Wealth and purpose

10 Jan 2024

In the tapestry of global aspirations, the desire for a better future for our children is a universal thread for parents, regardless of where they sit on the wealth spectrum.

From education and an entrepreneurial spirit to core values and having a positive social impact, the wishes for the next generation of wealthy families are easily relatable, although they will, often, face a unique set of challenges when considering succession planning.

An essential role for a trustee is to identify and understand the wishes of clients. One of the tools that aids a trustee in achieving this, is a letter of wishes, which is written by the settlor. While not legally binding, a letter of wishes acts as a guide to the trustee and can be as broad or narrow as the settlor sees fit.

A letter of wishes is flexible and can be updated through the lifetime of the settlor. This allows for a great deal of circumstantial adaptability, for example based on events such as marriages, births, or financial needs. Is it important that a trustee undertakes regular conversations with the settlor to ensure that the letter is still reflective of their wishes.

Letters of wishes can vary from a general overview as to how the settlor would like the trust assets to be distributed to their heirs, or can be incredibly detailed, even down to the behaviours the settlor wishes their children to demonstrate.

The Settlor can also include instructions as to how they wish trust assets to be used in alignment with ethical or moral values. This can include preferences for charitable giving, environmental considerations, or other causes that hold personal significance.

With decades of experience supporting clients with the transfer of trust assets to the next generation, we recognise that our clients will, often, express a desire to leave the world a better place for their children and wider descendants, and to safeguard their wealth and assets for future generations.

Most of our clients are seeking to establish a platform for their children to have stability, financial support, and wealth with they can control. Often, parents want to enable their children to make their own decisions regarding wealth, with the support of professional trustees.

Regardless of their financial status, parents often prioritise education as a key building block for their children’s future. A high value is placed on ensuring that children are provided the best possible opportunities to develop critical thinking skills and a lifelong love of learning.

Arguably, the more that children learn, the better able they are to form their own views on social, economic and political issues. As these views are established, there may be cases where the members of the next generation develop values and wishes that do not align with those of the wealth generators in their family, or with other beneficiaries.

A high-profile example of such a case is that of the Engelhorn family. When the head of the family, Curt Engelhorn – a billionaire businessman – died, his assets were distributed between his heirs. As the family wealth has been passed through the generations, one of Curt’s granddaughters, Marlene Engelhorn, was set to inherit “tens of millions of dollars”, and publicly declared that she will give away 90% of her wealth through philanthropic endeavours.

Marlene has become a well-known advocate for the redistribution of wealth, reportedly claiming that the family decision to leave her such substantial wealth had annoyed her, stating “it should not be my decision what to do with my family’s money, for which I did not work”.

This is a prime example of how vast the difference between the wishes of each generation of a family can be.

Wishes, and views on what is “right and fair” are subjective. It is important for trustees to recognise this and use discretion when being guided by a letter of wishes.

A trustee can play an essential role in ensuring that assets are utilised and distributed in such a way that the family wealth is preserved, and the wishes of the settlor are respected, while simultaneously ensuring that the wishes of the beneficiaries are also considered and accommodated.

This is a delicate balance and is best executed by experienced trusteed with proven expertise in client service. With a heritage of more than 165 years, including over four decades of establishing and administering multi-jurisdictional wealth structures, Saffery Trust excels in supporting families to create lasting legacies.

To find out more about how we can support you and your family, or your clients, contact our professional, friendly, team: Contact Us – Saffery Trust International