However, addressing these matters proactively can have significant benefits. Chris Cotillard, Director at Alex Picot Trust, emphasises in the JEP ‘Saying Goodbye’ feature that engaging in open conversations and seeking professional advice can play a crucial role in preserving wealth.
He highlights that thoughtful estate planning is not solely about preparing for the inevitable, but also about safeguarding assets and ensuring a smoother transition for future generations.
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We are all familiar with the saying “there are only two certainties in life: death and taxes. But, despite this certainty, many people are reluctant to talk about death and to think about their estate planning.
However, as Alex Picot Trust director Chris Cotillard points out, talking about the subject and working with professional advisers on strategies to preserve wealth for future generations can be hugely beneficial both for the individual and their families.
“While many people in the high-net-worth bracket do tend to think about the future, I am still always surprised by the number of individuals who put off those conversations because they find the topic difficult to talk about it,” he reflected. “However, planning early both gives you peace of mind, as you know that your affairs are in order, and reduces the burden on your family after your death.”
Having joined Alex Picot Trust as a graduate 20 years ago, Chris qualified as an accountant before shifting his focus towards tax and trust, where he now specialises in private client and family office work.
And while he appreciates the sensitivities involved with estate planning, he is keen to encourage people to seek advice and “begin those conversations” at an early stage.
“In most cases, we would recommend that people start thinking about this process when they are in their 50s or 60s but, depending on how much wealth people have accumulated, it could be appropriate to start much earlier than that” he said. “It is much easier to have open conversations when people are able to think clearly, than for such discussions to be triggered because someone is ill or has received an unfortunate diagnosis and is in a distressed situation.
“The earlier someone starts their estate planning journey with us, the more opportunity we have to build the relationship, not just with them but also with their spouse and children. That is very advantageous because it means that when the person does unfortunately pass away, we know the family dynamics and their asset base, so we can help to make the transition as easy as possible at what is a difficult time.
“At Alex Picot Trust, we focus a lot on Jersey residents and we place tremendous emphasis on building long-term relationships with our clients. That means that we are happy to begin by providing a small, focused service to start that suits the client’s immediate needs. This allows us to build a meaningful, face-to-face relationship from the outset, meaning we are well positioned to support clients as their needs evolve.
“Our focus is on working with families for several generations,” he said. “We are not going to recommend structures that are not appropriate or try to get individuals to put their assets into a structure too early. We want to build those partnerships and build trust and mutual respect, so that when they really need us, the relationship and knowledge is there.”
With many of Alex Picot Trust’s clients referred to the firm by lawyers, investment managers and bankers who may have been talking to clients about their Wills and estate planning, establishing a trust can be an effective way of preserving and helping to distribute wealth.
“While everyone should – but many don’t – have a Will, this is particularly important when someone has accrued significant wealth. Although we don’t write Wills, we can help people to think about their wishes, how they want their wealth to be distributed, how much they may want to donate to charitable or community causes, and how they want their children to benefit from their wealth.
“After all, you don’t want the wealth to ruin the children. It needs to be there as an enabler to help them launch their careers or to get onto the housing ladder. Therefore, one of the key conversations we have with clients revolves around how much help they want us to provide and in what situations they would like us, as the trustee, to assist and guide the next generation.
“In the majority of cases when we are talking about estate planning, a Jersey discretionary trust is involved. But that is the end point, and we often start with a personal asset-holding company, through which we structure the wealth, as that enables the client to keep control of their assets rather than placing them in a trust, at which point the control passes to the trustee.”
When a trust is set up, this is then named in the person’s Will of Moveable Estate as the beneficiary of their estate.
“Generally speaking, the discretionary trust is established at a fairly early stage and named in the Will as the beneficiary but people don’t put assets into the trust straight away,” he added. “Some people wait until they have passed away to do this; others prefer to do it as they get older to reduce the burden and enjoy their retirement, it is very flexible.”
But it is not just control that comes into the equation when establishing a trust. As Chris explains, there are also financial and tax implications to consider.
“There is a cost implication, so this is really suited for individuals whose assets are worth more than £2m but there may be family circumstances which warrant that threshold being lower,” he said. “Another key factor is where their children live. If they don’t live in Jersey, placing assets in a discretionary trust, rather than gifting them directly to their children in their Will, could save overseas inheritance tax liabilities further down the line.”
While encouraging people to “start this process early”, Chris also stresses that estate planning is not a “one-off” task.
“People’s circumstances change throughout their life,” he explained. “They could get married, divorced or remarried. They could have more children. They might purchase new assets or dispose of existing ones. It is therefore important to have regular meetings to make sure that the picture we have is up to date.
“In some cases, we recommend annual meetings. In other cases, we have formal quarterly meetings with families, at which there is a regular agenda and everyone provides updates on their areas of responsibility. That helps to provide structure and keeps everyone on top of their game.”
At this point, Chris emphasises the word family.
“There is no set age at which children should be involved in the meetings but, again, we recommend that this is done early with the age of 25 onwards seen as a sensible time, however this is very client dependent,” he said. “Bringing in the next generation is invaluable from an educational and observational perspective, as they can then start building their knowledge and understand how the wealth is being managed.
“It can also be quite daunting for some children to realise the extent of their family’s wealth and, as wealth comes with responsibility, being involved early can lessen the shock and help them to prepare to take on that responsibility. Involving them early in the meetings also enables them to build a relationship with us.
“I would therefore urge people not to be afraid to talk about death and to consider their estate planning in collaboration with both their family and professional advisers at an early stage, to provide a smoother experience for everyone involved and provide assurance and legacy for the future.”