REGULATORY TRENDS AND ITS

IMPACT ON THE FINANCIAL

PLANNING INDUSTRY-

ESTATE PLANNING

PERSPECTIVE

BY LEE CHIWI, CEO, ROCKWILLS GROUP

Dec 2015

1 copyright, Lee Chiwi 2015

Topics

How should FA Representatives engage in estate planning

for clients? This include up and rising developments such

as:

• Succession planning in family business

• Charitable giving

• Planning the disabled next of kin

• Mental incapacity and LPAs

• Cross national estate planning

• Other upcoming trends in the space of estate planning

and trusts

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Holistic Planning Opportunities

3

Estate and Succession

Planning

Individual

FamilyClient’s

Business

Social

Responsibility

Financial Advisory Firms engaging in Estate Planning

4

4.6 Non-FA Activities Conducted by LFAs Scope of Prohibited Non-FA

Activities

MAS agrees with feedback that financial planning services like will writing,

estate planning and tax planning services are complementary to the provision

of FA services and may be provided either by the LFA directly, or by way of a

referral to another entity or person.

• LFAs must conduct due diligence to ensure that the persons conducting

such activities, whether in-house or through a referral, are competent and

suitably qualified.

• Revenue cap of 5% to ensure that the non-FA activities of LFAs do not

become significant income drivers and LFAs remain focused on their core

role of providing financial advice.

30th Sep 2013

Can Financial Advisers afford to ignore the estate and

Succession Planning needs of their clients?

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Wealth Transfer Phenomenon with Trusts

• World wide succession

• In the U.S. approx. USD3 trillion currently resides

in irrevocable trusts. Close to USD30 trillion will

be put in trusts over next 20 years

(Robert A Rikoon “Managing Family Trusts”)

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Family Trusts- in its infancy in Singapore

• Protecting cash, investments, real estate, insurance

assets, business assets of the family

• Location of assets, domestic or cross border

• Client Profile and objectives

• His Beneficiaries, residence and tax issues

• Family wealth reserves and resources for multi-

generational wealth perpetuation

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8

Family Trust

Beneficiaries

Settlor

Transfer of $1 million

Autistic son

Trustee

AQT v AQU [2011] SGHC 138

Protecting Family Wealth against Divorce

The Bemali Trust was

established within the

same week that the

Husband said he

wanted a divorce and

mere months before

the Husband filed for

divorce.

The Court

noted that the

Trust was

primarily for

the schooling

expenses the

children and

the special

needs of the

son.

Ex-spouse

xxx

xxx

Succession- Business Owners

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Small and Medium Enterprises (SMEs) refer to

enterprises with operating receipts not more than $100

million or employment not more than 200 workers

Government Statistics, 2014

Profile of Enterprises

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Succession- Business Owners

Atlas Sound

and Vision-

Succession

Planning

When there is a Family Business

Tan Enterprise

Shareholder 1

Shareholder 2

Tan Enterprise

Shareholder 1

Shareholder 2

Shareholder 3

Shareholder 4

Shareholder 5

Founder and Spouse Children

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When there is a Family Business

Tan Enterprise

Shareholder 1a

Shareholder 1b

Shareholder 1c

Shareholder 2a

Shareholder 2b

Shareholder 2c

Shareholder 3a

Shareholder 3b

Shareholder 3c

Shareholder 4a

Shareholder 4b

Shareholder 4c

Shareholder 5a

Shareholder 5b

Shareholder 5c

Tan Enterprise

Shareholder 1

Shareholder 2

Shareholder 3

Shareholder 4

Shareholder 5

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Executive Directors

Non-Executive Directors

PTC

Family Member

Family Member

Family Member

TrustPrivate Company

ListCo Shares Investments

Properties

Trust Administrator

Class of Beneficiaries

Corporate

Trust

Family CouncilFamily Charter Precursor

to the

Family

Office

Family Business Succession

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Alternative Dispute Resolutions

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Arbitration

Mediation

Charitable Giving- strategic giving

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Charitable Giving- strategic giving

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Charitable Giving -Social Enterprise

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Elder Care

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Investments, cash,

deposits, property etc.

Retiree/ Spouse

Distribution of income for

retiree & spouse

ELDER TRUST

Settlor

Principal Beneficiaries

Secondary Beneficiaries

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Need for protection

88 year old widow, MdmChung signed an LPAgiving away her rights to a40 year old ‘adopted’grandson Yang Yin- fromChina, to decide on herfinancial well-being for theremainder of her life. Shealso made a will namingYang Yin as solebeneficiary of her $40million estate!

Widow with $40M

assets falling into

the wrong hands?

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Planning the disabled next of kin

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Planning the disabled next of kin

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Special Needs Trust Company

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Planning the disabled next of kin

OPG Annual Report 2014

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U.K. Office of the Public Guardian Annual

Report 2014-2015

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Set up in 2007, registered LPAs number 1.2 million,

53,000 deputyship orders under supervision

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The late "Sopranos" star's will is "a

disaster" that saw over $30 million of his

estimated $70 million estate go to the

government.

James Joseph Gandolfini, Jr. ,

American actor best known for his role

in The Sopranos as Tony Soprano,

Mafia Boss.

Estate and Inheritance Taxes- U.S.

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Lucian Freud archive acquired for the

nation to settle £2.9m in inheritance tax

Artist's sketches and letters will go on display

at the National Portrait Gallery next year Source: Guardian 16 Nov 2015

Lucian Freud, the grandson of

Sigmund Freud.

Estate and Inheritance Taxes- U.K.

Cross National Estate Planning

Singapore investors splurged US$17.3b on overseas

properties in 2013

Here are the top 5 destinations.

Citing the Real Capital Analytics’ statistics, Savills said

Singapore buyers invested a total of US$17.3 billion in

overseas properties in 2013, 31.8% higher than the

US$12.3 billion in 2012. The UK, China, Malaysia, Australia

and the US are the top five destinations, accounting for

80.3% of the total overseas real estate investments by

Singapore investors.

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Other upcoming trends in the

space of estate planning and trusts

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Accommodating new asset classes

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Other esoteric assets like

antiques, wine and other

collections

$3.9m in sales,

15,000 visitors

at Art Fair

Source: Straits Times,

17 Nov 2015

Accommodating new asset classes

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Data privacy issues, fights

among beneficiaries?

Succession of

Digital Assets

Source: 17 Nov 2015

Digital assets are classified as

images, multimedia and textual

content files.

Accommodating new asset classes

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Trouble owed her

coddled lifestyle to her

former owner, heiress,

Leona Helmsley who

died in 2007 and

bequeathed the bulk of

her estate, $12 million,

to her dog.

Pets!

Addressing maintenance of

Animals after death of owner

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Family Trust

Multi-

Generation

Beneficiaries

Settlor dies$2m proceeds

Part of money funds

Premiums on

new policies

$4m proceeds

Settlor’s child dies

$6m proceeds

Settlor’s Grandchild dies

NB: There is also insurable interest in lives of spouses of settlor and of beneficiaries

Perpetuating Wealth with Insurance Trusts

Pay off

mortgages on

real estate

Acquisition

of real estate

surplus

Trust Income

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Joint Ownership of Real Estate

Case Studies:

Lau Siew Kim v Yeo Guan Chye Terence and another

[2008] 2 SLR(R) 108

Chan Yuen Lan v See Fong Mun [2014] SGCA 36

Resulting Trust v Presumption of Advancement (Lifetime

Gift)

Estate Administration Services

• Avoid family acrimony

• Lack of suitable relative or friend

• Professional Accountability

• Onerous responsibility

My Wish List:

A significant

growth of

Financial

Advisers

specializing in

estate and

succession

planning

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Insurance Planner

Financial Planner/Adviser

Wealth Manager

Estate Planner

Thanks!

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