Charlotte Murtagh, head of private office at ZEDRA, provides tips to ensure wealth stays within the family and issues to consider around the business, taxes, profits as well as estate and inheritance fees to avoid unwelcome surprises
Around 70% of wealthy families will lose their wealth by the second generation, and 90% will lose it by the third. A shocking statistic indeed. But not a new one. It was revealed by Roy Williams of The Williams Group, which carried out a 25-year-long study into the transfer of intergenerational wealth.
Williams defined failure as ‘an involuntary loss of control of the assets’. If we go further back, to 1776, the economist Adam Smith noted that wealth accumulated by a family within the confines of a business ‘seldom stays in that family for long’.
But it need not be this way. Most of the reasons Williams found for the erosion of family wealth were ones that were entirely preventable; in fact, he found that 96% of intergenerational wealth seepage was entirely down to the family itself.
