Solutions for high net worth individuals from China

By Naomi Rive, Appleby
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Jersey is a leader in the field of offshore wealth management. While many offshore jurisdictions specialize in simple trust and underlying company structures, Jersey’s cutting edge legislation and high-quality legal, accounting and trust advisers allow it to meet the complex and sophisticated needs of international clients.

Trusts, companies, limited partnerships and foundations for international families are just some of the varied structures that Jersey can offer, along with the establishment of private trust companies and family offices for ultra-high net worth families.

Jersey trusts – tried and tested

Naomi Rive, Appleby 毅柏律师事务所, Partner 合伙人
Naomi Rive
Partner
Appleby

Trusts remain at the heart of Jersey’s wealth management industry. In recent years trusts have been used increasingly for succession planning and asset protection purposes, rather than for more traditional tax structuring.

The Trusts (Jersey) Law 1984 has, over time, been amended to ensure it remains flexible yet responsive and continues to provide solutions for the complex requirements of international families.

There are a number of different types of trusts that can be established, and the choice of the most suitable type will depend on the client’s circumstances. Some settlors will wish to retain powers in relation to the operation of the trust while others will wish the trustee to have complete discretion over the management of trust assets. The needs of both types of client can be met equally well under Jersey law, subject to obtaining appropriate local tax advice.

As well as establishing discretionary, life interest, fixed interest and purpose trusts for high net worth and corporate clients, Jersey is also able to incorporate private trust company structures (PTCs). PTCs are attractive to clients who wish, through a corporate entity that they can populate with directors of their choice, to act as trustee of their own trust structures.

PTCs are popular when a family is considering establishing a number of trusts for the benefit of different family members or to hold various types of assets.

Jersey has also led the way in the establishment of structures for companies wishing to put in place suitable and innovative arrangements for the rewarding of their staff, and to provide for their retirement.

In that regard, Jersey trust companies allow the desired planning in respect of cash deferral and executive share option schemes and other forms of more traditional international pensions.

Foundations – a new option

Aside from trusts, in July 2009 Jersey enacted legislation which introduced a new wealth planning structure known as the Jersey law foundation.

A Jersey law foundation can be distinguished from a trust by its incorporated status and separate legal personality. These characteristics make a foundation more likely to be upheld and recognized in civil law jurisdictions that are not familiar with the trust concept.

Foundations are therefore of considerable interest to clients from civil law jurisdictions including China, Russia and most of continental Europe. Foundations encompass many of the classic features of a company, but they also retain the flexibility of a Jersey law trust.

For instance, it is possible for a founder to retain considerable control over a foundation’s assets, should he or she wish to do so.

Foundations can be used for traditional wealth planning purposes but are also proving popular as vehicles for distribution by charities and philanthropic organizations.

Foundations also make the perfect natural orphan vehicle, due to the combination of the foundation’s corporate status and the absence of any shareholders. This formula is proving particularly attractive when looking to use a foundation as a corporate vehicle in its own right.

China links

Whether one selects a trust or a foundation, a PTC or an independent trust company, for a truly successful wealth management structure to be established it is important that the trustee and the settlor of the trust share common values and understand the objectives for which the structure has been established.

For this reason, wealth managers, lawyers and accountants from Jersey have in recent years invested considerable time and money visiting China and seeking to understand the needs of the Chinese market.

One theme that has emerged from these visits is that Chinese investors are particularly concerned to ensure that their money is managed in a well regulated jurisdiction that has a strong corporate governance ethic and robust regulatory regimes.

Transparency is also a key issue for Chinese clients, as is the quality of the legal and court system, as this may be called upon to resolve issues that might arise in years to come. In these areas Jersey has, in recent years, led the way among the offshore jurisdictions and has received the highest praise and endorsements from organizations such as the International Monetary Fund.

Wealth management

With wealth accumulating at record speeds in China and with Chinese families becoming increasingly global, there is a real need for high net worth individuals and entrepreneurs to give consideration to their wealth
management requirements.

In Jersey we are well placed to assist with this.

With service providers ranging from large banks to niche trust companies, Jersey has something to offer all prospective clients. Jersey’s experienced lawyers, accountants and tax advisers are always ready and willing to advise upon suitable structures and work closely with their counterparts in the world’s major centres to ensure that the needs of the client are met.

Naomi Rive is a partner at Appleby in Jersey, and head of the firm’s private clients and trusts practice group

Jersey

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Tel: +44 (0)1534 888 777

Fax: +44 (0)1534 888 778

Email: nrive@applebyglobal.com

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