The report commissioned by Royal Bank of Canada (RBC) from researchers Scorpio Partnership found surprising numbers of high net worth families lacking in their estate planning.
Individuals across Singapore, Hong Kong, Taiwan, mainland China, Indonesia and Malaysia with an average investable wealth of $5.15m (£3.8m €4.3m) were asked about their plans.
Surprisingly, 57% said they had done nothing to further their succession and estate planning.
Of the 425 individuals sampled, 19% said they had a will and 31% said they had full wealth transfer plan in place.
Mike Reed, managing director and RBC Wealth Management’s head of distribution strategy, said wealth transfer was an important opportunity for families in Asia.
“For those who are unprepared, wealth transfer could become a very high risk event,” he said.
“Given the diversity of assets that these wealthy families have, family governance is going to be become increasingly important in Asia.”
Different cultural influences and regulatory jurisdictions make wealth transfer for Asia’s global families potentially much more complex, the report warns.
Values transfer and value transfer
The report found families were taking important steps to equip the next generation with values and knowledge but are struggling with putting the wealth transfer mechanism in place.
Two-thirds of those inheriting have had conversations with their benefactors before receiving a wealth transfer and 57% were told what the money was for.
Setting terms for wealth transfer was a common mechanism for instilling values, with 64% of inheritances in Asia coming with strings attached. This compares to 26% in the UK and North America.
As part of this approach, 51% of benefactors said they would gradually gift money in their lifetimes to teach heirs responsible management.
Revealingly, 70% of those with no plan in place admitted they lacked confidence in their children’s ability to grow and preserve the capital given to them.
