Post-covid tax rises to result in boom in wealth restructuring

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Nearly two thirds (62 per cent) of private client advisers expect high-net-worth individuals to be charged more income tax over the next 12 months, with three fifths (60 per cent) also anticipating a rise in wealth taxes as governments start repairing their countries’ economies in the wake of Covid-19, according to a new global study commissioned by Ocorian, a global leader in corporate and private client services, capital markets and fund administration. 

Ensuring watertight succession planning arrangements was viewed as the most important factor in driving client discussions around changing structures and/or jurisdictions, being rated by four fifths (79 per cent) of advisers, according to the report. This was followed closely by changing regulation, such as economic substance requirements or public beneficial ownership registers (78 per cent), and tax efficiency (77 per cent).
 
Nearly three quarters (72 per cent) of respondents said that the pandemic has influenced their clients to change their existing succession planning arrangements with the same number fast-tracking their existing plans. According to the study, those jurisdictions and institutions able to meet this strong private client demand will see greater capital flows and succeed in the competitive global wealth market.
 
Nick Cawley, Global Private Clients Service Line Leader at Ocorian said: “Succession planning has always been a fundamental element of the private wealth sector, but Covid-19 has accelerated its importance and had a significant impact on how private clients and wealthy families protect wealth and fine-tune their portfolios. This is part of a wider focus on structures and jurisdictions in the wake of the pandemic and a strong desire from private clients and their advisers to optimise portfolios at a time of profound change.”
 
The report also found that when looking at the most attractive wealth structures for succession planning, foundations (79 per cent), partnerships (79 per cent), companies (76 per cent) and trusts (73 per cent) remain the favourite vehicles. Foundations, it noted, are seen as providing better confidentiality and offering restricted access to data while offering compliance with elements such as KYC. Overall, more traditional structures such as trusts remain popular and are expected to remain a fundamental part of the wealth restructuring tool kit.

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