Monthly Archives: November 2014

Knowledge pool: why you should attend the Contentious Trusts and Estates SIG Half-Day Conference

Toby Graham Blog

The Contentious Trusts and Estates SIG Half-Day conference is designed to appeal to litigators interested in the latest cases in the field. It’s also relevant to non-contentious practitioners wishing to avoid problems in the future.  It will feature leading speakers, in many cases with a direct involvement in the cases considered.

Nicholas Le Poidevin QC of New Square Chambers will discuss the Privy Council’s decision in Crociani v Crociani handed down yesterday. This is a landmark case on trust jurisdiction clauses in trust instruments. Robert MacRae of Carey Olsen will explain the latest developments in trusts and divorce in Jersey. Similarly, Schellenberg Wittmer’s David Wilson will discuss recent trust cases from the Geneva Court. Jonathan Speck, Managing Partner of Mourant Ozanne (Jersey) will discuss the recent decision of the Guernsey Court of  Appeal in Investec Trust v Glenalla Properties Ltd. I will analyse the case of FHR European Ventures v Cedar Capital Partner LLC, in which the Supreme Court decided that bribes and secret commissions paid to company directors and other fiduciaries are subject to an immediate trust, enabling tracing and accessory liability claims to be brought against third parties.

The conference will be followed by the Special Interest Group’s annual general meeting where the group will share exciting news of their new global forum, and a networking drinks reception.

I encourage any practitioner with an interest in contentious trusts and estates to attend.

Toby Graham is TEP is a Partner with Farrer & Co and Contentious Trusts and Estates SIG Steering Committee

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

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Welcome to the wrap-up of the top ten most popular stories in the STEP Wealth Structuring News Digest throughout October. In case you missed them, here are the worldwide industry news stories most viewed by our readers.

IFCS group publishes new trust regulation standards: The Group of International Finance Centre Supervisors has issued a new standard on the regulation of trust and company service providers, introducing a new benchmark for businesses administering international trusts.

Mass signing of automatic exchange agreement: The new OECD/G20 standard on automatic exchange of tax information was endorsed by 51 jurisdictions, including most major international financial centres, at this week’s annual meeting of the Global Forum on Tax Transparency. Information exchange will begin in September 2017 for early adopters with others to follow in 2018.

Switzerland prepares for vote on lump-sum taxation: The Swiss Federal Council has summarily rejected campaigners’ demands to abolish the lump-sum tax concession for wealthy foreign residents.

Reporting rules for taxpayers linked to foreign trusts: An expert at Baker Tilly discusses at length the tax reporting requirements for Americans with ties to foreign trusts.

Estate tax dilemma for foreign homeowners: An expert at Boston law firm Rackemann Sawyer & Brewster describes the estate tax regime imposed on foreign individuals who own US residential property. The 35 per cent tax rate is charged on the entire value of the property that exceeds USD60,000.

Savings directive to be repealed as agreement reached on automatic exchange: This week, European finance ministers agreed a revision of the Administrative Cooperation Directive mandating the full automatic exchange of tax information between all EU member states. As a result, the European Commission has abandoned long-standing plans to amend the Savings Tax Directive and is proposing to repeal it instead.

The Bartlett legacy: John Harper TEP looks back at one of the most important trust cases of the past 35 years.

EU accuses Gibraltar of unfair tax practices: The European Commission unexpectedly announced this week it is including Gibraltar in its intensive review of jurisdictions alleged to have given unjustified favourable tax treatment to foreign companies. The Commission says the evidence has been supplied by the UK authorities.

UK prepares attack on ‘double Irish’ tax planning: The UK government is to introduce a targeted anti-avoidance rule aimed at foreign multinational technology companies that hold intellectual property in a low-tax jurisdiction without treaty protection. Details will be announced in the December autumn statement, but it is thought to affect companies where there is significant UK activity but little UK tax base and where IP assets are hived off with no clear justification.

Swiss banks urge US government to amend conditions to bank amnesty: Lawyers representing 73 of the 100-plus Swiss banks that enrolled in the US Justice Department’s (USDoJ) bank amnesty programme have written to the USDoJ complaining that it has added new conditions that were not in the original agreement. In particular, banks are now being required to ‘cooperate fully with any other domestic or foreign law enforcement agency in any investigation’.

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 – October’s top stories

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Head in the clouds? Missed key recent industry news? Welcome to the wrap-up of the top ten most popular stories in the STEP online Digests throughout October as clicked by our readers.

Charity loses challenge to executors’ interpretation of nil-rate band: The executors of Valerie Smith were entitled to interpret the expression ‘nil-rate band’ in her will to include the nil-rate band transferred from her predeceased husband, the England and Wales Court of Appeal has ruled. The court rejected a challenge by the Woodland Trust charity which, as Mrs Smith’s residuary beneficiary, stands to lose a large sum as a result of the decision.

Guidance on NRB discretionary trusts: HM Land Registry has updated its PG70 guidance regarding nil-rate band discretionary trusts in England and Wales

HMRC simplifies system to reclaim or pay tax for bereaved persons: From 13 October 2014, form R27 ‘Reclaiming tax or paying tax when someone dies’ will be removed and replaced: with an automated process for PAYE customers; and with a tailored service for self-assessment customers. HM Revenue and Customs will extract the pay and tax information it needs from Real Time Information, making the form unnecessary.

Protections for executors against unexpected claims: A partner at London law firm Adams & Remers discusses the dangers for personal representatives in distributing an estate against which unresolved claims may still exist – an extreme example being the Jimmy Savile affair.

Abolition of 55 per cent ‘death tax’ is clarified: HM Treasury has circulated a document giving more details on the removal of the 55 per cent tax rate on pensions at death, and pensioners’ improved lifetime access to their funds. It promises measures to cope with pension providers who do not offer drawdown.

The future of forced heirship: Rachel Jones contemplates how England and Wales compare to other European jurisdictions when it comes to forced heirship, and the potential impact of the EU Succession Regulation.

Ombudsman joins call for tougher controls on will-writing: The Legal Ombudsman (LeO) has published a report criticising the poor service provided by many will-writers in both the unregulated and regulated sectors in England and Wales. LeO points to high levels of complaints about service providers’ charges, delays, and failure to explain their responsibilities.

Wealthy beneficiaries entitled to anonymity: The England and Wales High Court has ruled that a court judgment concerning trust beneficiaries must be anonymised before publication in order to protect them from the ‘adverse personal effects’ of their wealth. However, Mr Justice Morgan declared that their privacy and personal security is not a good enough reason for restricting publication.

Effect of Mental Capacity Act 2005 on testamentary capacity: The previously unreported case of Bray v Pearce and Smith examines the precise effect of the Mental Capacity Act 2005 on determination of testamentary capacity.  However, the effect of the 2005 Act has not yet been authoritatively decided.

Changes of the last three years: Law firm Farrer & Co has produced a useful summary of the past three years’ changes to the UK system of residential property taxation. These changes include: the punitive rate of stamp duty and the annual tax on enveloped dwellings imposed on corporate property owners; capital gains tax on the sale of ATED-rated property and the likely extension of CGT to all non-resident owners; the restriction of debt relief from inheritance tax; and the new statutory residence test.

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

 

 

Business, family and ownership: working in three dimensions

David HarveyThe Family Firm Institute annual conference is a mixing pot of those who advise family businesses and business families – family counsellors, management  consultants, mediators, accountants, lawyers, psychiatrists, psychologists, academic commentators, a good few family members and, interestingly, consultants who have come from businesses, families. A good few of the above are TEPs.

This year’s FFI conference offered a one-day introduction for US attorneys to advising families. A brave group of soft-skilled FFI members, led by Scott Budge and Roy Kozupsky, together with  STEP participants led by Mary Duke and me, and ably supported by UK family business guru Peter Leach, set out to cover some of the legal aspects, but focusing mainly on how families are different. We covered issues of psychology and chemistry; in essence, why every family business is happy or unhappy in a different way, how that often drives the business and why, to achieve any success with structuring, all of the right questions have to be asked to dig behind the external forms. We focused, too, on the mutually conflicting perceptions of advisors and consultants, using work carried out by STEP in association with the Institute of Family Business. This highlights on the one hand how lawyers can find families and family wealth frustrating and difficult to engage with because of issues of chemistry and blood; and on the other hand, it looks at complaints from the families themselves:

  • the failure to look at the family’s long term ambitions, rather than just proposing the best way of planning a structure and putting in place reasonable mitigation of tax;
  • the failure to look at long-term generational issues in the business e.g. training for the next generation, psychological issues regarding the retirement of those who are stepping back from the business;
  • not seeing the different drivers of family members, including tradition and adapting the business to include younger generations;
  • the interaction of professional, business management, whether family or not, with family owners who don’t work in business;
  • understanding the ghosts in the system — overwhelming influence of a dead founder or the power of ‘non-owning and never seen but extremely influential’ in-laws and partners;
  • the importance of family governance structures e.g. family councils

(You can read a summary of this research here http://www.step.org/new-perspectives)

The Chairman of attorneys for Family Held Enterprises, Michael Hawthorne, also joined us with a rather more hard skills and knowledge-based approach, but adding great interactions, insight and knowledge.

The challenge, though, is that most delegates at the conference were TEPs, and almost every one of them understood the above issues because their trust and estates practice had, at the very least, madeFamily business them both aware and respecting of what they did not know. The audience of attorneys who are oblivious to the drivers of family enterprise were, however, notable primarily by their absence. Yet, anywhere in the world, the practitioner who has at least a holistic understanding of family enterprise and can, at the very least, call in a colleague with soft skills to assist, is always going to give a better service and have a much stronger business model.

Talking to practitioners with family understanding is mutually rewarding and involves learning for everyone, but there are great mass of advisors out there who have yet to realise that business families are three-dimensional combinations of business, family and ownership, and you need to work on all three. Getting that message across is hard work, but also an exceptional opportunity for professional groups who want to offer the right professional development and for professional practices who see the market gap.