Less her­itage

China Daily (Hong Kong) - - FRONT PAGE - By GAO CHANGXIN in Shang­hai gaochangxin@chi­nadaily.com.cn

Amid an eco­nomic slow­down, Chi­nese par­ents are less will­ing and have fewer as­sets to pass on to their chil­dren than their for­eign peers, a sur­vey says.

Faced with a harsh eco­nomic re­al­ity, Chi­nese par­ents are less will­ing and have fewer as­sets to pass down to their chil­dren than their for­eign peers, ac­cord­ing to a sur­vey pub­lished on Mon­day.

The sur­vey by HSBC Life In­sur­ance Co Ltd, which polled more than 16,000 peo­ple in 15 coun­tries and ter­ri­to­ries world­wide, found out that nearly three in five, or 59 per­cent, Chi­nese re­tirees ex­pect to leave an in­her­i­tance of at least 418,000 yuan ($68,800) to their off­spring.

That com­pares with a global av­er­age of 69 per­cent, with an av­er­age be­quest of $148,200.

Not only that, but what is in­her­ited in China might be even less as Bei­jing could soon start levy­ing an es­tate tax.

Li Quan, 57, of Shang­hai, re­tired three years ago. He said he wants to leave his fam­ily with some­thing, but he is not sure whether there will be much to pass along. He is try­ing to make his son’s life eas­ier by help­ing to pay his mortgage and hold­ing weekly fam­ily din­ners along with his re­tired wife.

“I can leave my apart­ment to my son, for sure, but that’s pretty much it. I need cash for hos­pi­tal bills and money for my wife and I to live on,” Li said.

He added that he has never heard of par­ents who don’t want to pass down their wealth to their chil­dren; it’s just that they of­ten have lit­tle to give.

Ac­cord­ing to HSBC, only 3 per­cent of non-re­tirees in China had re­ceived an in­her­i­tance. In­her­i­tances of­ten are used to fund re­tire­ment: Of the non­re­tirees ex­pect­ing to re­ceive an in­her­i­tance, 81 per­cent said it would at least partly fund their re­tire­ment, with 14 per­cent hop­ing it would com­pletely cover their ex­penses.

The me­dian in­her­i­tance ex­pected by work­ing- age peo­ple is 287,100 yuan, which is about half the amount that re­tirees are ex­pect­ing to leave.

“The find­ings show that a high per­cent­age of global par­ents, in­clud­ing the Chi­nese, ex­pect to leave an in­her­i­tance to their chil­dren,” said Jim Costello, HSBC Life’s CEO des­ig­nate.

“How­ever, other needs over the course of one’s life, such as pay­ing for chil­dren’s ed­u­ca­tion and pre­par­ing for fam­ily med­i­cal care, may hin­der long-term sav­ings,” he said.

He ad­vises par­ents to in­te­grate legacy plan­ning into their over­all fi­nan­cial plan­ning to se­cure their chil­dren an in­her­i­tance.

Such plan­ning may have to in­cor­po­rate a new tax.

The Min­istry of Fi­nance first re­leased an in­her­i­tance tax draft in 2004 and re­vised it in 2010 but noth­ing came of it.

The tax, how­ever, re­gained trac­tion this year fol­low­ing re­ports that a pre­lim­i­nary tax pro­posal was brought up at the Third Plenum of the 18th Cen­tral Com­mit­tee of the Chi­nese Com­mu­nist Party in Novem­ber.

Ac­cord­ing to the lat­est draft, the in­her­i­tance tax will kick in at 800,000 yuan, with net suc­ces­sions of 5 mil­lion, 10 mil­lion, and 30 mil­lion yuan sub­ject to tax amounts of 840,000 yuan, 2.09 mil­lion yuan and 10.34 mil­lion yuan, re­spec­tively, ac­cord­ing to lo­cal me­dia re­ports.

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