W & Cie SA Family Office & Wealth Solutions

Swiss Arab Wealth Management Forum 2013 10 April 2013 1

The importance of Wealth and Succession Planning in the Current Difficult Economic Environment for the MENA Region

Etienne MouthonManaging Partner

W&Cie

W & Cie SAFamily Office & Wealth Solutions

The Importance of Wealth and Succession Planning in the Current Economic Environment for the MENA Region

Swiss-Arab Wealth Management Forum 2013 Geneva, April 10,2013

Recent Developments

› The world has become more transparent and is moving towards the end of bank secrecy.

› Some say it is the end of Switzerland as a major financial center.› But Switzerland has much more to offer:

› Confidentiality of professional institutions regardless of bank secrecy› Established private banking history

› Solidity and financial strength of its banks and institutions

› Political stability

› Global and sophisticated services designed to answer all Clients’ objectives and needs

› In that context, structuring of investments and estate planning are essential services that Swiss Financial Institutions offer or should offer in order to continue attracting new MENA region Clients and retaining existing ones.


Why Your Clients Should Consider Planning

› Once wealth has been created, it needs protection and enhancement in all regions in general including the MENA region.

› Private banks have to identify opportunities with professional advisors that can help Clients meet their wealth planning objectives. Here are 4 good indicators that may indicate that a Client might need wealth planning advice:

› Is Client concerned about political stability?› Is Client concerned with ensuring that assets are distributed according to

his wishes? is he concerned about avoiding probate problems (often long, complicated and public procedure)?

› Is he concerned that his business may break up after his lifetime?› Are there assets or investments personally owned by the Client in high tax

jurisdictions? › Are there specific family issues?

4Swiss Arab Wealth Management Forum 2013 10 April 2013

Threats

›These prompts will help identify a pattern of more general needs that are derived from certain threats.

› Political risk

› Forced succession laws

› Divorce

› Disability

› Claims by business partners

› Delays caused by probate

› Inability of children or family members to manage the wealth


So What Happens If Your Client…

› Holds his assets in his single name

› Holds his assets in joint name with his spouse

› Gives a POA to his eldest son

› Has a will

› Leaves everything to his favorite son in a will

› Puts everything in a company

› Holds US securities or real estate


Wealth Planning Solutions

›Private companies

›Trusts

›Private Funds

›Securitization vehicles

›Life Insurance


Wealth Planning Solutions: Trusts

› Historically and to our days, the only efficient succession planning tool has been Trusts.

› Some advantages that a Trust can offer:

› Efficient succession planning

› Consolidation

› Confidentiality

› Asset protection

› In some cases, flexibility to retain some control over the structure and the underlying assets by the Client


Wealth Planning Solutions: Private Funds

› Special purpose vehicles offering flexibility and simplified regulation for family members wishing to invest together a pool of assets, whilst keeping separate ownership through the issuance of units.

› Advantages Private Funds may offer:› Ownership and control

› Permit involvement and control of wealth› Flexibility of ownership-units can be held in personal name or in a

structure (trust/foundation)› Ability to access funds remains in the control of the family

› Efficiency› Collective investment opportunities› One legal structure can accommodate a number of custodians but

provide individual unit holder statement› Consolidated reporting of wealth


Wealth Planning Tools: Securitization Vehicles

› «Securitization» means a transaction by which assets and associated risks are contributed to a dedicated compartment of a securitization vehicle and the owners receive in exchange securities that can be shares or debt instruments.

› The compartments are completely segregated from each other (bankruptcy remote) and have their own bank accounts and financial accounting.

› The rights of the owners and/or debt or bondholders are limited to the assets of the compartment.

› The advantages of the Securitization vehicle are the following:› Very flexible and not regulated› Much cheaper than investment funds› Neutral from a tax perspective


Wealth Planning Solutions: Life Insurance

› There are many different wealth planning needs for which insurance based solutions may be an appropriate answer.

2 types of insurance solutions: › Private Placement Life Insurance (“PPLI” or wrappers)

› Universal Life Insurance


Structuring Servicesfor the Middle East

› Our experience in the Middle East shows that a very large number of High Net Worth Individuals are more and more interested in structuring services for asset protection and estate planning purposes.

› In addition, such Clients tend to like control over the structures and some very efficient solutions that we can provide will offer effective planning together with flexibility.

› Succession planning can be tailored to adapt to local considerations such as Sharia laws.

› Although such Clients are in general not concerned by taxation, their investment in the various jurisdictions are and will required careful planning.


The Interest of Your Clients is Also Your Interest

› Fiduciary structures are usually established for long term purposes. There is good evidence that once a structure is involved, Client relationship becomes very sticky. A study by the Boston Consulting Group found that if a fiduciary structure is in place, the private banking relationship will, on average, last 3 times longer.

› Our services compliment and add value to the private bank’s other services: we provide the wealth structuring to the holding of the assets and therefore add value to your offering.


Thank you


W & Cie SA Family Office & Wealth Solutions

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