Assisting a successful Hedge Fund Manager in initiating the wealth transfer process for their children

A Hedge Fund Manager contacted us, seeking an immediate solution to create investment portfolios for his family. As an EU citizen with two adult children—one residing in London and the other in Europe—he was keen to develop a comprehensive strategy to ensure their financial security. Understanding the urgency of this request, we were ready to craft a tailored strategy to fulfil these expectations

Client’s Goals

• Begin intergenerational wealth transfer
• Initially gift £16m to each child, but retain control
• To gift assets in a tax efficient manner, considering various cross border considerations.

Our Recommendations

• Introduced client to our Family Office team in Luxembourg (led by Helie de Cornois) to coordinate tax advice taking into consideration the client’s connection to Portugal, France, UK  and Italy
• Our law team provided the UK specific tax advice
• Produced a bespoke investment strategy that took into consideration the various tax nuances
• The portfolio utilises a range of asset classes (fixed income equities, alternatives and private capital) to meet the client’s objective of long-term capital growth
• Due to the tax implications, the portfolio is predominantly invested in US listed ETFs for broad market exposure in  a tax efficient structure. The team are also investing in a number of best in class active managers where it is deemed they add value
• The hedge fund manager gifted bare ownership of the capital value of the portfolio to his children, but retains the “usufruct” (right over the income generated by the portfolio) to retain an element of control over the portfolio

Outcomes (To Date)

• Compiled and reviewed tax advice from: UK, Portugal, France and Italy
• Client was able to successfully transfer wealth to children without ceding full control
• Client was also able to set the  parameters for an investment mandate that met his risk/return objectives but was also sensible from both a UK, Portugal and France and Italian tax perspective
• We now actively engage with both the Hedge Fund Manager and the Next Generation

Disclaimer: Please note, all case studies have been carefully anonymised. Although scenarios are based on real life events they have been fictionalised and are an amalgamation of client experiences. All names, locations and occupations have been replaced with pseudonyms.

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