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Succession planning is not just a consideration, it’s a cornerstone of long-term wealth strategy.
The ability to establish family offices, trusts and other estate planning vehicles is a critical factor in decision-making. When it comes to choosing a location, the ability to pass on an estate to the next generation efficiently is critical. Real estate plays a central role in this process as a strategic tool for wealth transfer. It’s not just a financial asset but a practical one too, as property assets can be acquired in the names of children, often with parents acting as co-signers. In some cases, clients are already thinking about inheritance tax implications before the property is even purchased. This proactive approach reflects a broader shift: real estate is no longer just about ownership, it’s about legacy.
For example, families can create Special Purpose Vehicles (SPVs) to hold property, allowing ownership to be passed on while retaining usage rights. This structure is particularly attractive in a country with higher levels of inheritance tax. While the age of the owner and the property itself can influence the strategy, the goal remains the same: to pass on assets in a tax-efficient manner. Multigenerational ownership is also common, where planning for the future starts from day one.
Succession planning has always been a priority, but the intensity of focus has increased. Tax lawyers and global private client law firms are in high demand, and there is increased activity in commercial real estate, which often escapes inheritance tax altogether. Hotels, offices and other commercial assets are being acquired through company structures, which are once again gaining popularity. The additional costs of company ownership are now seen as preferable to the tax burden of personal ownership.
Exposure to inheritance tax is a major factor in where more mature high net worth individuals make themselves a resident. And so, the global reach of the United Kingdom’s inheritance tax system weighs against its strong lifestyle offering. The shifting fiscal landscape of recent times have had a cooling effect on its appeal among the older demographic. By comparison, jurisdictions such as the United States, where thresholds are far higher, or the Middle East, where it is virtually non-existent, rank more highly from this perspective.
Family offices are at the heart of this evolution. Their numbers have surged from around 6130 in 2019 to over 8000 today, with projections pointing to more than 10,700 by 2030, according to analysis by Deloitte. Assets under management are expected to rise from US$3.1 trillion to US$5.4 trillion in the same period.
Over half of the top 100 family offices by assets under management are clustered in the United States. However, this is more a testament to wealth generation through investments and company growth, as well as the wealth management structures necessary in the United States, rather than the tax environment, which is still relatively favourable. In second place, with seven of the top 100 family offices, is the United Kingdom, followed by Denmark, Singapore and Germany – with four each in the top 100.
New York City and Los Angeles rank in the top five destinations for favourable legacy environments. New York City comes first in the ranking thanks to its concentration of family offices in the top 100 and lack of inheritance tax, although there is an estate tax to consider. Los Angeles finds itself in the top five for similar reasons.
The United States Federal Government calculates estate taxes on the value of the estate before the assets are distributed, rather than taxing the beneficiaries via inheritance tax – making the use of trusts increasingly common in the United States for estates over the threshold of $13.9 million. However, the looming reduction of the estate tax exemption in 2026 has triggered a wave of restructuring. Families are accelerating gifting, establishing Spousal Lifetime Access Trusts (SLATs), and employing valuation discount strategies to mitigate exposure.
Singapore, Dubai and Monaco each also feature in the top five locations for legacy and deliver favourable tax environments, with no inheritance, capital gains or wealth taxes. Singapore only has a 24% income tax.
Succession planning is not a trend, it’s a necessity. Real estate, while evolving, remains a powerful tool in the preservation and transfer of wealth.