A local real estate clan has come under spotlight recently after the matriarch filed a suit against a bank that serves as a trustee of the family business.
The family trust owns 33 percent of the listed company. But a second-generation family member has accumulated 27 percent of the company’s shares, and this has aroused the concerns of other beneficiaries over the trustee’s loss of control of the family flagship.
Some trust beneficiaries have requested the bank to increase its shareholdings from the secondary market in order to cement control over the listed unit.
However, the trustee has rejected the request, possibly because the mandate of the trust has not explicitly stated guaranteeing control of the listed company as one of its objectives.
In Singapore, the saga of the city state’s first family appears to run on a similar theme. Two siblings accused their brother Lee Hsien Loong, Singapore’s prime minister, of keeping their father Lee Kuan Yew’s house to further his own interests.
Singapore’s founding father had wanted the family home to be demolished after his death instead of turning it into a monument.
The two cases may suggest that family wills should be as specific as possible in order to avoid family feuds.
However, leaving excessively rigid instructions might restrict the trustee or descendants from making the right adjustments in accordance with the needs of the times.
For example, the Rockefellers built the family trust in 1913, and it has been passed on to the sixth generation.
Fortunately, the trust didn’t mandate that the family to stay in the oil business or keep control over Standard Oil. If it did, the family might have already lost its wealth during several oil market collapses.
The family has been able to shift its focus depending on business trends, and has accumulated even more wealth in other businesses such as property and technology, thanks to the flexible mandate of the trust.
But perhaps the secret of the Rockefellers’ success is that it has successfully passed on the family’s core values such as frugality and family solidarity to the next generation, something which proved to be more important than transferring the family wealth.
This article appeared in the Hong Kong Economic Journal on June 16
Translation by Julie Zhu
[Chinese version 中文版]
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