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ADMINISTRATION Family matters making a success of succession


Protecting the family wealth without breaking up the family requires a succession plan that starts with the human side, not the money.


Y


ou have spent a lifetime of hard work to build your wealth and secure your family’s future, but when it comes time to pass on control to the next generation, can you be confident that


the money won’t run out and the business fall apart? That it won’t fall victim of the ‘three generation’ rule? To avoid this, families need to develop a solid


succession plan. The problem, according to William Ahern, is that many people start at the wrong stage of this process, putting the focus on money rather than people. An Australian solicitor in Hong Kong, Ahern


established Family Capital Conservation Limited in 2008 to focus on providing independent and strategic


advice to families in complex tax, succession and legacy planning. It is a well known that many family business


succession planning fails by the third generation. Some wealth managers report that only one third of the family businesses survive the transition to the second generation and only 12 per cent on to the third. In Ahern’s experience this failure is a result of


neglecting the family’s goals and objectives, which are the building blocks for the development of the succession plan. “Families are complex and when you add the


complications of modern business they become even more so,” he says. “When it comes to planning for the future and


protecting the family wealth, you can’t just make it about money. It has to be about people and take into account egos, ambition and personal feelings.” A lot of people can put together a well written will or


“Families are complex and when you add the complications of modern business they become even more so”


organize trusts, but when planning for the future, Ahern says you must look beyond structural issues, such as taxation, trusts, accounting and legal considerations. “Too many people start with structural issues, but that isn’t the beginning. It isn’t where they should start,” he says. “Instead, before doing anything, families need to first


start thinking about what the wealth is for. What is the ultimate objective? This is the human side of succession planning.


“It is a laborious and time consuming process, but


it is absolutely necessary if families want to survive the transition process. “If this first step is overlooked, people will spend a lot


of time and money developing a transition plan that will almost always fail to reach the desired results.” Ahern says families must ask themselves who they


are and what do they want as a family. They will then often write a mission statement then a charter. “Once you get all that done – and only when you get


that done – do you move on to the structural issues. The problem is that not enough people deal with the higher purpose,” says Ahern. “The first generations often don’t think of the higher


purpose of what the wealth is for. They are too busy going into the factory to make the big bucks, but when crossing generations, it can’t be avoided. “The broad objective is to provide as many members


46 FAMILY OFFICE: ASIA TOMORROW


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