John Caudwell is thinking a lot about life and death these days.
The 67-year-old billionaire philanthropist said he intends to leave most of his wealth to charity, making him aware of the need to plan carefully for how his fortune will be used beyond his own lifetime.
“Succession planning is vital,” said Mr Caudwell, who sold UK mobile phone retailer Phones4u for £1.5 billion ($1.9bn) in 2006. “I just need to leave enough money to my beneficiaries for me to be happy that I’ve looked after them, and the rest all goes to charity.”
Since the pandemic began, the world’s rich have been making the most of more time at home and, in many cases, reduced asset values to outline the future of their wealth. Billionaires will transfer more than $2 trillion within the next two decades, according to research by UBS Group and PwC, and the virus is helping to accelerate that shift.
Succession planning is vital
“We’re having a big focus across the teams in EMEA to support clients around succession and estate planning,” said Jeremy Franks, head of wealth planning and advisory for Europe, Middle East and Africa at HSBC’s private bank. “It’s surprising how many wealthy individuals don’t have an up-to-date will.”
Succession plans are vital to preserving fortunes, but only about a third of family offices - the investment firms of the rich - had written blueprints by last year detailing how that would be done, according to research by Campden Wealth and UBS.
Sharp declines in global equities in March prompted some of the world’s wealthy to pass along publicly traded assets to descendants, with the lower values reducing capital gains and potential inheritance taxes.
While those markets have since rebounded, prices of illiquid assets favoured by the wealthy - such as real estate - are expected to slump in 2020, creating further opportunities to transfer wealth. Meantime, the World Health Organisation warned last month that the worst of the pandemic is still to come, and flare-ups are frequent even in countries where the virus appeared contained.
The lockdown “has prompted many of our clients to reflect on their succession planning in a wider sense”, said Philippe De Salis, a partner at multifamily office Stonehage Fleming. “It has acted as a catalyst.”
Some wealthy entrepreneurs are drafting wills for the first time, and lawmakers in nations such as the US, Australia and Canada have relaxed rules during the pandemic to allow electronic signatures for the documents. About two-thirds of the world’s 500 richest people have self-made fortunes, with most age 40 or older, according to the Bloomberg Billionaires Index.
“We’ve seen more focus on some of the bigger family issues, particularly with first-generation wealth,” said James Penny, head of Barclays’ UK International Private Bank. “Advice around the next generation and passing on wealth is something we’re going to focus on quite a lot more because of the unexpected events of this year.”
A handful of billionaire families aren’t letting the pandemic deter existing succession plans.
Wu Yajun, 56, one of China’s richest women, put her daughter in charge of their family office this year after transferring a stake in the property empire that made their fortune. Mexico’s Juan Francisco Beckmann, 80, recently handed over control of a New York City condominium to his daughter after giving her a stake last year in Becle SAB.
Mr Beckmann’s son is Becle’s chief executive, but other wealthy clans may struggle to entice younger generations to lead the family business amid rapidly shifting attitudes toward such things as climate change and income inequality. Most potential successors to family businesses have ambitions of starting their own firms after finishing their studies, according to research by EY and Switzerland’s University of St. Gallen.
We've seen more focus on some of the bigger family issues, particularly with first-generation wealth
“We’re now seeing families try to transfer businesses to a younger generation that is happier to own rather than operate, leaving them free to pursue different life goals,” said Ajay Wiltshire, a general counsel at accountancy and fiduciary firm Saffery Champness.
Philanthropy is often a major part of succession plans for the wealthy, as well. More than 200 members of the world’s rich have signed the Giving Pledge established by Bill Gates and Warren Buffett with promises to donate most of their money.
Mr Caudwell, a pledge signatory, said he plans to give away about 70 per cent of his fortune to charity, though that amount could increase. He said he doesn’t believe in bestowing huge windfalls to his offspring, but is relying on them to continue his charitable work after he’s gone.
“There’ll be a whole range of requirements in the way that they operate to make sure that money goes the furthest it possibly can,” he said. “That’s the way I operate, and that’s how I want them to operate.”
THE BIO
Mr Al Qassimi is 37 and lives in Dubai
He is a keen drummer and loves gardening
His favourite way to unwind is spending time with his two children and cooking
UAE currency: the story behind the money in your pockets
Mohammed bin Zayed Majlis
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
SPEC%20SHEET%3A%20APPLE%20M3%20MACBOOK%20AIR%20(13%22)
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Farage on Muslim Brotherhood
Nigel Farage told Reform's annual conference that the party will proscribe the Muslim Brotherhood if he becomes Prime Minister.
"We will stop dangerous organisations with links to terrorism operating in our country," he said. "Quite why we've been so gutless about this – both Labour and Conservative – I don't know.
“All across the Middle East, countries have banned and proscribed the Muslim Brotherhood as a dangerous organisation. We will do the very same.”
It is 10 years since a ground-breaking report into the Muslim Brotherhood by Sir John Jenkins.
Among the former diplomat's findings was an assessment that “the use of extreme violence in the pursuit of the perfect Islamic society” has “never been institutionally disowned” by the movement.
The prime minister at the time, David Cameron, who commissioned the report, said membership or association with the Muslim Brotherhood was a "possible indicator of extremism" but it would not be banned.
COMPANY%20PROFILE
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More from Rashmee Roshan Lall
Day 4, Abu Dhabi Test: At a glance
Moment of the day Not much was expected – on Sunday or ever – of Hasan Ali as a batsman. And yet he lit up the late overs of the Pakistan innings with a happy cameo of 29 from 25 balls. The highlight was when he launched a six right on top of the netting above the Pakistan players’ viewing area. He was out next ball.
Stat of the day – 1,358 There were 1,358 days between Haris Sohail’s previous first-class match and his Test debut for Pakistan. The lack of practice in the multi-day format did not show, though, as the left-hander made an assured half-century to guide his side through a potentially damaging collapse.
The verdict As is the fashion of Test matches in this country, the draw feels like a dead-cert, before a clatter of wickets on the fourth afternoon puts either side on red alert. With Yasir Shah finding prodigious turn now, Pakistan will be confident of bowling Sri Lanka out. Whether they have enough time to do so and chase the runs required remains to be seen.
Killing of Qassem Suleimani
UAE currency: the story behind the money in your pockets
The biog
Siblings: five brothers and one sister
Education: Bachelors in Political Science at the University of Minnesota
Interests: Swimming, tennis and the gym
Favourite place: UAE
Favourite packet food on the trip: pasta primavera
What he did to pass the time during the trip: listen to audio books
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
