By Steve Bougourd
Having worked in the trust industry for over thirty years, this proverb has always resonated with me. It must be my Asian heritage. Studies suggest that a significant proportion of wealth is lost across generations, and that wealth is largely gone by the third generation.
To put this into context, many readers will have built successful careers and accumulated a degree of wealth. Over the past few decades, we’ve seen strong economic conditions, business growth, and rising property values. Today, many enjoy comforts such as family holidays, quality education for children, and a good standard of living, often more than previous generations experienced.
However, research indicates that maintaining wealth across generations can be challenging. This is where effective planning becomes essential.
For more than thirty years, Guernsey has earned a strong reputation for managing private client structures and family offices. While tax considerations have historically played a role, the primary purpose of trusts remains estate and succession planning, alongside asset protection.
When speaking with families globally, from Latin America to Southeast Asia, the concerns are consistent: how to preserve wealth for future generations. Every Father and every Mother that I have spoken to worry. They absolutely recognise the importance of preparing for the transition of estates to the next generation but it is often “put off”. Common barriers include time constraints, reluctance to consider mortality, perceived costs, and concerns about losing control of assets.
On fees, I often draw comparisons to insurance: you hope to never need it, but its value only becomes clear if there is a tragic happens or there is a catastrophic event. Similarly, a trust can provide long-term security and enormous peace of mind.
Control is another key consideration. Understandably, transferring assets to a third party can feel daunting. However, modern trust structures offer mechanisms such as protectors, reserved powers, private trust companies, and letters of wishes, providing oversight and influence while maintaining the integrity of fiduciary obligations.
Guernsey’s reputation is underpinned by robust regulation and a respected judiciary. Leading law firms frequently recommend the Channel Islands for complex family governance matters. The Islands have been providing fiduciary services for some 50 years and this has resulted in unrivalled experience and technical knowledge.
New markets are emerging as we see continue to see an increase in the migration of global wealth to countries that often have investor programmes, coupled with low taxation, particularly in terms of capital gains, estate and wealth taxes. Political and financial stability are pre-requisites. Naturally, countries that offer the promise of good lifestyle are desirable. Good schooling and healthcare will also appeal. While challenges exist, these developments present opportunities for jurisdictions like Guernsey to support families seeking flexible long-term planning vehicles, managed by seasoned fiduciaries.
As the saying goes: “The journey of a thousand miles begins with one step.” For families, that first step is to initiate a conversation about wealth preservation and succession planning.