If you have any sort of wealth preservation measure in place, be it a simple will or a complex offshore trust structure, it is important to keep it under review. No matter how much planning went into its creation, an existing structure may no longer be fit for purpose, often due to changes outside your control. Geoff Kertesz looks at the importance of reviewing your trust structures.
There are many reasons a trust structure might need review. Maybe the political situation affecting the trust or its assets has changed, or there has been a shift in the family dynamics. Sometimes the nature of the family’s wealth and its priorities have evolved over time and require new preservation measures. Generational shift can also prompt changes.
Our Trust and Probate Litigation team does not create trusts or wills – it attacks or defends them.
We work alongside families and their existing advisors to identify vulnerabilities within proposed or existing structures and help minimise risk going forward. There is no such thing as a ‘bulletproof’ structure, but a degree of prevention is better (and almost always less expensive) than cure, which may take the form of costly litigation.
Recent reviews of structures have turned up issues that we have addressed at a preventative stage.
Unexpected tax implications
We were asked to review the trusts of an English family that has, for many generations, run a vast landed estate held on trust. The trust had been created many decades ago and lacked the flexibility one might expect to see in a more ‘modern’ trust deed. More interestingly, our review revealed that one of the primary beneficiaries turned out to be subject to an unfavourable tax regime, unbeknownst to the family. We were able to recommend a solution that not only modernised the trust for the family and made it more fit for purpose but also took account of this beneficiary’s particular tax situation.
Another family came to us just as the ‘next generation’ was coming up to adulthood, with concerns about whether that generation would be willing to enter into pre-nuptial agreements. There was a concern, based on unfortunate past experience, that a divorcing spouse might attack the offshore trust. This was obviously a sensitive topic but we were able to work with their family office and their existing offshore lawyers to devise a strategy that minimised the chances of a successful attack on the trust structure in the event of a divorce.
These are just two recent examples where reviewing a trust structure has prevented future issues. Our goal is not to recommend changes for the sake of it but to guide you as to what measures to consider, so that family wealth is protected for future generations. We are always happy to look at existing structures or possible structures to help families ensure their goals are achieved.
You can find further information regarding our expertise, experience and team on our Trust and Probate Litigation page.
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