Executive summary

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Succession: a crucial wealth challenge 3 of 9 Introduction 1 of 9

Residents of the United States, please read this important information before proceeding

Our survey finds that across the world, 34% of the wealthy are either ambivalent or do not trust their children and stepchildren to protect their inheritance. There are trust issues in all the major regions; generally those in the developed economies trust their children less than in emerging countries.

Wealth and happiness: Our survey confirms the positive relationship between income and one measure of happiness: financial happiness. We find the same steady, increasing relationship as income levels rise. However, our research finds that the source of wealth is important; there is a stronger relationship between wealth and happiness when it is earned, rather than inherited.

Wealth can beget family conflict: Some 40% of high net worth individuals have had personal experiences of family wealth leading to conflicts. We found that those with more wealth and those who have inherited their wealth are more likely to have experienced such family conflicts.

The importance the wealthy place on succession planning does not increase with age: The perceived importance of succession planning by high net worth individuals does not increase on a straight-line basis with age. Instead, it is most important in the earliest and the latest age categories. Our analysis shows that those under 54 think about this after marriage, and the purchase of property and inheritance, whilst those over 54 think about this in advance of inheritance and the sale of a business. After retirement, high net worth individuals are generally less concerned about succession, as they enjoy a stage in life where they are able to place more emphasis on their own needs.

Wills and disinheritance: Our research shows that 23% of high net worth respondents around the world do not have a will. This is a surprisingly high number, and unless an individual lives in a jurisdiction that has explicit wealth transfer law, could present difficulties when it comes to transferring wealth. Some 69% of wealthy individuals have revised their wills at least once and 26% have revised them three or more times. On the thorny issue of disinheritance, we find that as many as 10% of the wealthy have disinherited someone or cut a family member out of their wills. We also look at the use of trusts and insurance as alternative planning tools.

The gender gap: Our research finds that high net worth women say they place less importance on succession planning than men, with just 49% of women believing it to be important compared with 60% of men. Another important finding reveals that whilst there is a strong tendency towards dividing assets equally amongst children — some 70% preferring this approach — there are exceptions where gender or birth order assume more importance.

Trust is a key element: Our survey finds that across the world, 34% of the wealthy are either ambivalent or do not trust their children and stepchildren to protect their inheritance. Generally the wealthy surveyed in developed economies appear to trust their children less to protect wealth than the high net worth individuals surveyed in emerging countries. Additionally, at a family level, we see that individuals in their first marriage tend to trust their children more. Generally, those with stepchildren trust their children less.

Words of wisdom: Asked about future challenges, the number one selection for 56% of the wealthy is economic turbulence. This is consistently important across all of the surveyed regions, and is a reflection of the scale and unrelenting economic problems we face. When it comes to what subjects the next generation should study, the wealthy are adamant that the next generation should focus on technical subjects like IT/technology, mathematics and science. Their top choice of language to learn is Chinese, specifically Mandarin.