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ESTATE PLANNING


Families therefore may encounter liquidity issues especially if, for example all the bank accounts were held in the deceased’s name. As probate proceedings are open to public scrutiny,


they tend to generate a fair amount of public interest, especially with estates of substantial value. Families need to consider the full implications of these proceedings not just from a monetary perspective but also from a reputational one especially where the family business is to continue to operate beyond the patriarch’s lifetime. A key challenge in structuring trusts for Asian


families today is that a significant proportion of Asia’s wealth tend to be in active or operating investments and businesses. For such clients, the structuring process requires special considerations and the selection of an appropriate law to govern the trust. To this end, among the offshore trusts jurisdictions, the Cayman Island and the British Virgin Islands (BVI) are well positioned to meet these requirements. For instance, the BVI has enacted special VISTA trust laws which provide a framework to allow BVI trustees to hold complex assets such as operating businesses under a trust. Patriarchs with specific legacy considerations


looking to have a trust set up over many generations to hold multiple types of assets (for example family businesses and antique collections), have also benefited from the Cayman STAR trust. The STAR trust is gaining popularity for Asian families as they need not be limited in duration and the person setting up the trust (the settlor) can stipulate the amount of information that each beneficiary receives in relation to their entitlements under the trust. In such instances it is possible to appoint neutral (non-beneficiaries) third parties (enforcers) to enforce the trust for the benefit of the beneficiaries in a STAR trust. This is useful in avoiding intra family disputes amongst beneficiaries and beneficial if the patriarch desires the trust assets to be retained for the next generation. Both the BVI and the Cayman Islands have licensing


requirements for trust companies that offer trustee services to the public. Those involved in establishing such structures can expect that the trustee will properly carry out its role. In the unlikely event that issues should arise with regards to a trust service provider, an appropriate regulatory and legal framework has been put in place. In fact, as indicative of its established trust industry, Cayman has been recognised internationally as a preferred forum for the resolution of trust disputes with many leading international cases decided in the Cayman courts. As part of the structuring process, an adviser should


consider a client’s specific objectives for setting up the trust as different objectives will require different elements to be incorporated into the overall structure. One must consider the nature of the assets to be placed under a trust and whether there is a need to restructure assets located in the client’s home jurisdiction. With


the more complex assets and trusts, foreign recognition risks must also be taken into account and dealt with at the structuring stage. From a structuring perspective, families understand


that there is a need to seek advice early, particularly before a life changing event such as migration, marriage, divorce, or death occurs in the family. For immovable assets such as real estate it is ideal to seek advice before the actual property purchase as subsequent transfer costs (stamp duties and legal fees) may be prohibitive once the sale is completed. In fact, it’s never too early to seek advice on a trust- families have been


“The flexibility of the trust structure has given many families in the emerging markets a means to secure their assets against the threats of political and social unrest”


known to set up trusts even at the preliminary stage where they anticipate a realisation of their investment gains. Overall, the benefits of using trusts are multi-


dimensional and go far beyond the tax realm. Given its flexibility, it offers tremendous opportunities as a long term ownership structure that can be moulded according to the needs of the family it serves.


Lee Syin Long is Head of Trusts (Asia) with Walkers and is based in the firm’s Singapore office. Lee Syin advises families and corporates on private and commercial trust matters as part of their overall estate planning and business succession needs.


FAMILY OFFICE: ASIA TOMORROW 89


OPERATIONS


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