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Why Wealthy Families Seek Safe Spaces
A family ’ s physical security becomes a central consideration at family offices .
By Matthew Erskine
THE TRAGIC SHOOTING OF BRIAN Thompson , the UnitedHealthcare CEO , on December 4 , 2024 , has prompted security advisors to rethink the way they protect corporate executives . Estate planning advisors also have to reconsider some things , especially the way a person ’ s personal security intersects with their estate and tax planning .
Personal security has always been a priority for ultra-wealthy people and their families . But we are witnessing a paradigm shift in estate planning for these families , where security isn ’ t just an existential concern but a central consideration in structuring everything from their family offices to their succession plans . Today ’ s environment demands a more integrated approach .
A recent analysis by law firm Baker McKenzie highlights something often overlooked : the way corporate security programs are taxed as fringe benefits . There are certain exemptions to this , and estate planners can use their expertise to go beyond protection of an executive and their family members to also help save taxes . It creates an opening for innovative estate planning strategies that blend security with tax efficiency .
Tax Treatment Of Security Programs
The IRS provides favorable treatment for “ overall security programs ” that meet specific requirements . When structured correctly , these programs offer multiple advantages :
• Security costs are tax-deductible for the company .
• Benefits are not treated as taxable income for protected individuals .
• Protection can extend to spouses and children .
• Even commuting expenses can be covered .
Such programs can thus offer comprehensive family protection through corporate structures so that the executive won ’ t have to use after-tax personal funds — a significant consideration when it comes to wealth transfer planning between generations .
Integration With Succession Planning
Security concerns are also reshaping the ways families approach business succession . The timing and structure of leadership transitions should also be taking a leader ’ s physical security into account . Some families incorporate security assessments into their regular business valuations , while others build security costs into buy-sell agreements and succession funding mechanisms .
We expect to see more families put security protocols in their family office structures . This will allow consistent protection across generations while helping families maintain tax efficiency .
The Trust Factor
All this means that innovative planners are going to be the ones exploring ways to incorporate security programs into trust structures and family limited partnerships . Some of their approaches will include these initiatives :
42 | FINANCIAL ADVISOR MAGAZINE | MARCH 2025 WWW . FA-MAG . COM