ASIA PACIFIC-WIDE Trends and Developments Contributed by: Lu Li, Yinuo Zhang and Wenting Ma, Xuxiaoping Law Firm
merely on “who the wealth will be distributed to”, but raise more profound questions: “If I lose legal capac - ity in China, can my children living overseas assume guardianship in a timely manner?” and “How can my assets be disbursed lawfully to care institutions or beneficiaries?” The complexity of these questions lies in the funda - mental divergences across jurisdictions concerning the determination of legal capacity, commencement of guardianship proceedings, validity of trusts, and recognition of tax residency status. For instance, how can a voluntary guardianship agreement concluded under China’s Civil Code be recognised and enforced in common law jurisdictions? Will the asset segrega - tion feature of family trusts established in Singapore or Hong Kong be upheld by courts in Mainland Chi - na? Such issues cannot be resolved by a single legal instrument; instead, multi-jurisdictional collaborative thinking must be embedded at the stage of structure design. For lawyers and wealth management institutions aiming to expand business across the Asia-Pacific region, capabilities in two key areas must be strength - ened. First, they need to build foundational knowl - edge of succession law, trust law and guardianship regimes in major jurisdictions, including Mainland China, Hong Kong, Singapore and Australia, so as to identify potential legal conflicts within cross-border structures. Second, they should establish efficient collaborative networks with overseas legal practi - tioners. When designing structures, provisions ena - bling cross-border enforcement must be embed - ded in advance. Examples include clarifying remote authorisation mechanisms for overseas guardians in voluntary guardianship agreements, stipulating oper - ational procedures for multi-currency disbursements and cross-border remittances in trust deeds, and set - ting separate governing law clauses for overseas real estate assets within wills.
daughter. The son lacks civil capacity due to congeni - tal illness, while the daughter resides overseas and has a minor daughter who is under the de facto care of the settlor. Within this family, the settlor faces four overlapping risks concerning the elderly, illness, minor and person with disabilities: • decisions relating to her own retirement and medi - cal treatment; • asset management upon loss of capacity; • lifelong care for the incapacitated son; and • the upbringing and education of the minor grand- daughter. All these arrangements must continue to operate in scenarios where the settlor may subsequently lose capacity to make decisions. Structures of such “vulnerable composite families” are widely prevalent across the Asia-Pacific region. The “8050 Problem” (where octogenarian parents care for unemployed 50-year-old children) in Japan, the sharp surge in elderly single households in South Korea, and more than ten million “elderly supporting disa - bled dependants” households in China all illustrate that demographic shifts have rendered this challenge a shared regional issue. Clients no longer require dis - jointed individual instruments, but an integrated solu - tion spanning five dimensions:
• people; • assets; • medical care; • elderly support; and • education.
In respect of people, clear guardianship arrangements and mechanisms for personal care decision-making are essential; in respect of assets, asset segregation, preservation and growth, as well as targeted disburse - ments need to be realised; in respect of medical care, safeguards must be put in place to ensure medical treatment decisions align with the settlor’s prior wish - es and that funding is readily available; in respect of elderly support, a sustainable and stable system for providing elderly care services should be established; in respect of education, provisions must guarantee
Evolving Client Needs: From Standalone Instruments to Full Life Cycle Solutions
Risks facing Asia-Pacific HNW families can no longer be addressed by traditional standalone instruments such as wills or insurance policies. A typical case involves a settlor aged over 70 with one son and one
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