Wealth management for African families
Long before Africa was considered the rising star of the global economy, Jersey was proud to boast an affinity with the continent. This affinity has grown over the years and developed into what is now a significant and longstanding relationship, as the recent report by Capital Economics shows. The relationship has been further enhanced by the ongoing commitment demonstrated by Jersey’s trustees, bankers and asset managers, who frequently travel to the continent.
Jersey’s trustees have significant experience in matters relating to estate planning for African families from across the continent and they recognise Africa as a melting pot of cultures, ethnic groups and religions, with each country providing different and unique challenges for estate planning.
Like many families in emerging markets, African families have historically established fiduciary structures to protect their assets from the uncertainties and volatility of their home countries. African families’ estate and succession planning needs are however evolving, so whilst this remains a consideration, in our experience it is no longer necessarily the principal driver. Families are increasingly using structures purely for succession planning reasons so that the wealth earned can become an enduring legacy for future generations to enjoy. This is not merely a trend but increasingly prevalent, as families become more internationally mobile and the complexity of cross border succession and estate planning increases.
As many a trustee will confirm, it is not uncommon for a family’s second and third generations to move to new countries to study, work, establish a business and/or raise a family. This migration of the family members is frequently to Western countries and, as such, families are increasingly influenced by Western estate and especially succession planning methods. Although a family member may have left their home country, they will often maintain a strong bond to the country where the first generation of their family may continue to reside.
Families will discover that as their international footprint grows so does the complexity of managing personal and business assets in a tax efficient and prudent manner, ensuring that assets are not exposed to unnecessary risks and taxes. This is especially important as the increased distance between family members can frequently, if not properly managed, lead to a dilution of an established family culture and increasing conflict within the family (especially as the family members become increasingly susceptible to outside influence). This often results in Western estate and succession planning structures having an ‘African flavour’ and, in our experience, we have found that the entrepreneurial spirit, which is often associated with African families, is frequently reflected in the assets held within the structure and the manner in which the family conducts itself. With families and structures of this nature, a trustee will need to be far more proactive and engage with relevant parties, especially if the underlying asset held in a structure is a family business or another asset which has strong sentimental value to the beneficiaries. It is vital to have a trustee who can properly implement the planning, who understands family businesses and who is able to, if necessary, take an active and involved role in the management of the structure by drawing on their experience, education and professional qualifications. In addition to estate planning, succession planning and asset preservation benefits, fiduciary structures, in conjunction with a family governance mechanism, can help promote a family’s culture, religious beliefs and ethics, and also help to ensure close family relations. The planning also allows for international diversification so that families can hedge their political risk exposure and diversify their asset base.
Trustees in Jersey are in a very privileged position of being situated in a jurisdiction which has amazing depth and history in implementing fiduciary structures and the support of some of the world’s leading offshore bankers, lawyers, accountants and asset managers. Our judiciary is second to none, we have flexible and modern legislation relating to our international structures, a strong financial regulator, excellent travel links and a modern infrastructure, which facilitates business in today’s increasingly complex world. As an island, our longevity and the very good fortune of being able to draw on over 50 years of experience, are further factors which make Jersey an excellent destination for African families wishing to establish a robust international estate and succession plan.
Jersey Finance Links with Africa