Estate equalisation is specifically concerned with the equitable passing of family wealth to the next generation. The strategy involves advance planning by the business owner / parent to facilitate an equitable transfer of assets in a fair manner amongst his beneficiaries.


Estate equalisation is the process where one asset (e.g. the family business) is bequeathed to one child and an asset of equivalent value is bequeathed to the other(s). The method of providing this ‘asset of equivalent value’ using life insurance is a practical solution. The value of the insurance policy is realised on the demise of the parent insured (who is the business owner) and is the amount of insurance cover.

Why estate equalisation?


To the beneficiaries

  • Maintain trust and confidence amongst beneficiaries by preventing family dispute over inheritance.
  • Provide financial security for beneficiaries not interested in family business.
  • Liquidity: Life Insurance solution provides cash to equalise inheritance among beneficiaries.

To the business

  • Protect the value of the estate, since assets do not have to be sold.
  • Promotes long-term value creation by minimising business disruption.
  • Protect the continuity & value of the family business since it does not need to be split between beneficiaries where some may not be interested in the business.

How it works?

A life insurance policy is purchased to ensure that the estate is distributed equally while ensuring each member of the family is treated fairly. 


The members of the family with an interest in the estate inherits the family business or family assets, while other members are bequeathed an equivalent value to the estate from the life insurance policy.


Hence to summarise:

Beneficiaries receive Equal Share

This approach will ensure that each beneficiary gets a minimum amount equal to their share of the existing estate (i.e. the family business or family assets as applicable).


Beneficiaries receive Equal Amounts

This approach will increase the total estate so that each beneficiary gets an identical amount based on an assumed future growth.


Case study: failure to plan

  • The iconic Hong Kong's Yung Kee roast goose restaurant winds up after a 5-year court tussle.
  • Founded 73 years ago by Kam Shui Fai who died in 2004, he left shares to his first and second sons, Kinsen and Ronald.
  • In 2010, Kinsen went to court to force his younger brother to buy his shares for an estimated HK$950 million or liquidate the company. The proposal was rejected by Ronald.
  • Ronald, whose children manages the restaurant, had offered up to HK$1.1 billion (S$200 million). However, the family of Kinsen, who died of cancer in 2012, believe they are entitled to HK$1.3 billion.
  • The family dispute destroyed a 73 year old restaurant chain.


Parties involved

Insured: Parent / current business owner
Policy owner: Parent 
Premium payer: Self
Beneficiary: Spouse / children not interested in family assets or family business

Value creation

A pool of liquid asset is created at the time needed through the proceeds of death benefit of the life insurance policy. This promotes maintaining good relations amongst the beneficiaries while creating a stable estate planning goal.