Family wealth planning in Asia

One of the key assets driving wealth for Asian families is the family business, but Nigel Rivers - Managing Director, Hong Kong, and Regional Director of Private Clients, Asia Pacific, for TMF Group – believes not enough consideration is given to planning the transition of ownership of these essential assets.

Speaking with Hubbis recently, Mr Rivers outlined some of the key areas that ultra high net worth (UHNW) individuals should, but often fail, to consider when transferring wealth from one generation to the next.

“One of the key factors for the patriarch generation is to consider the best way that they can package together core assets of the family – for example, the business - and hold it for successive generations,” Mr Rivers said.

“So, for example, keeping the shareholding together - not dissipating it by legacy of will or disposition amongst family members, but holding it in a structure that keeps all of the shareholding together and allows the business to maintain its unity.

“They should also consider the family governance around who should run the business. Not every child of a patriarch is ideally suited for management, so there needs to be some consideration and planning as to who - if any - of the children is capable of managing the business in the father’s footsteps.”

A will may not cover all assets in all jurisdictions, and one of the most common mistakes made by UHNW today is believing that one will covers everything globally: “You need to get a holistic overview of all the global assets that the family has to ensure that you have a plan that is properly pieced together.”

Adding to the failure to plan is the question of tax. While estate duties and inheritance tax are not necessarily a worry in Asia Pacific – with the exception of Taiwan, though China is also considering a pilot scheme in some provinces – these taxes are definitely a factor when your wealth and family has spread across the globe. In some jurisdictions, tax can be up to 40% or 50% in these cases: “There is a very significant impact in not dealing with the tax issues in other jurisdictions,” says Mr Rivers.

Working with a partner with global reach and local knowledge can help to mitigate some of these issues; find out more about TMF Group’s work with private clients here.

TMF Group experts 
Opinion
  Opinion

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