Preserving the confidential nature of trusts

I welcomed David Cameron’s recent letter to the President of the European Council, Herman Van Rumpoy, rejecting calls to include trusts in the public registries of beneficial owners that the UK is proposing for companies. In the letter the Prime Minister noted the need to ‘recognise the important differences between companies and trusts’ in this context.

Families are right to expect that the details of trusts should be kept confidential – it would be inappropriate to expose families’ financial plans to public scrutiny. Trusts are private matters for families, and just like other aspects of their finances, they have a right to expect that their details will remain confidential. Trustees quite rightly have a legal obligation to co-operate with any official inquiries regarding a trust, but this is very different to requiring families to make public their personal decisions on how best to safeguard future generations.

The risk of family trusts being used for money laundering is very low indeed. Moreover HMRC statistics confirm that in around a quarter of cases, trusts are used to help protect vulnerable family members. Publishing details of vulnerable beneficiaries would leave them seriously exposed to potential abuse, given the risk of such information falling into the wrong hands.

At STEP we fully support efforts to tackle tax evasion and money laundering, and note that the current arrangements where trustees must collect the information on trusts and, where relevant, make full reports to tax and other authorities, have generally been found to work well by independent international assessors.

Trustees quite rightly have a legal obligation to co-operate with any official inquiries regarding a trust, but this is very different to requiring families to make public their personal decisions on how best to safeguard future generations.

George Hodgson is Deputy Chief Executive of STEP.

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