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Unused assets – ownership structures under review

28 May 2020

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High net worth individuals (HNWIs) and their assets enjoy a global lifestyle; property, companies and wealth are spread across multiple jurisdictions and travel between them is easy. Or at least it was.

Many HNWIs, along with the rest of the world, are accepting of the fact that Covid-19 is going to affect international travel for 2020 and maybe beyond. Meaning, this year, luxury assets located outside of the HNWI’s country of residence will probably go unused.

The natural question to ask is whether the HNWIs will still want or need these assets in 2021 and beyond? Depending on the answer, we could see a downturn in the acquisition of new luxury assets for this sector or the abandonment and sale of assets they already own.

The reality is most international luxury assets are still held in personal names. Many of these are in the form of precious gems and one-off jewellery pieces which are kept in safes, paintings which hang on walls within luxury properties or secondary yachts which could be used by many families only once a year.

In recent weeks conversations with HNW clients have centred on whether individual governments will seek to tax these assets and their owners as the “new tax norm” and introduce a specific higher tax on the HNW sector as they seek to balance the economy and stabilise government spending.

These families and asset owners have become very aware that both of these considerations may occur and are therefore looking to structure the ownership of their assets, ensure adequate insurance is in place and seek specific managers to help them protect these for 12 months or until general travel restrictions are eased.

This restructuring could be prudent as the global economy remains unstable, but each client will of course have different requirements and respond accordingly to their assets being inaccessible, at least for the time being.

If you’re considering an ownership structure that would best meet your needs please contact our Private Wealth team, who have the experience and global presence to ensure you and your assets are protected, wherever they are.