Next Generation Marriages and Children: guiding families through a complex world
The Forsters' Private Client Network hosted its inaugural virtual event on Wednesday 7 October entitled 'Next Generation Marriages & Children: guiding families through a complex world', held exclusively for private wealth professionals in Asia.
Alfred Liu, Patricia Boon, and Dickon Ceadel from our international Private Client and Matrimonial teams discussed the key wealth planning and succession considerations that we increasingly see families in Asia facing with the marriages and children of their next generation members.
Issues discussed include:
- Cross-border complexities arising from the transnational and cross-cultural marriages, more common in next generations;
- nuptial agreements and their growing use to protect family wealth from divorce risks; and
- modernising dynastic structures for the more internationally mobile next generations and the children of non-marital relationships.
The webinar was followed by an informal virtual networking session, giving guests the opportunity to connect with other likeminded private client professionals in the Asia region.
Key takeaways include:
- With families in Asia experiencing or anticipating significant intergenerational private capital and family business transitions, it is crucial to consider next generation issues as part of robust succession and wealth preservation planning. Marriage and children are the two most critical areas in next generations' lives that require such planning.
- A key characteristic of Millennials and Generation Z members of Asian families that distinguishes them from older generations is that they are more internationally mobile and have a global mindset. They are therefore more likely to be in transnational or cross-cultural marriages, which can often have unintended consequences on a family's wider wealth without proper planning. For example, the risk of shares in a family trading business being subject to foreign taxes that would not otherwise exist but for the transnational marriage of a family member.
- Nuptial agreements are increasingly favoured as a wealth planning tool to protect family assets from divorce risks arising within next generation. They can seek to ringfence pre-acquired or other non-matrimonial money such as inheritances or interests in family trusts. Given the greater cross-border nature of next generation marriages, the international aspects of pre-nuptial and post-nuptial agreements must not be forgotten especially in pre-UK arrival planning (in addition to UK tax and immigration matters). This is because if an individual relocates to the UK without a nuptial agreement, or one signed in another jurisdiction which does not meet the English requirements, their exposure on divorce could be considerable with London's reputation as the 'divorce capital of the world'.
- Children often follow marriage and are naturally the ultimate focus of succession planning for families in the region. There can be stark differences in cultural attitudes between older and next generations about how their children should inherit family wealth. Examples include gender equality and the types of children that can benefit from existing dynastic and wealth holding structures. Generational conflict occurs if these differences are not recognised, discussed amongst the generations and ultimately dealt with through the development of dynamic and flexible family governance frameworks. With family disputes comes the significant jeopardy of family wealth and businesses being tied up in litigation and diminished. So it is vital for patriarchs and matriarchs to involve independent advisers to help them successfully navigate the complexities of modern issues surrounding children at the core of their succession planning.
- Family disputes (which lead to wealth dissipation) are more likely to be avoided where there is good communication and open dialogue between family members. A family's trusted advisers (including family offices, lawyers, private bankers, fiduciaries etc.) all have a key role to play in acting as facilitators to ensure that there is good communication and engagement.
From growing a business to starting a family or handing over control of that business to the next generation, every individual has their own goals to aspire to. Our Private Wealth lawyers advise our clients throughout this family life cycle, providing the legal advice required for specific transactions such as purchasing a home or selling a business, whilst also advising on the long-term opportunities for succession and estate planning.