Practical Applications for Asset Protection & Succession Planning

For high-net-worth individuals (HNIs) and entrepreneurial families, wealth structures must do more than simply hold assets: they must safeguard value across borders, optimize taxation, protect privacy, and ensure smooth intergenerational transfer. The “Magic Five” tools – Fund Solutions, Securitization, Holding Companies, Life Insurance Wrappers, and Foundations/Trusts – are at the core of a sophisticated wealth strategy. Each tool addresses a distinct function, but two or more tools can be integrated into a tailored structure.

How can a bespoke investment fund be used for managing my wealth?

Liquidity and transferability

A single-investor or family fund can be established to hold a broad range of assets, including equities, alternative investments, private equity, and real estate, within a regulated fund vehicle. Instead of owning these assets directly, the investor holds fund units that represent their proportional interest in the portfolio.

Transferring assets into a fund improves liquidity and succession planning in several ways. Complex, cross-border holdings are consolidated into a standardized structure with fungible, divisible units. Such units can be readily allocated or transferred to heirs or family members, facilitating orderly inheritance plans.

The fund’s Net Asset Value (NAV) provides transparent, market-based valuations. This enables the sale or gifting of units without disputes over asset pricing.

Finally, fund units can be pledged as collateral to secure financing or leveraged private credit facilities, offering flexibility not easily obtained with direct ownership of fragmented assets.

Flexibility

A bespoke fund can be structured to meet the investor’s individual requirements in terms of jurisdiction, governance, management, and investment scope.

Several internationally recognized financial center, such as Luxembourg, Liechtenstein, Malta, or the Cayman Islands, offer fund regimes for single-investor or family-tailored vehicles. Jurisdictional choice often reflects tax, regulatory, or operational needs.

Such funds can be either externally managed by a licensed asset manager of the investor’s choice or, in certain circumstances be self-managed by a board appointed by the investor.

Regulated fund vehicles provide access to investment opportunities and financial products (such as institutional share classes of funds, private deals, co-investments, and lending facilities) typically unavailable to natural persons.

Taxation

The tax treatment of a bespoke fund depends primarily on the jurisdiction of the fund, of the investor and of the underlying assets. Fund structures, when properly implemented, offer either tax neutrality or tax benefits, such as deferral of taxation until distribution or sale, shielding of certain asset categories from inheritance or estate taxes etc.

Special consideration must be given to withholding taxes arising from underlying investments (such as dividends or interest from international holdings). Effective planning and possible use of double tax treaties can help mitigate this impact.

What are the advantages and risks connected to Actively Managed Certificates?

Actively Managed Certificates (AMCs) are structured investment products that are functionally comparable to investment funds but are typically more flexible, faster to establish, and subject to lighter regulatory requirements. AMCs can be issued under existing securitization frameworks and listed on regulated exchanges, making them attractive to high-net-worth individuals (HNIs) seeking agility in wealth structuring.

To create an AMC, the investor pools assets, such as receivables, loans, intellectual property rights, or private equity participations, into a Special Purpose Vehicle (SPV). This SPV issues securities (the AMC certificates or notes), which are then linked to the investment strategy defined by the investor or their asset manager.

An AMC offers several benefits. The SPV provides legal segregation of the contributed assets, shielding them from claims by outside creditors. The investor can raise capital or transfer exposure without selling or diluting ownership of the underlying assets. The securities issued (AMCs) are recognized as regulated instruments, making them tradable and transferable across borders. Creation of an AMC results in a conversion of illiquid holdings into regulated, transferable instruments while maintaining asset protection. The certificates or notes can be pledged as collateral for Lombard loans, providing fast, flexible borrowing capacity, even against previously illiquid holdings.

Unlike regulated funds, AMCs can usually be set up within weeks, not months. They can replicate virtually any asset allocation or bespoke investment strategy, giving families direct control over asset management. AMCs can be liquidated relatively quickly if circumstances change or if the family requires a restructuring of assets. This flexibility makes AMCs particularly appealing for entrepreneurial families and dynamic investors.

Securitization /AMC is typically tax neutral. Tax leakage should be avoided by structuring the transaction to allow for a tax neutral transfer of assets to the SPV. In order to enhance after-tax returns, withholding taxes on payments from the underlying assets should be avoided or reduced to the minimum. Depending on the jurisdiction of the investor, AMCs can provide for a tax deferral as long as there is no realization event.

Can I use a simple structure instead, such as a (holding) company?

An investment holding company may be a simple and elegant solution for investors, in particular ones with entrepreneurial activities. An investor can bundle assets, including operational businesses, real estate and portfolio investments in one vehicle. This creates a legal firewall and allows consolidated management. An asset manager may be mandated with managing the portfolio.

A holding or managed account enables consolidation of diverse investments, such as shares, real estate, and alternative assets, within a single structure.

Managing disparate assets through a holding or managed account significantly reduces administrative burden and complexity. This allows for streamlined portfolio monitoring, consolidated performance tracking, and better control over asset allocation and risk. Centralized control facilitates easier rebalancing, reinvestment, and succession planning.

A holding company is a very flexible tool for purposes of succession planning. Thanks to the various forms of capital participation, ownership in the holding company can be divided into voting shares (control) and non-voting shares (economic rights). This allows for a flexible governance allowing senior family members to retain decision-making authority through voting shares, while the younger generation participates in economic growth via non-voting shares. Family charters, shareholder agreements, and transfer restrictions can formalize decision rights and transfer schedules, ensuring an orderly and conflict-minimized generational shift.

Finally, a holding company provides for tax benefits in many jurisdictions, for example do the participation exemption at the company level, which exempts qualifying dividends and capital gains on participations from corporate income tax. This allows the holding to receive distributions from subsidiaries or portfolio companies with minimal tax leakage. At the same time dividends from qualifying participations are usually subject to a lower tax rate at the investor level.

How can a life insurance be used as a wealth planning tool?

Life insurance is one of the most versatile and powerful tools for high-net-worth individuals when planning the transfer, protection, and structuring of wealth. Beyond its protective function, insurance contracts can be tailored to serve as tax-efficient and internationally compliant estate-planning instruments.

A well-structured life insurance policy guarantees the transfer of a lump sum to designated beneficiaries, bypassing complex probate or inheritance procedures. This ensures speed, confidentiality, and certainty in the wealth transfer process. Policies are also widely used to equalize inheritances: for example, if one heir takes over the family business while others do not, the insurance payout can balance entitlements in a fair and tax-efficient manner.

Certain life insurance contracts allow various assets to be placed inside the contract rather than held directly. This separates them from the policyholder’s personal balance sheet, streamlining ownership and potentially reducing the size of the taxable estate. For internationally mobile families, this provides clarity when relocating to jurisdictions with divergent inheritance and wealth tax rules.

Life insurance contracts can be designed to pay benefits directly to heirs outside the taxable estate. This “carving out” feature can significantly reduce inheritance tax liability in many jurisdictions, while still ensuring controlled and compliant transfer of assets. Leading financial centers such as Luxembourg, Liechtenstein, Malta, and the Cayman Islands offer robust cross-border life insurance solutions that align with international mobility and changing residence patterns.

Despite their complexity, cross-border life insurance policies can usually be established within two to twelve weeks, depending on portfolio size and regulatory requirements. Once in place, they combine professional asset management with long-term estate planning efficiency.

I would like to use a trust structure. Will such structure work for wealth planning purposes?

Foundations and trusts are among the most established and effective instruments for succession planning, allowing families to preserve and transmit wealth across generations in a structured and controlled manner. By transferring assets into such a vehicle, the founder or settlor ensures that family wealth is centralized, professionally managed, and safeguarded against fragmentation. Governance rules, investment principles, and detailed mechanisms for distribution can be defined in advance and adapted to reflect the family’s values, long-term objectives, or evolving circumstances. Depending on the jurisdiction and form chosen, these structures may exist indefinitely or over multiple generations, providing stability for complex family situations.

One of their greatest strengths lies in their ability to address delicate family needs. A foundation or trust can earmark funds for education or healthcare, guarantee lifelong support for heirs with disabilities, or ensure that wealth is passed on only once beneficiaries attain a particular age or milestone, such as completing university studies, marriage, or readiness to assume responsibility in the family business. In this way, they function not only as technical instruments of estate planning but as vehicles for transmitting values and protecting vulnerable members of the family.

From a cross-border planning perspective, foundations and trusts are particularly valuable. Proper structuring may remove assets from the scope of local inheritance taxes, thereby shielding part of the family fortune from estate duties. Equally important, these structures are legally separate from the founder’s personal estate, providing protection from forced heirship rules in civil law countries as well as from potential claims by creditors. For internationally mobile families or founders relocating to different jurisdictions, they offer continuity and predictability where tax and succession laws may otherwise diverge significantly.

Jurisdictions such as Liechtenstein, Luxembourg, Malta, and the Cayman Islands have established stable frameworks for the use of foundations and trusts, each enjoying strong international recognition. Depending on governance complexity and regulatory environment, set-up times will generally range from two weeks to three months. If implemented correctly, foundations and trusts can be highly tax-efficient: the structure itself usually bears no ongoing taxation, with liability arising only when beneficiaries receive distributions from discretionary and irrevocable vehicles. In all cases, the treatment of inheritance and gift taxes requires detailed evaluation, since tax consequences are heavily influenced by the residence of the founder and beneficiaries. With the right planning, however, foundations and trusts remain one of the most powerful instruments for combining asset protection, tax efficiency, and orderly intergenerational wealth transfer.

At LINDEMANNLAW, we advise high-net-worth individuals and entrepreneurial families on the legal, tax, and financial aspects of the “Magic Five” tools in wealth management. If you are considering one of these instruments or would like to understand how they can be combined for your personal situation, our experienced attorneys are here to help.

Contact us today to arrange a consultation and receive tailored advice for your wealth management and succession planning needs.