Overcoming Asian reluctance to estate planning

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Migrants or permanent residents in Australia who have backgrounds from Asia are often very averse to discussing estate planning.  There are a number of time-honoured cultural reasons for that, but Jonathan See looks at whether they are still relevant.

Chang and his wife, Ming, migrated from China to Australia in 1975 with little money in their pockets. Like most first-time migrants, they did a couple of odd jobs for a few years and saved enough money before they opened their own Asian grocery store. Through hard work, determination and sacrifice, they were able to grow their business.

Chang and Ming have three children, Robert, Ashley and Terry, all born in Australia. Robert and Ashley help their father run the business as full-time employees whilst Terry works as a solicitor in a law firm. All three children are adults now and happily married with children.

Chang is now 70 years of age. Despite the substantial amount of wealth, he was able to make, he does not have a will in place and has not set up any plan as to who will make decisions for him should he lose his mental capacity. He is currently happy with his current disposition and does not see any need to plan these things as he is focused on growing his business more.

There are two reasons for his reluctance towards estate planning.

First is that death is a taboo, a topic nobody talks about in Chinese culture. Discussing or even thinking about it disturbs the inner harmony.

Second is the lack of understanding of its benefits. Before the 1990s everything the Chinese had was state-owned; hence they did not need to plan because the state would have provided for their children.

Should Chang be content about not doing anything about estate planning?

Definitely not. Times have changed and so has his situation. Chang is now living in Australia and he has savings and property.

The reticence to discuss death may derive from the teachings of Confucius. Confucius’s guiding belief was that of the philosophy Tien Ming (or the influences of fate and mission). Tien Ming states that all things are under the control of the regulatory mechanism of heaven. This includes life and death, wealth and poverty, health and illness. Confucius believed that understanding Tien Ming was his life’s mission. He encouraged people to accept whatever happened to them, including death.

Confucius affirmed that without knowledge of how to live, a person cannot know about death and dying. However, Confucius avoided discussions of death. He did not discuss death and the unknown future or afterlife in detail. He concluded that these issues were complicated and abstract, and that it was better to spend time solving the problems of the present life than to look into the unknown world of death and afterlife.

A discussion with Chang about this could assist him to reach the view that estate planning is not about his death but rather about the life of his surviving family.  Our motto in the Estate Planning Division of Townsends is “Your Estate Planning is not about you, it’s about those you love”.

Whilst it may be a difficult conversation to have with him, Chang could be advised of the following benefits of estate planning:

a)    He can plan his own needs.

A time will come when Chang may become incapacitated and unable to manage his own affairs. That is why it is necessary for him to appoint someone who can look out for his best interests to make these important decisions for him should that time come. He can appoint an enduring attorney and or guardian to look after his financial, investment, property, personal, medical and health matters.

b)    He can dispose of his wealth in any way he wishes.

He can choose to leave behind his properties or part of them not just to his family but to anyone who is not related to him by blood (e.g. son of the man who helped him when he was starting off his life in Australia). Equally important is who he can choose to exclude as a beneficiary (e.g. ex-spouses of his children). Should Chang die without a will, his estate will be distributed according to the law of the state which could even be against his wishes.

c)    He can prevent filial disputes.

Sometimes leaving the decision of distributing properties to the loved ones left behind can drive a wedge between them. The best way to avoid this conflict is for Chang to decide in his will how much to leave for his wife and each of his children especially in the case of Robert and Ashley who have substantial involvement in the family business.

d)    He can protect family wealth.

Even if Chang’s children are on good terms, non-family members may try to access the children’s inheritance. For example, creditors could try to attack Robert’s assets and Terry may be open to lawsuits because of his profession. With a carefully crafted testamentary trust in his will, Chang can place his assets in a trust with his wife and children as his beneficiaries. In this arrangement, the assets are not placed in the names of the children thereby protecting the assets from reaching the hands of creditors. At the same time, Chang will be able to let his children enjoy the fruits of his labour and provide for future generations.

e)    He can minimise taxes.

Considering that he was able to accumulate wealth by starting out from scratch, he would certainly want to keep as much of it as he can so that he can provide more to his family and the succeeding generations. Planning his estate carefully can help his heirs save in taxes and keep more for themselves. He can do this by creating a trust in the will wherein the trustee can distribute the income to the heirs in a tax-efficient manner.

In the end, the biggest benefit Chang can get from this is that he has control of his estate which will take effect even when he is no longer around.

By Jonathon See, Solicitor

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