Owners of ultra high net worth family businesses are likely to be less prepared for succession planning, estate planning and tax planning issues than they think they are, a new study in the US has revealed.

While over three quarters (76 per cent) of owners surveyed have succession plans, only 38 per cent implement them, inadequately addressing issues of succession, according to consultancies Prince & Associates and Campden Research.

The study was commissioned by US Trust, Bank of America Private Wealth Management based on a research pool of 242 second to third-generation business owners with a mean value of around $730 million.
 
The study also found almost nine out of 10 (89 per cent) business owners surveyed were "very" or "extremely concerned" about protecting the family's wealth, however, nearly three quarters (73 per cent) of them were found to not have asset protection plans in place.

Most individuals with succession plans in place are not focusing on tax-mitigation issues (73 per cent), even though nearly all participants (93 per cent) report a desire to lower the tax burden associated with transferring the business, according to the survey.

"Most family business owners do have basic succession, trust and estate plans; however, too often, they are sitting on shelves gathering dust.  Not only do these families need to act on implementing and updating their wealth planning strategies, they need more sophisticated strategies to better protect their wealth," said Mindy Rosenthal, managing director of Campden's North American Business and co-author of the research.

"Most owners of ultra high net worth family businesses don't implement strategies for asset protection in large part because no one has educated them about such options," Ms Rosenthal noted.

The objective of the study was to examine the success rate of family-run businesses in the transition phase from one generation to the next and uncover wealth planning issues that urgently need to be addressed, according to Bank of America.

Over three quarters (78 per cent) of owners have personal estate plans; however, 89 per cent have not updated them after a life-changing even such as marriage, birth or death rendering the plan obsolete. Also, more than half (54 per cent) of participants lacking estate plans reported difficulty dealing with their own mortality, and one quarter (25 per cent) cited a lack of time as reasons for not creating a plan.