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Management
Higher costs fail to deter company formation and use of trusts Continued from p22
legislation, legislation increasing the perpetuity period for private trusts, and ‘fire- wall’ legislation applying Gibraltar law to Gibraltar trusts to the exclusion of any other law.”
Fintech (financial technology) start-ups are showing interest in Foundations, although none are thought to have been registered since being permitted from April. The UK has no foundation legislation; Guernsey and Jersey have, as well as traditional civil law jurisdictions such as Lichtenstein.
“A foundation offers some of the advantages of both a company and a trust. Assets held under a trust are held in the personal name of the trustees subject to the principles of equity and the common law which operate to ring fence the assets from the trustee’s own estate. A foundation, on the other hand, is a separate legal entity in the same way as a company, and therefore holds assets in its own name. Like a trust, however, a foundation can be extremely flexible, and can also legitimately help maintain privacy,” Pilcher explained.
Conceptually, US FATCA was a smart, revolutionary piece of legislation”, Pilcher
felt, but questioned how it was possible to implement “something so ground-breaking” and be able to anticipate all of its potential effects and consequences. “When applied to certain scenarios, the legislation seems unclear, which of course, is the last thing you want. With trusts in particular it has not always been clear exactly who has to report, what is to be reported, or on whom.”
Pilcher pointed to government and industry guidance, but that was “not always in alignment, and often varies significantly from jurisdiction to jurisdiction.” The consequences of failing to report something reportable are such that service providers quite understandably err on the side of caution and opt for over reporting in cases of doubt, (although legislation discouraged it), “which creates a tremendous amount of unnecessary duplication, often at significant cost.”
This lead Pilcher to reflect: “Eventually, they will need to rein some of it back in.” It’s a situation made worse by a proliferation of other reporting regulations with a great deal of overlap, yet with no consolidated reporting framework.”
Threshold for new trust up from £200,00 to £750,000: Joey Imossi, Fiduciary Group
company law, company administration and regulation/compliance focusing on our particular laws, procedures and practices,” Ellul said.
Gibraltar company law has recently been overhauled with significant input from the Gibraltar Society of Trust and Estate Practitioners (STEP), whose chairman, Peter Isola, the senior partner at ISOLAS, set up a committee to look at bolstering Gibraltar’s private client / family
office legislative offering.
Fire-walls added
“We identified a number of areas,” Pilcher noted, including “foundations legislation (that is particularly attractive to clients from civil law jurisdictions, who are not as familiar or comfortable with trusts), purpose trust
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