Evanna Phoon wrote the below article and she is a Senior Franchisee of Rockwills. She can be contacted at email@example.com . * This article written by Evanna Phoon appeared in Malaysia SME newspaper *
Family Businesses are very complicated and they are a few key concerns among them when passing on their wealth to the next generation or generations to come. Malaysia SME now are more dynamic and globalized, because of this, Malaysia SME families no longer can confine themselves to local solutions, they will need to look at a broader aspects.
Once the SME family assets are global or family members are globally diversified, the family themselves should start looking for a complete solution when planning for their family wealth and business to be able to pass through multiple generation. There are different taxation regime, marital law, divorce law, inheritance law to consider on different countries where their business, assets and family members are residing.
The families that we plan for now fall into two groups. One group is family that has financial assets like lands, money, investments. Lots of it and they want to know how to house some of their family wealth to last through multiple generations. Another group is those who accumulated their family wealth of business in a way that their family name is deeply rooted in their business.
One example that the family name is tie into their business is YTL, it’s not only the business but it’s a family identity. Well, these families normally will only give out the financial assets and not the family business shares. They won’t want to transfer their shares or division of company shares among family member because it’ll mean that one day, their great grandson might only hold 2% of the company share, another great granddaughter might be holding another 5%. And the company shares are all scattered around and there’s no control, and we notice that this type of structure is a target for take over.
First of all, the family name is deeply rooted in their business and secondly, they don’t want the family members to lose control over the family business. In summary, they want stewardship of family business and to make sure that family members are in control of the business.
Besides looking on structures to protect the financial asset and wealth of the family, it’s very critical that when planning for trans-generational wealth transfer, FAMILY MEMBERS are the ultimate beneficiary of the family assets. So, family values, family traditions, family bonding and harmony should be preserved. At the end of the day, Malaysia SME families should ask themselves, “Is it business that keeps the family together?” or “the family that keeps the business together?”
During our time, family traditions are carried on orally. We hear uncles, grandparents telling their stories to us. We go back to celebrate every Chinese New year or other festive seasons and it becomes a part of our upbringing. However, nowadays, we hardly can get a full house of family member during Chinese New Year or major festive seasons.
It is important to think of ways on how to get the family member together to make sure that their children continue to know who they are even though they are not staying close to each other as children needs identify and if they don’t find it in the family; they’ll find it somewhere else.
For Malaysia SME to succeed in transferring wealth to multiple generations, firstly, we have to agree that your wealth is not only family business and financial assets. Your wealth also consists of family identity, family unity, family harmony, family traditions & family vision.
Below picture shows the family business three circle model. We’ll explore more on this circles in the next issue… Stay Tuned.
About the Author:
Evanna Phoon is CEO & Founder of www.MalaysiaWills.com, Malaysia’s first online will writing service provider for Rockwills Corporation Sdn Bhd & as-Salihin Trustee Bhd. Visit her website to download FREE ebooks www.MalaysiaWills.com & watch over 300+ videos on the topic of Will Writing for Personal & Business. She can be contacted via firstname.lastname@example.org.