Lawyer Monthly Magazine - July 2019 Edition

Considering the above, it is very important that the qualification of the financial manager allows for an appropriate financial investment strategy, and that the management of market volatility and the risk inherent to each class of assets - as well as what we call the Total Balance Sheet - which is precisely how all assets (not only the financial ones) of a client’s portfolio are distributed, compares to the risk allocated to each one of them. Thus, through the adoption of specific economic concepts and principles, a practice of very high relevance in the wealth planning and management universe, which is the Asset Risk Management, is achieved. Moreover, what common legal challenges are presented when devising a suitable plan? Aspreviouslymentioned,facing the globalization of families, their assets and businesses, the greatest challenge is to achieve an equalization of the legal aspects of the multiple jurisdictions involved in each case, including the analysis of which legislation will apply to each family member and to each asset in a given time frame. This stage of the work associated with wealth planning is the one that usually requires the greatest attention, time and investment in term of costs in the whole process. Adding to the challenge above, often the difficulty that we face is for the client to feel comfortable to talk about sensitive and delicate issues, such as death and what their plans and goals for the good of the family are when they are no longer around. Although it is not a purely legal aspect, it is among the biggest challenge, because otherwise, it creates an obstacle to progress in the elaboration of a relevant part of planning. How much importance does tax structure have when managing wealth? Can you expand on common points and issues clients should be aware about, in order to devise an efficient plan? There is amisunderstanding that one should use a structure with the exclusive tax objective. The importance and relevance of these structures are associated with their integration with other aspects of planning in search of the best tax efficiency in line with operational efficiency and post-implementation planning management. On the other hand, it is clear that such structures play a very important role, because all that is generated in terms of tax savings is financial resources available for investment in other classes of assets; not only that, they can also contribute to the generation of tax deferrals, which is different from a tax reduction, in which a postponement is achieved at the moment when the respective tax is due, which in practice results in the capacity to reinvest the results before the payment of taxes (in some cases linked to the moment in which such income is effectively distributed to customers to their individual name – also known as cash effect for tax and accounting purposes), thus increasing the “lot” invested. What all clients should take into account is precisely the point I made earlier in relation to the harmonization and it during maintenance or transfer of equity phase; avoiding the need for changes in the financial and corporate management plans or liquidation of assets in unplanned periods, causing the loss of value or the lack of optimization of the gains linked to such assets. Not to say that the savings results inherent to tax optimization, within the most diverse possibilities according to the applicable laws, become available for investment in other assets contributing to the formation and growth of the family global wealth. 4. Supported by the previous benefits, an additional one, although it depends on less objective aspects and the control of the financial managers, is the growth of the wealth, mainly the portion related to financial assets or also called banking assets. “There is no objective answer or a general rule that can be applied in all cases.” LM90-17 71 Professional Excellence www. lawyer-monthly .com JUL 2019