Jul 5
East Asia Case Study Discussion with Mishcon de Reya
In April, David hosted a private breakfast meeting with Partners from Mishcon de Reya, using a case
study of an East Asian family to frame the discussion.
The case involved an example of a Singaporean based business family with a substantial local
enterprise that has generated the family wealth and an increasing number of foreign investments and family members residing abroad.
The family are considering thorny issues of succession, estate planning and wealth transfer. The case considered the challenges of appointing a member of the next generation to run the family business and another sibling seeking investment for their new business.
One of the younger siblings is moving to London and has a number of personal issues to address including a new partner and issues with their child in school.
The Mishcon team gave us the 360 degree view of all the issues:
Charlie Sosna - Charlie noted that UHNW clients with international investments often start by
saying they want to keep it simple, but there are many complex issues to grapple with. They need a
global approach to legacy based on their goals - the family dynamics are very important. Tensions can arise between siblings if appointing one member of the family to run the business. New marital partners entering the family shift the dynamic. The family might preemptively consider how the situation would play out in litigation.
For estate planning, there are many options to use trusts to avoid probate issues and liquidity issues
on the death of the patriarch. Asian families have a different dynamic to wealthy families in the
West, with more deference to the patriarch and respect for hierarchy. It can be a challenge for
professional trustees to prevent the settlor of the trust from overreaching, making the planning less
robust.
Peter Steen - Peter’s key objective in advising families is to mitigate risk. One of the key areas of
tension here is the succession of the family business from G1 to G2, particularly with concerns
around the new martial partner and potentially seeding control of the business to her. In Asian
culture, the patriarch will not want to relinquish control. Succession planning and wealth transfer
plans will have to address these concerns and issues.
Janet Tobin - Janet focuses on corporate and commercial disputes for UHNW families and so
considered some of the factors here for the family member who has established her own newly
successful business. A dispute with the founding partner threatens to compromise their success.
Janet emphasised the importance of planning for all eventualities at the inception of the enterprise,
before issues arise.
Victoria Pigott - Victoria also focuses on commercial litigation and notes that disputes often arise between cousins in family businesses on transfer down the generations. Perhaps that is the right time to sell the family business? It needs careful consideration and communication within the family from an early stage. Removing a family member from the business is complicated, as you are still a family after all. Family Charters can help promote cohesion but it depends on the family dynamics and how the document is used.
Guests from the audience noted a number of features of the case that they recognised:
75683069.1 2
● Nancy Chien said in 95% of structures, the Settlor has the Power of Investment, which can
create an issue where the settlor may be impulsive. What to do then? The trust must be
drafted very tightly as this is a significant area of risk for trustees. It is important to consider
what happens when the settlor passes away? The trustees need to think ahead after the
settlor passes away.
● Ben Heaton notes that US connected children can be expatriated when under 18. It is
relevant to take advice and address early on in respect of expatriation.
● Virginia Lee said building relationships with clients is difficult. It needs trust to make it
happen. It might take over 5 years to win the mandate to create a structure. Reviewing the
client’s family tree can throw up surprises including secret second families.
Do you want to host a breakfast meeting with us?
Email members@pcd.club to find out more...
study of an East Asian family to frame the discussion.
The case involved an example of a Singaporean based business family with a substantial local
enterprise that has generated the family wealth and an increasing number of foreign investments and family members residing abroad.
The family are considering thorny issues of succession, estate planning and wealth transfer. The case considered the challenges of appointing a member of the next generation to run the family business and another sibling seeking investment for their new business.
One of the younger siblings is moving to London and has a number of personal issues to address including a new partner and issues with their child in school.
The Mishcon team gave us the 360 degree view of all the issues:
Charlie Sosna - Charlie noted that UHNW clients with international investments often start by
saying they want to keep it simple, but there are many complex issues to grapple with. They need a
global approach to legacy based on their goals - the family dynamics are very important. Tensions can arise between siblings if appointing one member of the family to run the business. New marital partners entering the family shift the dynamic. The family might preemptively consider how the situation would play out in litigation.
For estate planning, there are many options to use trusts to avoid probate issues and liquidity issues
on the death of the patriarch. Asian families have a different dynamic to wealthy families in the
West, with more deference to the patriarch and respect for hierarchy. It can be a challenge for
professional trustees to prevent the settlor of the trust from overreaching, making the planning less
robust.
Peter Steen - Peter’s key objective in advising families is to mitigate risk. One of the key areas of
tension here is the succession of the family business from G1 to G2, particularly with concerns
around the new martial partner and potentially seeding control of the business to her. In Asian
culture, the patriarch will not want to relinquish control. Succession planning and wealth transfer
plans will have to address these concerns and issues.
Janet Tobin - Janet focuses on corporate and commercial disputes for UHNW families and so
considered some of the factors here for the family member who has established her own newly
successful business. A dispute with the founding partner threatens to compromise their success.
Janet emphasised the importance of planning for all eventualities at the inception of the enterprise,
before issues arise.
Victoria Pigott - Victoria also focuses on commercial litigation and notes that disputes often arise between cousins in family businesses on transfer down the generations. Perhaps that is the right time to sell the family business? It needs careful consideration and communication within the family from an early stage. Removing a family member from the business is complicated, as you are still a family after all. Family Charters can help promote cohesion but it depends on the family dynamics and how the document is used.
Guests from the audience noted a number of features of the case that they recognised:
75683069.1 2
● Nancy Chien said in 95% of structures, the Settlor has the Power of Investment, which can
create an issue where the settlor may be impulsive. What to do then? The trust must be
drafted very tightly as this is a significant area of risk for trustees. It is important to consider
what happens when the settlor passes away? The trustees need to think ahead after the
settlor passes away.
● Ben Heaton notes that US connected children can be expatriated when under 18. It is
relevant to take advice and address early on in respect of expatriation.
● Virginia Lee said building relationships with clients is difficult. It needs trust to make it
happen. It might take over 5 years to win the mandate to create a structure. Reviewing the
client’s family tree can throw up surprises including secret second families.
Do you want to host a breakfast meeting with us?
Email members@pcd.club to find out more...