Dead Men Tell No Tales?

For all you successful and wealthy men and women out there, particularly those with children and loved ones, one of the greatest things you can do before you go (and unfortunately, most of us don’t know when we might go) is to get your affairs in order.

There are countless cases where your heirs, your executor, your trustee...is left with the excruciating problem of how to deal with your assets. Who gets what? When? How? Etc. Families have splintered and become sworn enemies because of your failure to make things crystal clear. Sometimes there will be guesswork, sometimes there will be long bitter fights which not only help to make the lawyers rich but also may end up unintended or undesirable results.

A lot of Asians, particularly the older generations have relied on “secret trusts” or nominee relationships to effect wealth transfers, wealth holding, probate/transfer tax avoidance, etc.. Sometimes gifts are gifts, sometimes they are not. Sometimes loans are loans, sometimes loans are not. Sometimes bequeaths are bequeaths, sometimes, they’re not. This isn’t a great issue when the patriarch/matriarch is alive, but it becomes a mess when he/she dies. No one else knows the “truth”.

A recent Singapore case highlights some of these issues [Wong Chong Yue v Wong Chong Thai [2011] SGHC 3]. Not a great case by any means (but some nice Asian flavour) and just to show how where these cases usually end up. The short of it was that Father made some transfers of the family business company’s shares to the children. One child claimed it was an “express trust” in favour of him. The other siblings disagreed. Had Father made some (better and more) explicit declarations, say a Deed of Gift or Loan Agreement or a formal trust, there would probably would be no argument as to his intentions. [Of course nothing prevents people from challenging anything but with less merits or less uncertainty, the sooner frivolous or fraudulent claims can be laid to rest.] Instead, we the courts having to decide. And in the absence of good compelling evidence, the courts could easily get it wrong.

But dead men can tell tales…..only if you do it before you die. Get your affairs in order by leaving no questions unanswered. Otherwise your heirs will be burning money, not as an offering to you but as legal fees.

[Update 26 Jan: I see HK/Macau gambling tycoon Stanley Ho Hung-sun (何鴻燊) took my advice.....hasn't gone totally smoothly and you can see all the ruckus it is causing....but since he is alive (and apparently has full mental capacity despite his recent stroke), he should be able to squash any "uncertainties" over his desired wealth splitting. The TV appearance was a nice touch. We can only imagine the years of litigation [tough luck HK lawyers!] it might have took to settle his estate had he chosen not to make this bold step. Your turn. ]