Many business and family wealth structures were established for specific purposes, whether that be to facilitate growth, protect assets or secure tax efficiencies that were available at the time. However, family circumstances, legislation and tax policies evolve meaning structures, which were once effective, may no longer achieve those original objectives.
As succession planning is rarely a single event and typically involves a combination of tax, legal, commercial and family considerations, it is important to periodically review existing arrangements to ensure they remain fit for purpose. Obtaining updated professional advice can help identify new opportunities, risks and potential restructuring requirements before a succession plan is implemented.
The transfer of business interests, investments and other assets can involve significant tax and transaction costs, including potential capital gains tax, inheritance/ gift tax, restructuring expenses and professional advisory fees. As a result, succession planning should be approached from a long-term perspective, taking into account both the immediate costs of transfer and the family’s future tax and ownership objectives. Early planning can provide greater flexibility and help to ensure that transfers are structured in a way that balances tax efficiency with appropriate control.
For many wealth creators, transferring legal ownership of assets is easier than transferring control. Years of personal investment and control often make it difficult to step back, making careful planning essential.
Consideration should be given to how much control to retain, when successors are ready to assume responsibility, and the timeframe for transition. Providing opportunities for the next generation to gain experience and develop relationships with existing advisors can help ensure a smoother and more successful handover.
In an increasingly mobile world, succession planning can be complicated by the location of those involved. The location of people and assets is key as this can affect tax treatments on the transfer of assets and, in the case of transferring control of a business, the tax residency of the business.
For families considering relocation, this may create tax and regulatory implications in both the old jurisdiction of residence and the new one. The costs and wider impact of relocating, including professional fees, business disruption and effects on family life, should therefore form part of the succession planning process.
Open communication involving the next generation in planning discussions is essential and can help align expectations and reduce the risk of future disputes. Some families may benefit from establishing a family constitution to support decision-making.
Successful succession also relies on trusted advisors who understand both the family's objectives and the technical complexities involved. Where assets, family members or business interests span multiple jurisdictions, specialist international tax, legal and corporate finance advice can be invaluable. Introducing successors to these advisors early helps ensure continuity, build trusted relationships and support a smooth transition for future generations.
Successfully transferring wealth to the next generation requires trusted advisers with both local knowledge and global reach. At BDO in the Channel Islands, our specialists work closely with families and business owners to develop tailored succession strategies, drawing on expertise in international tax and cross-border structuring. Through BDO's worldwide network, we can provide coordinated support across jurisdictions, helping clients preserve and transition their wealth with confidence.
Zaeem Youssouf
