FAMILY BUSINESS SUCCESSION

Planning helps a family to chart a roadmap to attain its ultimate financial goal. Similarly, wealth succession planning enables the business owner to utilize the estate planning instruments such as will, trust, foundation, and holding companies to achieve the wealth succession objectives.

 

Below are some questions you may ponder over:

> Can your family wealth last more than 3 generations?
> Do your heirs know how to manage wealth?
> Do you have a succession plan for your spouse and children upon your demise?
> Do you know that overseas assets in certain countries may be subject to wealth, gift, capital gains or inheritance tax upon demise?

 

All family businesses will face common challenges in business succession that the owner should address before going.


 

Solution 1: Family Business Trust

The objective of setting up a family business trust is to protect and preserve the Family Business over multiple generations while keeping the shareholding within family. This trust may last for a period of 80 years. Under the Malaysian laws, there is a rule against perpetuity.

 

Solution 2: Family Foundation

A foundation is an independent legal entity, usually established to hold assets with the objective of managing the assets for the benefit of a class of persons. It is typically used for private wealth management and charitable purposes. It provides both the benefits of a trust and the structure of an independent corporation. It looks like a company and works like a trust. It is set up in Labuan and is governed under the Labuan Foundation Act 2010.