31 January 2022
At Bedell Cristin, we recognise that there is more to a matter than the strict letter of the law. There is a bigger picture to a transaction. Most importantly and above all, there is a client who is seeking to achieve a desired outcome, and in many cases, not just for immediate future, but for generations to come.
This is particularly true for the clients of our International Private Client team, who benefit not only from the team's ability to guide a client through all of the legal requirements of establishing a trust or other wealth management structure (including foundations and companies), but also from their strong understanding of the wider tax considerations which may be relevant depending on the client's domicile and tax residency.
An example of this is the team's understanding that, despite the modern nature of Jersey's trust law allowing a broad range of powers to be reserved to the settlor or granted to a protector, taking advantage of these provisions may have adverse tax implications for those individuals, or the trust. Could the retention of powers by the settlor or protector mean that trust is deemed to be managed and controlled in the jurisdiction of the settlor or protector thereby bringing the trust into the tax net of that jurisdiction? Such discussions are a vital part of any planning process.
Another example is the effect of the settlor being included as a beneficiary of the trust. This is a key consideration for clients who are resident non-domiciled in the UK ("RND"), or who may become a RND in the future. Whilst the inclusion as a beneficiary is acceptable as matter of Jersey law, and may not trigger any inheritance tax implications, the UK income tax and capital gains tax rules for RNDs are very complex, with a separate regime applicable to trusts. Certain protections are available but the construction of the trust's investments is key to retaining these.
Further, for those RNDs who later become domiciled in the UK, it is critical that no action is taken in respect of the trust which could affect its excluded property status, keeping it out of the reach of the UK inheritance tax net.
Our International Private Client team's awareness and understanding of such issues allows them to provide holistic advice and work seamlessly with clients and their advisors to establish and administer structures which will best serve the needs of the client and his or her family now and in the future.
If you have any queries about the establishment of a new structure or your existing structures, please get in touch with a member of our International Private Client team.