hawk-i newsletter - spring 2012

Issue 2 | April 2012

Thinking

beyondtomorrow

FiduciaryFamily OfficeWills & ProbateSuccession PlanningEmployee Solutions Funds AdvisoryMedia & SportsL-S&S GmbHpart of the Hawksford Group

page 2 A welcome to Hawk-i from Peter Murley

page 3 Client insight research

page 4 What makes a good trustee?

page 6 Why should we make a will?

page 9 United Arab Emirates and Switzerland offices – market update

page 10 Guest column: What might 2012 have in store? – Geoffrey Shindler, Consultant for LS&S GmbH

In this issue

1

AcquisitionIn January we acquired Trustcorp Jersey Limited. This is excellent news as the acquisition brings with it a great book of clients, who we are very pleased to work with, and 29 new members of staff, strengthening Hawksford’s resource pool, expertise and knowledge. This builds on our expansion of last year when we opened an offi ce in Dubai and acquired LS&S GmbH, based in Zurich, and its New Zealand trust company.

While we are growing, we understand the need to maintain the strong relationships with our clients and advisers that we pride ourselves on. We will not lose sight of what matters most: providing top quality service for our clients.

Investing in technologyWe are working with Jobstream, a leading independent specialist provider of software to the offshore fi nancial services industry, on a large project to improve our administration systems and enable us to work more effi ciently. Before engaging Jobstream, we listened to client feedback and reviewed all of our processes to make them more streamlined and

consistent across the business. The new system will be tested for a period of three months in one of our client teams and will be in full use right across Hawksford by October.

It is important that we invest in our people and technology to ensure that we continually improve the service we provide, and to build a strong, sustainable business for the future.

Client insight researchThe second phase of our client insight research will begin in June. 100% of the people who took part in our research last year said that they would be happy to be involved again. This year we will carry out our research online, rather than through face-to-face or telephone interviews, to allow us to increase the amount of feedback we receive and to give you more fl exibility in providing your views. If you would like to take part and share your feedback, helping us to improve the service we provide to you, please let us know.

Welcome to the second edition of Hawk-i.The feedback from our fi rst edition was extremely positive and we hope that you will continue to enjoy our topical articles and Hawksford business updates. Since our last issue in December, we have had an exciting few months and I am very pleased to be able to share some of our news with you.

improve the service we provide to you, improve the service we provide to you, please let us know.

Peter Murley Chief Executive Offi cer

T: +44 (0) 1534 740132E: [email protected]

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| April 2012

In our last edition of Hawk-i, we shared with you an overview of the improvements we’re making based on last year’s research. In this issue we will provide more detail on the progress in two of these areas: communication & capability and creativity & innovation.

Communication & capabilityLast year’s research told us that we needed to communicate what we can do through a wider range of channels, and we are addressing this through a number of activities.

We have made strong progress, including our new website, which provides much more information about the services we provide, as well as profi les of every member of staff. We have also achieved an increase in media activity, and of course the launch of this newsletter, which is available in both print and electronic forms.

We are starting to invest in a new client and adviser extranet, which will provide a further means of communication and will, among other things, provide secure access to certain amounts of information.

More details will follow on this over the coming months.

We have actively embraced digital media as we recognise that many younger generation clients (and some older) enjoy this type of communication and it is likely to grow in popularity. We have therefore established company Twitter and Linkedin profi les, which are steadily growing in followers and many of our employees have their own Linkedin profi les.

We must not forget however that the most effective methods of communication are often good, old-fashioned, meetings and phone calls and our client teams are working to increase direct contact with clients and advisers where it is wanted. This is something we will continue to focus on.

Creativity & innovationOur research showed that we needed to differentiate ourselves better and communicate our full service offering so that we could help you in other areas. We rebranded at the end of last year, part of which included making our services much clearer by listing them in all of

our stationery and marketing materials. The feedback from clients so far has been overwhelmingly positive and we are seeing that increasingly, clients and advisers are benefi ting from our wider range of services.

As part of our rebrand we introduced thinking beyond tomorrow. This is more than a positioning statement - it clearly outlines our business philosophy for our clients and echoes our people’s commitment to be client focused. It is a reminder to our staff that we must always consider our clients’ longer-term objectives as well as meeting their short term goals. In addition to highlighting our existing services, we are investing in new service lines such as Hawksford Media and Sport, which launched at the end of last year. We are listening to what our clients need and want and will be launching a number of other new services later this year.

Client insight researchAt Hawksford we aim to provide the best possible service. We understand that in any business there is potential to improve, and we acknowledge that we are not perfect. It is for this reason that we began investing in client research last year, to understand how you think we are doing, what we are doing well and where we can improve. We then act on your feedback.

Peter Murley Chief Executive Offi cer


Would you like to get involved?

If you would like to take part in our next survey, please email [email protected] with your details.

3

A trustee’s role is a complex mix of duties, responsibilities and potential liabilities, and in spite of what some clients might think, is not to be undertaken lightly! By drawing on my experiences during a 25 year career in the trust industry, including my mistakes, I will summarise what I think makes a good trustee.

Academic understanding of the roleBy suggesting that this is a pre-requisite, which I think it is, I am not suggesting that only Oxbridge scholars should apply. Some of the best trustees I know have few formal qualifications but a wealth of experience, appropriate characteristics and a willingness to learn. Trustees must however fully understand their fiduciary responsibilities or they will place themselves at considerable risk. Total reliance on professional advisers is likely to increase the chances of referring to them when something has gone wrong and not before. A trustee’s education process may begin at college or on formal trust courses, but for others it is more beneficial being mentored by those with a wealth of knowledge and experience in the industry, who can set the trustee responsibilities in the context of real problems; in my view, there is no better way of realising the scope of some trust issues and how to deal with them.

Familiarity with the trust documentation It is essential that a trustee is totally familiar with the trust documentation, which most commonly will include the original trust document, and in the case of discretionary trusts, the letter of wishes. It is also necessary, and sometimes rather overlooked, that the settlor fully understands the implications of the documentation that he or she is signing, including, in particular, the implications of any indemnity or exoneration provisions incorporated within the trust. Once the trustee relationship has been established it is all too easy to forget the terms of the trust, which can lead to unfortunate mistakes. Only recently I was advising in a situation where the trust administrator, having read the trust documentation as far as the overriding power of appointment, had concluded that he was dealing with a

discretionary trust whereas in fact a quick review of the following clauses would have confirmed that, subject to the exercise of the overriding power, the trust was in fact conferring an interest in possession on the settlor. In a similar vein, it is all too common to find that where a protector is appointed, the trustees act without obtaining the protector’s consent, and many distributions later, have to consider notifying the insurers and in some cases incurring considerable professional costs. Generally however it is, in any event, crucial that the trustees fully understand their role and responsibilities as fully set out in the trust, taking particular care to note any unusual provisions. Those responsible for the trustee relationship should in turn ensure that all those working on the trust are aware of the principal provisions, and keeping a computer note to try and avoid inadvertent slip ups is always advisable.

Good communicationAt the root of most trustee litigation is a failure to communicate. Whilst the student of trust law may consider it a very dry subject, the reality is of course that it deals with people, their money, aims, aspirations and objectives. It is therefore essential to be a good communicator, which includes being a good listener. I often tell my colleagues to pick up the phone rather than email, and not just because the intention of an email can so often be misinterpreted, but also because almost invariably one will glean something from a conversation which will add to the reservoir of knowledge on your settlor and beneficiaries. By way of example, if a beneficiary suddenly announces that he or she is having more than routine marital problems, this should be recorded on the file and particularly borne in mind if, for example, an unexpected and unusual request is then received to exclude a beneficiary from the beneficial class, make a substantial distribution to a beneficiary or even wind up the trust. The trustees in such circumstances are on notice that considerable care will be required and possibly advice sought. A routine conversation with a client will in all probability cover everything from detailed tax analysis, trust problems from a legal perspective, and family dynamics, which might include everything from comments about the educational successes or failures of the younger class of beneficiaries, the lame horse and the elderly aunt who is perhaps enjoying her sherry too much!

A good trustee must have empathy with people and without this I think it is impossible to be truly good at the role. A solid trustee relationship with his beneficiary will inevitably involve disclosure

What makes a good trustee?

Michael PowellDirector


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| April 2012

of significant personal detail, understanding as to why a beneficiary might be acting in the way that he or she is, an ability to be firm but fair in delivering good or bad news, whilst being able to explain to the beneficiaries that notwithstanding that you as trustee wish to build up a trusting relationship with them, this does not equate to always saying 'yes'. Too many allegations of breach of trust have their roots in old style trusteeship where sometimes relations between the settlor and the trustee became just too cosy so that the trustee found themselves compromised and sometimes unable to refuse what they would otherwise have accepted to be an inappropriate course of action.

A good trustee forgets the younger generation at his peril! There are good reasons why parents in particular do not want younger beneficiaries to be prematurely aware of trust funds from which they may benefit, however do not forget their rights and the possible risks of not communicating with them soon enough. In my experience most parents can be persuaded of the potential benefits of letting their children know about the respective rewards and responsibilities of wealth. In some cases trustees can (together with appropriate parental input) succeed in getting messages across where the parents know they will not. Establishing a solid relationship with the next generation of beneficiaries also heightens the chance that they will not seek to remove you simply because you have been too closely associated with their parents.

Being a good facilitator It is very important for a trustee to understand at what point he requires the support of professional advisers, whether it be on the subject of tax, property matters, investment matters or any other areas, in most cases generated by the composition of the trust fund. The beneficiaries will, depending on the extent to which they themselves may already have such contacts, require the trustee to be a good facilitator in bringing together professionals who can reasonably be expected to advise the trustees accurately and concisely and in a manner which the beneficiaries will themselves fully understand. It is sometimes quite literally a case of horses for courses, so that in certain instances a trustee might instruct a particular tax counsel because of his very specific area of expertise, whilst in other areas a trustee might pick counsel because they are a very good communicator and fully able to explain to the beneficiaries very detailed aspects of tax law in a way in which both the trustees and beneficiaries understand.

Of independent mindThis really echoes some of the comments above, but is worth a separate reference as it is crucial that the trustee is able to stand quite independently from the settlor and/or any of the beneficiaries to make up his own mind on any particular issue without feeling either compromised or in any way bound to support a particular beneficiary’s course.

Using initiativeSettlors and beneficiaries will nearly always welcome a trustee who takes initiative. If it is apprehended that tax changes might impact on one or more of the beneficiaries (take the recent changes to the French tax code, the anticipated changes arising from FATCA, rebasing for UK capital gains tax purposes for example) then the beneficiaries will expect that their trustee is at least aware of these proposed changes even if they cannot advise on them personally. Trustees are, however unreasonable it sometimes seems, expected to be ahead of the game and be able to apprehend problems such as statutory changes and changes in the family dynamic.

Having a balance of various skill setsIn my experience, a trustee is expected to have a reasonable level of legal knowledge, be relatively tax conversant (at least have an idea when there may be tax implications for a settlor or beneficiary), numerate, and to have some understanding of investment matters. In reality of course it is most unlikely that a trustee will excel in each area, however, they will be expected to be in a position to comment fairly authoritatively on each matter, quite possibly with a colleague’s assistance, and wherever they feel they cannot do so, to apprehend this quickly and ensure that advisers with the appropriate skill sets are appointed.

When my teenage son recently asked me whether I would recommend a career in professional trusteeships it did not take me long to suggest that there may well be many other careers far less challenging, but when trusteeship works well it is in fact a very fulfilling role indeed.

Michael PowellDirector


5

Why should we make a will?

It is an often quoted fact that upwards of 70% of people dying in England and Wales, do so without having a proper will in place.

Lawyers, banks and indeed charities go to great efforts to encourage us all to consider what happens if we die without having addressed how our estates should be managed when we are no longer around.

At Hawksford, our Wills and Probate team see first hand on a regular basis the problems that face families and advisers when someone has passed away, be it in Jersey, England or further afield, without thinking about the devolution of their financial affairs. In addition, being a premier offshore centre, it is fairly usual to see such individuals leaving assets in more than one legal jurisdiction.

A will is a legal document which sets out:1 How you would like your estate dealt

with after your death2 The names of individuals and institutions

who you would wish to benefit from the estate

3 Who you would wish to appoint as executor to 'step into your shoes' and administer the estate

Why is it that so many of us choose not to make a will?

Reasons include:• 'Idon’twanttofacetheinevitable'• 'Tooexpensive'• 'Myassetsdonotwarrantit'• 'Mywifewillgeteverythinganyway'

What might happen without a will?Let us now briefly look at the practicalities following the death of an international businessman, who dies leaving assets located in countries around the world. He has not made a will and has ignored all advice during his lifetime to create a lifetime trust or foundation, which would continue after his death and allow his family members to receive on-going financial benefit.

What happens:1 All worldwide assets in his sole name

are frozen, including business assets2 A grant of letters of administration or

similar, or some form of testamentary or notarial process needs to be undertaken in each country in which assets are held

3 Ongoing liabilities, such as family day-to-day living expenses, school fees and utility bills become unpayable for some time

In general, there is no quick fix.

As there is no will anywhere and therefore no executor to “step into the shoes” of the deceased, it becomes necessary for the family and their advisers to consider first who are the persons, under the law of the deceased’s domicile or perhaps residence, able to administer the estate. Secondly and perhaps more importantly for the family, it also becomes necessary to determine who becomes entitled to the estate, given there is no will directing how the estate is to devolve. In common law countries such as England and Wales, the devolution is governed by the rules of intestacy. Here, more problems can arise depending on the value of the estate and where it is situate.

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| April 2012

The notion of 'everything will go to my wife' can quickly be dispelled when one considers the current laws of intestacy that apply for England and Wales, as the illustration demonstrates.

By contrast, let us look at what happens where the international businessman is a Muslim. A different set of rules determine how the worldwide estate devolves. Here the estate devolves in defined proportions depending on the survivors. So if those survivors include one or more wives, and then children of both sexes, eventually the estate will be divided amongst a great number of people in a variety of proportions. Once again, one of the major problems will be actually getting access to the estate, particularly in common law countries.

'…the Hawksford team have

become well experienced

in understanding the

nuances in international

probate matters.'

In each country, some form of probate procedure will need to be undertaken. In that procedure, Sharia documents could be the basis of the application, however as Sharia declarations do not specifically stipulate who are the persons that can actually administer the estate and therefore apply for the appropriate grants of letters of administration, then it becomes necessary to obtain confirmation of who can administer the estate, usually from an appropriately qualified lawyer.

If that confirmation provides that all of those who are entitled to inherit under the principal Sharia declaration are equally entitled to administer, then either all of those persons must become involved in the probate application in each location or, perhaps more conveniently, they will need to appoint an attorney to act under power of attorney. As we can see, the whole process then becomes extremely time consuming and equally expensive.

As mentioned above, the Hawksford team have become well experienced in understanding the nuances in international probate matters. They have an excellent rapport with the Jersey Probate Court and have established links with other professionals around the world who are equally experienced in this field.

It is perhaps interesting to note how international the Jersey Probate Court has become. The records provided by the Royal Court service show that the probate office handles in the region of 2,000 probate applications each year. In 2011, they had to deal with applications from 69 different countries around the world.

Many people use the excuse that making a will is too expensive. It is true to say that constructing a will, or series of wills, that take account of all of a client’s requirements dealing with the devolution of his worldwide estate, cannot be undertaken cheaply. Losing a loved one is upsetting and traumatic for the family; this can be compounded by the time, expense and delays in becoming embroiled in a variety of legal bureaucracies throughout the world. Compared with this, an investment of a few hundred to two thousand pounds seems minimal.

'Losing a loved one is upsetting and traumatic for the family;

this can be compounded by the time, expense and delays

in becoming embroiled in a variety of legal bureaucracies

throughout the world. Compared with this, an investment of

a few hundred to two thousand pounds seems minimal.'

Continued…

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25 Variation of dispositions etc by consent(1) Subject to paragraph (2), the Court may by order made

with the consent of all parties who in its opinion should

be consulted and having regard only to the interests of the

beneficiaries or heirs interested in so much of the estate as is

affected by the order - (a) vary any disposition (whether effected by will, under the

law of intestacy or otherwise) of the movable estate of

the deceased person;(b) provide that any variation made under sub-paragraph (a)

shall have effect as if it were a disposition effected by the

will of the deceased person or under the law of intestacy,

as the case may be; and(c) direct to whom and in what manner the movable estate of

the deceased person shall be distributed.(2) An order for a variation under paragraph (1) (a) may only

be made within 2 years after the death of the deceased person.

Lastly, looking at matters from a Jersey perspective again, we know that the Probate (Jersey) Law 1998 (as amended) governs this area of the law. It is interesting to note that contained within this law, is the provision (article 25) which allows for the variation of the devolution of an estate.

Article 25 provides that:

Therefore, this interesting tool can provide advisers and families with the option, if all agree, to vary the terms of a will, if the contents of the will are very much out of date and do not reflect the current position or indeed vary the intestacy provisions.

This can be a very useful post-death option of bringing about some form of equalisation in the distribution of a deceased person's assets.

Meet the Wills & Probate team:

Tim CartwrightDirector


Eliana LennonSenior Probate Administrator

T: 44 (0) 1534 740122E: [email protected]

Nicki Brittain Probate & Wills Administrator


Jeremy JohnsonConsultant


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| April 2012

Market update

Lynda O'MahoneyBusiness Development Manager - Middle East

T: +971 50 8595564

E: [email protected]

Switzerland–––––––––––––––––––––––––Liechtenstein Disclosure FacilityWe’ve recently been seeing an increase in work using the Liechtenstein Disclosure Facility (LDF), which we believe could be useful for a wide range of clients and for a variety of reasons.

What is the LDF?The Liechtenstein Disclosure Facility (LDF) was negotiated between HMRC and the Liechtenstein authorities and is in all but name, a tax amnesty. It is open to all UK residents whether domiciled or non-domiciled with undeclared offshore liabilities and in respect of assets anywhere in the world. There need not be a pre-existing link with Liechtenstein as the necessary link can be simply created.

Advantages of the LDFAdvantages include the maximum penalty being fixed at 10% of the outstanding tax plus interest, which is extremely favourable compared with an involuntary tax investigation where HMRC may seek a minimum 30% rising to 100%. Other advantages are immunity from prosecution where full disclosure is given (and providing funds do not come from wider tax fraud or criminal activity), the option of using a single composite rate of 40% or to calculate actual liability on an annual basis, and above all, clarity, certainty and peace of mind.

Who can benefit?To take advantage of the LDF a number of criteria must be fulfilled but one of the main requirements is to have a ‘meaningful relationship’ with a Liechtenstein financial intermediary.

The most common form of ‘meaningful relationship’ is a transfer of assets to a Liechtenstein bank account. This can be costly and clients are often concerned that the bank will then try to cross-sell them other products that they are not interested in. The route we recommend is to appoint a Liechtenstein trustee to hold the relevant assets on trust until the disclosure period is over. This will allow for greater flexibility to restructure

affairs once the disclosure has been completed, as the assets under control can be repatriated anywhere as long as the trustee remains constant.

How can we help?Hawksford has established a Liechtenstein based trustee company that is fully authorised and licenced by the Liechtenstein authorities. Our team in Switzerland comprise UK qualified private client lawyers and have in-house accounting capability. They have extensive experience in the regulation of clients’ affairs through the LDF and will be happy to discuss how this might benefit you or your clients.

Dubai––––––––––––––––––––––––––Pension schemes Pension schemes and the subject of saving for one’s retirement have become hot topics in the Middle East, and particularly in the UAE. Recently Hawksford was delighted to take part in a round-table event to discuss the issues and challenges faced by employers and employees and to hear what the Dubai Government had to say on the subject of a 'pension system' for expatriates. The event was co-sponsored by Hawksford, Ryland Gray and Clyde & Co, all of whom are leading providers of employee solutions services in the Middle East. The general consensus was that many people are beginning to change their mind sets and consider their longer-term financial needs, but there is still much education needed in this regard, both for employers and employees. The Government of Dubai acknowledged the lack of organised systems for retirement income in the Gulf Co-operation Council

(GCC) countries and the fact that many of the existing structures only offer real benefit to nationals.

In terms of non-nationals, there is nothing funded at government level, nor is there any pension legislation in place, so when we refer to pension schemes, what we mean is 'retirement savings schemes'. There is an End of Service Benefit (EOSB), which is the amount payable to expatriate employees by an employer on the termination of employment. Employers, although they should be accruing for the payment, are not compelled to put funds aside during employment for their employees. In most cases, this liability is unfunded. From an employee’s perspective, depending on length of service, it can be the most significant benefit after remuneration.

Therefore at present, it is up to the individual to save, and more increasingly we are seeing employers starting to provide a vehicle for their employees to save for retirement.

From the government’s perspective, there is no doubt the creation of a ‘pension’ system to replace the current benefit model will be challenging, however it would result in a number of advantages, one of which would be encouraging a savings culture in the UAE. Expats will need to realise that they too have a responsibility to save for their future and employers are already beginning to see the benefits of providing these schemes to their employees.

At Hawksford our Employee Solutions team are highly experienced in providing a wide range of offshore employee benefit incentive schemes, which can help businesses recruit and retain personnel as part of an overall remuneration strategy.

James NormanSolicitor

T: +41 (0) 43 500 38 74E: [email protected]

9

Crystal ball gazing and predicting the future generally is one of life’s more hazardous occupations. So by attempting it here I am becoming very brave or just foolhardy.

My prediction for this year is that one of the most important events that will strike those involved in trusts and estates will be the Financial Action Task Force (FATF) report and recommendations. FATF issued a consultation paper in June 2011. It was entitled 'The Review of the Standards – Preparation for the Fourth Round of Mutual Evaluation'. From our perspective it was nothing else than the overture to the next act in the Anti Money Laundering soap opera. As such it is likely to impinge upon the way we operate and, as the 19th century British Prime Minister Lord Palmerston once remarked, 'Reform – why do we want that; are not things bad enough already?'.

I might begin with another FATF report, July 2011, 'Laundering the Proceeds of Corruption' which surveyed 'The use of corporate vehicles and trusts' (my underlining) in laundering the proceeds of corruption. If you look carefully at the report you will see that no case study relates to trusts – they all relate to corporate vehicles.

As STEP has pointed out in its comments about trust reporting systems, the major practical problem with regard to trusts is not that relevant information is unavailable but that, except for a few specific instances, the limitations on competent authorities sharing information was the real problem. Where information is shared effectively the UK has stated that 'current and prospective investigatory powers are generally considered by law enforcement and financial investigations to be adequate to probe the suspected criminal use of trusts'.

Notwithstanding this statement, there are three recommendations in the July 2011 FATF report which concern us.

Recommendation 5 wants protectors to be included in the definition of 'beneficial owners', and for that matter any other natural person exercising effective control. No problem here. My own experience is that protectors are a double edged sword. If trustees have a close working relationship with their

beneficiaries, one has to ask why you need a protector at all. But that is for another day.

Recommendation 4 deals with data protection and privacy. My experience of these concepts is that it would help if those manning the data protection vessel would understand that they should treat data protection as lawyers treat their client’s privilege. If the client wants to disclose what is privileged then I can do so. Why cannot data protection take the same view? The concept is presumably there to protect people; if those people do not want protection, why does data protection prevent disclosure of information that the person who is being protected wishes to be disclosed?

However, the core of the FATF recommendation so far as we are concerned is recommendation 34 – legal arrangements.

I do not suppose anyone would disagree that the level of transparency relating to the beneficial ownership of companies should equally apply to trusts, and for that matter, foundations.

There is of course one fundamental distinction between many companies and most trusts – many companies trade, most trusts are investment vehicles. Whilst someone trading with a company wants to have details of their accounts and their governance documents (that is why, with concept of limited liability, came the requirement for the filing on a public register their Annual Report and Accounts and their Memorandum and Articles of Association) there should be no need for an investment house to know anything more about the trust than its investment policy. STEP suggests that, in this context, trusts should be as transparent as bank accounts i.e. protected by a law of confidentiality.

Those of us who come from a common law background are surprised at many aspects of the attitude of non common lawyers to trusts. We know, it is in our bloodstream, that trustees are obliged to act solely in the best interests of beneficiaries; must never put themselves in a conflict between their own financial position and that of their beneficiaries; that they must keep accurate and full accounts of their transactions; and, following the original AML legislation, they must hold full details of 'beneficial owners' as defined for AML purposes. It is of course one of the problems that common law lawyers have which is that the definition of beneficial ownership for AML bears no relationship to the definition of beneficial ownership as we were taught it

What might 2012 have in store?

Geoffrey ShindlerConsultant for LS&S GmbH part of the Hawksford Group


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| April 2012

at our mother’s knee. Having two entirely different concepts covering apparently the same definition is confusing to say the least.

And why should it be that any 'competent authority' needs to have details of the trust? Of course trustees must make full, accurate and timely returns to their relevant tax authority but what else? What other competent authority is lurking around the place that thinks that it needs to know anything about family trusts, because most trusts are for the benefit of the family?

'It is something of a joke to assume that any

government department can keep anything

secret for so long as civil servants travel

about in taxis and contrive to leave their

briefcases there.'

Which leads very quickly onto the issue of the registration of trusts. Without wishing to resort to '1066 and All That' type argument, registering trusts is, in my view, a 'Bad Thing'. For whose benefit would a registry exist? And, if it claimed that the register will not be open to the public but only to those who need to know (a category of people it will be fascinating to be defined), what possible guarantees can be given that the register will be ring fenced and secure? It is something of a joke to assume that any government department can keep anything secret for so long as civil servants travel about in taxis and contrive to leave their briefcases there. Of course many common lawyers, like me, come from an English Whig background and are libertarians. Someone needs to justify to me why any of my freedoms, including the freedom not to tell anybody about my business, should be breached? I cannot see that FATF begins to address this argument – though as most of the members come from civil law countries perhaps that is the answer in itself.

There is another concern in the FATF recommendations, which is that countries other than those in which the trust is managed should somehow have access to information relating to the trusts. If a trust is managed in say Jersey, but the trustees own a

property in Switzerland, why should the Swiss authorities need to know anything about the ultimate ownership of the property? Yes, the property will be subject to some aspects of Swiss law – environmental protection, the making of tax returns if the property is let, but beyond that, why?

It is now, 'a truth universally acknowledged' that FAFT appears to regard the trust as evil. Will they be treating civil law equivalents such as the foundation, the fiducie and others with the same level of suspicion?

All of this is to suggest that when FATF produces its report we need to look very, very carefully what it is proposing and not be afraid of challenging any proposals. One of the more unfortunate aspects of current life is that if you challenge one of the international quangos as to the purpose of any particular restriction, you are greeted with the reply that the restriction is intended, amongst other things to deter international terrorism and crime, so therefore if you object to our proposal you must be an international terrorist or criminal. This attitude has to stop.

Remember that in the UK when the current AML regulations were passing through Parliament there was not one single member of either House of Parliament who had a word to say on the topic. This must never happen again. The end of Margaret Thatcher’s reign might have been heralded by her attitude to the European Union and her famous, 'No, No, No', but David Cameron’s walkout in December 2011 was heralded by many in Great Britain as standing up for Britain and not letting national interests be bulldozed by any form of continental alliance. We may need that attitude again. Indeed Mr Cameron has told the European Court of Human Rights that it needs to change its attitude.

I wonder how we will look at events of 2012 with hindsight on the 31 December of this year?

Geoffrey ShindlerConsultant for LS&S GmbH part of the Hawksford Group


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Hawksford Group (and Hawksford International) are the Registered Business Names of Hawksford Trust Company Jersey Limited which is regulated by the Jersey Financial Services Commission.

FiduciaryFamily OfficeWills & ProbateSuccession PlanningEmployee Solutions Funds AdvisoryMedia & SportsL-S&S GmbHpart of the Hawksford Group

Hawksford Group Jersey | British Virgin Islands New Zealand | Singapore Switzerland | United Arab Emirates

15 Esplanade, St HelierJersey, JE1 1RB Channel IslandsT +44 (0)1534 740 000F +44 (0)1534 740 074www.hawksford.com

For feedback and suggestions, or if you would like to contribute to future editions of Hawk-i, please contact:

Rebecca StannardMarketing & Communications Manager


| April 2012

hawk-i newsletter - spring 2012

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