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Succession planning in a pandemic: How Asia’s affluent prepare for the future

The COVID-19 pandemic has spurred the region’s wealthiest families into confronting a once-taboo subject – death. Experts share how the affluent can embark on estate planning in a sensitive and prudent manner.

Succession planning in a pandemic: How Asia’s affluent prepare for the future

There are many benefits to planning for the future. (Photo: Pexels)

In Asia, legacy planning has always been a sensitive topic to broach, especially among affluent families with a traditional mindset. But with the ongoing global pandemic spurring many into a reckoning with their own mortality, experts say the crisis has been a “catalyst” among the wealthy to take stock of their succession plans.

“Lockdowns of varying severity have forced people to spend more time at home with their families. The time spent with children and grandchildren may also have stimulated reflection on life priorities. Time spent on these issues inevitably leads to thoughts of succession,” said Gary Tiernan, managing partner of Golden Equator Wealth, a Singapore based multi-family office.

There are many benefits to planning for the future. “A good succession plan leaves a positive legacy and unites the family around common goals and values,” said Dawn Quek, principal and head of wealth management at Baker McKenzie Wong & Leow. “It can protect the interest of the family, minimise the risk of unmet expectations by family members and provide the next generation with viable opportunities to carry on and grow businesses.”

Here are five key considerations that the affluent should know about estate planning in these times of uncertainty.


(Photo: Freepik)

Wills, trusts, family offices and foundations are some of the different components of an overall estate and succession plan. While wills take effect only after the individual’s death, other plans can already be set in motion during an individual’s lifetime.

“An individual can set up trusts, foundations and family offices to help hold, manage, consolidate his assets for an orderly transition to the next generation,” said Quek.

“For example, a private trust can ensure that assets are managed and distributed in accordance with the individual's wishes, so that wealth is well-managed and passed on to future generations smoothly.”

Some families may also wish to set up a family charter that maps out the common goals and values that the family has, she added. Think of it as a document that guides the decision making process for the family’s businesses, financial investments and philanthropic activities. It may set out circumstances such as when a family member may participate in the management of the family business or when the business may be managed by non-family member employees, said Quek.


(Photo: Pexels)

Family offices, which are often staffed with experts in their fields, including investments, tax planning, philanthropy, estate and legacy planning, are growing in popularity in Asia.

“Family offices can protect the privacy of the family and handle confidential matters with great sensitivity. An independent and trusted advisor inside a family office can address some of the difficult inter- and intra-generational challenges that may exist,” said Tiernan.

It can help to provide continuity, especially during traumatic times of transition such as during the death of the family head. “The consolidation of all the family assets under one roof removes the need to deal with a vast number of different advisers. Investments and holdings of all types will continue to be managed according to established procedures, even in different countries, thereby protecting the family interest,” Tiernan added.

In general, for cost effectiveness in running a competent family office, families of net worth starting in the tens to hundreds of millions of dollars can consider creating a personalised family office within a multi-family office.


(Photo: Unsplash/Robynne Hu)

Even those who have already embarked on succession planning now wish to review their existing plans to ensure that their structures are still efficient and relevant today, particularly since the coronavirus has upended many things we take for granted, such as easy access to travel.

For example, wealthy individuals who spend time in different countries may have to examine any potential unintended consequences to their tax structure should they be stranded in a country for longer than normal and whether this creates a greater individual tax exposure, said Quek.

“Another potential concern is that governments in some jurisdictions may consider measures to raise more revenue to deal with the fallout of Covid-19, such as the reintroduction of inheritance tax, which may affect structures that are already in place.”


(Photo: Freepik)

Besides putting into place the key structures for wealth preservation and allocation, heads of families will do well to ensure their descendants are equipped to take over when the time comes.

“Estate and succession planning go beyond just the transfer of financial wealth and tax efficiency, and this should more holistically also include the family’s social and intellectual capital,” said Tiernan.

“Families need to plan ahead so that the next generation is prepared for how to manage financial wealth, how to run the family business under new leadership, how to adjust to different family dynamics and to individual needs.”

He suggested that the older generation should invest time in teaching the younger ones about the family history and values to help them develop an emotional tie to the heritage of the business.

It is also helpful to allow the next generation to make their own life choices. “This may involve working in the family business, but it could also mean taking a different path to be a separate entrepreneur, or to run an investment business, or take on a different philanthropic endeavour. Whatever the direction, the wise family equips them with the necessary skill sets and experiences to succeed,” said Tiernan.


(Photo: Pexels)

To paraphrase a saying, with great wealth comes great responsibility. Affluent individuals and families have the rare opportunity to make a positive impact on the world through philanthropy – and this can also be a way to unite a family around shared values and purposes. “Establishing a foundation creates a formalised structure to enable members of the family to be engaged in decision-making and setting philanthropic goals,” said Quek.

Besides being the “connective tissue” for a family, there are practical benefits to philanthropy too. Said Tiernan, “This can provide opportunities for younger family members to develop leadership skills that can enhance the whole family. Also, it may be that taking a leadership role in the family’s philanthropic endeavours is a more desirable route for some heirs.”

READ> How to make your money speak volumes about your values

Source: CNA/mm(ds)