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Transferring private wealth in the Bahamas: why succession planning matters

6 May 2021

Kimika Roberts

Local Managing Director, Bahamas

Kimika Roberts

Local Managing Director, Bahamas

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Effective succession planning via Bahamian trusts and wills can help high-net-worth individuals secure their legacies and allow for a smooth transition of wealth to their loved ones.

The past year has shown that, unfortunately, we are not always in as much control as we think. The Covid-19 pandemic has brought so much uncertainty that wealthy individuals are increasingly turning to private wealth experts and corporate service providers in the Bahamas to preserve and protect their wealth from one generation to the next.

In 2020, Intertrust Group surveyed 100 private wealth and private client managers and advisors globally to gauge sentiment on a range of key issues. The research highlighted the importance of succession planning, effective tax planning strategies and efficient wealth transfer. Succession planning, in particular, emerged as the fastest-growing private wealth service. Many respondents highlighted a demand for greater transparency and the need for robust governance in managing their wealth.

Succession planning to protect family and business legacies

Succession planning is crucial for high-net-worth individuals because it underpins legacy. Without a strategy and appointed successors, family legacies and the sustainability of any existing businesses are at great risk.

Disputes most commonly arise among family members and beneficiaries when they have no direction or guidance on succession. In addition, surviving beneficiaries may find themselves unable to meet liquidity needs readily, creating financial anxiety and even leading to the sale of assets if they do not have enough cash to sustain themselves.

There are plenty of cautionary tales. In one situation in the Bahamas, the sole beneficial owner of an international company died intestate. His company was left in limbo and his Bahamian assets could not be readily distributed to his heirs. The courts in the Bahamas could not make any determination to distribute the estate as the deceased had been domiciled in Brazil, giving it territorial jurisdiction over the case. It took approximately 11-and-a-half years for the estate to be wound up. If he’d had a Bahamian will, the assets in the Bahamas would have been distributed in accordance with the provisions of the last will and testament once a grant was obtained from the courts in the Bahamas.

Bahamian wills and trusts

Wealthy individuals who have an international business in this jurisdiction (or plan to incorporate one) should strongly consider a Bahamian last will and testament. They could also have the option of setting up a Bahamian trust that would act as the sole shareholder of the international business company. In case of unforeseen circumstances, physical or mental incapacity, the trustees would be able to deal with the assets according to the provisions of the trust.

Another key advantage of the Bahamas for estate administration and succession planning purposes is that the transfer of assets attracts no succession taxes.

Even advancing age can become a risk when managing affairs efficiently – especially against the fast pace and rapid changes of private wealth management and the ever-evolving legislative landscape.

Serving the Latin American market from the Bahamas

The Bahamas has a robust financial sector that has been established for many decades. Over 200 licensed banks and trust companies (including major financial institutions) have a presence in the country, delivering services involving private banking and trust services, accounting, legal and corporate services.

Additionally, there are more than 800 licensed funds in the Bahamas, with more than 50 fund administrators.

We are a well-respected jurisdiction in close proximity to the Americas, operating as a financial hub for the Latin American market. The regulatory and legislative landscape of the Bahamas is known to comply with international standards, implementing measures against money laundering, terrorism and related activities.

We are a member of the United Nations, the Commonwealth of Nations, the Organization of American States and the Association of Caribbean States. As a jurisdiction, we have certainly equipped ourselves to adhere to international standards and best business practices as well as anticipating regulatory trends.

With Intertrust Group, we can rely on a network of professionals that goes beyond the Bahamas, extending to the Caribbean, Latin America and Europe. We can collaborate and propose the best investment vehicles for our high-net-worth clients, especially those with multiple streams of income across several jurisdictions.

We create companies and investment vehicles that can help structure assets correctly and protect them over time, ensuring private wealth is preserved for the next generation.

How Intertrust Group can help with private wealth planning

We can assist with:

  • private trust companies
  • international business companies
  • family offices and foundations
  • private investment funds
  • asset protection and succession planning