Abstract If you must add a period of love to your daughter, Zuckerberg’s choice is “lifelongâ€. However, the rich loves the way of being rich, as a special birthday gift, Zuckerberg and his wife Priscilla Chen promise...
If you must give your daughter's love a deadline, Zuckerberg's choice is "life." However, the rich's love has a rich way. As a special birthday gift, Zuckerberg and his wife, Priscilla Chen, promised to donate 99% of Facebook shares (about 45 billion US dollars) to their own and their surnames in their lifetime. The famous charity “Chan Zuckerberg†hopes to let the new born daughter live in a “better worldâ€. Like most wealthy American tycoons, you may not be convinced that the world will be better, but you must prepare more and better wealth in your lifetime. Parents always want to leave their children best, and Chinese private entrepreneurs are no exception, but Chinese private entrepreneurs have more realistic expectations than donating money to charity. Since the reform and opening up, Chinese entrepreneurs have experienced a transition from nothing to perfection, from superior to rich. Today, most entrepreneurs have become the most discussed topic after a long period of commercial ups and downs. However, in the face of the company that has been established by itself, is it to let the second generation take over, or to sell the enterprise, or to entrust the professional manager to take charge? In the next five to ten years, China will have a large number of entrepreneurs facing the inheritance of wealth and business.
However, the inheritance of private enterprises is not their own. According to Gao Wei, director of the Family Business Program at Wudaokou Finance College of Tsinghua University and executive director of the China Financial Case Center, this is not only related to the sustainable development of the company itself, but also to the economic development of China in the next 10 years or even longer.
"For high-net-worth customers with wealth inheritance needs, the tool of trust, although far from perfect, is already the best one in the tools that humans have invented so far." "How to do when the rich generation is old" The book has a description of the family trust, or a glimpse of its appeal to high-net-worth people.
Despite the benefits of family trusts, the family trusts in China are basically a vacant lot to be seen. From a legal perspective, there is only one general trust law, but there is no detailed regulation on private trusts. From the implementation level, although the trust has been introduced into China for more than ten years, it has been regarded as an investment and financing tool in China, and few people equate trust and wealth management.
"The rich three generations" curse
Through industry research on 200 family business cases in Hong Kong, Taiwan, and Singapore in the past 20 years, the industry has found that family businesses face huge loss of wealth in the process of inheritance, in the year of succession (the year after the handover of the new and old chairman, Usually this transfer is accompanied by the control of equity transfer) and the cumulative stock excess return rate for the previous 5 years and the following 3 years is on average -60%. That is to say, the equity owner has a share of 100 yuan worth of shares in the first five years of the company's inheritance, and only 40 yuan is left when the inheritance is completed.
If it is the second generation to take over, how to help it make a smooth transition, and continue to operate along the right track in the future, to avoid business difficulties caused by the successor experience or lack of ability?
If you choose a professional manager, when the ownership and management rights are separated, how can you protect the enthusiasm of the operators and effectively protect the rights and interests of the owners and avoid mutual distrust?
If it is reselling and withdrawing from the enterprise, how can we carry out effective intergenerational inheritance for the large amount of cash flow thus formed, and avoid the curse of “rich three generations�
A person who is engaged in family inheritance training believes that if a family trust is set up, even if the second generation is not good at business, it will not fall to the point of decline.
"The family trusts in mainland China are still in the development and starting state. The development of overseas family trusts is earlier than the development of domestic family trusts. The well-known mainland riches who are well-known overseas have Wu Longjun and Cai Kui couple trusts. Pan Shiyi, Zhang Xin's family trust, Niu Gensheng charitable trust, family trust, etc.. Dr. Bo's Plateau, secretary general of the Kyoto Family Trust Legal Affairs Center, told the Legal Daily reporter that, specifically, the family trust refers to a trust institution with professional qualifications. Or an individual, entrusted by a family or an individual, in accordance with the agreement of the trust agreement, a contractual means of managing and disposing of family property, the ownership and income rights of the assets are separate, the ownership belongs to the trustee, and the income right is entrusted The person designates or determines according to the trust agreement. Its purpose is to help clients achieve long-term planning and inheritance between their family wealth.
There are also successful cases in China that are good at using family trusts to minimize risk.
Wu Yajun, Chairman of the Board of Directors of Longfor Real Estate, and her husband Cai Kui have become the wealthiest couples in China with 39.06 billion yuan. Finally, at the end of 2012, Wu Yajun and Cai Kui "dismissed the marriage in a peaceful and friendly way." However, this divorce did not cause equity disputes for Longfor Real Estate. In fact, the two adopted the family trust arrangement under the Anglo-American legal system.
Wu Yajun and Cai Kui completed the divorce property division by holding the trust fund in an understatement. The industry believes that compared with the disastrous consequences of the divorce of major shareholders of some listed companies, this model of property division that concerns corporate stability and family wealth inheritance is undoubtedly mature and forward-looking.
"In our experience, the demand for family trusts in China is increasing. There are many reasons. On the one hand, the accumulation of private wealth has reached a certain level, and wealth owners have begun to consider how to preserve wealth and inherit wealth; On the one hand, the function of the trust is also diversified. Traditionally, the trust is mainly used as an investment and financial management tool. With the development of the trust industry, a considerable part of the trust function is returning to the source – wealth management, and the family trust is a development of the trust industry. Important direction." Bai Peiyuan said.
Uncertainty in many problems
Since 2013, Ping An Trust and China Merchants Bank have officially signed a wealth inheritance family trust, including banks, trusts, third-party wealth management and other institutions, have begun to plan their own family trust business. Therefore, in 2013, it was called the first year of the Chinese family trust in the industry.
However, the superficial Chinese family trust has hidden shortcomings.
For family trusts, beneficiaries are the biggest risk point. Chen Sheng, a partner of Beijing Jindu Law Firm, believes that family beneficiaries need to split common property due to divorce, death and other reasons, which may involve the splitting of the beneficial rights of natural person trusts.
Chen Han, an associate professor at China University of Political Science and Law, believes that the reasons for this problem are as follows: beneficiaries are often minors; beneficiaries may increase or decrease; beneficiary rights may be inherited; beneficiaries may conflict with clients. So, can the beneficiary rights be inherited?
"This is a dilemma. If you limit the inheritance of beneficiary rights, then all the beneficiaries will die in the future. What should be done? If inheritance is allowed, can the spouse have inheritance rights? How does the trustee determine the heirs?" Chen Han said.
"In the international family trust, its assets belong to the trustee, but it is limited by the lack of China's trust registration system. From the legal point of view, it is difficult for China's family trust assets to achieve real ownership transfer." Senior financial planner Chen Yun said.
At the same time, since the “trustee regulations†have not been promulgated in China, the relevant regulations in business trusts have not systematically stipulated the rights and obligations of trustees. The rights and obligations of trustees in family trusts have become a problem for the theoretical community. Problems with the practice community.
"In theory, this situation may indeed bring some problems. For example, the trust law of China is stricter on the obligations of the trustee and does not stipulate the exemption of the trustee. Take equity asset management as an example, if the trustee is a family The 'nominal' shareholder of the enterprise, the trustee fails to fulfill the fiduciary duty when exercising the rights of the trustee, then it shall bear the responsibility according to the trust law of our country, but if there is any possibility of exemption under the BVI trust legal framework.†Say, but this theoretical hypothetical scenario does not pose a serious obstacle to the family trust business. On the one hand, family trust business requires the initiative design of professionals, similar problems can be avoided through active design; on the other hand, many provisions of the trust law should be arbitrary rules, allowing parties to adjust by contract.
Baibo Plateau said that on the one hand, on the one hand, the parties can make an agreement by contract and distribute the rights and obligations of both parties. For example, the rights of the trustee are limited, and any management or disposition of the trust property is subject to the consent of the trustor or the beneficiary, so as to avoid abuse of their rights. On the other hand, it is possible to add a protector within the scope permitted by law to give the protector the right to supervise the trustee.
Legal issues "seeking the truth"
It has also been suggested that in order for family trusts to function well in China, a series of supporting regulations and policies are needed to regulate them. In the current domestic legislative environment and social environment, there are still many uncertain factors in the legal system supporting family trusts. For example, the legality of the source of the property, the legality of the property of the client, the ownership of the property, and the legality of the establishment of the trust. In addition, the relevant practical rules associated with the Trust Law are also blank, and can only be terminated in the form of program vulnerability patches through regulatory layer normative documents.
"The problem should be that the benevolent sees the wise and sees wisdom. First, many laws, including the trust system, may have more or less imperfections, but this does not mean that the law is inoperable or unenforceable. Second, for In the case of family trusts, in the face of the lack of laws or obstacles, we can adopt the 'curve to save the country' approach. Third, the so-called operating rules are blank, which is debatable. There are indeed ambiguities in the system, but the family trust itself has taken the initiative. Sexuality can be circumvented by active design to avoid these ambiguities," Bai said.
In addition, one of the reasons for the establishment of family trusts for high-net-worth families to carry out wealth inheritance is the high inheritance tax, which has not yet been levied in China, which makes China's family trusts less urgent.
In this regard, Baibao Plateau believes that the inheritance tax will promote the degree of family trust business to a certain extent. By setting up a family trust early, it is indeed possible to make part of the wealth not considered a personal legacy when the founder dies. However, family trusts are not simply for tax avoidance. They have multiple functions in terms of wealth inheritance, family governance, and improvement of family business governance.
"Although the Chinese version of the family trust has some of the above deficiencies, it still has obvious advantages compared to other methods of inheritance." Baitiao said that as an imported product, relevant departments and industry insiders must design from the system, legal supervision, From the perspective of management operations, learn from mature models, and then combine local characteristics to make targeted innovations to help China's high-net-worth families and realize the “three generations of wealthâ€.
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