Blended families creating demand for tax services across jurisdictions: study

An increase in blended families with members living in different tax jurisdictions is making estate planning more complex and contentious, a new study from the Society of Trust and Estate Practitioners (STEP) says.

A global survey of STEP members, sponsored by professional services firm TMF Group, found that 96% of respondents are now advising blended families, with three-quarters noting an increase in the number of blended families they work with in the past 10 years.

Tax issues resulting from differences across jurisdictions are a leading point of contention and often lead to litigation, according to three-quarters of respondents.

“The increase in complexities and the potential for conflict associated with the modern family has resulted in increasing demand for advisors and their services,” the study noted.

Tax advice tops the list for multi-jurisdictional families, STEP found, due to differing tax rules and a heightened focus on tax transparency and compliance.

Trusts are also appealing to blended families due to their flexibility and ability to respond to evolving circumstances, the survey said.

“The complexity and wide-ranging compositions of today’s families means a bespoke approach is needed, which invariably takes time and money and often requires collaboration with other professionals,” the report stated.

When it comes to multi-jurisdictional clients, “practitioners increasingly need to be aware of and knowledgeable about the varying rules in relation to domicile and tax, and differing succession and matrimonial property regimes and how these interact with each other in order to effectively advise families,” the study noted.

To avoid future issues, more than one-third of respondents stated communication within families was the most important piece of advice advisors could give to blended and multi-jurisdictional clients. This is especially the case when it comes to “early and open conversations about planning and succession.”

STEP conducted the online survey of lawyers, tax advisors, wealth managers and investment advisors in August. Sponsored by TMF Group, the study was compiled by STEP, with input from members of the STEP modern families thought leadership steering group.

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