This article has originally been published in Funds People. Read the original article here (in Spanish) and here (in Portuguese).
Elite sports, especially soccer, has become over the past few decades a highly professionalized industry that moves astronomical amounts of money. Wages and advertising contracts generate multimillion-dollar returns for young professionals whose careers last only fifteen years and whose personal and family circumstances are constantly changing (marriages, children) also due to sports opportunities which often involve changing residence. In this context, it is absolutely necessary to provide wealth planning that is adapted to these young, highly mobile, international clients, with solutions that are flexible and can easily be adapted to their circumstances at all times. It is about designing solid solutions that stand up to the highest level of public scrutiny these professionals are subject to and that, as far as possible, grant them freedom so that their sports or personal decisions are not limited by strictly tax and other revenue considerations.
Lombard International Assurance has been working with elite athletes in different sports for decades, designing life insurance contracts that are tailored to the specific needs of each client, adapting them to continue being effective if the client changes residence, from Spain to the United Kingdom or vice versa, to Latin America, Turkey, France, Italy, Germany, etc. The most common solutions are those designed to offer (1) clear, flexible estate planning, (2) protection against creditors in the future, (3) an investment strategy that is adapted to this type of client which may include alternative investments, hedge funds and private equity, (4) tax deferral with respect to the returns generated by the client’s fortune as long as they do not need to access the money, and (5) exemption from Exit Tax mechanisms in various countries without it affecting the use of special tax schemes that can be availed to such as impatriates or non-domiciled residents.
Using an internationally recognized figure such as life insurance grants flexibility, being able to know the requirements that are necessary in each jurisdiction to reach the client’s desired objectives. In addition, these solutions offer clear tax treatment, far from fiscally aggressive solutions which, as we have seen in recent years, have damaged the image of some of these professionals for the use of offshore companies and remuneration schemes for their image rights through special purpose entities.
Clients can be informed about the fiscal and legal framework that governs their life insurance in each country and can modify their contract in case of future changes of their country of residence (for example, if they decide to return to Latin America). Likewise, in the event that the client’s children or heirs live in different jurisdictions or correspond to different marriages/partners, different payments can be planned to these beneficiaries in advance. In this way, a different compensation strategy can be designed for each of the beneficiaries. In some cases, it may be advisable to take out different policies to adequately address the particular situation of a beneficiary or a specific group of beneficiaries.
Our open architecture approach also enables us, in most cases, to maintain the client’s pre-existing relationships after signing a life insurance contract. This approach not only includes custodian banks, but also investment managers, independent lawyers, and the client’s personal financial advisors. In collaboration with all of them, Lombard International Assurance can design life insurance policies that are adapted to each client’s objectives.
By Pablo Peciña
Associate Director - Wealth Planning
Lombard International Assurance
