Administering High Net Worth Estates
In the financial services industry, there is frequent talk of High-Net-Worth Individuals (HNWIs). Such clients are very attractive to professionals and of course, many people aspire to be classified as “HNW” themselves. There is really no accepted definition of a High Net Worth individual, although some say anything over £1 million would be HNW. For solicitors, a meaningful definition should perhaps focus on what makes advice about richer people’s affairs different to those with less: and solicitors will focus more on the nature of the work required rather than the bottom line.
All clients need their advisors to provide oversight of the big picture, and to pay attention to the detail of their affairs but for HNW clients, their concerns can be greater and the impact of their wealth planning more far-reaching.
The work begins during a client’s lifetime with a Will and lifetime planning that takes into account the individual circumstances and assets of the client. Succession planning can be more complex, particularly when it comes to business involvement. For example, with a farm or business things need to be structured carefully to preserve inheritance tax reliefs. Further, consideration should be given to appointing an appropriate person who can maintain the future of that business beyond the client’s lifetime. This will help to ensure such assets are protected as far as possible and depletion prevented.
Age of inheritance and protection from third parties can also be a greater concern with larger sums. Trusts can be set up to ensure young people inherit only when they reach a responsible age. Trusts can also protect assets from third parties. Trustees must be carefully selected, who will prudently manage assets to preserve wealth for the benefit of the client’s chosen beneficiaries.
Estates belonging to HNWIs who have passed away are often more complex to administer than smaller estates. This is because there are frequently more assets to deal with and the variation and spread of assets involved, such as structured investments, insurance policies, trusts or offshore accounts may also need to be considered. Further, business assets or agricultural assets can benefit from different IHT treatment. Specialist knowledge and advice is needed to ensure that the Probate process is handled efficiently, where assets are many and varied in their nature and location.
Our approach with any probate case is to be clear with the family about what to expect, particularly in terms of the steps which need to be taken and how long they usually take. We have to submit information to HMRC about the IHT position and tax needs to be paid before applying for the Grant of Probate, so it is essential that we establish the full extent of the estate as early as possible. HNWIs’ complex financial affairs can take longer to confirm, particularly where there are intricate structures, foreign assets or generous gifts made in the deceased person’s lifetime.
One area in which things can be more straightforward with HNW clients is the solicitor-client relationship. HNWs are often used to dealing with professional advisors, and so the management of the relationship can be easier.
In addition, HMWs often have well-organised financial affairs, having benefitted from financial advice throughout their lifetime. It can therefore be simpler to find the value and extent of the assets than in some smaller estates. Where the family is unclear about where everything is, or where the person who has died has not left their affairs in good order, we recommend an asset search.
Our clients appreciate our matter-of-fact approach which is sympathetic to the loss they have suffered but is also pragmatic and calm. We focus on what needs to be achieved, helping them through the various steps. This activity can become part of the grieving process and ultimately helps them come to terms with their loss and move on. Whatever the level of wealth, our duty is to work with efficiency and due diligence to offer the best quality service possible to bereaved families regardless of the size of the estate.
If you are would like to discuss anything mentioned in the article above, or another aspect of private client work, please reach out to our Private Client team by filling out an enquiry form on our contact page.
Disclaimer: General Information Provided Only
Please note that the contents of this article are intended solely for general information purposes and should not be considered as legal advice. We cannot be held responsible for any loss resulting from actions or inactions taken based on this article.
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