Written by Tal Kaufman, Partner, Head of Wealth Management and Intergenerational Transfer, ABADI & CO.
Family wealth management is a strategic, comprehensive, and ongoing process for managing the wealth, assets, and investments of the family unit. It combines financial planning, investment management, retirement planning, tax planning, legal structuring, and intergenerational transfer planning, while taking a holistic view of the family’s needs, goals, and values.
Its purpose is to assist the family in making informed decisions throughout all stages of wealth management from initial planning, through ongoing management, and until the transfer of wealth to future generations in a manner that promotes the family’s wishes, supports its objectives, and preserves its cohesion over time.
What does a family wealth management plan include?
At its core, family wealth management is not solely about money. It begins with understanding the family’s values, needs, goals, and vision, both in the present and for the future, and translating them into a coordinated action plan that enables consistent and informed decision-making over time.
The planning process includes various aspects:
Wealth preservation and growth
Developing an investment strategy tailored to the family’s objectives, desired risk level, and market conditions. The strategy includes diversification of assets across various financial instruments, alongside ongoing monitoring, oversight, and adjustments, with the goal of preserving wealth and enabling long-term growth.
Wealth protection
Identifying and mitigating risks that may affect family wealth, such as market volatility, changes in family circumstances, incapacity, or the death of one of the spouses, as well as considering the need for trusts, prenuptial agreements, or other legal mechanisms.
Tax planning
Tax planning is a central component of family wealth management. Proper planning enables value creation, optimization of income and investment structures, and preparation for tax considerations related to ongoing income, retirement, investments, deferred tax, and capital gains tax.
Retirement planning
Defining the timing of retirement, which does not necessarily coincide with the end of employment, and determining the order of withdrawals and sources of funds after retirement, while considering cash flow needs and tax implications.
Intergenerational transfer
Family wealth management also includes preparing for the transfer of wealth to the next generation. This process may include developing a family plan, creating a family charter or framework, lifetime gifting, prenuptial agreements, and additional mechanisms designed to preserve the family’s wishes and ensure continuity.
Benefits of family wealth management:
1. A comprehensive approach to managing the family’s finances and investments.
2. Developing a financial plan tailored to the family’s personal needs and objectives.
3. Managing investments with the aim of maximizing returns while mitigating risks.
4. Tax planning designed to create maximum value.
5. Legal structuring and development of a family charter.
6. Protecting assets through risk mitigation strategies.
When family wealth management is carried out by experienced professionals, it enables families to act with clarity, manage risks, achieve financial objectives, and build a stable legacy for future generations.
Legal Disclaimer:
The information provided in this article is presented in summary form only, is intended for general informational purposes, and does not constitute legal advice, a legal opinion, or a substitute for professional advice tailored to the specific circumstances of each case. In any matter involving a legal question or a decision with legal implications, professional and qualified legal advice should be sought.
