More than a tick in the box: why CPD audits matter

ValCoxMost professional associations and regulators require members to adhere to a set of professional standards —usually including a clause on maintaining and updating knowledge. STEP has had rigorous requirements in this regard since the Society was formed in 1991, but since the majority of STEP members also answer to various regulators and professional bodies in their respective jurisdictions, why does STEP audit its members?

Like other international professional bodies, STEP must take great care to compare qualifications so that successful applicants in every country can be said to be equal. All professional bodies must then factor in how training and professional development have evolved over time. For example, a degree completed in 1989 may have lost some currency compared to the same degree (in title at least) completed in 2009, unless a graduate has supplemented their knowledge.

Assessing the capabilities of members shifts from assessing initial development, to continued development. STEP members work hard to gain initial qualifications and build their careers through further studies, so they deserve to have their status as a fully-qualified professional upheld.

Even more importantly, clients and their beneficiaries need to know that they can trust estate planning professionals. We are wary of a doctor who doesn’t keep up to date on the latest medical developments; why should it be any different if someone writes a will or sets up a trust without being aware of important new knowledge? How our possessions will be passed on is one of the more serious decisions we make in our lifetime, so the public tends to react strongly to any media coverage of negligence.

Auditing members’ learning, whether we call it Continuing Professional Development, Continuing Professional Education or anything else, is one way of helping our members maintain public confidence in the profession.Audit-stamp

STEP Worldwide will begin its annual Continuing Professional Development (CPD) audit, requesting records from 5% of members, in September. If you have any questions on the auditing process please feel free to contact me.

Val Cox is STEP’s CPD Manager.

Straight from the top – ‘Ask the Chair and CEO’

Helen-and-David‘Ask me anything’ online engagement events are increasingly being used by public personalities and organisations to offer direct responses to questions posed by fans, followers and, indeed, members. In the spirit of talking directly to our membership we, STEP worldwide Chair Hélène Anne Lewis, and CEO of the worldwide Secretariat David Harvey, are inviting you to put forward your questions so that we may answer them ourselves. We will be recording and releasing a global webcast of responses to your questions in September and aim to fill you in on what is happening in STEP, plans for the future, the Society’s role in the changing policy landscape and changes to our educational offerings.

In order to answer as many questions from as many members as possible, we ask that you limit your submissions to no more than three questions. Submit your question here using the subject line ‘Ask the Chair and CEO’. Submissions close on 31 August 2014.questions1

STEP is a professional body representing your qualifications, your fees, your commitment of time and your status as a professional in your field. So this is your opportunity to ask us what STEP is doing for you and your behalf.

Questions, anyone?

Why should you go to STEP’s inaugural Global Congress?

Hélène Anne Lewis

Hélène Anne Lewis

As Chair of STEP Worldwide I look forward to welcoming a large number of my fellow members to the inaugural STEP Global Congress

This event offers an opportunity for all STEP members from all 80 jurisdictions and all 105 branches and chapters to connect, share ideas and enlarge our personal networks.

Congress will serve as a platform for the discussion and development of the thought leadership that will drive the Society forward in the years ahead. It will offer superior technical learning in an environment geared towards productive and highly valuable networking opportunities for members across jurisdictions.

International political imperatives are proving to be enormously challenging to all professionals who practice in the wealth management and estate planning sector. The Global Congress therefore aims to offer a forum for interacting with the world’s foremost advocates for our professions. They have spent recent years interfacing with the European Parliament, EU Member States, the OECD, the FATF and the UK government in order to improve the implementation of measures aimed primarily at winning tax revenues for their constituencies; which so dramatically affect the business models and careers of STEP members around the world.

STEP’s Special Interest Groups, which now form an exciting part of our member service offering, will host several sessions on their separate specialisations and stage opportunities for recruiting new members while offering existing members the chance for face-to-face encounters — some for the first time. If you are passionate about an area of trust and estate practice covered by a Special Interest Group, I strongly encourage you to use the Global Congress as a chance to find out how you can benefit professionally and play a role shaping the field.congress

Our long-term objective is for the Congress to be firmly established as an important forum for STEP – held biannually and offering every worldwide member an opportunity to interact and be a part of the decision-making discussions that guide and inform STEP’s direction and policy.

What will you take away from Congress? I look forward to seeing you in Miami.

Beards, Beliefs and Best Practice

Richard FrimstonIn Act III of Oscar Wilde’s The Importance of Being Earnest, Lady Bracknell remarks to idle young gentleman Algernon, ‘never speak disrespectfully of society. Only people who can’t get into it, do that.’

At that time, it was usual for men in the western world to carry facial hair and this continued until the First World War. Thereafter, beards were increasingly seen as a sign of pomposity and the incompetence of the generation responsible for the slaughter of that war. Moustaches on the other hand were still worn until the Second World War and well into the 1950’s. In the UK armed forces they were often seen as a feature that distinguished the officer class.

Since then, the razor has generally triumphed, although with occasional forays into hippiedom. The trend does seem to have been towards an almost Roman absence of body hair, although different countries do seem to have varying attitudes to particular areas of the body.

Amongst UK male politicians, facial hair gets the spin doctors’ thumbs down, whilst in other cultures, different norms may apply.

Whilst there is no mention of facial hair in the Q’uran, the habit of the Prophet was to leave the beard uncut, but the moustache trimmed and this habit has accordingly continued in many Islamic cultures. In traditional Jewish society, too, the beard may also be seen as appropriate.

Some clients welcome advisors who reinforce and resonate with their cultural norms. Now it is quite likely that the majority of individuals on the UK FCO financial sanctions target list in Afghanistan; Al-Qaida, Belarus; Central African Republic; Congo; Egypt; Serbia; Iran; Iraq; Ivory Coast; Liberia; Libya; North Korea; Guinea; Guinea-Bissau; Somalia; South Sudan; Sudan; Syria; Tunisia; Ukraine; or Zimbabwe may have beards. However, in an increasingly tense, yet globalised and international world, we have to be ever more alive and sensitive to all of our cultural differences and act appropriately.beard

To coincide with Eid-al-Fitr and the end of the month of Ramadan, is it time for a Cross Cultural Hirsute Special Interest Group? All members with a particular interest please apply.

Richard Frimston TEP is Co-Chair of the STEP Public Policy Committee and Chair of the STEP EU Committee. He is a Partner and Head of the Private Client Group at Russell Cooke LLP. Richard sports his own well-maintained beard and seldom strays into ‘hippiedom’.

STEP LATAM and North America News Digest wrap-up – July’s top stories

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Catching up on the latest trust and estate sector news on the go? Welcome to the wrap-up of the top ten most popular stories in the STEP North America and LATAM News Digests throughout July. In case you missed them, here are the top STEP LATAM and North America News Digest stories most clicked by our readers.

CRA announces it has 80 new leads on taxpayers who may be hiding money offshore: The Canada Revenue Agency (CRA) said it has 80 new leads on taxpayers who may be hiding money offshore after getting hundreds of calls on its new hotline, established on January 15, 2014. This announcement comes after it was revealed that British Columbia’s securities regulator is funnelling more resources into a crackdown on suspicious trading activity coming from offshore bank accounts in “secrecy” jurisdictions, saying the accounts often belong to locals who are hiding their identities.

A brush with death taxes: Dhana Sabanathan TEP and Shu-Ping Shen offer estate-planning advice to international couples from the US and the UK.

FATCA – Most US expats considering giving up their citizenship: Four out of five American expatriates are considering giving up their United States citizenship due to the ongoing implementation of the Foreign Account Tax Compliance Act (FATCA), according to a new survey by the deVere Group. It found that 79 percent said they had “actively considered, are thinking about or have explored the options of” renouncing their US passport due to the implications of FATCA, which came into force on July 1, 2014.

IRS suffers multiple blows in its attempt to regulate tax professionals: The IRS has recently suffered multiple defeats in federal court which many experts believe could undermine its authority to regulate tax preparers and other tax practitioners. A few months ago it lost the case of Loving v IRS in the United States Court of Appeals for the District of Columbia, which hampered its efforts to regulate the tax preparer industry. The IRS has now suffered another setback – again in the United States Court of Appeals for the District of Columbia – in Ridgely v Lew.

CRA releases FATCA guidance on reporting obligations under IGA: The Canada Revenue Agency (CRA) has released some guidance for entities that could be subject to the US Foreign Account Tax Compliance Act (FATCA) regime – which went into effect on July 1, 2014. The guidance is intended to provide clarity to help financial institutions and their advisors understand and comply with their due diligence and reporting obligations under Canada’s intergovernmental agreement (IGA) with the United States.

New tax rules and exemptions will affect the financial market: Several changes are to be introduced to Brazil’s tax system after Provisional Measure 651/2014 was published in the Official Gazette on July 10, 2014. Changes include new tax rules and exemptions related to the financial market, effective as of January 1, 2015. For example the administrator of an investment fund will now be responsible for the calculation and collection of income tax levied on capital gains realized by investors who use their own securities to capitalize the investment fund.

IRS’ Individual Taxpayer Identification Numbers to expire: Individual Taxpayer Identification Numbers (ITINs) will expire in 2016 if not used on a federal income tax return for five consecutive years, the Internal Revenue Service has announced. A new policy applies to any ITIN, regardless of when it was issued, that “will ensure that anyone who legitimately uses an ITIN for tax purposes can continue to do so, while at the same time resulting in the likely eventual expiration of millions of unused ITINs”, said the IRS.

Tax Authority provides clarification on non-residents’ capital gains tax: The Mexican Tax Administration Service has issued proposed regulations on non-residents’ capital gains tax. The regulations provide clarification on certain aspects of the 2014 Mexican tax reform, which repealed the capital gains exemption for holdings of less than 10 percent applicable to foreign residents with respect to the sale of publicly traded shares. The proposed regulations affect the 2014 Temporary Tax Regulations, which includes rules for non-residents’ capital gains, including the determination of the tax basis, the withholding of tax responsibility and the taxation of American Depositary Receipts.

Tax Court holds that trustees’ activities as employees count for purposes of material participation: In the recent case of Frank Aragona Trust, et al. v Commissioner, 142 TC No. 9, (3/27/14), the United States Tax Court determined that a trust engaged in rental real estate activities qualified for the Code Section 469(c)(7) “real estate professional” exception to the passive loss rules for rental real estate activities. The court held that a trust is capable of performing personal services by and through its individual trustees, and that the trustees’ activities as employees of a limited liability company wholly owned by the trust enabled the trust to

Tax authority releases ruling on deductibility of payments made to ‘tax havens’: In Ruling No. 31855 of May 26, 2014, Colombia’s National Tax Authority pronounced on the interpretation of articles 124-2 and 260-7 of the Colombian Tax Code concerning the deductibility of payments made to ‘tax havens’. According to article 124-2, payments made to such jurisdictions are not considered deductible costs or expenses for the Colombian taxpayer, unless the corresponding withholding income tax has been applied.

The STEP Industry News Digests provide a round-up of relevant industry news for trust and estate practitioners and other professionals in the wealth management sector. They provide brief summaries of topical news stories gathered from news providers internationally, providing a quick reference for busy practitioners to all the relevant news and issues. The News Digests also feature job listings from our recruitment site and list local STEP branch events and conferences. STEP’s digest services include twice weekly UK and Wealth Structuring (international) editions as well as a bi-weekly North America Digest focusing on the US, Canada and Mexico, and a Latin America Digest.

To subscribe to STEP’s digest services you will need to first register here: http://www.step.org/register

STEP Wealth Structuring News Digest wrap-up – July’s top stories

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Work and life proving to be too fast paced to keep up with all of the latest trust and estate sector news? Welcome to the wrap-up of the top ten most popular stories in the STEP Wealth Structuring News Digest throughout July. In case you missed them, here are the worldwide industry news stories most viewed by our readers.

Nolan family’s claim against trust company ruled within time limit: Jersey’s Royal Court has ordered the financial and trust services group Minerva to pay GBP11.5 million in damages to 13 members of the Nolan family. The family members lost large sums through fraudulent investments they were induced to make by one of Minerva’s former clients, Gerard Walsh.

Newspaper exposes clients of Jersey wealth advisor firm: The Guardian newspaper has obtained the names of 20,000 people, both UK and non-UK residents, who are said to be clients of the Jersey-based wealth management division of Kleinwort Benson or beneficiaries of trusts it administers.

Full text of OECD auto exchange standard: The OECD has published the full text of its Common Reporting Standard for the automatic exchange of tax information between jurisdictions.

HSBC retreats from Cayman Islands: HSBC has announced the winding down of its Cayman Islands corporate and retail banking operation, in a strategic withdrawal from the market.

Marketed schemes are doomed but individual planning will survive: A briefing paper from Farrer considers the future of tax planning in the UK in the face of government-inspired media hostility. It concludes that highly artificial marketed schemes will no longer work, but bespoke long-term tax planning for individual clients is still on the table.

New money laundering rules to identify trust beneficiaries: Singapore’s Monetary Authority has released a consultation paper on amendments to anti-money laundering guidance, embodying the latest FATF recommendations. The proposals specify procedures to identify beneficial ownership of companies and trusts; allow a risk-based approach for some politically exposed persons; and restrict cross-border funds transfers above SGD1,500.

Credit Suisse advisors about to be shopped to USA: Credit Suisse is preparing to pass the names of a thousand of its employees to US officials who are investigating tax evasion by American citizens. The employees – former and current client advisors who processed payments for US clients – have been given until 28 July to object.

Purpose trusts: a perplexing ruling: Keith Robinson TEP contemplates a recent Bermudan judgment on disclosure in the case of purpose trusts.

More on anti-offshoring and beneficial ownership legislation: The latest issue of Withers’ bulletin for investors based in Russia and the CIS countries includes a briefing on the proposed changes to Russia’s controlled foreign companies rules and other anti-offshore measures. It also discusses changes to the UK’s Tier 1 (Investor) visa scheme.

Court awards half of businessman’s Jersey trust to ex-wife: The Hong Kong Court of Final Appeal has awarded Kay Kan half the funds held in her ex-husband’s Jersey family trust, as part of her HKD840 million (USD108 million) divorce pay-off. The trust holds 85 per cent of the equity in Otto Lok-To Poon’s engineering firm, and its income consists solely of the firm’s dividends which are set by Poon himself, said the judge (case FACV20/2013, KLK and PLTO).

The STEP Industry News Digests provide a round-up of relevant industry news for trust and estate practitioners and other professionals in the wealth management sector. They provide brief summaries of topical news stories gathered from news providers internationally, providing a quick reference for busy practitioners to all the relevant news and issues. The News Digests also feature job listings from our recruitment site and list local STEP branch events and conferences. STEP’s digest services include twice weekly UK and Wealth Structuring (international) editions as well as a bi-weekly North America Digest focusing on the US, Canada and Mexico, and a Latin America Digest.

To subscribe to STEP’s digest services you will need to first register here: http://www.step.org/register

STEP UK News Digest wrap-up – July’s top stories

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On the go and looking for takeaway news? Welcome to the wrap-up of the top ten most popular stories in the STEP online Digests throughout July. In case you missed them, here are the top STEP UK News Digest stories most clicked by our readers.

Practitioners must anticipate relevant property trust charges: Practical Law has provided a detailed legal update on HMRC’s proposals to alter the inheritance tax charges on relevant property trusts, under which settlors will be given a settlement nil-rate band to allocate between their trusts. Practitioners must take these proposals into account in clients’ estate planning now.

Government abandons new charity definition for tax purposes: HM Revenue & Customs has dropped its plans to redefine ‘charity’ for tax purposes, because both of its proposed definitions would have a ‘disproportionate and unacceptable’ effect upon the charity sector and legitimate donors.

Form R27 to be replaced with three new forms: The standard R27 form dealing with the deceased’s income tax liability is to be dropped in October. Instead, HM Revenue & Custom will send one of three alternative form letters, either seeking information about the personal representative, or confirming that the PR need take no action, or asking the PR to complete a self-assessment return.

Opening a trustee account at a high street bank: Which, if any, high street banks still offer trustee current accounts? Practitioners discuss those that do and don’t, the favourite appearing to be Handelsbanken.

Law Commission plans reform of 1837 Act regime: The Law Commission (England and Wales) is planning fundamental changes to the law on wills and testamentary capacity to take account of changes in social norms, technology and medicine. The reforms will aim to reduce the number of wills being challenged and to make it easier to rectify will-drafting mistakes after death.

Artist left vast fortune to secret trust beneficiaries: It has emerged that the artist Lucian Freud, who died in 2011, left his residuary estate of GBP42 million jointly to his solicitor and a daughter – but secretly subject to a trust with undisclosed beneficiaries. This week the England & Wales High Court rejected an attempt by one of Freud’s illegitimate sons to have the will clause declared invalid on the basis that it was a half-secret, not a fully secret, trust.

Some recent Court of Protection cases: The July issue of 39 Essex Street’s mental capacity law newsletter covers some cases on deputies, undue influence and the Court of Protection, and the duty of attorneys in continuing healthcare disputes. The Scottish section includes a case on the proper duration of guardianship and an update on the Mental Health Bill.

Yachts used to impress customers were legitimate expense: A couple who operated a high-prestige management training business have been permitted to write off the cost of their ocean-going yachts against income tax – but not their diamond necklaces and antique clocks.

Marketed schemes are doomed but individual planning will survive: A briefing paper from Farrer considers the future of tax planning in the UK in the face of government-inspired media hostility. It concludes that highly artificial marketed schemes will no longer work, but bespoke long-term tax planning for individual clients is still on the table.

Tax tips for trusts turning ten: Robert Jamieson TEP reviews some inheritance tax aspects of disrectionary trusts.

The STEP Industry News Digests provide a round-up of relevant industry news for trust and estate practitioners and other professionals in the wealth management sector. They provide brief summaries of topical news stories gathered from news providers internationally, providing a quick reference for busy practitioners to all the relevant news and issues. The News Digests also feature job listings from our recruitment site and list local STEP branch events and conferences. STEP’s digest services include twice weekly UK and Wealth Structuring (international) editions as well as a bi-weekly North America Digest focusing on the US, Canada and Mexico, and a Latin America Digest.

To subscribe to STEP’s digest services you will need to first register here: http://www.step.org/register