The document discusses four steps for families with global assets to gain a global view of ownership structures and maximize tax efficiency and asset protection. The steps are: 1) Conduct an ownership audit to understand what assets are owned, by whom, and where. 2) Choose jurisdictions that have stable laws, good professionals, and address the family's tax and legal concerns. 3) Consider establishing trusts in chosen jurisdictions to diversify ownership and provide central management. 4) Create a strong family governance structure through a family constitution, council, and assembly to facilitate decision making and avoid disputes over assets.
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Gaining a Global View of Ownership Structures - Presentation by Barbara R Hauser LLC - Elite Summit
1. Gaining a Global View of
Ownership Structures
(to Channel Ultimate Tax Efficiency and
Asset Protection)
by Barbara R Hauser LLC
For
Marcus Evans Elite Summit
Montreux 31 May 2012
3. To Opportunities
chaos Strategy
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4. Goal: Safeguard from Risks
Country Instability
Foreign Taxes
Claims against the client
Failure to leave to the chosen heirs
Poor Management
Family Disputes
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5. Example
Swiss accounts
Paris apartment
New York apartment
Equity in private firms
Stock in US public/listed companies
Jersey trust
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6. Likely Chaos
Taxes could apply: UK, France, USA etc
โฆ Wealth tax
โฆ Capital gains tax
โฆ Inheritance tax
โฆ Will a treaty help?
Disclosure reports for USA? (FBAR & FATCA)
Local inheritance rules apply?
Trust recognized?
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7. Client Concerns
Minimize all taxes
Ensure that wealth passes on as the client
wishes
Avoid exposure to risks and claims
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8. Global Four-Step Solution
Four-
1. Conduct an Ownership Audit
2. Choose/change the Jurisdiction/s
3. Consider a Trust
4. Create strong Governance
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9. The 4-Step Process
4-
Governance
Trust
Jurisdiction/s
Ownership
audit
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10. #1-Ownership Audit
#1-
1. The first and most critical step is for the
family to have an "ownership audit" of
exactly what they own
2. In whose name, and
3. where it is located.
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11. Ownership Audit -- Elements
โข The legal type of asset matters
What
โข The legal owner matters
Who
โข The โlocationโ matters
Where
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12. Example
Ownership of stock may be an โintangibleโโlocated
where the client โisโ
Ownership of a home is likely to be a โfixedโ assetโ
subject to the laws of where it is located
Investment ownerships (and insurance) may be
controlled by a contract
Marital property may be subject to spouse rights
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13. What do they own?
Listed
Stock
Private
Homes
Equity
Client
Insurance Collections
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14. Who is the legal owner?
Individual client
Married couple (spouse rights)
Undivided Hindu Family
Private company
Off-shore company
Trustee
Holding Company
Other
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15. Why does the owner matter?
Right to
transfer/sell/gift
Inheritance Exposure to
impact taxes & claims
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16. Example
Individual owner โ free rights to transfer
Married owner โ must consider spousal
rights
Partnership โ terms of agreement?
Corporate ownerโ who owns the
company?
Trust โ will the Trust be valid?
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17. Why does the location matter?
Right to
transfer/sell/gift
Inheritance Exposure to
impact taxes & claims
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18. Example
USA โ freedom to dispose (with taxes)
UK โ dependentsโ claims
France โ forced heirship
Switzerland โ may follow citizenship
Gulf Region โ Shariah law may apply
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19. #2- Choose a Jurisdiction (or two)
#2-
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20. Why the Jurisdiction Matters
Important General Attributes:
Stable law (including trust law)
Good Professionals
Convenience
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21. What the Jurisdiction Controls
Taxes
Inheritance
Claims
โฆ Commercial creditors
โฆ Family disputes
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22. Jurisdiction in Particular
Consider clientโs particular risks:
Where are the clientโs assets
and
Who might make a claim (and what kind?
and where?)
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23. # 3 Use a Trust (or two)?
Client Beneficiaries
Trustee
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24. Why Consider a Trust ?
Advantages:
Diversification
Central Management
Safety
Control through generations
Disadvantages:
Complexity, cost & administration
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25. Choice of Trustee
Extremely important
Many choices:
โฆ โbig bankโ
โฆ Professional private trust company
โฆ Family private trust company
Add a Protector?
โฆ Ability to remove Trustee
โฆ Expand into a family Protector Committee?
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26. Last: The Worst Risk: Family Conflict
L'Oreal Heiress Liliane Bettencourt --Loses Control Of Her
$23 Billion Fortune
Pritzker Lawsuit Divides Family
The notoriously private owners of Hyatt โ The Pritzker
family โ have decided to part ways, leaving billions in assets
up for grabs.
GCC - The Saad-Algosaibi disaster
Lack of transparency in Saudi firmsโ feud leaves billions in
losses hidden
Family Feuds Grip Ho Casino Empire & Yung Kee Restaurant
brothers
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27. # 4-Create Strong Governance
4-
Create a strong family governance
structure to keep the family in alignment
(and to avoid those claims)
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28. What is Family Governance?
Answer:
โHow the family makes decisions togetherโ
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29. Range of Governance Options
Dictator (some Patriarchs/Matriarchs)
Benevolent Ruler (some Patriarchs/Matriarchs)
Appointed Leader
Elected Leader
Participatory System
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30. Best Practices Globally
Family Constitution
Family Council
Family Assembly
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31. Process to Follow
Constitution
Council
Assembly
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32. The Family Constitution
โข Preamble: Why are we doing this?
โข Who will make what rules on what
subjects and how?
โข How will we allow changes and ask the
next generation to sign on?
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33. The Family Council
Who is on it?
What can it do?
What can it not do?
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34. Participatory Process: The Key
All contribute to the Process
All views are considered
Compromises and Consensus Result
Flexibility & Amendability are Crucial
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35. Strong Governance Results
Creates a strong family governance
structure to keep the family in alignment
(and to avoid family disputes)
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36. Conclusion: Four Steps to Success
#1โConduct Ownership Audit
#2โChoose good Jurisdictions
#3โConsider Trusts
#4โCreate strong family Governance
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37. References--Books
โฆ International Family International Estate
Governance (Amazon) Planning: A Reference
Guide (JurisPub)
Mommy, Are
We Rich?
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38. Additional References
See www.brhauser.com (includes articles
to download) and Appendix in
International Family Governance
LinkedIn Group: โInternational Family
Governanceโ
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39. Selected Books
Generation to Generation: Life Cycles of the Family Business
(Gersick, Lansberg, etc.)
Family: The Compact among Generations and Family Wealth:
Keeping it in the Family (Jay Hughes)
Creating Effective Boards for Private Enterprises (John Ward)
The Rule of Law: On History, Politics,Theory (Brian Tamanaha)
Theory of Justice (John Rawls)
Flow: The Psychology of Optimal Experience (Mihaly
Csikszentmihalyi) (core meaning of โa good lifeโ)
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40. Questions?
Thank you, and feel free to email me with
any additional questions.
Barbara Hauser (BRHauser@gmail.com)
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