Author: Charlotte Clabon

Dixcart Expertise in Relation to Wealth Structures

The Dixcart Group has over forty-five years’ experience in assisting clients to run and manage Family Offices.

We are very familiar with the issues facing families in this ever-changing international world and have extensive experience in providing trustee services in a number of jurisdictions.

We take time to establish and develop close relationships with the relevant family and with the other professionals advising them. As well as providing technical expertise in terms of structuring we also understand family dynamics and frequently assist in offering advice as to how to improve communication and how to avoid potential conflict, before it happens.

Recent Changes

Recent changes in terms of global tax regulations and increasing international tax transparency are vital to take into consideration in relation to the implementation of strategies to preserve family wealth and family business ownership structures.

Relatively new global regulations include: Common Reporting Standard (‘CRS’), the US Foreign Accounting Tax Compliance Act (‘FATCA’), and numerous ultimate beneficial ownership registers, which have been implemented across a variety of jurisdictions.

What are the Key Considerations to Achieve Effective Wealth Management?

Please see below the key areas that need consideration in relation to the management of wealth and succession planning, and the type of reviews that need to take place on a regular basis.

Succession and Inheritance Planning

• Set up or review policies and procedures to ensure the adequate preservation and transfer of wealth to the next generation.
• Review the ownership structure of any family businesses and other relevant assets.
• Understand how relevant local laws would apply, in relation to inheritance (for example; Civil Law, Shari’a Rules etc.).

Structuring and Tax Advice

• Consider where all relevant family members are resident and also tax resident.
• Consider or review structuring options (e.g. use of holding companies and/or family wealth protection vehicles such as; family investment companies, foundations, trusts etc.
• Review international investment structures, including the holding of real estate, from a tax and asset protection perspective, in particular in relation to ‘BEPS’.

Confidentiality Management

A procedure needs to be developed to deal with relevant confidential information requests from financial institutions and third parties.

Family Governance

• Successors need to be identified and their role discussed with them.
• Develop open communication amongst family members regarding decision making strategies and processes.
• A ‘Family Constitution’ is a useful way to formalise family governance and to prevent potential future conflict.
• Create or identify education and training programmes to groom the next generation.

Contingency Planning

Rules and procedures (such as shareholder agreements or trust documentation forming a ‘Family Constitution’)  should be in place to protect the family business in the case of unexpected events:

• Policies and procedures to underwrite business continuity.
• Use of appropriate legal structures to provide as much asset and wealth protection as possible.
• Consider ‘citizenship by investment’ programmes in reputable jurisdictions, to provide opportunities for the tax residence of family members to potentially be diversified.

Family Office Advisory Services

• Consider the segregation of the family’s wealth from the family business(es).
• Develop a strategy regarding the use of the profits derived from the family business and investments, that is not going to be re-invested.
• Create a team to manage the wealth (a Family Office).

Additional Information

If you would like further information regarding a well-considered and comprehensive approach towards succession planning, please speak to your usual Dixcart contact or to a member of the professional team at the Dixcart office in the UK: advice.uk@dixcart.com.

South African families are currently experiencing a number of challenges. Increasingly, South African families are looking at international wealth protection strategies, business relocation options, and residency and citizenship solutions in the UK, Europe and elsewhere. Safety, security and currency volatility are big drivers, but political, economic and educational issues play their part too. 

Astute planning using qualified professional advisers who understand the specific circumstances in South Africa can help families better plan for their future.

Should I Stay or Should I Go?

Some South African families may prefer the option to remain living in South Africa, whilst at the same time taking steps to secure a right to reside elsewhere in the world. A second passport or residence card can provide access to an international platform, create opportunities to reside elsewhere and to conduct business globally.

There are currently a number of attractive Residence Schemes and International Investor Programmes in existence, each with its own criteria and benefits. Certain countries offer a second passport without the need to reside in that particular country, which provides a family with a sense of security for future use, if needed. Call it an ‘alternative insurance policy’.

Dixcart Domiciles has advised and assisted South African families with their relocation to jurisdictions such as Cyprus, Guernsey, Isle of Man, Malta, Portugal, St Kitts & Nevis and the UK. Dixcart is involved at every stage of the process; from the initial application and provision of appropriate documentation to the move itself and recommendations regarding property, schools and even restaurants.

Exit and Entrance Strategies

If families wish to move to a new location, Dixcart – working in collaboration with key professionals in South Africa – can advise on the most effective exit strategy from South Africa. In addition, pre-arrival tax and strategic planning is offered prior to arrival in the new location to make the move as tax- efficient and as smooth as possible.

Formation and Management of Companies

Most South African entrepreneurs and business owners want to continue their commercial activities and form trading and asset-protection structures in their new place of residence. Corporate structuring and ongoing management of those structures are key areas of expertise within the Dixcart Group.

Dixcart Business Centres and Professional Support Services

A number of South African entrepreneurs will want to commence business operations immediately, when they move to a new location, without having to spend capital or incur on-going costs for commercial office space, support staff and IT facilities. Dixcart Business Centres provide an efficient and cost-effective way for a new company to establish itself. Dixcart offers serviced office facilities in Guernsey, Isle of Man, Madeira (part of Portugal), Malta and the UK.

Dixcart provides a number of professional support services to companies, including recruitment of local staff, human resources and IT services. Accounting, tax advice, payroll, company secretarial and legal services can also be provided.

Preservation of Wealth, Trusts and Fund Services

Wealth preservation and management across the generations is of great importance to South African families. The Dixcart Group’s private client advisory and trust teams have extensive experience in the formation and administration of trusts, foundations and bespoke family office services. South African private clients can take advantage of these services from any one of six, fully regulated, independent trust companies located in different jurisdictions around the world.

The Dixcart offices in the Isle of Man and Malta also each hold a fund licence.

Family Offices

Historically, wealthy South African families have established family offices to manage their wealth around the world as effectively as possible. Appropriate family members are often involved as well as professionals with expertise in a variety of different disciplines. Dixcart has worked with many South African families over the years, advising them as to the appropriate family office structures and wealth management solutions to meet their particular needs.

Dixcart Group and Internationally Mobile South Africans

Dixcart is an independent company and has provided professional support services to South African and other families, businesses and private clients for more than 45 years. It has over 160 members of staff the vast majority of whom are professionally qualified. There are ten offices in the Group and these are located in Cyprus, Guernsey, Isle of Man, Malta, Nevis, Portugal (Lisbon and Madeira), Switzerland, the UK and South Africa.

Many senior members of staff, including those located in Dixcart offices in Cyprus, Malta, Portugal (Lisbon and Madeira), the UK and South Africa, are of South African origin.

Paul Flude (South African-qualified Attorney) and Laurence Binge (South African-born Chartered Accountant, Director) are both based in the UK after time in the Isle of Man, and are responsible for supplying family office and related services to Dixcart’s South African clients. 

Wealth – a Responsibility 

The transfer of wealth to the next generation is a critical issue. The ability and understanding of the next generation as to how to deal with the organisation and management of the wealth being passed to them is also a vital consideration.

A family’s financial wellbeing can be lost or reduced in disputes over control and management of the wealth. Unfortunately the old English expression “from rags to rags in three generations” can often become true.  

Planning is Critical 

Extensive initial planning, during the lifetime of the creator or current custodian of a family’s wealth, needs to take place to ensure that the next generation successfully receives, manages and enjoys the wealth. The next generation must also understand the benefits to be gained by accessing appropriate professional expertise to protect and preserve their inheritance. 

In situations of substantial family wealth it is fundamental for a successful transfer of the wealth, to establish an atmosphere of trust and communication between the members of the family. In addition, an understanding of the issues to be addressed with long standing and trusted professional advisers should be considered. It can be of great value to organise a family office structure either in conjunction with a professional advisory firm or independently.

Importance of the Availability of Family Office Services in a Number of Jurisdictions

During the past forty-five years, the Dixcart Group has developed the ability to establish family office structures through a number of Dixcart offices in a variety of jurisdictions.

This has enabled family offices, which are managing the wealth of international families, to develop holding and investment structures in a tax neutral manner. This is key as family members often live in different jurisdictions, experiencing a variety of taxes and with  each jurisdiction demanding a different structuring approach.

A Changing World: Challenges and Opportunities 

The transparency of ownership within international investments places greater emphasis on suitable and robust investment structures. Where the access to wealth is publicly acknowledged and disclosed this can potentially create a personal security problem for many wealthy individuals, which can provide motivation for individuals to move jurisdiction. 

Changes to taxation expectations around the world are also now dictating the movement of individuals to jurisdictions where the imposition of tax has less impact than in the countries in which they currently live.

This movement of family members around the world presents opportunities to:

• Put in place tax neutral structuring of investment positions for the benefit of the current generation
• Provide the initial overview and planning necessary to ensure the responsible maintenance, management and distribution of the wealth to the next generation

What is Dixcart’s Approach? 

Dixcart works with each family wealth structure to coordinate communication with the family and to provide access to, and liaison with, additional independent, professional advisers. 

Plans can be put in place to allow for changes in a family’s structure and relationships to be recognised. Dixcart can coordinate variations in structure to accommodate individual and specific family wishes, whilst complying with the overall family office policy.

Summary: Appropriate Structures and Effective Communication from the Start 

As wealth owners move from one jurisdiction to another, an opportunity to restructure  the ownership of family wealth for succession planning purposes presents itself. Simultaneously, this provides an opportunity to implement the initial organisation of an ongoing family office and the tax neutral organisation of  family affairs. 

When wealth passes down generations, openness between the family, together with effective communication and coordination, will help to ensure that potentially destructive family disputes are avoided or, at minimum, are more easily contained.