Skipping a generation: Lessons from the late Nippon Paint tycoon’s inheritance play
For families planning to hand over wealth directly to the third generation, the grandchildren’s tax residency is important
[SINGAPORE] Months before Nippon Paint tycoon Goh Cheng Liang died at the age of 98 in August 2025, the future of his multi-billion-dollar empire was already mapped out.
Regulatory filings by Nippon Paint show that by December 2024, the shares of its parent company, Nipsea International, had been transferred to six individuals – later revealed to be six of Goh’s eight grandchildren. Together, they hold one billion shares worth over S$10 billion.
His son Goh Hup Jin, chairman of Nippon Paint, was issued just one redeemable preference share but it carries 90.9 per cent of the voting rights. In other words, he remains the firm’s super commander.
Succession experts who spoke to The Straits Times (ST) said the Goh family’s approach – passing ownership of the family’s crown jewel directly to the third generation while letting the second generation retain control – is unusual, but not illogical.
Associate Professor Yupana Wiwattanakantang of the National University of Singapore, who has a specialisation in family capitalism, said the strategy makes sense, as Goh Hup Jin is already in his early 70s and can avoid having to manage another round of ownership transfer – which can be costly – in a few years.
Instead, he can focus on grooming the next leader, with third-generation heir Martin Lavoo now serving on Nipsea’s board and listed as the company’s representative. The 38-year-old in 2013 co-founded urban farming company Sustenir.
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“It is good that one grandson is on the board, learning the ropes,” Prof Yupana said, adding that separating ownership transfer from leadership transfer is a hallmark of professional governance.
Prof Yupana noted that the grandchildren own shares in Nipsea – the holding company which has a 55 per cent stake in Nippon Paint – rather than shares of the Tokyo-listed firm directly. This structure helps prevent family members from selling shares on the open market and diluting the family’s control.
Still a rare move
While there are merits to the Goh family’s succession play, the practice is uncommon among wealthy families in Singapore and elsewhere in Asia, several private bankers with decades of experience in generational wealth transfer told ST.
Michael Troth, head of wealth planning for the Asia-Pacific market at Citi Private Bank, said the traditional pattern of succession in business families – from parents to children before the grandchildren get involved – is still entrenched.
But if the parents see that their children are not able to manage their business, they could skip a generation when there are suitable third-generation candidates. But they have to be mindful of “unintended consequences”, as conflicts could arise if the third generation has a different strategy or objective from their parents, said Troth.
Angela Koh, head of wealth planning and family office advisory at UOB Private Bank, said in most cases, even when the second generation is bypassed in ownership because they are completely uninterested in the family business, they are often still involved in key decisions, such as senior management hires, dividend policies and strategic directions.
But when it comes to the transfer of liquid assets such as cash and equities, she is seeing many more generation-skipping cases in recent years, especially among families whose second generation is already independently wealthy.
Paul Chua, head of wealth planning and family office advisory at Bank of Singapore, shared similar observations. For private bank portfolios, real estate or collectibles, some of his clients would pass these assets to their children, who then decide how to distribute them within their branch of the family. In other cases, the patriarchs or matriarchs may allocate portions of their private wealth directly to their grandchildren.
“I won’t call it generation skipping, but I would say it’s more like providing for different generations,” he said.
He added that in many of these cases, the decision is made with the consultation and support of the second-generation children, who saw what their parents went through to build the wealth. As a result, they have a keen interest in ensuring that the transfer reflects the wishes of the first generation.
The tax factor
For families planning to hand over wealth directly to the third generation, the grandchildren’s tax residency is important. If they live in high-tax jurisdictions, passing assets to them can become a liability. “They may end up with some tax bill they would not otherwise have,” said Citi’s Troth.
Polka Mishra, partner at Javelin Wealth Management, said families must also consider the potential for double taxation – particularly if the beneficiaries hold citizenships or permanent residencies in countries with estate, inheritance or gift taxes.
In the US, for example, the federal estate tax rate ranges from 18 per cent to 40 per cent, although high exemption thresholds mean only very wealthy families are affected. In the past, to avoid being taxed twice, many used to bequeath their assets directly to their grandchildren – until the generation-skipping transfer tax was introduced in 1976 to close the loophole.
Singapore’s tax environment, by contrast, is much friendlier, following the abolition of estate duty in 2008.
UOB’s Koh said she is seeing more clients from Japan, South Korea and Taiwan who are keen to relocate members of the third generation to Singapore because of the favourable tax regime here.
In Japan, for example, tax rates can go up to 55 per cent depending on the size of the inheritance. If the wealth is simply passed down without any calibration, it can be wiped out in two generations.
While the ultra-rich in many jurisdictions can make use of a trust structure to preserve family wealth, it is culturally less acceptable in Japan. “You will have this bad reputation that you are trying to avoid paying taxes,” said Prof Yupana from NUS.
Instead, wealthy Japanese families often establish foundations, where they serve on the board and direct how their money is used for philanthropic causes.
This allows them to remain influential, she added.
That said, tax treatments are not always the main driver in succession planning, said Guo Jiawen, head of family office and structuring solutions at Bank of Singapore.
The beneficiaries’ needs – whether they are still studying, have young children to support, or need more capital for entrepreneurial ventures – are also key considerations, Guo said.
But based on her observations, if the beneficiaries choose to live in a high-tax jurisdiction, rarely would their parents or grandparents allocate a larger proportion of assets to them to offset the impact. “If 30 or 40 per cent of whatever the grandchildren inherit is going to be subject to taxes, that is their choice, and they have to live with that decision,” she said.
Lessons for other families
While most individuals and families do not have billion-dollar empires like the Gohs, experts said their approach still offers lessons for anyone thinking about their own legacy and succession planning.
- Plan early and communicate openly
Succession is rarely a one-time event and can be a long process, so people should not delay planning until the last minutes of their lives, said Prof Yupana.
Some people fear that if they give away their assets too soon, their loved ones won’t come and see them any more, she said. “But if you keep hanging on and on, the thing is if there is a sudden death, it’ll be a mess.”
Private bankers said they always advise clients to communicate openly with their children, especially when they plan to bypass the second generation, as such decisions can lead to confusion or resentment.
UOB’s Koh said: “Some family members might think: Am I not being trusted enough? Is this a kind of punishment?”
She said the second generation may also feel like they are losing control of their children, if the latter inherit too much, too soon from the grandparents. Hence, it is important for the patriarchs and matriarchs to communicate their intent with the second generation clearly, and involve them in the decision-making process.
- Separate ownership from leadership
For families with businesses – whether big or small – they can benefit from clear rules on who owns shares and who runs the company.
It is “very dangerous” to simply hand a business to one’s favourite child, said Prof Yupana. If the founders want their company to last long, they have to identify and appoint the most capable heir or professional to manage it.
But such an arrangement can also throw up interesting dynamics, said Citi’s Troth. He has seen families with only one child putting all his effort and energy into growing the family business, while other children just go along for the ride. In these cases, simply splitting the company shares equally among them may result in tensions.
Conflicts can also emerge when the child running the show wants to reinvest profits to grow the company, while the other children are just after more dividends, Troth noted. In such cases, using a holding company to set clear rules could help prevent disputes.
For families with more financial resources, they can also transfer the business to one child and compensate others with private assets or insurance policies of similar value, Troth added.
- Nurture shared purpose
Wealth alone rarely sustains a family across generations. The important thing is for family members to have a shared purpose, said UOB’s Koh.
Wealthy families with a lot of social, financial and human capital can create a powerful impact when they remain united. But if they allow their wealth to breed discord, they often end up in the news for all the wrong reasons, she said.
It is important to cultivate a sense of shared responsibility – if their values are aligned, they will strive to grow and compound the wealth as a safety net for the next generation, she added.
Amy Wirtz, a senior consultant with The Family Business Consulting Group in the US, has a similar take.
In the US, wealthy families often set up a trust to minimise their exposure to taxes, and to protect their assets from bankruptcy, lawsuits and divorces.
Yet, the trust is just a tool. “What truly helps future generations prosper is the transfer of not just wealth, but also the family’s vision, values and mission,” Wirtz said. “This ensures each child develops a healthy relationship with the wealth created by previous generations.”
The Goh family appears to be living by this principle, she said. Through the family foundation, philanthropic contributions and scholarships, the family is “building the structures necessary to keep future generations grounded, capable and aligned with the family’s long-term goals”.
Only with a shared sense of purpose can families transform wealth from a potential source of conflict into a lasting legacy that endures across generations, she added. THE STRAITS TIMES
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