(Please note that Lee Soo Chye is now Managing Director at Oaks Legal LLC. This interview was conducted when Soo Chye was a Managing Partner at Wee Swee Teow LLP)
“He LOVES local food”. That was the immediate response we got when we asked Soo Chye’s team what’s interesting about him. Among the many lawyers we've met (some of whom are really obnoxious), this comment aptly describes Soo Chye’s style as a lawyer – down-to-earth, relatable and practical. As the Singapore government pushes for more entrepreneurs in the island nation, we spoke to Lee Soo Chye, a partner at Singapore law firm Wee Swee Teow LLP and an expert in succession planning for businesses, on the pros and cons of trust structures and estate planning for business owners.
Name: Lee Soo Chye
Company: Wee Swee Teow LLP
Estate Planning Specialization: Succession planning
Base Country: Singapore
Service Style: Practical, relatable, professional
Something interesting: Loves eating local food at hawker centers
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Q: What kind of estate planning work do you do?
Lee: Succession planning. Succession planning isn’t just about wealth planning, it is also about how the client’s business can continue after them. Most of our clients in this space are those who have been with us for a while. We will share with them the need for succession planning, but they may not see the importance at that time. When they do see it, they want to move fast.
Q: How lucrative is the estate advisory, succession planning portion out of all the things that you do?
Lee: We don’t think of estate advisory and succession planning as a lucrative practice. If you measure it that way, I must say that it’s not very lucrative based on the amount of time we spend on such matters. The primary driver for us in offering these services is that we hope our clients’ businesses, which they have built over their lifetime, can continue after them, if that is their wish. It’s very sad to see a business doing well but not being able to continue after the client passes away just because they didn’t plan for succession.
Q: That means you offer succession planning as a complement to your greater offerings?
Lee: Over time, it may become a primary service that we provide.
Q: Why? Are there any trends that are helping this industry?
Lee: People are getting richer and family situations are becoming more complicated. Many businesses now have cross-border jurisdictional issues and for many individuals, their assets aren’t just in Singapore, but also overseas.
Where estate duties imposed are substantial, you need to think about how to divest the legal ownership of your assets. In some countries, estate duties can be as much as 40 percent. Many Singaporeans don’t look at what structures they should use to hold the overseas assets.
Cross-jurisdictional Issues
Going forward, as businesses become more sophisticated, business owners will need to think about appropriate structures. For example, we have a client where some of the overseas businesses are held in the name of locals as per local regulatory requirements. In this case, we need to think about what has to be done to address risks associated with that. Also, there are some jurisdictions that don’t recognize trusts. For example, in Indonesia, you can’t subject Indonesian assets into a trust. In this case, we need to explore alternatives to meet the clients’ objectives. Invariably, this requires us to work with other professionals (both in and outside the legal industry and with our Indonesian counterparts). That’s where it gets more exciting.
Q: What is a typical client for you for estate planning?
Lee: The SMEs (small and mid-size enterprises) or the “towkays” (business owners) with businesses in Singapore and overseas.
Q: How much does it cost to do succession planning? I understand it depends on the complexity and other factors but is there a range?
Lee: We phase the services. The first part is advisory. Don’t spend too much on it. It will usually take four to six hours so about SG$4,000 and we usually suggest a cap. After determining what the client really needs, we’ll explore the different structures that may be appropriate for the client. This will take a bit more time. Once we decide on the most appropriate structure, the next phase would be the implementation phase and the cost of this phase depends on how complicated the structure is.
Drafting and advising on a trust can cost between SG$10,000-SG$30,000. It’s a one-time fee for us. There are also other structures like foundations which may be considered. In the trust structure for such business owners, we usually recommend that the trust companies be appointed as trustees. They typically charge an annual management fee based on a percentage of the assets under management. For larger estates, we would usually recommend working with bank-based trustees. However, for certain kind of assets, boutique trustees may be more appropriate.
Q: This trust business is significantly more profitable, no wonder everyone is fighting for this business.
Lee: For us as lawyers, we mainly advise clients. We don’t sell any ‘product’ (maybe the money is in the product sales). Given the nature of the clients and the work involved, much time is required to walk this journey with the client.
Over the years, I have also learnt that clients need to first realize and understand the importance of succession planning, and to desire to get it done. Sometimes, it can take years before they are ready to embark on succession planning. There was a client whom we walked with for several years without progress in this area, and only when certain incidents happened did he decide to embark on the plan, which then moved quickly. For me, a lot of time is spent on helping clients crystallize their thoughts and goals on succession planning.
Q: Well, that’s because the cost is a bit deterring isn’t it?
Lee: Cost is usually not an issue for clients who need this type of advice. At one level, you should consider such structures if your assets are substantial and there are specific goals that can only be achieved through such structures. Most of these tools, like a trust, requires them to give up legal control. Many business owners have to get past this question – “If I am a successful business owner, why would I want to give up control?”
Q: Trust is popular in countries like Australia and less so in places like Singapore. Why is that the case?
Lee: In Australia, there is tax considerations in adopting a trust structure. In Singapore, a trust is more for protection - protection against creditors, protection against your next generation spending the money, etc.
Q: Besides the costs, what are downsides of having a trust?
Lee: Once you put assets into the trust, you can’t take the assets back, unless it’s a revocable trust. But for a revocable trust, sometimes there is no real protection. Typically, the creditors can still go after the assets in a revocable trust. The other type of trust is an irrevocable trust. It will be more difficult for creditors to go after the trust assets in an irrevocable trust.
Q: Is there a way irrevocable trust can be revoked?
Lee: There are certain circumstances when this can happen, but I wouldn’t call it revoking the trust. It’s more about dismantling the trust. For example, beneficiaries of such trust can come together to agree on dismantling the trust in certain situations.
This interview has been edited for length.
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