Wealthy use wills to benefit neediest heirs

PUBLISHED : Wednesday, 16 November, 2011, 12:00am
UPDATED : Wednesday, 16 November, 2011, 12:00am


When it comes to inheritance, not all children are equal, according to a new survey of the wealthy. The needier offspring are likely to get more, as are those willing to take over the family business.

Barclays Wealth recently surveyed 2,000 high-net-worth individuals, those with GBP1 million (HK$12.4 million) or more in investible assets, 100 of whom were in Hong Kong.

Sixty-five per cent of Hong Kong respondents said they felt they should pass on their assets equally to their children, but 95 per cent also said they would be willing to bestow more of their wealth to those of their children with greater financial needs.

Financial need was also the most important factor for respondents in North America, with 86 per cent choosing this as a key factor to consider when deciding how to allocate assets. In Europe 84 per cent agreed with the idea.

In Hong Kong, the second-most important factor was children's willingness and ability to take over the business, with 91 per cent of respondents ticking this box as a factor to consider.

About 78 per cent of European respondents and 82 per cent of North American interviewees concurred.

'Hong Kong seems to be quite in touch with having experience of family conflicts and disputes,' said Thelma Kwan, head of Wealth Advisory, Asia Pacific, Barclays Wealth, perhaps an oblique reference to the epic inheritance battle among relatives of casino tycoon Stanley Ho.

Yet more than half of those interviewed in Hong Kong said they do not have a will in place, even though 70 per cent of Hong Kong respondents said inheritance planning requiredd a significant level of professional advice, ranking in the top five of all global respondents surveyed.

By contrast, 85 per cent of respondents in Europe and 94 per cent in North America said they had wills.

The lack of planning has often led to family disputes, and 51 per cent of Hong Kong respondents said they had experienced family conflict due to inheritance issues.

Kwan said the most common conflicts in Hong Kong were among siblings, or between first and second families - often the result of mistresses - and disputes between the next generation of children and their uncles over the inheritance of the family business.

The low percentage of Hong Kong's wealthy who have wills shows how mortality can be a difficult issue in the city and that it can be especially sensitive among people in their 70s to 80s. Younger generations are gradually opening up to the idea of planning for wealth succession, said Kwan.

She said the best way to avoid conflicts was to plan early, either by writing a will or by setting up trusts for family members.

Without a will, the children may fight over the money, and if people waited until they were old, family members could challenge the validity of the will by questioning the sanity of the donors.