It is almost unimaginable that a war in Europe broke out again. After all, it’s the 21st century and after the two World Wars that ravaged most of the European continent the previous century we should know better.
However, the recent high level of distress brought about life changing experiences both for civilians fleeing war and Russian oligarchs whose wealth got caught up in all encompassing economic sanctions directed against Russia in order to curb its war effort in Ukraine.
The latest treatment of highly politically influential and economically wealthy sheds some light in relation to the future developments of legal structuring and asset protection.
Today, I am sharing some tips that may help you as you set out to plan or revisit your own global wealth protection strategy:
1. Be Proactive and Start Early
In the wake of possible disaster it is important to start early and in advance. It is only then when it is possible to take an interest in solutions available to protect your assets, differentiate risks and keep your family’s and business’ assets safe.
It is late when things get out of control and you find yourself in circumstances where you are being deprived of your assets.
Some of the examples are not necessarily as extreme as war or international sanctions imposed directly at you, but also the situations when you are placed under duress and demands are made to sign off and formally hand over your assets.
2. Consider Jurisdictions that are Safe
Perhaps, if you are a politically exposed person, you will take an additional effort to look at the jurisdictions that traditionally were held to be safe, such as the UK and Switzerland.
In relation to Russian oligarchs, Members of Parliament in the UK have long argued that it was necessary to publish the list of beneficial owners of high value properties in London.
For a number of legitimate reasons, such properties are usually held through legal structures that can be more complex depending on the value of the real estate. The ultimate reason is to protect and manage the asset effectively.
The UK is already operating the Unexplained Wealth Order, which helps to tackle assets that may be criminal proceeds.
However, an unsuspecting investor might have had recently invested in Ukraine just before the war broke out or invested in Egypt or other Middle East countries just before the Arab Spring.
The likelihood of war or civil unrest needs to form a possible risk assessment when investing your assets in well known and less familiar jurisdictions.
3. Use the Right Legal Structures to Protect Your Wealth and Assets
As you seek to differentiate risks, put aside for safekeeping or invest your assets, you should always evaluate the correct legal structure for holding such assets.
For instance, offshore corporate structures and trustee arrangements can be a very good solution. Again, you will need to look into the legal set up and implications in these jurisdictions.
However, whatever ultimate jurisdiction you choose for your own sake, you will need to ensure that the jurisdiction you choose to physically keep or acquire an asset needs to be safe.
4. Consider Tax and Legislative Initiatives and Changes
It is said that it is much easier to look back and connect the dots than to do so going forward.
Similarly in this scenario, there were a number of red flags that could inform about a conflict possibly escalating in Ukraine.
In relation to the UK, the offloading of overseas assets into the property market raised a number of very serious concerns during a number of years.
The super rich, especially in the shape of Russian oligarchs, were perceived to be less and less welcome.
The latest versions of legal requirements relating to measures adopted to counter money laundering in the UK, as well as, greater tax liability for high value property ownership might have indicated the measures, yet to be implemented.
There is an ongoing global pressure to be able to pierce through asset protection mechanisms in order to reveal the beneficial owners of assets. This either through journalistic curiosity or wider campaigning by international organisations for economic transparency.
5. Monitor and Review Your Assets
Constant monitoring and review is not only required in relation to the safety of the jurisdiction, the use of the right legal structure to protect your assets, latest tax and legislative initiatives; but also in relation to the asset itself.
Is the asset still required? Does the investment still make sense in relation to the changing political and economic environment? Do I still have investments and cash deposits safe elsewhere if my favourite investing jurisdiction is not as friendly as before?
These are some of the questions that may be worthwhile asking.
What did the last couple of weeks teach us?
Sadly, the world is a highly dynamic place and changes are inevitable. Some of these changes may warn us with a number of red flags that are easy to ignore against the arguments of stability and predictability.
Asset protection, risk diversification and safety of investments are high on the agenda and are desirable outcomes.
Jurisdictions that appeared safe and stable may become highly hostile, threatening and unwelcoming very quickly.
Develop or review your own global wealth protection strategy and book a consultation with me.
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Saule Voluckyte, M.A.E.S, LL.B, FAIA
I have been working exclusively with UHNWI in Mayfair, London since January 2008. I built specialist knowledge and expertise required to serve ultra high net worth individuals investing, operating and relocating to the UK or Switzerland.
Within the industry, I am the single adviser who is able to traverse the different areas of expertise and bring a comprehensive approach across: global structuring, UK immigration, international taxation and FOREX to develop their global wealth strategy, while they build, grow and expand their wealth worldwide.
Previous experience as one of the senior advisors for the government, made me a go-to person when delicate and uncomfortable scenarios involving heads of state need to be handled with care and preserve privacy.