Private Client Services by Mercer
An insurance application to equally divide assets and pass to the next generation whilst preserving long term family harmony and business continuity.
When planning for distribution of estate, a parent may wish to leave the family business to one or more of their children. It is common for a parent to groom one child to take over their place in the family business. But what happens to the other siblings?
Family businesses face the risk of being dissolved because of disputes over inheritances following the passing of the founder. This is especially true when not all family members are actively involved in the business.
Assume Mr. XYZ, 50 years old, male, has 3 kids. He runs a family business that is worth USD15M and has other accumulated assets worth USD20M. However, only one of his children is interested in inheriting and running the family business.
Assume Mr. XYZ buys a HNW Insurance Policy with Sum Assured of USD15M for a Premium of USD5M.
Estate equalisation is a very useful application of life insurance in HNW families with more than one intended beneficiary as it allows inheritance to be properly divided equally in an optimal manner. This preserves long term family harmony and unity. For the family business, if there is one, it means business continuity for years and even generations to come.