Legacy or Inheritance? Defining What a Family Is Really Passing On
Most succession planning starts with the assets: who receives what, through which structure, at what tax cost. Those questions matter, but they are the second half of the job. The first is deciding what the family is actually trying to pass on. An inheritance is property that changes hands. A legacy is the capability, relationships and sense of purpose that allow the next generation to hold that property well. Families that plan only for the first often find that the second does not arrive on its own.
Two words that are often used as one
In everyday language, "inheritance" and "legacy" are used almost interchangeably. In planning, it helps to separate them.
An inheritance is what passes on a death or a gift: shares, property, portfolios, cash, perhaps a business. It can be counted, valued, documented and taxed. Lawyers, notaries, trustees and tax advisers are well equipped to deal with it.
A legacy is harder to list. It includes the reasons the wealth was built and what the family wants it to achieve; the skills needed to own and oversee it; the relationships with advisers, banks, partners and employees; the family's reputation; and the ability of family members to make decisions together. None of these passes automatically under a will or a share transfer. They have to be built deliberately, usually over years, and usually while the founder is still active.
The distinction matters because the two can diverge. A family can transfer every asset efficiently and still lose most of what made those assets valuable: the judgement that selected them, the trust that held the family together around them, and the reputation that made banks and partners willing to deal with it.
The scale of what is about to move
The question is not abstract. In its Global Wealth Report 2025, published in June 2025, UBS estimated that more than USD 83 trillion is expected to be transferred over the next 20 to 25 years. Of that, about USD 9 trillion is expected to move horizontally, between spouses, and USD 74 trillion between generations.
Preparation, however, lags behind. The UBS Global Family Office Report 2025, based on a survey of 317 single family offices in more than 30 markets, found that just over half (53%) had wealth succession plans in place for family members. Among those without plans, many beneficial owners believed they still had plenty of time. Just over a fifth (21%) said the beneficial owners had not yet decided how to divide their wealth. Only 26% consulted the next generation about the succession plan from the outset, and 43% saw preparing the next generation to take on wealth responsibly as a major challenge.
The same report found that the most frequently cited challenge for families that did have a plan was ensuring the transfer happens in the most tax-efficient way, mentioned by almost two thirds (64%). Tax efficiency is a legitimate aim. But when it dominates the conversation, the harder questions about readiness, roles and purpose are easily postponed.
Why assets alone rarely carry a family forward
Many cultures have a proverb about wealth disappearing within three generations. Whatever the precise numbers, experienced advisers tend to agree on the usual causes, and few of them are technical. Heirs who were never prepared for ownership. Siblings who disagree and have no agreed way of resolving it. A founder whose knowledge of the business, the advisers and the structure was never written down. A family that knows what it owns but not why.
Survey data on family businesses points to the same gaps. PwC's Global Family Business Survey 2023, which polled 2,043 family business leaders in 82 countries, found that 85% considered trust between family members essential. Yet only 30% said they had a family constitution or protocols in place, only 19% had a conflict-resolution mechanism, and only 50% had a shareholders' agreement. One in four reported a trust gap between the current and the next generation.
Those findings describe family businesses rather than every wealthy family, but the lesson carries over. Families value cohesion highly and invest relatively little in the structures that protect it.
Four things a family passes on
A useful way to frame succession is to list what the family intends to transfer, in four layers.
1. Assets. The balance sheet: operating businesses, investments, real estate, cash and personal assets, together with the entities and documents through which they are held. This layer is the subject of most planning, and rightly so. Clear ownership, valid documents and an orderly transfer are the foundation.
2. Capability. The knowledge and skills needed to own the assets well: reading financial statements, understanding the structure, working with advisers, taking decisions as an owner rather than a manager. Capability does not have to mean running the business. It does mean being able to oversee those who do.
3. Relationships and reputation. The family's standing with banks, partners, employees and the communities in which it operates. Much of it is personal to the founder. A relationship manager who has known the founder for twenty years will not automatically extend the same confidence to an heir they have never met, and a bank's due diligence will ask the next generation the same questions about Source of Wealth that it once asked the founder.
4. Values and purpose. Why the wealth exists and what it is for. Some families want to preserve a business across generations; others want to fund each member's independence, support education and enterprise, or dedicate part of their wealth to philanthropy. There is no right answer, but there should be an agreed one. Without it, every later decision becomes a negotiation from first principles.
The first layer can be transferred on a single day. The other three take years, and they are the ones that determine whether the first survives.
Questions to answer before choosing a structure
Wills, trusts, foundations, holding companies and shareholder agreements are tools. They work best when the family already knows what it wants them to do. Before choosing among them, it helps to answer some plain questions:
What do we want this wealth to make possible for the next generation, and what do we not want it to do?
Do we want to keep certain assets, such as the family business or a family home, together over the long term, or is each heir free to go their own way?
Who in the next generation wants to be involved, and in what role: owner, director, manager, or simply a well-informed beneficiary?
How will the family take decisions together, and how will disagreements be resolved?
What would happen tomorrow if the founder were suddenly unavailable? Who knows where the documents are and whom to call?
How will the family's story and Source of Wealth be documented, so that heirs can answer the questions banks and providers will ask them?
The answers will shape the legal and tax work that follows, which should always be carried out with qualified advisers in each relevant jurisdiction. They will also reveal how much of the plan has nothing to do with legal documents at all.
An illustration
The following example is fictional. Names and details are invented and any resemblance to real persons is coincidental.
Elena Varga built a precision-engineering group over thirty years and now holds it alongside a property portfolio and a liquid investment portfolio. Her three adult children live in three different countries. Her advisers have prepared a technically sound plan: holding structures, updated wills and a tax analysis in each relevant jurisdiction.
Before signing, Elena asks a different question: what would each of her children actually do on the day after the transfer? The honest answer is that none of them has read the group's accounts, met its bankers or sat on a board. Only one is interested in the business; the other two are not, and quietly expect to be bought out.
The family decides to use the next three years differently. The child interested in the business joins one of the group's subsidiary boards as an observer. All three attend an annual family meeting at which the group's results and the investment portfolio are presented by the advisers, not by Elena. A short family charter sets out what the business is for, how dividends will be distributed, how a sibling can exit, and how disputes will be escalated. Elena writes a summary of how the wealth was built, supported by the key documents, and records where every important file is held.
The legal structure is completed largely as originally designed. What changes is that the children who receive it understand what they are receiving, and have agreed in advance how they will handle it together.
A practical starting point
Write down, in a page or less, what the family wants its wealth to achieve over the next generation.
Map the four layers: assets, capability, relationships and values. Note what is in place and what is missing for each.
Talk to the next generation early, before documents are drafted, not after.
Agree how the family will take decisions and resolve disputes, and put it in writing.
Build a documented Source of Wealth narrative and a central record of the structure, advisers and key documents.
Prepare an emergency file so that heirs know whom to contact and what authority exists if the founder is unavailable.
Only then finalise the legal and tax structure, with advisers in each relevant jurisdiction.
How Kuts & Co supports families
Kuts & Co works with families on the parts of succession that sit between the legal documents: family governance support, the preparation of next-generation owners, documented Source of Wealth narratives and central records of the structure, and the coordination of advisers across jurisdictions. Legal, tax, trust, audit and banking services are provided by independent licensed firms, which Kuts & Co coordinates alongside the family's existing advisers.
This article is for general information only and does not constitute legal, tax or investment advice.
Sources
UBS — Global Wealth Report 2025: Wealth growth accelerated in 2024 (media release) — Zurich, 18 June 2025 — https://www.ubs.com/global/ja/media/display-page-ndp/en-20250618-gwr-2025.html
UBS — Global Family Office Report 2025 (media release; survey of 317 single family offices in more than 30 markets, 22 January – 4 April 2025) — Zurich, 21 May 2025 — https://www.ubs.com/global/en/media/display-page-ndp/en-20250521-global-family-office-report-2025.html
PwC — Global Family Business Survey 2023: Building family member trust (2,043 family business leaders in 82 countries, fieldwork 20 October 2022 – 22 January 2023) — 18 September 2023 — https://www.pwc.com/gx/en/services/family-business/family-business-survey/building-family-member-trust.html