After spending six days with colleagues from our Jersey, Guernsey and Dubai offices meeting with clients and intermediaries in the UAE, the message remains upbeat: there's plenty of work to be done, and the Channel Islands continue to be seen as "gold standard" jurisdictions for personal wealth structuring and asset protection.
As before, motivating factors behind the establishment of new structures include the protection of business and personal assets from future risks and making provision for the orderly transfer of wealth from creators to second and third generations and beyond. Tax considerations will also be relevant where clients are thinking of acquiring residency or domicile in other jurisdictions.
Confidentiality is a more nuanced discussion. It is now generally understood that tax authorities and regulatory bodies can be expected to have access to private information and this is a changing landscape, but there is still scope to maintain legitimate privacy as against the public at large. The tension between transparency on the one hand and rights to a private life on the other is of course a hot topic in the western world.
Here are our five key takeaways:
- Women are increasingly involved with important decisions. There has been a rapid change in the way that women are becoming more prominent in the GCC generally, and this is reflected in their increased participation within families and the running of their businesses.
- Control. A significant proportion of instructions involve families seeking to retain a degree of legitimate control – for example, through a private trust company or foundation structure, reserved powers trusts or a broader family office arrangement. This is combined with more attention to planning for the second and third generations (some of whom may not want to be directly involved in the family business) and structuring to avoid disputes.
- Start simple. Many corporate structures have gradually evolved and increased in complexity over the years while under the personal ownership of the wealth creator. The effect after a few decades can be unnecessary layers of complication and redundancy. There is work to do to simplify these structures from a cost and administrative burden point of view and, when establishing a new trust or other offshore structure, every part should have a clear rationale. Restructuring can also help to prepare the ground for an IPO or a partial asset sale. It is also important to avoid the temptation to provide commoditised or standardised solutions, especially where families and their assets are complex and spread around the world.
- Onshore and offshore collaboration. Local assets often need to be structured differently from international ones. While a simple offshore trust or foundation may work well for a client's investment portfolios in London or Switzerland, for example, the same is not necessarily true for real estate in the UAE, where the use of DIFC and ADGM foundations is picking up speed. Clients do not immediately appreciate the difference and it is up to us to work together with our counterparts in other jurisdictions to provide seamless and holistic advice and solutions.
- Private Funds. Cayman remains a popular jurisdiction for funds generally, but the Jersey and Guernsey private fund models are catching on quickly, particularly for wealthy families who want to put together their assets for international investments and are looking for something more sophisticated than a simple joint venture or club deal.
Thanks to everyone who took the time to meet us during our trip. We look forward to being back again in the New Year.
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