Trusts and foundations are a powerful tool expats can use to transfer wealth.
The ever-changing nature of global tax and legislative environments has helped drive development in the international trust industry, with clients counting on trusts to transfer wealth between generations. Gone are the days of the one-size-fits all fund–today trusts can be bespoke (earmarked for a particular purpose), multi-jurisdictional and may also include professional protectors and guardians.
The product range typically offered by an expert trustee includes traditional client discretionary trusts, reserved powers structures, structures designed to own operating companies, specialist investment funds, international pension funds, QROPS/QNUPS structures and even marine and aviation services.
Other, more specialized trust types include:
- Trusts designed to hold companies operating in multiple countries. It is generally possible to arrange for one of these trusts so long as the trust can demonstrate it fully understands the operating entities, the nature of their business and their corporate governance.
- Holding vehicles as a pre-cursor for listing businesses on international exchanges. For clients who own businesses in riskier parts of the world (such as Russia and some Asian countries) these structures can provide for everything from wealth management to shareholding structures.
- Bespoke funds. These can be earmarked anything from property to wine. The Skiers Trust Bespoke Fund, for example, allows families to create funds to support their children’s participation in competitive skiing and snowboarding.
Choosing a trust company
When choosing a trustee, a client should carefully consider who will be able to best provide for his particular needs. Chemistry is important, as client longevity and service quality depend on establishing and maintaining strong client relationships across generations.
Faced with increasingly complex demands from clients, many trustees are now moving away from traditional cost-time structures and “menu pricing” to a more intimate, client-oriented, bespoke pricing model. Another popular pricing model (particularly in emerging Asian markets) is fixed fees.
Hence, the other critical point to consider is cost-effective delivery of services. Client servicing costs can easily spiral out of control in high-cost jurisdictions, so it’s essential to choose a company that devotes resources to technology and process improvement programs.
Today’s complex trust products can only work for a client if the trustee or foundation provider has the correct skill set and is able to provide services in a cost-effective manner. Though cost plays a crucial role in this mix, clients are likely to be pleasantly surprised by how much value a modern, technology-driven global trust company is able to provide them.