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Handing Down Your Business Legacy

20 December 2017UK
  • US$30 trillion of global wealth is expected to pass from the baby boomers (those born after the World War II) to their successors
  • 64% will not disclose the extent of their assets to their children
  • Did you know that 70% of wealthy families will lose their fortune by the next generation1?

Some of the largest and most profitable private businesses are family-run2, yet a 2015 survey by the US Trust on high-net worth individuals (HNWIs) found that the majority (64%) will not disclose the extent of their wealth to their children3.

In the same survey, 78% of HNWIs indicated they didn't trust the next generation would be financially responsible enough to handle significant wealth, and that could explain why the wealth of 70% of HNWIs fails to pass down to the next generation.

Though it's difficult to envision how your business will be run beyond your years, US$30 trillion of global wealth is expected to pass from the baby boomers (those born after the World War II) to their successors4, so devising a succession strategy is more important now than ever before.

Have a clear picture

It would be worth having a firm understanding of your present wealth and your goals for its future. A Relationship Manager will take the time to identify each of these on your behalf, as being able to communicate these to your successors could be important when ensuring your wealth has a profitable legacy – for the next generation as well as subsequent ones.

Conversations with loved ones about either money or what will happen after a family's death are far from easy. But it's important to identify how you plan to pass on your wealth, as well as who will receive it. Different family members have different attributes, so consider whether you want to pass on your assets equally or vary plans based on each person's strengths. Whatever you decide, ensuring that the most important people in your life are kept in the loop will give them the best chance to continue your work.

Devising a strategy with Citi's Young Successor Programme

A 2017 survey conducted by the Office for National Statistics found family-run businesses to be 20% less productive than other enterprises5, which could stem from a failure to fully prepare the next generation.

As a means to counteract this trend, Citi partnered with Imperial College, Tesla and many other firms to create the Young Successor Programme.

With an agenda focused on innovation, leadership and entrepreneurship, the three-day course covers future investment opportunities, as well as digital banking and how to best ensure business success.

The knowledge gained from this program can lay a foundation towards creating a succession strategy.

Handing down values with an ethical will

As well as arming your offspring with the understanding of how to run a successful business, some entrepreneurs create ethical wills in addition to their official last will and testament – often using it as a means to pass on advice, beliefs and personal values.

Though it's not considered as a legally-bound document, this type of communication can be used to explain why certain decisions were made in your official will, as well as tying up loose ends. This document can be recorded any way you wish6, and can be a good way to outline your roadmap for the family business.

Keeping a diverse portfolio

Once you've devised a strategy for your successors, you can also help to protect any assets you leave behind by keeping a diverse wealth portfolio. If you're aware of the key risks, you can help your family mitigate against them in the future too.

If you'd like to find out how best to secure your investment for future generations, contact us today to find out more about our tailored investment plans.







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