17 December, 2013

Legal News & Analysis – Asia Pacific – Singapore –  Investment Funds

Woon Hum Tan, Partner & Head of Trust, Asset & Wealth Management Practice at Shook Lin & Bok LLP in Singapore, outlines what’s important to South-East Asian families wanting to preserve the family assets for future generations – and the issues these clients often overlook.

Only now is the enormous amount of wealth that was generated in Singapore in the mid 1900s being transitioned to the second generation.

But according to Woon Hum Tan, Partner & Head of Trust, Asset & Wealth Management Practice at Shook Lin & Bok LLP in Singapore, families are typically not familiar with structures like trusts, foundations, and charitable investing vehicles; many just have a will at the most.

And a will may not be sufficient for protecting the family wealth. A good way to get clients to come to terms with this, says Tan, is to say to them: “You love your kids. And you love your grand-kids. But you may not love their friends – and you may not love their future spouses.”

“This often gets clients talking about how they don’t like their daughter-in-law or their in-laws, leading to discussions about how much wealth – and which assets – the client wants certain family members to receive,” says Tan.

In some cases, the patriarch or matriarch decides that their children should be bypassed and that the wealth should go straight to the grandchildren. And some families like to carve out a proportion of the estate to go to a particular charity.

Philanthropy is becoming more important to Asian clients. High net worth family offices are becoming increasingly interested in “green”, “responsible” or “ethical” investing, says Tan.

Business succession is a top priority for many clients. To avoid a standstill or a dispute after the death of the patriarch – which could affect the value of the shares of the family controlled company – many families want to make provisions detailing who will obtain control of the shares when they are no longer in a position to run the business.

An increasing number of families in Singapore are now considering engaging professional advisers to run a family office that will manage the investment portfolio, insurance protection, tax planning, and other concerns.

But the family office concept is still in its infancy, and some families are leaning more towards a holding company-type setup. These don’t have proper governance and structure and they also don’t address issues relating to the transition of wealth, says Tan.

“It’s more about managing the family portfolios of properties, businesses, and other assets.”

For further information, please contact:

Shook Lin & Bok Investment Funds Practice Profile in Singapore