Asian families confront awkward trust issues when succession planning
A survey found 64pc of Asian families plan to place conditions involving age, education and jobs when preparing a wealth asset transfer plan
Asian families making arrangements to transfer wealth to the next generation are having to confront a paradox of affluence unique to a region known for economic miracles.
In many instances, the accumulation of family wealth happened so quickly, there are few precedents to help guide the Nouveau riche when it comes to transferring wealth from one generation to the next. Another concern is the issue of jurisdiction and compliance when transferring family assets which are spread globally, as well as legal and tax issues involving potential inheritors who live outside Hong Kong.
As a result, family heads are concerned that their children, should they receive a windfall at a young age, lack the discipline necessary to properly manage the parent’s assets, said Vivian Kiang, Asia head of wealth planning at Royal Bank of Canada (RBC) Hong Kong.
In a recent RBC survey, 26 per cent of high-net-worth individuals in Asia said when preparing an wealth asset transfer plan, they worry that their children would become irresponsible upon receiving the family’s wealth, compared to only 5 per cent of their Western counterparts who were worried their children would become irresponsible.
For this reason, 64 per cent of Asian families place conditions on inheritance, such as requirements in age, education and profession. This contrasts with only 26 per cent of Western families, Kiang said.
The research, undertaken from April to August, surveyed 425 respondents across Singapore, Hong Kong, Taiwan, Indonesia, Malaysia and mainland China. Respondents had an average net worth of US$5.15 million and minimum investible wealth of US$500,000.