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Experts outline offshore solutions at Swiss fiduciary seminar
July 26, 2010
The value of life assurance as a succession planning tool and the offshore solutions available to high-net-worth clients came under the microscope during a seminar in Geneva organised by Equity Trust.
The ‘Staying Ahead of Fiduciary Risk’ event took place at the Swissôtel Métropole Geneva and was attended by around 30 of Geneva's leading financial intermediaries, plus hosts from Equity Trust, the leading independent provider of trust and fiduciary services.
The opening presentation by John Stone, Chairman and Founder of Lombard International Assurance, focused on the importance of life assurance as an effective tax and estate-planning solution. He outlined the different options for high-net-worth individuals in respect of transferring wealth to relatives and the implications in respect of tax, and was able to answer a series of testing questions from the audience.
John warned the audience about 'insurance wrappers', generic offshore life assurance policies that did not comply with tax laws in most European countries and were likely to cause problems for future generations.
"I can't think of anything worse than the heirs of, say, a French or German family to receive the benefits of a non-compliant, non-qualifying Singapore insurance policy - why would they take it out?" he said.
John recommended onshore, tax-compliant life assurance policies that could form part of a sophisticated tailor-made succession planning solution. Such a policy could be taken out on the life of children or grandchildren, offering a longer-term solution, with the policy held inside a trust as an asset.
Taking out a life assurance possibility also offered the prospect of incorporating the policyholder's wishes in the event of his/ her death, enabling them to control the flow of assets after their death.
Nigel Bradley, Director of Private Clients for Equity Trust Geneva, addressed the question of 'Structuring for the Future', examining the future prospects of the offshore world, and considering ways of meeting the concerns of a fictional client who was likely to be anxious in respect of estate planning, possible divorce proceedings and forced heirship.
Domestic structuring solutions were not viable as there were too many potential international issues involving businesses, bankable assets and property in different countries, he added.
"The offshore world has firms specialising in international planning and providing advice on local and international taxes, he said. "They can help with issues such as an IPO or sale of the business, and offer confidentiality and a means of avoiding forced heirship."
Solutions outlined by Nigel included VISTA trusts owning a business through an underlying BVI company and the establishment of a family trust for the client's wife and children.
Nigel concluded that there was most certainly a future for the offshore world, as the reasons for using offshore structuring solutions remained as valid today as they were in the past.
"Wealthy individuals have always had far greater concerns than tax, concerns about a wide range of issues arising from the complexities of wealth and life, their family situation and their desires for the future," he said. "The offshore world provides the forum to enable those concerns to be addressed in ways that a domestic solution cannot."
'Managing Trustee Risk and Settlor Expectations' was the topic addressed by Nick Lane, Director of Private Clients for Equity Trust BVI. He contrasted a range of solutions including joint tenancies, lifetime gifts, BVI wills, bespoke M&A drafting, Private Trust Companies (PTCs), traditional trusts and the Virgin Islands Special Trust Acts (VISTA), outlining their respective benefits and weaknesses.
Nick focused particularly on VISTA trusts and PTCs, their advantages and typical uses, describing VISTA's unique Office of Director Rules (ODRs) which allow the settlor to determine the make-up of the board of the underlying company, even after his death; along with VISTA's significant risk management benefits. Nick also explained the benefits of using a VISTA trust to hold the shares of PTCs and the invaluable comfort the ODRs can provide a reluctant settlor.
"With a good following wind, helpful husbandry by the BVI regulator and responsible use by practitioners, there's a very bright future ahead," Nick concluded.
The event was hosted by Matthias Belz, MD for Equity Trust Geneva, and attracted intermediaries from companies such as Collins Stewart, Saffery Champness, Bank of China, Barclays Wealth, ABN Amro and UBS.
"We were pleased to welcome a high calibre of guest to this event, and believe that all those who came left with an invaluable insight into the far-reaching implications of fiduciary risk," states Matthias.
"We were privileged to get a man of John's seniority and professional standing to come and support our seminar," adds Thorold Youngman-Sullivan, Equity Trust's Head of International Incorporations. "The options for using BVI-based structuring solutions can be very advantageous for Swiss clients and intermediaries, and with an impressive line-up of speakers we were able to provide authoritative guidance."
The ‘Staying Ahead of Fiduciary Risk’ event took place at the Swissôtel Métropole Geneva and was attended by around 30 of Geneva's leading financial intermediaries, plus hosts from Equity Trust, the leading independent provider of trust and fiduciary services.
The opening presentation by John Stone, Chairman and Founder of Lombard International Assurance, focused on the importance of life assurance as an effective tax and estate-planning solution. He outlined the different options for high-net-worth individuals in respect of transferring wealth to relatives and the implications in respect of tax, and was able to answer a series of testing questions from the audience.
John warned the audience about 'insurance wrappers', generic offshore life assurance policies that did not comply with tax laws in most European countries and were likely to cause problems for future generations.
"I can't think of anything worse than the heirs of, say, a French or German family to receive the benefits of a non-compliant, non-qualifying Singapore insurance policy - why would they take it out?" he said.
John recommended onshore, tax-compliant life assurance policies that could form part of a sophisticated tailor-made succession planning solution. Such a policy could be taken out on the life of children or grandchildren, offering a longer-term solution, with the policy held inside a trust as an asset.
Taking out a life assurance possibility also offered the prospect of incorporating the policyholder's wishes in the event of his/ her death, enabling them to control the flow of assets after their death.
Nigel Bradley, Director of Private Clients for Equity Trust Geneva, addressed the question of 'Structuring for the Future', examining the future prospects of the offshore world, and considering ways of meeting the concerns of a fictional client who was likely to be anxious in respect of estate planning, possible divorce proceedings and forced heirship.
Domestic structuring solutions were not viable as there were too many potential international issues involving businesses, bankable assets and property in different countries, he added.
"The offshore world has firms specialising in international planning and providing advice on local and international taxes, he said. "They can help with issues such as an IPO or sale of the business, and offer confidentiality and a means of avoiding forced heirship."
Solutions outlined by Nigel included VISTA trusts owning a business through an underlying BVI company and the establishment of a family trust for the client's wife and children.
Nigel concluded that there was most certainly a future for the offshore world, as the reasons for using offshore structuring solutions remained as valid today as they were in the past.
"Wealthy individuals have always had far greater concerns than tax, concerns about a wide range of issues arising from the complexities of wealth and life, their family situation and their desires for the future," he said. "The offshore world provides the forum to enable those concerns to be addressed in ways that a domestic solution cannot."
'Managing Trustee Risk and Settlor Expectations' was the topic addressed by Nick Lane, Director of Private Clients for Equity Trust BVI. He contrasted a range of solutions including joint tenancies, lifetime gifts, BVI wills, bespoke M&A drafting, Private Trust Companies (PTCs), traditional trusts and the Virgin Islands Special Trust Acts (VISTA), outlining their respective benefits and weaknesses.
Nick focused particularly on VISTA trusts and PTCs, their advantages and typical uses, describing VISTA's unique Office of Director Rules (ODRs) which allow the settlor to determine the make-up of the board of the underlying company, even after his death; along with VISTA's significant risk management benefits. Nick also explained the benefits of using a VISTA trust to hold the shares of PTCs and the invaluable comfort the ODRs can provide a reluctant settlor.
"With a good following wind, helpful husbandry by the BVI regulator and responsible use by practitioners, there's a very bright future ahead," Nick concluded.
The event was hosted by Matthias Belz, MD for Equity Trust Geneva, and attracted intermediaries from companies such as Collins Stewart, Saffery Champness, Bank of China, Barclays Wealth, ABN Amro and UBS.
"We were pleased to welcome a high calibre of guest to this event, and believe that all those who came left with an invaluable insight into the far-reaching implications of fiduciary risk," states Matthias.
"We were privileged to get a man of John's seniority and professional standing to come and support our seminar," adds Thorold Youngman-Sullivan, Equity Trust's Head of International Incorporations. "The options for using BVI-based structuring solutions can be very advantageous for Swiss clients and intermediaries, and with an impressive line-up of speakers we were able to provide authoritative guidance."
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