Succession across three jurisdictions: what the structure has to survive

A family relationship that spans three jurisdictions is three sets of rules that were not written with each other in mind. The operating business sits in one, the holding structure in another, the heirs in a third. Each has its own law of succession, its own view of who may hold what, and its own reporting obligations. The firm advised 48 family relationships at September 2024. Twenty-nine of them involve assets or people in three or more jurisdictions. The structure has to survive the death, incapacity or divorce of the person who built it.

The first question is who signs. Not who owns, and not who benefits: who signs. In half of the relationships reviewed during 2024, the answer at the outset was one person, usually the founder, with no documented alternate. The standing requirement is two named signatories for every entity and a written incapacity trigger that does not require a court. Where a trustee is involved, and Corbière Trust Company in St Helier and Andros Sound Trust Company in Nassau act in several of these structures, the trigger belongs in the deed rather than in correspondence.

Forced heirship is the constraint discovered latest and resented most. A jurisdiction that reserves a fixed share of an estate for children will apply that rule to assets it considers within its reach, whatever a deed drafted elsewhere provides. The firm does not give legal advice and does not draft. It insists that the family counsel in each relevant jurisdiction has read the whole structure rather than the part placed in front of them, and it records in the file the date on which each of them last did so.

Distributions are a currency problem before they are a tax problem. Heirs living in a third jurisdiction are paid in a currency the structure does not earn. The firm sets a distribution policy at the outset covering the amount, the currency, the frequency and the source. Where the operating business cannot fund a distribution without weakening its own working capital, the policy says so and the family agrees a reserve instead. Reserves of between one and three years of expected distributions are held in the booking centre for eleven of these relationships.

The reporting perimeter is agreed in writing and it is narrower than most families expect. The firm reports on what it advises and what it holds. It does not consolidate assets it has not seen. A statement that combines verified and unverified holdings looks complete and is not, and a family that takes a decision on such a statement has been badly served. Where a family wants a consolidated view, the firm records the source and the date of every line it did not verify itself.

The whole file is reviewed once a year with the principal, and the review is a conversation rather than a document. The questions are the same each time: who signs now, who would sign next, what has changed in each jurisdiction, and what would happen if the principal were unavailable for six months. Under the Ethical Technology Charter any client may require that a decision be taken by a person. In private wealth the firm has never automated one, and the annual review is where that commitment is tested.

Published 2024-09-17 by the Private Wealth & UHNW division. Research is prepared for eligible counterparties and does not constitute advice.