Subscribe
Share
Share
Embed
Welcome to the Guernsey Finance podcast page.
Our podcasts bring you all the latest news and insight from Guernsey, the global finance specialist, as well as audio from some of our online events.
Speaker 3 (00:00)
Hello and welcome to today's episode of the Guernsey Finance podcast. That's the show where we bring you interviews with top thinkers from across the global financial services industry. For those of you who are not familiar, we dive into emerging trends and themes from investment funds to captive insurance and everything in between. My name is Rosie Allsopp. I am Communications Director at Guernsey Finance, the island's promotional agency for the financial services sector.
And today I'm delighted to be joined by Kerrie Le Tissier, who is Country Head at HIGHVERN's Guernsey office and Greta Pender, a Director at Collis Crill Trust. Welcome both. Prior to becoming a trustee, Kerrie practised as a senior private wealth lawyer in several leading law firms in Guernsey. She has extensive experience of advising on complex, high value structures, including trusts, foundations and corporate entities settlor up by high net worth individuals and entrepreneurs.
Kerrie's chair of the Guernsey Association of Trustees, which represents and promotes Guernsey's fiduciary sector. Greta has more than 25 years experience in the Guernsey fiduciary services industry. She specialises in working with ultra high net worth individuals on their intergenerational wealth planning and asset protection needs. Greta is an associate of the Chartered Governance Institute and member of the Institute of Directors, Chair of STEP Guernsey and a committee member
of the Guernsey Association of Trustees. So yeah, not that busy then. Today we'll be drawing on recent data made available to us by the Guernsey Financial Services Commission to discuss why the Guernsey Private Trust Company structure is proving increasingly popular, typically for means of asset protection among ultra-high net worth individuals. Thank you both for joining.
So Greta, I'm going to start with you. I understand that you work closely with ultra high net worth individuals and families on asset protection. Can you start by telling me the difference between the asset types typically held by high net worth individuals and ultra high net worth individuals and how it impacts wealth planning?
Speaker 1 (02:06)
Thanks, Rosie.
Yeah, so to give some context, the tipping point from high net worth to ultra high net worth is often defined around 30 million US dollars. So given that sum, we often see that the ultra high net worth individuals have a much wider diversity of assets. So this can include the more usual investment portfolios, but this tends to be alongside alternate investments such as private equity and hedge funds. There may be shareholdings directly in operating businesses.
as well as property and personal luxury assets such as yachts and aircraft. From a wealth planning perspective, this really adds further complexity in structuring and managing the assets and how that's aligned to the future needs of the family.
Speaker 3 (02:48)
So what sort of structures are appropriate for ultra high net worth clients? And maybe you could talk us a little bit through why.
Speaker 1 (02:55)
Sure, I mean, these are of course subject to legal and tax advice being taken by the relevant individuals, just for the usual caveat. The trends we tend to see amongst the ultra high net worth clients is looking to transfer their assets to be held via a trust or a foundation. And this is largely for asset protection or succession planning purposes. In some cases though, giving up the actual legal ownership of those assets can be challenging, particularly if, for example,
Those assets include a business the settler has maybe built up over many years. And so that's one of the circumstances where maybe a private trustee structure is worth considering.
Speaker 3 (03:32)
Okay,
so Kerrie, for those who don't know, can you just outline what a private trust company is and how it's different to say a regular trust company?
Speaker 2 (03:41)
Of course, a private trust company or PTC for short is simply a company that acts as trustee of a specific trust or a group of connected trusts, usually for one family. PTCs don't offer their services to the public, unlike a regular licensed trust company, which is not usually restricted to acting as trustee for one family. A Guernsey PTC can apply to the Guernsey Financial Services Commission for a discretionary exemption from licensing.
also known as a granted limited permission, where it meets certain criteria. The criteria include that it can only act as trustee to a specific trust or a group of connected trusts with a common interest, such as trust for one family. The PTC mustn't advertise or market its services to the public in any way. The PTC must be administered by a Guernsey Licensed Fiduciary.
The licensee administering the PTC must confirm to the GFSC that it will retain sufficient knowledge and information about the PTC's ownership and control structure and its activities to be satisfied that the PTC will meet applicable laws and regulations in Guernsey. That's usually achieved by the licensed fiduciary providing a director which would sit on the board of the PTC or sometimes they provide a company secretary or resident agent or authorised signatory to the PTC.
The PTC would usually be administered within the AML controls and framework of the licensed fiduciary. So for example, the licensed fiduciary would carry out a CDD on the relevant parties. An alternative type of PTC is where the PTC would obtain its own fiduciary license rather than being exempted. And that might be appropriate in some circumstances where the family, for example, have sufficient expertise to run the PTC themselves.
in which case they go for a full licence from the GFSC. It's also just worth mentioning that an alternative to a PTC is a private trust foundation and that's another type of private trustee structure that we're seeing more of and that would be a PTF for short.
Speaker 3 (05:53)
So Kerrie, what are the benefits of Guernsey PTCs?
Speaker 2 (05:57)
Guernsey's regulatory regime for PTCs is transparent and proportionate. Guernsey PTCs must fall within the AML regime framework of a licensed fiduciary, but there's no requirement for a PTC itself to be regulated if it falls within the criteria for an exemption. There's therefore no requirement for a PTC to appoint its own money laundering reporting officer or compliance officer, or for it to have its own AML policies and procedures.
or for it to submit annual returns to the regulator, which is unlike in some jurisdictions where that can be quite burdensome and costly.
Speaker 3 (06:35)
Now, as I understand it, Kerrie, you have quite a bit of experience advising on complex structures settlor up by high net worths and entrepreneurs. How can PTCs offer an element of control for those clients? And how do Guernsey fiduciaries come into this?
Speaker 2 (06:54)
So the settlor could retain a degree of control by being on the board of the PTC themselves, alongside the licensed fiduciary that would also provide a director. So whether the settlors on the board, they've got control in the way any director would on the board of a company. Alternatively, they could choose someone else to be appointed to the board or other certain individuals. So, for example, selected family members that meet certain criteria.
or a trusted advisor. So they might choose someone with particular expertise if the underlying assets, say, include property, they might appoint a property advisor that they know very well. Or where the underlying assets are a family business, they might appoint someone that's involved in the family business or that's got significant knowledge of the family business to sit on the board of the PTC. In that way, they've retained some degree of control over who runs the PTC.
could also be a requirement for the settlor or another individual that they nominate to consent to any changes to the board of the PTC. So while they might not sit on the company board themselves, they retain kind of a veto over who can get appointed. And in that way, they retain another type of control. The constitutional documents of the private trust company would usually settlor out the board composition and requirements for appointment and retirement of
directors which the settlor again can have some control over when they're designing the PTC with their advisors when they're setting it up. The settlor's chosen directors would usually sit on the board of the PTC alongside at least one representative from the fiduciary that administers the PTC and in that way the licensed fiduciary is able to attain enough oversight to meet their regulatory obligations and the board is also strengthened by the experience and knowledge
of the director from the license fiduciary.
Speaker 3 (08:51)
So Greta, how can PTCs assist with intergenerational wealth planning and protecting wealth for the future?
Speaker 1 (08:59)
Sure, so as Kerrie mentioned, the board make-up can involve the wider family. And so this can be one way to facilitate some of those conversations about succession planning, particularly when there's a family business involved, who might be running that in the future as well. It's a good way to bring the next generation along in terms of the decision-making and also kind of using it as a forum to hear about what their values and priorities are as well.
It can also be used to enhance the financial literacy of the next gen around structuring and international finance centres, which is something we're hearing a lot of demand from clients at the moment. However, from attending STEP Global Congress recently, they shared some data from a study of over 2000 students who were all born after 1996 into entrepreneurial families. And it was quite surprising that over 88 %
had no intention of going into that family business. So maybe we'll see a shift in terms of what that NextGen are bringing to the board of the PTC. Maybe they're going to be less focused on that historic family business and they might push towards diversifying into areas that interest them, such as digital assets, startups, and possibly deploying funds into philanthropy too.
Speaker 3 (10:19)
Now you've traveled recently to the Middle East, Greta, to meet with clients and intermediaries about Guernsey's offering. We understand from data shared by the GFSC that this is one of the core jurisdictions using PTCs. Maybe you could talk us through a little bit about why it's attractive.
Speaker 1 (10:39)
Yeah, sure. So a PTC is a great solution for Middle East families, particularly as we've touched on, where giving up that sense of control and legal ownership of assets is a challenge. And a trust might also still be a slightly unusual concept based kind of under civil and also Sharia law. So by having a PTC in place, this can enable that ongoing involvement that many clients from the region, we find are keen to maintain if possible.
I understand from meetings in the region that interest in and knowledge of structuring options is increasing generally. So it's really important that we in industry are also working with Guernsey Finance to make sure that matters like the advantages of PTCs are being shared across these key jurisdictions.
Speaker 3 (11:24)
Good to know. Now Kerrie, data from the the GFSC shows us that as at September 2024, there were 126 PTCs with a discretionary exemption, also known as a limited permission, and that 112 of those are incorporated in Guernsey. I mean, that's a good number. What does that tell us about Guernsey's financial services ecosystem relative to similar jurisdictions?
Speaker 2 (11:52)
I would say that tells us that Guernsey is a solid choice for setting up a Guernsey PTC. The fact that a significant portion of PTCs that have obtained the exemption from the GFSC are structured as Guernsey companies highlights the fact that Guernsey is very much a one-stop shop for PTCs. We have a proportionate and appropriate regulation, robust legal structures like Guernsey companies, tax neutrality,
and a mature and experienced private wealth sector with lawyers, trustees, accountants, all with a significant amount of experience in advising and looking after the wealth of high net worth individuals and dealing with a wide variety of types of structures, including PTCs. So all of this together tells me that Guernsey is an ideal choice of jurisdiction for setting up a PTC.
Speaker 3 (12:43)
Certainly looks that way. Now my final question is for both of you. As the private wealth landscape continues to evolve, what trends do you see playing out and how can Guernsey structures like the PTC play a role? Kerrie, can I ask that to you first, please?
Speaker 2 (13:00)
Sure. We're seeing a lot of clients reviewing their structures at the moment. so I'm talking about existing structures. We've got a lot of clients that have been looking at getting refreshed tax advice because the structure has been around for a few years. They've had changes in circumstances, either the death or loss of capacity of someone that's got power within the structure, office holders.
We're also seeing a lot of outdated trust instruments, for example, that have been around for a long time that may need refreshing. And all of this is coming together with clients going to their advisors, getting up to date advice and looking very closely at their structures. And I think now's a very good time to introduce a new private trust company to those existing structures. So that's one big trend. And I think it's something for us all to be bearing in mind, those that work with high net worth individuals.
Those listening to the podcast that might be advising high net worth individuals looking at their structures that now's a good time to think about whether or not a private trusted company could be incorporated. In terms of new structures and the opportunities for setting up new structures, we're seeing more and more new wealth creators. So this is new wealth, not those inheriting wealth or that second or third generation of a family. New wealth creators such as tech entrepreneurs.
social media influencers, sports stars, musicians that are very wealthy and suddenly very wealthy and getting legal advice. And often they're not experienced with private wealth management. They're the first generation of wealth. They're often internationally mobile. They've got quite unique circumstances. And I think in those cases, a private trust company could be an ideal opportunity for them to build a team around them to look after their wealth.
And so I think that's the trend for us all to watch and be mindful of that those types of clients, a PTC could suit them.
Speaker 3 (14:59)
Yeah, absolutely. Greta, what would you say to that?
Speaker 1 (15:03)
Yeah, just
picking up the point on the new structures that we're seeing. And there is increasing complexity and diversity in terms of both the assets, but also the clients and the makeup of their families. Their goals tend to be less focused on tax planning than in the past and much more on asset protection and succession planning now. And so I think, you know, for the reasons we've raised that a PTC fits really well in terms of trying to guide that.
through the family involvement. And also we do have a really strong regulatory differentiator there as well. So I think that's something where if our clients are getting more complex, we need to consider these more sort of diverse structures as well.
Speaker 3 (15:46)
Yeah, absolutely. That's what it's all about, isn't it? That's all we have time for today. Thank you so much for joining us on the podcast, Greta and Kerrie. And if you'd to find out more about what Guernsey has to offer, you can visit our website at guernseyfinance.com. And if you'd like to know more about Guernsey's success in sustainable finance, you can tune into our sister podcast, the Sustainable Finance Guernsey Podcast.
And thank you so much for listening today. If you enjoyed the discussion, we've got some great interviews on the Guernsey Finance podcast channel and you can check them out by searching Guernsey Finance wherever you get your podcasts. We look forward to welcoming you back soon and until then, it's goodbye from Guernsey.