Common Law

Professional planning for a lasting legacy

PUBLISHED : Tuesday, 23 October, 2007, 12:00am
UPDATED : Tuesday, 23 October, 2007, 12:00am

Setting up a private trust involves a great deal more than simply satisfying tax objectives and estate planning.

According to Wendy Yeo, director of private banking, international estate planning, ABN Amro Private Banking, it is crucial to fully understand a client's family structure and aims before beginning to tackle the issue of trusts and wealth transfer.

'Each client we work with has unique goals, backgrounds, perspectives and thoughts on long-term planning. Our success depends upon understanding the individual objectives and advising appropriately on strategies. We sit down with clients to understand their family structure,' Ms Yeo said.

She said the transference of assets to the next generation also required planning in terms of preparing the next generation to take on these assets. They must learn, as much as possible, about the structure of the trust so that they were not caught unaware should they become a beneficiary of the trust unexpectedly.

'In short, we look at setting up a trust from different perspectives. What is the best structure we should put in place in order to achieve our clients' objectives. This could include tax planning, philanthropy, succession and - where businesses are involved - the complex issues that take into account the balance of power between family members,' Ms Yeo said.

She said the firm also dealt with the emotional aspects that were often overlooked by advisers, but featured prominently in clients' minds. For example, ensuring mechanisms were in place to smoothly manage a family business and defining the various roles and responsibilities assigned to family members.

'Helping families and individuals deal with these issues is one of our most important roles. Experience has given us unique insights into the practical and emotional factors that shape the decisions individuals and families face when establishing a trust,' Ms Yeo said.

'Most trusts require professional management to ensure that it keeps growing and is not eroded by inflation. Cash sitting idle in an account really is a lost opportunity.'

She said she had noticed an increase in the number of younger clients who wanted to discuss succession planning and set up trust structures to protect their assets. 'In addition to setting up trusts to avoid the process of probate, there is a demand for trusts for pre-migration and for clients with companies about to list on the stock exchange,' Ms Yeo said.

More trusts and foundations are being set up by philanthropists who want their assets to provide a lasting beneficial legacy outside of their families. 'We emphasise to them that it is never too early to start planning,' Ms Yeo said.

Last year, ABN Amro Private Banking commissioned INSEAD, a leading business school, to undertake a research project into the emotional aspects of wealth transfer and inheritance among Asian families. The study showed that wealth and succession planning management was not a priority.