Slide 1 Welcome to this session on Professional Trustees. My name is Emma Rice and I am a Tax and Technical Support Consultant in Business Development. Slide 2 The aim of this session is to provide an overview of why professional trustees should be appointed and the solutions that can be provided through the St. James s Place Trust Company. Slide 3 We will begin by covering off: Why clients should use professional trustees Slide 4 Details of the St. James s Place Trust Company Slide 5 Why the trust company is based in jersey Slide 6 Identifying the right client for professional trustees Slide 7 The range of solutions available to clients Slide 8 What we can offer ultra high net worth individuals Slide 9 and The fees applicable to the St. James s Place Trust Company Slide 10 The role of a trustee can be extremely daunting for a non professional trustee (also referred to as a lay trustee). Often decisions will be made which may not be completely in the interest of the beneficiaries. Slide 11 This may be simply because the trustees do not have a clear understanding of the impact their decisions may have on the beneficiary s inheritance. Individuals often appoint family members and friends as trustees to avoid the cost of fees for professional trustees. The majority of lay trustees will be unaware of the responsibilities they are taking on. Page 1 of 5
Slide 12 The core duty of a trustee (professional or lay trustee) is primarily to administer the assets on behalf of all beneficiaries. The Trustee Act 2000 introduced a statutory duty of care for all trustees. They must act with reasonable care in all matters, follow standard investment criteria when considering trustee investments and obtain proper advice when reviewing those investments. Slide 13 Professional trustees have the expertise, specialist knowledge and experience to identify potential problems and provide solutions for the beneficiaries. Slide 14 Professional trustees will give consideration to the tax status, financial status and marital status of the intended beneficiary(s) i.e. if the beneficiary were undergoing financial difficulties or entering divorce proceedings. This ensures that the trust assets will not be lost to creditors or future ex spouses and provides that extra layer of protection. Having professional trustees can be crucial in preserving assets and ensuring as much as possible is received by the intended beneficiary(s) and is not lost to tax, divorce or in settlements to creditors. Naming trustees as beneficiaries can lead to a number of challenges and potential conflicts of interest. It is difficult for lay trustees to adopt an objective approach when they are personally involved and conflicts between what is best for them and what is best for all beneficiaries can arise. Professional trustees are completely unbiased and will uphold the settlor s wishes. Therefore appointing professional trustees will avoid such conflicts. Slide 15 Let s consider a case study: Dan sets up a trust fund worth approximately 2 million. One of the beneficiaries wants an advance of 250,000 for his business. The business has run into some difficulty and there is a risk the business could go bust. The lay trustee made the advancement to the beneficiary, 6 months later the company went in to liquidation. If professional trustees had been appointed they would have considered the financial circumstances of the beneficiary and made a loan out of the trust rather than a direct payment to the beneficiary. This would have protected the money from the beneficiary s creditors. Slide 16 The St. James s Place Trust Company based in Jersey offers an extensive range of trustee services, including, wealth management, succession planning, tax efficiency and estate planning. Slide 17 The Trust Company works closely and proactively with each client and their St. James s Place Partner. Bespoke solutions are provided to each client and are combined with the St. James s Place approach to investment management to provide the best solution for each individual client. Page 2 of 5
Slide 18 It may also be appropriate to use the Trust Company where there is a need for non UK resident trustees. For example an Excluded Property Trust must be established with non UK resident trustees. Slide 19 Your clients may well ask why do we use Jersey, what s wrong with the UK? Slide 20 The majority of professional trustees are based offshore and more importantly over 100 professional trustee companies are based in Jersey. Therefore there are more expertise in professional trustees based offshore. Slide 21 Jersey is one of the longest established, most politically stable and respected international financial centres. Jersey is a tax neutral environment and services provided by the Trust Company are not charged to VAT. Its long term stability and international reputation together with its strong principles for client confidentiality made Jersey the preferred choice for St. James s Place. Slide 22 Identifying the right client The St. James s Place Trust Company is an ideal solution for clients who are non UK domiciled these individuals should consider an Excluded Property Trust especially if their intention is to remain in the UK for the long term and it is likely they will become deemed UK domiciled. By transferring non UK situs assets (such as IIB or UT for example), they will remain exempt from UK IHT, even if the client, becomes deemed UK domiciled and will therefore be subject to UK IHT on their worldwide assets. There could be significant tax advantages in using offshore trustees where it is likely the beneficiaries are going to be non UK resident. Slide 23 For clients with existing trusts in place who are no longer happy with their existing trustees, because perhaps they are unhappy with the charges, communication levels or poor service could consider appointing the Trust Company as professional trustees. There are often substantial amounts of money held within certain trusts appointing the Trust Company could allow for business potential for the assets within the trust.. The Trust Company works very closely with St. James s Place Partners, they also have an excellent understanding of St. James s Place products and services. This will allow you to build a strong relationship with the trustees (the Trust Company) and to ensure you are the chosen adviser for the trust investment. Slide 24 Complex family situations may result in the need for professional trustees. For example, you may have a married client with children from a previous relationship and a new partner or spouse. If the client wants to ensure both their children and new partner benefit without conflict, it may be worth considering the appointment of professional trustees. Page 3 of 5
Slide 25 Let s consider another case study Jean has been living in the UK for 15 years, she is originally from Belgium which is where her father is domiciled. She is therefore non UK domiciled. She is looking to protect her assets from UK IHT. Her assets include: Slide 26 Property in Belgium Slide 27 SJPI Bond Slide 28 Offshore OEICs If Jean was to set up an Excluded Property Trust via the trust company, by transferring her non UK situs assets into an EPT, they will remain exempt from UK IHT even when she becomes deemed UK domiciled. She can also retain full access to the trust assets and have loans made out of the trust to provide further IHT benefits. It is important to note that clients must use offshore trustees for EPT to be efficient for UK IHT purposes. Therefore clients who are currently non UK domiciled and are likely to become deed UK domiciled should consider an EPT. Slide 29 There is a range of solutions available through the St. James s Place Trust Company OAPT Slide 30 The St. James s Place Excluded Property Trust, Slide 31 The St. James s Place International Loan Scheme, which is ideal for attorneys who wish to engage in estate planning. Normal gifting solutions are restricted for attorney s who acting on behalf of individuals who have lost mental capacity, therefore the international loan scheme is a suitable investment (as no gift is being made) for attorneys trying to achieve some form of IHT benefits. Slide 32 The St. James s Place International Discounted Gift Scheme Slide 33 The St. James s Place International Gift Plan Slide 34 For ultra high net worth individuals, there is number of specialist structures that can be put together through the Trust Company Page 4 of 5
Slide 35 For clients who have in excess of 5 million to invest there are a number of company type structures they may wish to consider, which will allow them to retain an element of control with the flexibility of changing to their needs and requirements Slide 36 Through the St. James s Place trust company clients can establish a foundation, a family office or even a family limited partnership. For further information on these company type structures please refer to the intranet. Slide 37 The fees depend on the complexity of the case but we would expect our packaged trusts to have set up fees of around 2,000-3,500 and annual responsibility fees of around 2,000-3,500. Prices exclusive of VAT, as VAT is not payable in Jersey Slide 38 The initial fees include the cost of the meeting between the client and the trustees Due diligence on the client and the source of funds Negotiation with incumbent trustees about the deed of appointment and retirement of trustees for existing trusts Welcome pack Changing the ownership of the assets to St. James s Place Trust Company Opening of trustee bank account where applicable The annual management fee is between 2,000-3,000. The fee includes: Slide 39 Preparation of trustee accounts Trustee minutes and meetings Distributions to beneficiaries Payment of premiums of life plans Slide 40 Due to the level of fees payable, it is, however, only advisable to consider this option where the value of the trust assets is in excess of 300,000. Slide 41 Additional information can be found on the intranet. If you require any further assistance, then contact Tax & Technical Support either by email or via the helpdesk on 01285 878110. That concludes this session on Professional Trustees. Page 5 of 5