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Succession plans of UHNW family businesses “gathering dust”

Nearly four out of five affluent family business owners want to keep control of the business within the family but very few have the structure in place to achieve this, a new study from US Trust, Bank of America Private Wealth Management and Campden Research has found.

The research, conducted by renowned wealth consultant Russ Alan Prince, found that 78.1% of ultra high net worth family business owners wished to keep their businesses in the family but that very few of them were utilising succession plans that would ensure this outcome.

While a large majority of wealthy owners of UHNW family businesses had wealth transfer plans in place, most of these plans – both professional and personal – had lapsed. Over three quarters (76%) of owners had a succession plan, but only 38% were implementing them, inadequately addressing issues of succession. In addition, the study showed that most individuals with succession plans in place were not focusing on tax-mitigation issues (73%), even though nearly all participants (93%) reported a desire to lower the tax burden associated with transferring the business.

"Most ultra-affluent family business owners do have basic succession and trust and estate plans. The problem is they are all too often sitting on shelves gathering dust. Not only do these families need to act on implementing and updating their wealth planning strategies, they need more sophisticated strategies to better protect their wealth," said Mindy Rosenthal, managing director of Campden's North American Business and co-author of the research.

The study surveyed 242 second or third-generation wealthy business owners with business interests valued at a minimum of $300 million, and mean value approaching $730 million.

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To read an excerpt from this ground-breaking study, click here

To find out more about US Trust, Bank of America Private Wealth Management/Campden Research study Protecting the Family Fortune, click here

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