Protecting the real value of assets over time, in the knowledge that unknowns tend to grow, but also that new opportunities emerge. This is the priority for holders of large assets, as underlined in the interview with Repubblica Stefano Loconteowner of the law firm Loconte & Partners, as well as a university professor and author of numerous volumes on the topics of wealth management and estate planning.
Let’s start with the scenario regarding the question. What are the main concerns of large wealth holders today and how can wealth planning allow you to manage the most delicate phases without anxiety?
“The main concern is represented by the need to protect the heritage from all phenomena and/or factors that could, in any way, reduce its value. The delicate issue is the ability to understand such phenomena and/or factors as, in line general, they can be the most disparate and, clearly, they impact different people in different ways and, above all, they are also the consequence of the qualitative and quantitative composition of their heritage”.
What is it referring to?
“The case study is very broad. It ranges from very macro and general themes (such as inflation, the ability to generate income and geopolitical tensions) to more specific themes such as the number of people in the family and their systematic increase with the entry of new generations and the ability of the assets to generate an overall income suitable for meeting everyone’s needs. It is then necessary for family members to understand that not all of them can be managers of the assets, so it is necessary to define, in good time and correctly, the characteristics and peculiarities that those who have (or will have) roles of governance of the assets must have from those who are (or will be) users of the relative income. An unclear definition of the roles and expectations of individuals would, in fact, end up generating tensions and frictions that are certainly harmful to the collective interests of the family”.
A jumble of issues that are not easy to sort out
“Not only that. Alongside these general issues, there are specific ones linked to the particular type of assets (real estate, corporate, business, financial, collectibles, etc.) together with those deriving from the possible concentration on a particular asset class. The theme, therefore, is broad and complex and requires an extremely professional and dedicated approach.
With regard to generational transition, what are the main critical issues that emerge and how can they be best managed?
“The generational transfer of assets creates further critical issues as it has the natural effect of creating co-ownership and community of individual assets forming part of the assets and this is normally a particularly dangerous mechanism. This is why, perhaps even through the drafting of a ‘simple’ will, it is necessary to ensure that the property is not fragmented and that its unity is maintained. This, obviously, depends a lot on the qualitative composition of the assets as the concentration in a single asset class can make it extremely difficult to achieve this result in consideration of the rules of our inheritance law which provide mandatory provisions with the attribution of minimum quotas in favor of certain subjects (the so-called ‘necessary or legitimate heirs’). The topic becomes even more delicate, if possible, if the
assets are represented by corporate entities for the management of which it becomes essential to also be able to count on ownership stability”.
Also because in history it has happened that even companies with solid fundamentals were overwhelmed by family disputes.
“This is the moment when we need to resort to suitable legal instruments that can help resolve this potential problem: holding companies (in the different types), trusts, family agreements, destination restrictions, family constitution, just to name a few. In essence, the objective is to be able to build a new approach to heritage that places ownership, governance and enjoyment on different and distinct levels; all accompanied by an educational and cultural path that leads family members to understand that it is not necessarily necessary for all three of these elements to come together in the same person”.
How does the legal activity in this field integrate with that of the other advisors who follow clients?
“In light of the above, it is clear that legal activity is central in this context: the creation of these tools, their structuring and the consequent definition of the operating rules can only be the prerogative of professionals in the legal world. However, these professionals must necessarily shape their activity to those that are the initiatives and activities of other professionals and of individual members of the family. Generally speaking, it is the legal instrument that must be able to adapt to the specific needs of the family and never the other way around. Another fundamental element, then, is the correct management of the tax variable: although Italy, thanks to an extremely efficient tax system on inheritance and gift tax (moreover in the process of legislative amendment), this does not seem to represent a real problem, it is necessary to avoid that the assets are also “eroded” by a high overall taxation. This is even more relevant if individual members of the family rather than specific assets are placed in other jurisdictions as each of them could, legitimately, request the payment of additional taxes with respect to the Italian ones”.
In this web of interests, how does the consultant operate?
“The ‘job’ of the wealth planner or wealth planning expert is, therefore, extremely delicate because the variables to be taken into account in developing the most suitable wealth planning strategy for the family are many, varied and multidisciplinary: but precisely to this is a fascinating and satisfying activity.”
