Society of Trust and Estate Practitioners 2023 Asia Conference Insights

Society of Trust and Estate Practitioners (STEP) was founded in 1991 and has since grown into a globally recognised organisation with 22,000 members across 200 countries. Its members include lawyers, accountants, financial planners, and other professionals who advise clients on trusts, estates, and inheritance planning issues. STEP 2023 Asia conference was held in Hong Kong on 14-15 November, with 500 delegates worldwide.

Here’s a snapshot of some key highlights and insights from the conference.

Recent developments in trust and estate

Forced inheritance and Firewall Legislation.

When heirs or beneficiaries have a legal right to inherit assets or property from a deceased person, even if a will specifies otherwise, the Firewall Legislation will structure the forced inheritance claim. This ensures that the structure is protected and that nothing interferes with the distribution of assets.

Family law implications of trusts.

In the China Tiger trust case, there was a question about whether a philanthropic trust could be involved in a family legal issue. The court decided the trust’s assets weren’t part of the marriage resources. This decision was based on evaluating control and access to the trust’s resources. It highlighted the power of family law over trusts.

The duties of protectors.

Protectors are similar to what we have in New Zealand. Depending on the trust deed, it could be fiduciary or non-fiduciary. Cases from Bermuda and Jersey tested whether protectors could exercise independent discretion over trust for beneficiaries in parallel with trustees.

Mental capacity.

Mental capacity, a perennial issue in trusts and estates, was discussed with insights from the Mental Capacity Special Interest Group (MC SIG).

Philanthropy for an ultra-high net-worth family.

When considering philanthropy (contributing to a greater good), families with over US $30 million in liquid assets were advised to focus on aspects such as the choice of cause, the structure of family foundations, the cooperation with international NGOs and sustainability.

Sanctions.

A comprehensive overview of the history of sanctions, their enforcement, and the specific cases of different jurisdictions, including the EU, US, Hong Kong, and Singapore.

Private Trustee Companies.

Professionals from Jersey, the Cayman Islands and the UK shared their insights on roles and regulations around using private trustee companies.

Bilateral Invest Agreements.

Bilateral Investment Agreements (BIAs) safeguard investments between countries. They provide protections for investors based on where they’re from, where they invest, and their family connections across different places. These deals differ from country to country. China, for instance, has many BIAs, ranking second after Germany. Hong Kong and Singapore have investor-friendly BIAs, while India and Australia lean more conservatively in their agreements. Choosing the right BIA matters because each offers unique investment benefits and safeguards.

Discussion on Family Office

Panelists from Singapore, UAE, Hong Kong, and the UK-Swiss shared insights on where to set up a single-family office or satellite family office. They discussed the pros and cons of various jurisdictions, such as time and speed, immigration possibilities (golden visa in UAE), talent (training and poaching from other professions such as banking) and long-term certainty and stability. The panellists from the UK and HK mainly shed insights on ensuring effective family office governance surrounding surveying for future proof, the formality of governance roles within the office, culture, chief learning office, business planning for the family office and the importance of reviewing it annually.

Jurisdiction Updates

Hong Kong

Tax concessions for family offices and establishing a family office academy and network.

United Kingdom and Europe

Updates on beneficiary owner registration.

United States

Insights into the Corporate Transparency Act, Foreign Bank Balance Reports, Anti-deferral regime of CFCs, and recent Supreme case on tax.

Singapore

A briefing was on a significant money laundering case involving forged documents and assault involving Singapore dollars 2.8 billion and several single-family offices.

British Virgin Islands

Introduction of customer due diligence on trusts and annual financial return filing requirements.

Technology and the Industry 

They discussed the evolving role of AI in the legal profession, emphasising that AI will not replace lawyers. Instead, it will augment and support their work.

Recent Cases Highlights

A roundup of recent cases in the trust and estate field, including the Zhang Lan Case, Lau Zheng Jan Alistair vs Lau Cheok in HK, and others.

Needs of Chinese Immigrants

Challenges and considerations faced by Chinese immigrants while managing their finances were addressed:

• Getting money out: There is an official way to transfer money outside of China, and there are penalties for using unofficial methods.
• Proof of source of funds: Chinese immigrants must provide evidence of the source of their funds, which may pose a challenge.
• Implications of the Community Property Regime: Chinese immigrants may face challenges when dealing with cross-border matrimonial and inheritance property due to the Community Property Regime.
• Reciprocal arrangement between HK and China: There is a reciprocal arrangement between Hong Kong and China, which may have implications for Chinese immigrants.
• CRS follow-ups in China: There may be follow-ups by the Common Reporting Standard (CRS) in China, which Chinese immigrants need to be aware of.

This newsletter provides just a glimpse into the wealth of knowledge shared at the STEP 2023 Asia Conference. We hope you find these insights valuable, and if you have any queries on your own situation around trust and estate planning, please get in touch with me to discuss further.