Key highlights from expert discussions about mental capacity, philanthropy and international clients

Delegates from across the world attended STEP’s Special Interest Spotlight Sessions in London, UK on 9 December. Expert panellists discussed the latest issues affecting philanthropic giving, cross-border estates, international clients, business families, contentious trusts and estates, mental incapacity and digital assets.

This is the final in a series of blogs capturing the sessions and the expertise shared. It focuses on the discussions during three sessions:

  • Mental Capacity Special Interest Group (SIG) session, Incapacity of business owners: Planning, problems and practice,
  • Philanthropy Advisors SIG session, How new technologies are advancing philanthropy and;
  • International Client SIG session, Implications of political and economic risks and uncertainties

Mental Capacity

Delegates during this session heard about the importance of pre-planning how a business will run if the owner loses capacity. Practical considerations covered what happens if forward planning is absent, if the person in question does not accept the pre-planning, or what to do when capacity issues arise and there has been no forward planning. Incapacity can also affect the business’s trustees and shareholders. The more complicated the business, the greater the need for planning.

From the England and Wales perspective, speaker David Wedgwood remarked of a director’s role being a personal role and appointment. This role therefore cannot be delegated in the same way a shareholder’s would. If a director loses capacity, they have to be replaced completely. This isn’t the case with shareholders, who may apply for an Enduring Power Of Attorney (EPA) or Lasting Power Of Attorney (LPA) to act on their behalf.

Capacity and business owners

When it comes to navigating the loss of capacity in a business owner, diplomacy is key. Barrister Barbara Rich TEP gave some tips about what an advisor needs to keep in mind:

  • Consider whose job it is to ascertain a person’s capacity and when was it lost
  • There is always a moment when someone who has lost capacity, and is now anonymised as ‘P’ in court proceedings, had capacity. A large proportion of such cases involve younger people, when the moment of the loss of capacity is clearer than those who may be older and have neurodegenerative diseases.
  • Very often, an advisor takes on a fact finding mission once they agree to be a deputy.
  • It may become more complex when working with a previously appointed professional or family member, where diplomacy is paramount. The previous person may not be acting maliciously, and they will often still be close to the incapacitated client.

Cultural differences

Teresa Chong, Executive Director of ITC Group, a group of companies serving cold chain logistics in Singapore, gave an example of what can happen to a business when the owner becomes unexpectedly incapacitated. In her particular case, the incapacity of the family matriarch was kept a private matter, which meant that no-one outside of the immediate family knew about it.

This highlighted how cultural differences can affect how a family business is run, plans and handles issues such as loss of capacity. Yue-En Chong TEP, Advocate, Solicitor and Managing Director, Bethel Chambers, summarised Asian values as taking care of your parents at the sacrifice of your own time, money and career.

Philanthropy Advisors

The three biggest challenges in philanthropy are lack of transparency, inefficient processes and a fragmented ecosystem, according to Darshita Gilles of Maanch, who was one of the panellists at the philanthropy session. She remarked how cutting edge technologies hope to offer solutions to these across the industry with Maanch’s tech-informed data helping people make informed and transparent choices about their giving.

Delegates heard about how cutting edge technologies support collaborative discussion and strategic collaboration. It also enables better sharing of best practice of due diligence and is very helpful in emergency response situations, such as COVID.

When asked about the issue of fragmentation across the sector, Jules Chappell OBE, Chief Executive Officer of Kokoro Change, felt that indications of a degree of humility about the purpose of the mission, rather than focusing on ego, were a sign of hope.

Collaboration between funders and NGOs is also helping, including with government, which can lead to creating a solution that it adopts. In effect, philanthropy becomes risk capital that draws in government.

International Client

Ahmed Abdel-Hakan, Principal Associate with Eversheds Sutherland, discussed the history, interpretation, use and structure of bilateral investment protection treaties. When dealing with international clients, practitioners are familiar with double-taxation treaties, with 3,000 in place around the world.

Three expert speakers took part in a panel discussion about whether anti-Bartlett clauses ever really work. (An anti-Bartlett clause allows the company to function without interference from the trustee, and relieves the trustee from any such duty or power to intervene).

The speakers were:

  • Tony Pitcher TEP, Chair of the Jersey Board, Altum Group and Chair of STEP Worldwide
  • Ashley Fife TEP, Counsel-Trusts and Private Wealth, Carey Olsen Bermuda and
  • Jeremy Kosky, Head of London Commercial Litigation and Partner, Clifford Chance.

The panel pointed to the landmark Hong Kong case of Zhang Hong Li and others v. DBS Bank and others where a very aggressive and robust anti-Bartlett clause resulted in the trustees not being held liable for not intervening. Ashley stressed the importance of being careful to manage the concern that the anti-Bartlett clause achieves its purpose.

Liz Skinner, Communications Manager at STEP

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