Ultra-wealthy family businesses do little wealth planning – study
The majority of ultra-high net worth family businesses are not implementing succession plans, do not have asset protection strategies and are not updating estate plans, said a report compiled by US Trust, Bank of American Private Wealth Management, Prince & Associates and Campden Research.
The study entitled Protecting the Family Fortune found two distinct groups among family businesses – business-focused and family-focused.
The business-focused segment places the needs of the business above those of family members, whereas the family-focused segment uses the business as a mechanism for the family to prosper, and to address family issues.
The study said that 38% of owners were identified as business-focused, giving little consideration to family concerns when making business decisions.
“Business-focused owners of ultra-high-net-worth businesses tend to be more successful than their Family-focused counterparts,” said Russ Alan Prince, president of Prince & Associates, Inc.
“This segment tends to own businesses with much greater net worth, and creates and implements succession and estate plans in greater numbers.”
The study also reveals that while a large majority of wealthy owners of UHNW family businesses have wealth transfer plans in place, most of these plans – both professional and personal – have lapsed.
Protecting the Family Fortune also found that a significant portion of wealthy owners of UHNW family businesses desire to maintain control of the business and are concerned with protecting their wealth, yet they fail to create asset protection plans.
The study surveys 242 second- to third-generation wealthy business owners whose business interests are valued at a minimum of $300m, and average $730m.
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