The report on preserving family wealth was insightful and highlighted valid points about empowering next-generation successors to be responsible guardians of family businesses (Keeping family wealth is serious business, Jan 6).

As a family business is transferred to the next generation, it is also important for the succession planning conversation to cater for the founding members' retirement planning needs.

One way to achieve this could be through the use of private annuity vehicles, whereby shares in the family business are transferred in tranches from the founding members to the next-generation successors.

This is done in return for the consideration of a regular income stream over the lifetime of the founding members.

Such a mechanism gives time for the successors to be assessed on their readiness and willingness to take over the family business. It also permits the successors to gradually gain control of the family business in a calibrated manner as they acquire the experience and the skills needed to run it and eventually fully take over.

Should there be any lengthy transition between the founding members ceding control and the successors taking over, third-party partners such as asset managers could be hired to plug any gaps, or to manage assets under trust. However, this needs to be sensibly managed.

These third-party partners should be given incentives to grow the family business without dilution of control over it, and not to merely maintain the status quo.

Onerous covenants, including non-disclosure agreements, non-competition clauses and compensation claw-back provisions, could be used to protect the family business' interests and trade secrets from any potentially renegade third-party partners.

Strong communication is also paramount in family business succession planning to manage conflict, which could create divisions and cripple the business.

Family business succession planning involves managing a range of financial and behavioural issues. It is heartening that banks in Singapore are stepping up their game for family businesses in Singapore.

Woon Wee Min