The importance of wealth planning for the globally mobile 

Sep 6, 2022 | Wealth Planning

The importance of wealth planning for the globally mobile 

By Yash Naidoo, International Business Development Manager, Nedbank Private Wealth 

It was Benjamin Franklin who allegedly said, “If you fail to plan, you are planning to fail”, and this is perhaps a good analogy when it comes to considering a relocation or emigration. With the world now regarded as a global village, many more people are globally mobile. Some families make a point of having their children educated abroad or find opportunities to relocate for better career prospects.

Whatever the reason to emigrate or temporarily relocate, thinking ahead is of utmost importance. Possibly the most daunting task is navigating the financial minefield of multiple currencies, and tax jurisdictions, while ensuring the security of your wealth. 

Transferring your assets to your ultimate destination may not always be the right choice and, in many cases, it could actually have a negative impact on your financial wellbeing or erode family wealth. In these instances, using an international financial centre like the Isle of Man, in particular, would be of significant benefit. 

The Isle of Man is a self-governing British crown dependency with an excellent track record of political stability and more than 50 years of experience as an international financial centre. It is well positioned for South Africans given the minimal time difference and its geographical location. As an island nation situated in the Irish Sea, half way between Great Britain and Ireland, it has close connections to the UK and the rest of the world.

A good tax-neutral jurisdiction provides a safe and secure destination for wealth preservation, growth and, eventually, transition of accumulated wealth to your heirs or, perhaps, opportunities for lasting philanthropic desires. With its exceptional service providers, the Isle of Man can provide a tax-efficient location for managing the family wealth, wherever you are based in the world. 

Once a decision to relocate has been made, wealth planning should be the start of the journey. The Island offers qualified and experienced professionals who can work with you and discuss your plans and goals for the move. These goals should be time based and specific to ensure a smooth transition and clear prioritisation. A list of typical goals can often help you to focus on what is most important when making a wealth plan, for example:

Lastly, discussions around succession and legacy planning are beneficial. In some circumstances, setting up trusts to manage the family wealth should be considered. It helps that the Isle of Man hosts a number of providers that can address this need too. 

The cornerstone of a good wealth plan is a detailed cash-flow analysis. This process is very useful as identifying the cash flow that your wealth can provide could assist with securing finance for your first home in your new country. It is a truly powerful financial tool as your existing pot of wealth could be maintained while allowing for expansion of the balance sheet. It can also ensure that long-term savings are not totally invested in a property that may not produce an income. This solution ensures diversification of the family wealth while keeping most of the funds intact. It helps enormously as entering a new country comes with the added complication of no credit history. This is where the right partner and good advice come together – provided it’s done well in advance of your move. 

As time goes on, families tend to become more widely dispersed. In our experience, children end up studying in other countries or the initial plan evolves as work opportunities take family members to different destinations. In these situations, having the family wealth in a tax-neutral hub like the Isle of Man really benefits everyone, as your assets do not necessarily need to move each time family members do. 

I have recently relocated to the Isle of Man with my family and undertaken this very process. It would seem that Franklin’s words do hold true but perhaps the nuance, in the context of emigration planning, is that you may not really fail but rather experience a more arduous task and risk expensive mistakes without a proper plan. Relocating is more than just moving your household goods; it’s being pragmatic about your wealth and planning the economics of your adventure ahead.