En Voyage_Issue#14_Flickbook

Business
THE GUERNSEY
TRUSTS INDUSTRY
- MOVING WITH THE TIMES
The explosion in the number of trusts being
established in the Channel Islands began in the
1970s as a result of a number of factors including
an increase in the sophistication of international
tax planning, the UK's exchange controls, and
the migration of wealthy residents to Guernsey
and Jersey. As the industry evolved, so too did
the types of structures being set up; by the 2000s
the simple vanilla vehicles that had proved so
popular during the 1980s and 1990s began to be
replaced by more complex, bespoke structures.
Nowadays, while there are fewer new private wealth
structures being established on a daily basis, those
that are being set up are generally of much higher
value, and are significantly more complicated, than
the trusts of past decades. The previously archetypal
format of a simple trust holding a company is no
longer predominant on the fiduciary scene; instead
there are typically multiple entities within a given
structure, with existing vehicles being used in novel
ways. For example, there has been an increase in
the use of private trust companies to act as trustee
of one or more family trusts, while the Foundations
(Guernsey) Law, 2012 has enabled the use of
foundations as fully orphaned trust corporations.
Further evolution in this space has seen clients
exploring options such as using private protector
companies (held by purpose trusts and run by
directors with the assistance of specialist advisers) as
alternatives to the traditional protector committee.
The motivating factors behind such structures'
creation have also changed, now tending increasingly
towards succession planning, asset protection and
privacy rather than tax strategising. A constant in this
fast-moving market is the popularity of Guernsey as
a jurisdiction of choice, which is widely credited to its
robust legislation, well-respected judicial framework,
and decades' worth of case law, inspiring trust
participants and advisers alike with confidence as to
how the court will apply and interpret the legislation.
In addition, Guernsey's reputation as a well-regulated
jurisdiction has seen an influx of structures moving
to the island pursuant to the 'flight to quality';
Guernsey having placed, nearly ten years ago, on
the OECD's “White List” of approved jurisdictions in
recognition of its adherence to the internationally
agreed principles of transparency and co-operation
for the exchange of tax related information.
BY PARTNER GAVIN FERGUSON AND
SENIOR ASSOCIATE ALICE BRICOGNE,
PART OF OGIER'S GUERNSEY PRIVATE CLIENT AND TRUSTS TEAM.
Meanwhile fiduciary service providers and advisers
have had to adapt to a number of significant
changes and challenges over the last half century,
such as the ever more complex and wide-reaching
compass of the regulatory framework; the increasing
sophistication and demands of trust and foundation
participants; the emergence of knotty historic
problems amongst older trusts; and issues arising
as wealth is transferred between generations, as
new generations of trust participants engage with
trustees, and as global financial troughs occur.
Turning to what the future may hold for the private
wealth sector in Guernsey, it would appear that the
trend towards higher value, more bespoke structures
is likely to continue; that more robust structures
will be developed as a result of lessons having been
learnt from past issues; that trusts and foundations
will be used in increasingly innovative ways; and that
more family offices will be established in Guernsey.
Technology is bound to disrupt and improve the
industry, with those fiduciaries and advisers that
embrace the development in this area gaining a first
mover advantage on their competitors. The demand
for highly specialist service providers, who bring with
them a thorough understanding of the underlying
legal principles and technicalities of trusts and
foundations and who are able to adopt a flexible and
agile approach, is also sure to increase. Clients will
continue to be able to choose from a wide selection
of trust companies and advisers (notwithstanding the
likely continued consolidation of these companies
and advisers) who are able to assist with every aspect
of their fiduciary needs while having confidence
in the excellence of Guernsey as a jurisdiction.
97