Asset protection strategies for expats and HNWIs

High-net-worth individuals (HNWI) and expats often have complex assets spread around different regions and protecting a diverse portfolio of assets can be challenging. Without adequate protection strategies, assets can be depleted through taxation, economic instability and political uncertainty.

Asset protection strategies enable you to preserve your assets from all these risks, plus additional ones such as legal claims and divorce settlements. To have peace of mind that your assets will not be affected by these significant risks, you may want to consider some of the following asset protection strategies:

Legal structures for asset protection

You can work with wealth planners to protect your assets using legal structures such as trusts, foundations and holding companies. This removes your assets from your personal estate and places them into structures that are separated from your personal finances. They can also provide a solution to pass wealth on to your family in a more tax efficient way.

Offshore trusts

Offshore trusts allow you to transfer assets to trustees based in jurisdictions with favourable tax regimes and strong regulatory frameworks. Placing assets into offshore trusts in locations such as Jersey and the Isle of Man provides additional legal protection through strong regulations. These locations also offer numerous tax efficiencies that can help to grow your wealth while it is held in the offshore trusts. They can benefit investors who are based in less stable political climates, as they can transfer assets into a politically stable environment.

Insurance as a wealth protection tool

Taking out suitable insurance to cover high-value assets is an essential protection tool. Solutions such as life assurance wrappers can provide a tax-efficient structure for holding investments, while specialist insurance policies can protect valuable items, including luxury property, fine art and high value collections. The insurance needs for high value assets are complex, often requiring specialist cover for unique risks such as luxury assets valued much higher than standard insurance policies will cover. Ensuring that your insurance does not have inadequate limits or coverage gaps is an important element of effective asset protection.

Diversification for risk mitigation

Another way to protect your assets is to diversify the asset classes that you invest in. By investing across multiple different classes, you minimise the financial impact if one investment is affected by regulatory changes or exchange rate fluctuations, for example. Many expats and high-net-worth individuals diversify their investments across equities, bonds, property and commodities. You can also minimise risk by spreading investments over alternative geographical markets e.g. in developed markets such as the UK and US, as well as emerging markets such as India.

Nedbank Private Wealth has offices across the UK, Isle of Man, Jersey and Dubai. Our wealth planners help high-net-worth individuals and expats to protect assets, adhering to international tax laws and financial regulations. We do not offer tax advice, but we work with our clients’ other advisers, including tax professionals. Contact our team if you would like to find out more about how we can help you.

The suggestions above are based on general market principles, and some suggestions may not be appropriate for your circumstances or may not be available in your region