China Family Business Development Report predicts that in the next 5 ~ 10 years, China family business will usher in the largest wave of family inheritance in history, and more than 3 million private enterprises will face the problem of successors in the next 3 ~ 8 years, with an estimated wealth value of 4 ~ 7 trillion yuan. The more people are at the top of the pyramid, the more important it is to protect and inherit wealth.

Comparison of Common Wealth Inheritance Tools

The first one is a will.

This is the easiest way to inherit wealth. The testator explains his property distribution before his life, and then carries it out according to his own wishes. However, the limitations of this method are also obvious. First of all, the issue of inheritance tax cannot be avoided. At present, the draft of inheritance tax collection bill is in full swing, and Shenzhen has also carried out a pilot collection. Inheritance tax will become the biggest constraint of testamentary succession. Secondly, there are privacy problems such as weak execution, easy to cause disputes afterwards, moral hazard of guardians, and disclosure of wills will also expose net assets.

The second is a gift.

That is, the donor gives his property free of charge and the donee accepts it free of charge. The law stipulates that a certain amount of gift is exempted, and the way of gift is easier to implement. However, the allowance is generally low, and the excess is subject to gift tax, which is usually levied at the same time as the inheritance tax. When it comes to real estate issues, taxes such as deed tax and stamp duty need to be paid.

The third is commercial insurance.

After years of development, the commercial insurance model is becoming more and more mature, and the insured can completely transfer the wealth to the beneficiary. In addition, the policy property is independent, which can effectively isolate the debt recovery of the insured and protect the interests of the beneficiaries. However, the transfer of financial assets is far from meeting the requirements of wealth inheritance. In addition, problems such as poor liquidity and difficult implementation of policies have to be considered.

Family trust has unique advantages.

Family trust is a kind of trust that aims at the inheritance, management and protection of family fortune. The clients are generally individuals, and the beneficiaries are generally family members. Its advantages are mainly manifested in the following points:

First, family trusts have incomparable financial advantages in other aspects.

At present, the trust industry is the only chartered financial institution in China that can make portfolio investment across the money market, capital market and industrial market. With the diversification of wealth management needs of high-net-worth individuals, it is of great significance for the trust industry to "customize" the asset portfolio for customers and allocate their assets on a global scale.

Second, the way of wealth inheritance is flexible.

Family trust can flexibly set various terms according to the requirements of the client, such as the establishment period, the way of asset allocation, and the disposal of property in an emergency. However, these terms are not immutable, and can be adjusted according to prior agreement during the duration of the trust. In addition, family trusts are usually established for a long time, and even have indefinite trusts. In theory, the benefits of setting up a family trust can cover several generations.

Third, realize the safe separation of property.

Trust assets are independent, and once a family trust is established, the beneficiary becomes the legal owner of these entrusted assets. Therefore, when the trustor goes into bankruptcy liquidation, the trust assets established by him will not be included, and the debts of the trustor will not be transferred to the beneficiaries of the trust assets, so the court has no compulsory recourse effect on the trust assets. In addition, because the family trust stipulates the beneficiary and the scope of benefit, the breakdown of marriage relationship will not affect the complete inheritance of wealth.

Fourth, it is conducive to tax saving and tax avoidance.

From the experience of foreign countries, the rich can transfer their assets to the trust and be managed by a third party, which on the one hand realizes the transfer of wealth ownership; On the other hand, because it is a transfer of wealth before death, it is not included in the scope of inheritance tax collection. Therefore, by setting up a family trust for a long enough time, wealth can be passed on without paying any inheritance tax. Under the background that the voice of introducing inheritance tax in China is getting higher and higher, the advantages of family trust will also be highlighted. The transfer of physical assets can also be carried out by means of trust, which also has a good evasive effect on the above-mentioned transaction deed tax and other issues.

Fifth, it is conducive to the inheritance of family businesses.

Equity represents the control right of the enterprise. For the controllers of family business, they hope that the equity can be concentrated among family members, and they don't want the equity to be diluted and marginalized because of marriage. Family trust can maintain the stability and inheritance of equity structure. The enterprise can put the equity into the trust plan, clearly state the rights of the actual controller and other controllers of the equity, so as to optimize the controlling shareholder and ensure the absolute control of the founder.

Sixth, it is conducive to encouraging and restraining the behavior of future generations.

The trustor can clearly stipulate the conditions for the beneficiary to obtain benefits in the trust terms, and attach terms that are binding on future generations, such as distributing more benefits after being admitted to a university or finding a good job. If you do nothing and squander your life, you will have less money at your disposal. Through the constraints of these specific terms, we can effectively avoid "black sheep", thus realizing the education of heirs and inheriting material wealth and spiritual wealth.