The toughest decision you will ever make

High-profile billionaire, real estate mogul and one of the world’s top philanthropists, Yu Pang-Lin passed away at the age 92 in 2015. In a gathering five years earlier, he announced that he would entrust his entire wealth valued at D$1.5 billion to a bank and the money would then be donated to charity after his death.

Yu was believed to be China’s first billionaire to donate an entire fortune to charity. He gained prominence when he acquired Bruce Lee’s home in the early 70’s and rose from toilet cleaner to billionaire.

He once said, “If my children are more capable than me, it’s not necessary to leave a lot of money to them. If they are incompetent, a lot of money will only be harmful to them.”

In the West, there appears to be a growing awareness of the dangers of children entitlement. Elton John, whose net worth is around $550 million, has the same mindset. He has no plans of leaving much of it to his sons. “Of course, I want to leave my boys in a very sound financial state. But it’s terrible to give kids the silver spoon. It ruins their life! Listen, the boys live the most incredible lives, they are not normal kids. But you have to have some semblance of normality, some respect for money, some respect for work.”

The world’s most savvy investor, Warren Buffet, whose fortune is estimated at $65 billion, intimated that only a very small part of that money will go to his three children. According to Fortune magazine, Buffet pledged to give away 99 percent of his wealth over his lifetime. “My family won’t receive huge amounts of my net worth. I still believe in the philosophy…that a very rich person should leave his kids enough to do anything but not enough to do nothing.”

It looks like Jaycee Chan will have to make it on his own as well. His celebrity father, Jackie Chan, has decided to donate his money to charity instead of leaving it to his son. As reported in Hong Kong media, Jackie Chan, who has a fortune estimated at $350 million, recently announced that he will donate all his wealth to charity.

The “Bleeding Steel” star, who originally intended to split his wealth between his family and charity, has decided to give it all to the needy. Chan was quoted as saying that his son Jaycee should be capable of earning his own money now that he has his own career.

Inheritance can be tricky, so discussion is often avoided. However, as the founder reaches the age of 60 and up and the children are all grown up and likely to have been forced (lured) into the business with zero outside work experience, founders can expect the following worrisome scenarios:

-Escalating dispute between founder and children related to management style;

-Simmering sibling rivalry on family and business issues;

-Children jockeying for power aggravated by in-law influence;

-Worsening spats between the founder and spouse;

-A competitive and highly regulated marketplace

-Growing tax pressure exacerbated by different sets of internal books; and

-Urgency to align a complicated ownership structure for estate and transition planning.

When these combustible issues are mixed, the process of initiating an inheritance plan can be so overwhelmingly daunting that owners tend to naturally forego the process. Procrastination or the “Do Nothing Option” then ends up as the most convenient choice.

So when an event like death or illness strikes the founder, expect the phenomenon “Rice bowl to rice bowl in three generations” to reappear.