Good fiduciaries at the heart of generational wealth

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Personal finance

Good fiduciaries at the heart of generational wealth


Setting up a family trust is a popular and practical way to preserve family wealth and create a lasting legacy. PHOTO | SHUTTER STOCK

Setting up a family trust is a popular and practical way to preserve family wealth and create a lasting legacy. What are the considerations that must be taken into account during this operation?

Creating a family trust is not a walk in the park and it is not something that can be done overnight, as it may seem like. It requires a lot more, especially from a regulatory point of view.

So it makes sense to approach this with caution and with a carefully considered course of action:

LEGAL REQUIREMENTS

Understanding the legal framework surrounding creating and managing a trust is the first step in the process. Each jurisdiction has different requirements and understanding.

WHAT ARE THE REQUIREMENTS FOR VALIDATION OF A TRUST?

Clear Intent: This means that there must be a clear intention to create a family trust by all members involved. Clarity of the assets contained in the trust: local assets, offshore assets, property, shares, etc.

Who are the ultimate beneficiaries of the trust? While these requirements may seem straightforward enough to complete, the most effective trusts are managed by professional trustees who are familiar with all applicable laws and regulations and make sure you comply with them at all times. Often times, we appoint family members, friends and associates as trustees because we believe they are known to family and trustworthy, but it can also be fraught with risk and conflict.

THE ROLE OF TRUSTEES

Trustees are central to the effective management of the trust while ensuring that it reflects the changing needs of the family. Today’s needs may change in the coming years for various reasons, death in the family, increased wealth, nationality status, etc.

This long-term commitment is crucial if the initial intention to preserve the estate through good succession planning is to be realized. This role becomes more important if this plan includes the acquisition of the shares of the family business in the trust.

IT IS PAID TO USE PROFESSIONAL TRUSTEES

One of the biggest threats to your family trust is a trustee who does not follow applicable regulations.

Given the level of control exercised by financial services regulators, trust companies must ensure that they adhere to strict guidelines, failing which they may be subject to regulatory sanctions ranging from penalties to dismissal. Licence.

Given the risk of non-compliance, it makes sense to appoint a professional trustee who can effectively manage, preserve and enhance family trust.

These responsibilities include the fiduciary duty to act in the best interests of the beneficiaries and to ensure that all regulatory requirements are met. There should be no personal benefit that the Trustees could gain that would be contrary to their role of working in the best interests of the beneficiaries.

Trustees have specialized skills often held only by properly qualified and accredited professionals.

CHOOSE THE RIGHT JURISDICTION

Having found the right trustees, you can now consult the most suitable place to establish your family trust.

The framework in different jurisdictions can have far-reaching implications, particularly from a regulatory perspective, and will determine how the trustees manage the assets of the trust. It will be essential to ensure that your trustee is accredited to manage the structures in the jurisdiction of your choice.

In most jurisdictions, professionals are able to handle family governance, trust law, estates and wealth management which may all be required.

APPLICABLE TRUST LAW

A consequence of the jurisdiction you choose is how trust law is applied there. This will dictate the structure and conditions under which the trust is run, which will directly influence the relationship with the beneficiaries.

Choosing a proven trust law helps increase certainty and predictability for family members.

A TRUSTED PARTNER

Stanbic Bank is part of the larger Standard Bank of South Africa and the Standard Bank Trust Services team aims to take out the complexities of setting up a trust and ensure you stay compliant at all times.

Standard Bank has been providing business and fiduciary services for 130 years. Through our teams in Mauritius and Jersey, we offer a powerful combination of two leading international financial centers that bring together the best of both jurisdictions.

While Mauritius provides a local entry point to the African continent, Jersey provides world-class procedures, systems and technical capabilities as well as access to European financial markets. Our team of experts are on hand to help you set up a trust and ensure you meet the necessary compliance measures.

Aliya Khanbhai is responsible for high net worth and high net worth clients, Stanbic Bank.


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