A survey of high net worth advisers found that 41 per cent said their clients in the region are most worried about family disputes. - ST
SINGAPORE: The super rich in South-East Asia are more worried that a lack of succession planning could lead to family disputes than those who are well-heeled in other regions, a poll has found.
A survey of 129 high net worth (HNW) advisers between early April and mid-May found that 41 per cent said their clients in the region are most worried about family disputes.
This is higher than the 27 per cent in North Asia, the Middle East and Europe.
Other concerns that the HNW individuals have are tax implications and delayed or inefficient asset distribution, said life insurer Transamerica Life Bermuda on Sept 4.
Family offices top the list among those polled in the succession and estate planning survey, accounting for a third of them. They are followed by wealth managers, private bankers, insurance brokers and others.
About 35 per cent of participants ranked health issues within the family as the top trigger for their HNW clients in the region to review or put in place succession plans. In other regions, it is about 30 per cent of those polled.
More than half (58 per cent) of those surveyed said minimising taxes and legal fees is the least important goal for succession and estate planning. This is almost twice (29 per cent) that of the other regions.
The poll said other objectives were: asset preservation, ensuring a smooth asset transition to beneficiaries, and business succession. These were evenly rated in the findings from other regions.
More than half of the respondents saw a rise in their HNW clients’ awareness and interest in having succession and estate planning post-pandemic. About 54 per cent said their clients wanted to act immediately or within five years.
Compared with a 2018 survey the firm conducted on a bigger scale, chief commercial officer Jeremy Young said the HNW clients are warming up to the idea of succession and estate planning.
“In comparison, with the caveat that it’s a different methodology, about 11 per cent in 2018 said they wanted to take action within the next five years if they didn’t have a plan already. Now we’re seeing something in the region of 50 per cent,” he said.
Of the clients who have not done such planning, the poll found that 61 per cent are either busy with other priorities or think the process of doing so is too complex.
Young said the pandemic made the impact of health issues real to people. A ramp-up in intergenerational wealth transfers, as founders of businesses get older, is another reason for the rise in uptake.
“Despite it being lower in some jurisdictions, we’re seeing changes to regulation, which includes taxation and estate duties. It is starting to happen across the globe and that’s making the HNW group a lot more aware that they need to do something,” Young said.
For instance, Brazil is set to levy higher estate duties across the board and the HNW clients want to know how to manage the transfer of assets without having to liquidate or use cash to manage inheritance tax.
This can be done through the use of a life insurance policy, Young noted.
Findings of the poll showed that in general, lawyers are the main source of advice in succession and estate planning.
However, in the region, fiduciary service providers such as trust companies are almost equally preferred.
Typically, the most commonly used tools in succession and estate planning are trusts and foundations, and wills.
But 31 per cent of HNW clients in South-east Asia rely primarily on joint accounts, which is the least preferred tool in the other regions.
Of those polled, 40 per cent were from Singapore and other South-east Asian markets such as Malaysia and Thailand.
The firm said its definition of HNW in the survey is US$1 million (S$1.31 million) in assets and over, but most of the respondents represent clients who have much higher net worths.
The specialist insurer, which started operations in Singapore in 2006, has over US$7 billion in total assets. Its two other offices are in Hong Kong and Bermuda.
It has a total of 150 staff globally, of whom 30 are in Singapore. - The Straits Times/ANN
