From the Editor
As ever, when I come to prepare an editorial for the STEP Journal, I am impressed by the practical spread of content and topics covered. Nearly every article in this edition caused me to stop and consider just how relevant they are to issues I have come across recently in practice.
Apart from the geographical spread of interesting current planning topics (in alphabetical order, Canada, Gibraltar, Malta and Russia), there are three themes that must strike a chord with every STEP practitioner.
The items on insurance run from a tale of poor basic implementation of an insurance policy, to considerations of how or if trustees should take out insurance, and the categories of assets that might create problems in a trust structure. Apart from the difficult question of valuation of trust-owned assets, and in particular collectibles (or ‘passion assets’), there are issues to consider regarding custody, storage and maintenance. All these require considerations of both careful trust drafting and fiscal consequences – never mind what the asset might be ‘worth’. This type of assets can present trustees with practical difficulties; in addition to the difficulties discussed in a very interesting article, there has been one recent well-reported New York court case where a valuable violin was placed on consignment sale with a (believed reputable) dealer and simply disappeared, without the owner receiving any notification or payment.
Digital records, ownership and security are becoming of increasing concern, not least to the US government, which seems to reserve special treatment for hackers, instead of trying to convert poachers into gamekeepers. Digital security is a double-edged topic. On the one hand we are all concerned for our personal privacy and the security of our office systems; on the other, many practitioners (and several governments) have benefited from increased workload and revenues as a result of the thefts of digital data from Swiss and Liechtenstein private banks in recent years. One is tempted to wonder whether, however many better mousetraps might be invented, the determined mouse will always find a way to eat the cheese – but in our world of increasing regulation and governmental data-sharing, maybe the mouse (in the form of the ‘tax neutral’ client) has had his day. This decade may end up being defined by the elimination of all historically known financial hiding-places. But the inventiveness of practitioners will, I am confident, continue to find investment and asset-protection structures that will continue to satisfy client demands.
Data-gathering and exchange brings us to the third notable topic: regulation, regulation and yet more regulation. Martyn Gowar’s thought-provoking and well-argued article will, I am sure, strike a personal chord with all readers. I have been trying to get a small life assurance policy written in trust for a client for four months, all because the life company has an ever-changing internal interpretation of regulation and compliance. The insurance company keeps inserting details in appropriate blanks in the trust document (the date, the policy number, the date of issue of the policy) and then requiring, on no less than three occasions, different bits of the trust document to be re-signed, re-initialled, re-dated and re-certified as a true copy. We all have clients (or lose potential clients) who become frustrated because of what seems like a permanent piecemeal and attritional approach to compliance. No, we cannot turn back the clock of regulation, but Martyn’s message should be compulsory new-year-resolution reading for all banks and life companies that proudly proclaim that they are in the financial ‘service’ industry. That surely is one item for the practitioner’s pipe-dream Christmas stocking – to be set against the UK Prime Minister’s recent statement that he wants to introduce legislation to require disclosure of ownership of all UK companies. That, if introduced, will surely further affect regulatory compliance and its associated asinine questions and consequences regarding the ‘ownership’ of assets that belong to one or more discretionary trusts. Maybe the time has come to turn back the clock in one respect: in the 19th century lawyers were paid by the page, not by the hour…
The new year
Will 2014 be too soon to start developing clarity in the operation of the new General Anti-Abuse Rule (GAAR) regime in the UK? Australia and Canada have lived with their own versions of GAAR for several years, but practitioners in the UK are still getting mixed messages. The courts are confirming that professionals are duty-bound to advise clients about effective tax planning, otherwise they risk negligence. The fiscal authorities seem to be saying, in these early days, that historical court decisions will still have a bearing on the operation of GAAR, which was touted as a completely new era. Many practitioners and clients would welcome a little more clarity and certainty – something else for the pipe-dream Christmas stocking.
Happy festive season to our readers.
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