various listed companies in an offshore trust.
When their elder son and former chairman turned hostile to the family, the trustee exercised its power in the trust deed to exclude him as a beneficiary. Wealth was thus preserved in the family.
ASSESSING YOUR PERSONAL & BUSINESS RISKS
If the family has mining interests, and most family members are involved in this business, and they require frequent travels to high risk countries, what they might need more is to have insurance against kidnapping rather than more investable income.
This is precisely OUR approach, and this is why we have specialized in offering Legacy Management services to African families.