Banks.am asked Karina Arutyunova, Director of Strategic Projects at Wilco and a specialist in family governance and succession planning, to share her insights on the topic of family wealth succession.
Challenges are universal
Capital has no fixed address, but the challenges of planning for and transferring family wealth are universal. Generational conflicts, differences in perspectives, a lack of open dialogue, and the absence of shared principles and legal mechanisms for resolving intra-family disputes can all hinder the transmission of intangible assets – values, traditions, knowledge, and family history –to future generations. Yet it is precisely an understanding of family history, mutual trust, and a clearly defined approach to the future of capital and business that can lay the foundation for long-term prosperity and family harmony.
Building this foundation is the purpose of an entire field of global practice known as family governance. Far from being an abstract concept, it is a practical system that can include family councils, family constitutions, decision-making protocols, and mechanisms for resolving conflicts. In its more comprehensive form, this infrastructure takes the shape of a family office – a professional structure designed to manage a family’s capital, investments, and broader interests as a unified whole. At Wilco, we work both with families that are just beginning to build such an infrastructure, helping them establish the right principles from the outset, and with established family offices that require expertise on specific issues related to governance, management, and succession.
Effective succession planning is not just a private matter
In the West, family governance has a history spanning several centuries, whereas in our region, the practice of treating the family as a partnership – with governance structures, committees, and formal rules – is still in its early stages.
It is important to recognize that this is not simply a matter concerning the fate of individual families. How the first generation of entrepreneurs transfers its wealth will largely determine whether that capital remains invested in the region’s economy or gradually leaves it. Sound succession planning is therefore not merely a private matter; when substantial amounts of capital are involved, the way wealth is transferred can have broader implications for the economy of an entire country or region.
Understanding the purpose
There is no single legal instrument capable of resolving every issue, operating autonomously, and remaining effective without periodic review. The first step in estate planning is to clearly define its purpose: what the testator wants to happen after their passing – to their assets and to their family.
For example, a will should clearly specify which assets and businesses are to be transferred not directly to the heirs, but to a specially established structure, such as a fund or trust. It should define who will manage those assets and determine to whom, in what amounts, and under what conditions distributions will be made to the heirs. This allows to protect not only the assets but also the heirs themselves—from their young age, their inexperience in business matters, and the advice of people with “good intentions.”
At the same time, the choice of a specific instrument is largely determined by the jurisdiction in which the capital is held. In CIS countries, for example, one of the most common mechanisms is the fund.
Planning tools
As the saying goes, “Truth is the daughter of time.” Only time can prove whether a decision is the proper one. Life is diverse and highly unpredictable; people today cannot completely protect their families, but they have access to planning tools that can significantly reduce risks compared to their predecessors.
Uncertainty or predictability – the choice is ours.
Read the full feature on Banks.am’s website.
