Forsters’ Asia team win ‘Estate Planning Team of the Year’ for Greater China at the WealthBriefingAsia Awards 2024
3 June 2024
News
Named ‘Estate Planning Team of the Year’ (Greater China) at the 2024 Wealth Briefing Asia Awards, Forsters Private Wealth Asia team were recognised for their unique approach to advising HNW individuals and families, trustees and family offices in the region on international cross-border estate and succession planning.
The annual WealthBriefingAsia Awards programme recognises the most innovative and exceptional firms, teams and individuals. The awards have been designed to showcase outstanding organisations, deemed to have ‘demonstrated innovation and excellence during the last year’.
The award winners were announced at the ceremony on 30 May 2024 in Singapore.
Forsters’ dedicated Private Wealth Asia team
With an established track record in Greater China, including Hong Kong and the wider Asia region stretching back 33 years, Forsters’ Private Wealth Asia team are renowned for their expertise in estate and succession planning with a cross-border focus.
Taking a unique approach to estate planning particularly in the context of family governance for multigenerational business families; the team make it a priority to understand the psychology of the families they advise and marry this with the practical and commercial aspects to preserving family wealth and mitigating the risk of family disputes.
Only after taking the time to get to know the family, and understand their dynamics and needs, do the team create the bespoke structures that help establish family harmony and ensure the successful transition of wealth from one generation to the next. Many clients have built international businesses with assets and family members based across the world; lending added complexity to their planning needs.
The award showcases Forsters’ continued commitment to serving families in Asia and follows the team’s recent promotion of Alfred Liu to Partner. Nick Jacob and Daniel Ugur are also two of only three lawyers recognised in the Chambers HNW Guide as foreign experts for Singapore. This team, which also includes Private Client Global Elite Rising Leader, Patricia Boon, travel to the region monthly to advise clients and have cultivated strong relationships with many private wealth advisors based there.
The Private Wealth Asia team is part of Forsters’ Asia group advising clients based in the region on a wide range of services including:
Estate & Succession Planning
Family Governance
UK Tax
Trusts Structuring
UK Residential & Commercial Property
Matrimonial & Divorce
Contentious Trusts & Estates.
Please do get in touch with any of the team, to find out more about our Asia services.
James Brockhurst to speak on family offices at the Global Partnership Family Office European Conference 2023
31 October 2023
News
Private Client Partner, James Brockhurst, has been invited to join the expert panel at the Global Partnership Family Office (‘GPFO’) European Conference 2023, held at the Royal Society London, to an audience of representatives from global family offices.
James will be a panellist for the session entitled ‘The Evolving Jurisdictional Landscape’ which will explore the changing legal and regulatory frameworks that govern family offices in different regions and will discuss tax issues, compliance obligations and cross border issues for family offices with a global outlook. James will be sharing his expert insights on knowledge on especially on the Middle East.
Joining James on the panel are Ruth Bloch-Reimer of Bar and Karrer and Gavin st Piere, former Chief Minister of Guernsey. The session will be chaired by Lisa Cornwell of PWC.
More information about the event can be found here.
Wealth that works: Alfred Liu joins other private wealth experts for an ESG-focussed STEP Journal roundtable discussion
1 September 2023
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Private Client Senior Associate, Alfred Liu, shared his views as a Family Governance and Next Gen adviser at the latest STEP Journal roundtable discussion, sponsored by Hawksford.
The conversation focused on sustainable investing, examining who the responsibility sits with and how trustees and advisors can manage their fiduciary duty as they balance environmental, social and governance (ESG) factors and return on investment.
When asked how ESG values and sustainable legacy considerations develop in his family governance and business advisory experience Alfred comments:
“It’s incumbent on us as advisors not to be static and to be very aware that families evolve. In turn, structures and investment strategies need to be updated. What does it take for families to consider sustainability? It tends to be the second or third generations that are driving those discussions because they’re the ones considering the implications of the structures the first or predecessor generation has picked. It’s important for us to be able to discuss and educate, help families find where the common values and disparities lie, and get consensus to preserve harmony – which is a big part of any meaningful family governance exercise”.
Click here to read more about the roundtable discussion in the STEP Journal, Issue 4 2023.
STEP Asia Conference 2023 – Nick Jacob to moderate session on ensuring effective family office governance
26 June 2023
News
Private Client Partner, Nick Jacob, has been invited to moderate a session on family governance at the STEP Asia Conference 2023.
The STEP Asia Conference brings together speakers and attendees from around the world to discuss cutting-edge topics relevant to the wealth management community.
Nick will be moderating the session entitled ‘Ensuring effective family office governance’ on 14 November at 12:00 HKST.
The session will see an expert panel address the following issues:
What are the roles of a family office and how can these be implemented, achieved and monitored?
What procedures need to be put in place to operate a successful family office?
How does one distinguish the interests of the various stakeholders such as the family and the managers?
Are family offices inherently inefficient compared to the discipline one would expect to see in, say, a listed company?
Joining Nick for the session are panellists Thomas Ang of Credit Suisse AG, Cynthia Lee of Central Cove and Christian Stewart of Family Legacy Asia (HK) Limited.
The Conference will run from 14-15 November 2023 at the Grand Hyatt Hong Kong. To find out more, please click here.
Labelled “the godfather of Asian Family Governance work” in the Chambers HNW 2022 Guide, Nick has unparalleled experience advising high net worth clients on putting together plans that provide for family succession, the protection of the family business, the avoidance of family disputes, and all aspects of international family governance.
In a video call with Singapore’s The Business Times Nick shared his experience of working with HNW family businesses in Asia and the challenges these families must face.
In the article, Nick emphasises the importance for heads of family businesses to address conversations around succession planning earlier to preserve their dynasty for more than a generation.
He reflects on a particular case, where the client regrettably passed before finalising his succession plan, resulting in the split of the family business and a significant loss in the value of a business the client spent his entire life building. “If he had bitten the bullet 10 years earlier, it is quite possible that the business could have been saved”.
Nick explains that many families are now realising the pressures of time and describes a “definite shift from a decade ago”. Clients are now approaching him earlier than before and preparing for a “gradual changing of the guard”. He notes that “while more than half of his clients used to reject the idea of passing on elements of control, including their voting shares in the company, only one in four still take such a stand today.
He recommends that “the heads of families should have succession plans by the time they are 70 at the latest. The patriarch will be seen to have enough influence, that he will not allow himself to lose face, or will not allow himself to be demoted to second division, and the family respects that”.
The article also features interviews with the founder and executive chairman of the Banyan Tree Group, Ho Kwon Ping and other prominent advisors in the industry.
To find out more about International Succession Planning and Family Governance you can read Nick’s article here. Please do get in touch with Nick to discuss the issues raised in these articles.
Why Family Governance is Important – Patricia Boon speaks to Jersey Finance
23 January 2023
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Private Client Partner, Patricia Boon, speaks to Jersey Finance about what Family Governance means and why it is so important for wealthy families in Asia.
Speaking to Business Development Consultant, Maria McDermott, Patricia explains the concept of family governance and shares why it is so important in succession planning, particularly in times of divorce or conflict.
It is well-documented that a good number of high-net worth Asian families are on the cusp of a very significant inter-generational transfer of wealth as, over the course of the next decade, we will see the ownership and stewardship of family wealth and family businesses pass from the hands of the wealth generators/creators of Generation 1 to Generations 2 and 3.
The families standing at the precipice of this change will, in some cases, not yet have considered the implications of this inter-generational wealth transfer or, if they have, may be uncertain as to how to deal with them. Family businesses are at their most vulnerable at the point of this transition, particularly when the business founder/wealth creator is still the person at the helm. For such families, family governance planning can enable them to meet the challenges that this transition to the next generation poses.
The main challenges facing families in this position are:
to ensure that the value that has been generated by Generation 1 can be preserved, grown, and perpetuated for the benefit of future generations and/or for philanthropic purposes; and
to equip the next generations to deal with the businesses, assets, or structures that have been passed on to them so as to avoid a diminution in the value of the business or dissipation of the wealth.
There are further sub-sets of challenges within these categories, including the risk of inter-generational and cross-generational conflict, risks to family harmony as the number of family members grows and becomes more disparate, and the risk of divorce.
If these challenges are to be navigated successfully, it is essential for Generation 1 to look carefully at how to involve Generations 2 and 3 in their succession planning and to obtain the next generation’s contribution and buy-in to the philosophy that will shape the family’s management of their businesses and assets for the medium to long-term. However, it is often difficult for Generation 1 to let go of the reins; of the respondents to the PwC Global NextGen Survey 2022, 45% said that they found it difficult to prove themselves as a new leader or board member in the business. In this context, family governance planning has an important role to play, as the implementation of a governance framework for families to manage succession to the business and/or control of family assets is a key way to involve the next gen today and to minimise the risk of dispute and wealth dissipation tomorrow.
Using a Family Governance framework to involve the next gen
The aim of any family governance strategy should be to ensure that there is a robust and flexible succession plan in place for Generations 2 and 3 (and beyond) to play their part as stewards of the family wealth and assets.
Good communication is essential to mitigating the risk of disputes and conflict, as it encourages transparency, minimises suspicion, and offers the opportunity for the stakeholders to have their say.
Where the family is at the start of the governance exercise, it may be helpful to have a third-party, such as the family’s trusted advisor, to co-ordinate the discussion process, meeting together and individually with Generation 1 and members of Generations 2 and 3. This is an important step to flush out areas of frustration, that are ripe to develop into points of conflict between the generations, so that these can be discussed and addressed openly at the outset. It is noteworthy that, in the studies looking at the difficulties inherent in inter-generational wealth transition, many next gens of business families who are surveyed cite their frustration that they are unable to have a voice. Consequently, open dialogue is a crucial part of allowing the next generation to feel involved and engaged.
The creation of a family council can ensure that each family branch has a voice and representation. Where there are family trusts, the family council can act as an interface with the trustees, ensuring a regular flow of information to the family members. The family council can also act as a ‘training ground’ for the next gen, making clear the expectations there will be of any family member who wishes to work in the family business, any requirement to have undertaken particular work experience within or without the family business, and/or setting out criteria that must be met for a family member to be considered eligible to work in the business.
A family council may also allow the next gen to:
observe the workings of the family council before assuming a formal role;
receive training in understanding the family business, responsibilities and duties of office-holders and shareholders, and financial statements.
Such training can help to identify at an early stage the leaders of the future who have the relevant qualities and skills to contribute to the business.
Where there are multiple shareholders, shareholders’ agreements are a valuable tool which can be used to educate the next generation in relation to shareholder co-operation. They are also useful for focusing the attention of Generation 1 as to whom shares should be transferred.
The involvement of experienced and trusted non-family management and advisors has a role to play, as these individuals can offer objectivity and can act as a sounding board to the different generations, as well as assisting in the transition of Generation 1 out of day-today control into an ‘oversight’/advisory role.
There is no ‘one size fits all’ solution to sorting out the myriad issues that business and wealth transfer will bring to the fore between family members.
However, what is self-evident is that a failure to consider succession planning and the involvement of the next generation (and beyond) in a timely fashion will increase the risks of family conflict and fragmentation of wealth to the detriment of all of the family members.
This makes it vital for wealth creators to recognise the value of involving the next generation in their succession plans early on, and to understand the means available to them to achieve this.
A guide for British Expats in Singapore: Estate & Wealth Planning Post-Divorce
23 May 2022
News
Your divorce is now final. What next? The last thing on your mind may be to consider your estate and wealth planning, and the prospect of dealing with lawyers again so soon after your divorce can quite understandably be unappealing for some!
However, there is a good chance that your existing planning arrangements (if any) are no longer appropriate for your post-divorce circumstances. They may be overly reliant on your ex-spouse, or too intertwined with their planning and not reflective of your individual wishes. Perhaps they do not cater for any post-divorce obligations you may owe to your ex-spouse or are wholly inadequate for the significant windfall you received from them.
Doing nothing or waiting too long to redress these sorts of issues may lead to serious and unintended consequences that could adversely affect any or all of your children and the rest of your immediate family in the event of your death or loss of mental capacity. Now is therefore the most critical and opportune time to start afresh with your estate and wealth planning and give yourself peace of mind after going through such a major life event.
This article serves to highlight the key areas of planning to consider, which are equally applicable to either party to a divorce and to British expats residing in jurisdictions other than Singapore. UK tax considerations in a divorce scenario are also critical given that estate planning and tax (particularly UK inheritance tax if a person is UK domiciled) go hand-in-hand and cannot be compartmentalised. Further details of such considerations can be found here but suffice to say tax advice should always be sought when embarking on any aspect of estate and wealth planning.
Please note that references in this article to England or English law should be understood to also include Wales but not Scotland and Northern Ireland whose laws differ to that of England and Wales.
The first step – review your estate
Your estate may have significantly changed as a result of the dissolution of your marriage. Therefore, the best starting point is to review it, and prepare a general inventory of your current worldwide assets and liabilities.
Not only will this help to identify what is in your estate, but it will also focus your mind on your succession objectives and help to establish your thoughts on important issues, such as:
any particular wishes you have regarding the devolution of specific assets;
assets of sufficiently high value that require bespoke succession arrangements;
how to deal effectively with any digital assets or cryptocurrency you own;
any family inheritance you are due to receive; and
liabilities (particularly any owed to your ex-spouse pursuant to the divorce) and how they may need to be dealt with following your death.
Such a review should also establish if you have a life insurance policy or pension (either privately or through your employment in Singapore or elsewhere) and whether pay-outs to nominated beneficiaries require updating if you had previously nominated your ex-spouse.
Cross-border estates
Living in Singapore, you may have an international lifestyle and perhaps own assets located in multiple jurisdictions. You may even have acquired a foreign asset from your ex-spouse as part of the divorce settlement.
In these circumstances, you have a cross-border estate, which will add a level of complexity to your wealth and succession planning if ‘conflict of law’ issues arise. Broadly, conflicts may arise between the laws of different countries when determining which law should ultimately govern the succession of your assets at death. To resolve such conflicts, countries have developed domestic ‘private international law’ rules to determine which law should apply in different circumstances. This is a particularly complicated area of law and beyond the scope of this article, so formal legal advice should be sought if such rules may be relevant to you.
As a general overview, if you are domiciled in England at the time of your death, then English private international law rules will apply to the succession of your estate. Having British nationality and a British passport does not automatically mean you have a domicile within one of the countries of the UK. The concept of ‘domicile’ under English law is rather nebulous and made up of a variety of relevant factors that seek to draw out a person’s strength of connections to a particular jurisdiction and their current and future intentions. It is important to bear in mind that domicile can differ for succession purposes and UK taxation purposes.
If you have an English domicile, the general rule is that ‘moveable’ assets (e.g. paintings, jewellery, shares etc.) devolve in accordance with English law, whereas the succession of ‘immoveable’ assets (e.g. real estate) is governed by the local laws in which the asset is situated. Under English law, a person generally has complete testamentary freedom to dispose of their entire estate on death provided they have a valid and effective English Will in place. This widely contrasts with the rules in civil law jurisdictions (such as countries in Europe) where a system of ‘forced heirship’ operates which dictate that a certain portion of a person’s estate must devolve to certain family members in prescribed percentages and cannot be altered by a Will.
A situation could occur where your English Will governs the succession of your worldwide estate, but it does not when it comes to your holiday home in France, for example. The EU Succession Regulations were introduced in 2015 to avoid these types of situations and harmonise succession laws for cross-border estates involving EU countries by enabling a person to choose whether the law applicable to their whole estate wherever situate and whether moveable or immoveable should be that of either their habitual residence at the time of their death (the default position) or their nationality, which must be elected in a Will to override the default position. Therefore, if you own real estate in an EU country, you have the option to elect in your Will that English law governs the succession of that property on the basis of your British nationality. Brexit has had no impact on your ability to make such an election.
Nonetheless, this only applies to assets situated in EU countries. Conflict of law issues will still exist if you own assets in other civil law countries with forced heirship such as Vietnam, the Philippines and Japan. Careful planning will be necessary for such assets, particularly if they are valuable
Wills
Both England and Singapore are common law jurisdictions and therefore provide for testamentary freedom facilitated by a valid and effective Will. If a person dies without one, then the relevant intestacy rules will apply to the succession of their estate. Such rules dictate who can inherit from the estate and in what manner, which are likely to be contrary to the deceased’s wishes. To avoid this situation occurring, it is vital that a person has a Will regardless of their circumstances.
Being newly divorced, it is critical that you update your Will if you have one already. For example, it may leave everything to your ex-spouse and appoint them as an executor of your estate, which is a common and appropriate arrangement for married couples but not for divorcees.
If you are domiciled in England and have an existing English Will, divorce does not revoke it. Your ex-spouse is treated as if they had died at the date of the decree absolute. This could inadvertently result in an intestacy situation if your existing Will leaves everything to your ex-spouse but is silent on what should happen in the event of their death. Problems can also arise if your ex-spouse is named as the sole appointed executor and trustee in your existing Will and fails to appoint substitute executors and trustees in the event of their death.
If you are not domiciled in England, then your Will could create a discretionary trust over your estate for the benefit of your children (but not for your ex-spouse). This may be very useful in long term tax planning for any of your children (and successive generations) who may live in the UK in the future and therefore have a UK domicile; it avoids your assets and wealth your children may not immediately need from falling into their own individual estates for UK inheritance tax purposes.
Minor children
If you have minor children, an important question will be: who should be their guardian(s) if both you and your ex-spouse pass away while they are still minors? This can be a tricky and highly emotive issue but if you and your ex-spouse are able to agree on a guardian in this scenario it is best to record this in a separate document signed by you both rather than leaving it to be stated in your respective Wills (which is common practice), one of which could be changed without the other’s involvement or knowledge.
Another important consideration is that if your ex-spouse does become your children’s sole guardian following your death, they could have absolute control over any wealth your children inherit directly from your estate until they reach 18 years old. Any risk that your ex-spouse may abuse their position and enrich themselves from your wealth may be mitigated if under the terms of your Will, you create a trust over it for the benefit of your children to be managed and controlled by independent trustees appointed in your Will.
Lifetime trusts
Singapore has a thriving and robust professional trusts and fiduciary services industry and a modern trust law. If your estate is of significant value with surplus wealth, you might wish to create a discretionary trust during your lifetime as part of your estate planning. A discretionary trust is so-called because it is made by the ‘settlor’ (you) in favour of a class of potential beneficiaries (for example your children and immediate family). The appointed trustee(s) have absolute discretion to determine how much (if anything), when and in what manner potential beneficiaries receive funds from the trust.
Discretionary trusts are flexible and enable the trustees to take into account the changing circumstances of the beneficiaries. It is usual for the settlor to write a non-legally binding letter of wishes to the trustee(s) to provide guidance on how the trustee(s) should consider exercising their discretion and manage the trust. This is a flexible mechanism, as a letter of wishes can be changed from time to time without any legal formality.
Holding assets through a trust structure can be advantageous for a number of reasons:
it allows you to plan for the succession of assets for the benefit of future generations of your family;
it avoids the need to go through the probate process on death for assets held in the trust;
it may assist with asset protection and tax planning for your family; and
it may help in family governance or business succession planning.
Trusts are not appropriate in every case for particular reasons. For example:
a core feature of a trust is that the settlor gives up a significant degree of control over the trust assets, which some may not find comfortable (although there may be ways to mitigate this to some extent);
the creation of a trust is likely to give rise to UK inheritance tax consequences if you are UK domiciled (or deemed to be so domiciled for tax purposes), or if you are non-UK domiciled but transfer UK assets (or non-UK companies owning UK residential property) into a trust; and
other rules regarding the UK taxation of offshore trusts may apply if beneficiaries of the trust are UK tax resident (for example, children being educated in the UK) or you plan to relocate to the UK in the future. These rules can be complex, and you may decide that the cost and effort of navigating the complexities is disproportionate to the non-tax advantages of a trust.
Incapacity planning
A growing feature of estate planning is to ensure arrangements are in place to deal with the eventuality of a person becoming mentally incapable. Given your connections to the UK and Singapore, you may have created Lasting Powers of Attorney (LPAs) in each jurisdiction already, whereby you appoint someone as your attorney to make decisions on your behalf regarding the management of your personal affairs if you lose mental capacity.
There are two forms of LPA available in England, one relating to property and financial affairs, and the other dealing with health and personal welfare. During your marriage, you may have created one or both types of LPA, and perhaps appointed your ex-spouse as an attorney. Your divorce will have had the effect of terminating their appointment, which could have the wider knock-on effect of terminating the LPAs entirely depending on how attorneys are appointed. For this reason, it is advisable to review and update your existing English LPAs following your divorce. This is also advisable if you have an LPA in Singapore or its equivalent in any other jurisdiction where you have assets.
