First-generation Chinese wealthy turn their attentions to succession

Date: 04 May 2016

Bumblebee Design

If there is one thing keeping wealth advisers in Hong Kong busy, it is succession planning for wealthy Chinese families. Not a day goes by without another newspaper headline about a nasty family feud brought on by the death of a patriarch, or a divorce, and HNWIs are turning to Hong Kong advisers for help.

“We are seeing more and more of the traditional use of structuring using trusts and foundations for succession planning,” says Melanie Ison, managing director of the Hong Kong office of fiduciary business Nerine. “There is much less of a tax focus now than there was even just a few years ago.”

Paul Christopher is the Hong Kong managing partner at offshore law firm Mourant Ozannes, and has witnessed the same trend: “There remains a cultural issue in China around failing to plan for the future and around death and succession. Even though there is quite a lot being done, that can be culturally quite difficult for people, and there is still plenty more that could be done. There’s no doubt families are feuding over planning failures, and those fallouts can be pretty high-profile here in Hong Kong.”

Much of the challenge for advisers is therefore to educate wealthy families on the issues they might face, and how they should be better structuring their affairs. What can make things more complex is a blurring of the lines between business and family, given that so much of the wealth in the region remains in the hands of the first-generation business leaders.

“For our clients out here, we still see a lot of that first-generation wealth concentrated in the hands of the original wealth creators, so there is not necessarily…To read the full article, please subscribe to our e-magazine.