SINGAPORE: Around US $15.4 trillion in family wealth is expected to be passed from one generation to the next by 2030. According to Wealth-X, about 12 per cent or US $1.9 trillion will be transferred to Asian heirs.
In 2021, there were 2,755 billionaires in 70 countries around the world, according to Forbes. More than 40 per cent of the total were from the Asia-Pacific region, or 1,149 billionaires.
The family businesses in Southeast Asia are the heart of wealth creation in the region.
A number of Asian founders are approaching retirement age, while many young billionaires derive their wealth from relatively young businesses.
There is a growing need for wealth transfer planning.
Professor Mandy Tham is the academic director of the Master of Science in Wealth Management, at the Lee Kong Chian School of Business, Singapore Management University.
She warns of the consequences of not having a formal structure for succession and wealth transfer: Whatever could go wrong, it would go wrong. We can have the family destroying the business because it's a family business. We want none of this. One of the structures that are growing in popularity is the family office. These privately held wealth management firms cater to ultra rich families and set up frameworks for succession and wealth transfer planning.
They allow family members to separate family wealth from the family business, thus ring-fencing some of this wealth.
There were around 400 single family offices in Singapore at the end of 2020.
Business families usually set up wills, trusts or holding companies as part of wealth transfer planning.
Family offices can serve specific purposes, such as asset management, philanthropy, or tax advisory.
Such offices can be staffed with professionals if the family feels comfortable outsourcing such decisions.
Some people prefer to retain more direct family control.