Vistra was created in 2006 from a management buy-in of the private client business of Chiltern plc. Each of our offices provides the full range of trust, corporate and estate planning solutions, including company formation, immigration and marine services.
At Vistra we pride ourselves on being large enough to provide a full range of trust and corporate services, but at the same time we are conscious of the fact that we can guarantee personal service and tailored solutions.
With over 70 professionals, Vistra is currently present in London, Jersey, Geneva, Auckland and Brussels and is rapidly expanding its global network. New offices will be established in Luxembourg, The Netherlands and Cyprus in the next months.
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Our Swiss Office
Vistra is proud to announce that Walter Stresemann joins Vistra as Managing Director of its Swiss operations in March 2007. A specialist in estate planning and international structuring, Walter has gained over 20 years of experience serving leading providers as UBS, Intertrust and Fortis, successfully developing the fiduciary and trust business from Switzerland. Walter was a member of the board of Fortis Intertrust Group and the managing director for its Swiss operations since 1989. The same positions he holds now within Vistra.
Walter is a member of many professional associations and he is a founder and committee member of the Swiss anti money laundering self-regulatory body, ARIF. Under the leadership of Walter Stresemann, Vistra will focus on further developing its estate planning activities in this key jurisdiction.
For more information please mail Walter Stresemann or call him on +41 (0)22 319 18 94.
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The use of Private Trust Companies
The Anglo Saxon jurisdictions have for many decades offered the trust as an effective tool in estate planning for clients who are nationals of countries where there are strict forced-heirship rules. While many products had attractive aspects, it would be fair to say that for each fervent supporter of these trust solutions, there were an equal or greater number of doubters who questioned their ultimate robustness.
Finally Jersey has addressed this issue in a way that can give certainty to this difficult issue; and we consider now the utilisation of the trust solution is worthy of very serious consideration, as is illustrated by the following real case.
A client, who lives in a European civil law jurisdiction, wished to ensure that there would be no claims against his estate from his children, or other issue; particularly as she wished to give substantial amounts to charity. We proposed establishing a Private Trust Company which would be the trustees of an Interest in Possession trust - whereby the trust commits to pay the income of the trust to the Client (as Settlor) during her lifetime. The Trust would commit to pay the Settlor’s tax liabilities on the trust assets as if the assets were still owned by her.
We have indeed noticed a significant increase in the use of private trust companies (PTCs) as trustees of family trusts, especially in those cases where the Settlor of the trust wishes family members to retain a degree of involvement in decisions relating to the trusts. The board of directors of a PTC will usually include both members of the family, and trusted family advisers. In this way, the family can actively participate in the decisions that need to be taken by the PTC as trustee, including decisions relating to the control and management of companies owned by the trustee.
There are a number of ways in which a PTC may be owned: for example, the Settlor may own it directly; or another member of the family may own it. A common solution is to have the shares of the PTC owned by Jersey trustees of a purpose trust, the sole purpose of which is to own the shares of the PTC for the benefit of the Settlor and family members.
The trust would be one where the Settlor can freely and without restriction dictate the investment policy of the trust assets during his lifetime, without the Trustees being involved. Under new legislation passed in Jersey the Settlor of such a trust may reserve to him or herself certain powers specified in the law, or the grant of a beneficial interest in the trust property, without affecting the validity of the trust or postponing the commencement of the trust. In a nutshell, these provisions allow the Settlor of a trust to direct the trustee in the exercise of a range of powers.
Conclusion
The trust would be see through during the lifetime of the Settlor and the local tax authorities would receive the tax that it would have received were the assets still in the Settlor’s estate – the same would apply to estate taxes.
It is only on death that the full effect of the trust kicks in and the heirs would not be able to block the wishes of the client as they could if those wishes were only set out in the will.
Under the new law, the courts in Jersey are able to ignore foreign law claims in relation to trust disputes. This amendment expands on existing provisions in the law and expressly provides that the Jersey Courts will not take into consideration a claim that any foreign law prohibits or does not recognise the concept of a trust or that the trust violates some foreign forced-heirship rules.
Find out more about Vistra’s Trust Services
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On Robbery, Pies and Taxes
Paolo Pamini of the Constant de Rebecque Institute recently asked the following rhetorical question: "How does one incite the most innovating and entrepreneurial persons to slow down their activity?" Obviously, one can achieve this by depriving them from an over proportional part of their resources through a system of progressive taxation. And this is basically the current state of affairs.
For the sake of this short discussion, taxation shall be assumed to include all forms of taxation (income, capital gains, estate tax, etc.). Suffice it to say that in our societies the taxation of wealth is always progressive, by the mere fact that the generation and distribution of wealth systematically attract new and various forms of taxes.
When progressive taxation first became advocated in Britain and France during the first half of the 19th century, the economist J. R. McCulloch expressed the following criticism: "The moment you abandon the cardinal principle of exacting from all individuals the same proportion of their income or of their property, you are at sea without rudder or compass, and there is no amount of injustice and folly you may not commit."
John Stuart Mill has described progression as "a mild form of robbery" and generally one could surmise that whereas proportionality was regarded as a principle, progression as a political expression of envy, resulting in hateful arbitrariness and even expropriation. Indeed, the principle of progressive taxation is problematic both from an ethical, as well as from en economic point of view.
Why should a majority be free to impose a discriminatory tax burden on a minority?
All mainstream political parties today adopt the conservative, no-risk, populist ideology to defend various degrees in tax progression in the name of an overall societal good of greater income equality. The consequence is that such "democratic rule" supersedes the rights of individuals, which contradicts one of the basic principles of a free society. Alternatively, let us imagine a possible flip side: what would people think if wealthy people today had more votes per capita in the electoral process than average, or low-income constituents, as was the case in 19th century Prussia? Bill Gates and Warren Buffett could surly tilt a presidential election!
Progressive taxation confronts us with another philosophical dilemma: how can society enforce ex ante an over-proportional claim on income and wealth to be created in the future, for instance, through innovation before the conscientious decision of individuals to pursue such productive activity is made and the wealth, which benefits the entire society, generated? Is it indeed normal, that the most productive elements of society should suffer the abuse of paying the highest taxes?
Curiously, if not intentionally, proponents of progressive taxation traditionally assume that a pie of wealth exits in a fixed quantity and that its pieces simply require a "fair" distribution. This approach could also be dubbed the "reverse Pareto principle": it is impossible that someone be better off without making somebody else worse off.
However, whether in a domestic, or international context, this zero-sum game approach by definition negates any beneficial consequences of capital accumulation for the purposes of investment and innovation, the two main "i" ingredients for baking a larger wealth pie from which the entire society benefits. Therefore, nobody is robbed, if the creator of wealth, because of his ideas and competence, keeps more of it for re-investment and innovation. To the contrary, as a society’s wealth grows, more people benefit from employment growth, as well as from more valuable products and services.
The paradox is that most mainstream political forces would also agree with this. Intellectual incongruence (or dishonesty) unfortunately prevents the necessary "civil courage" to introduce new forms of regressive or flat taxation, or in Paolo Pamini’s words a situation where "justice is also efficiency."
A personal view by Walter Stresemann.
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Trusts and Civil Law Foundations: a Comparison
Civil law foundations and trusts are at the centre of the most commonly used estate planning techniques; nonetheless, clients and their advisers are often confused about their exact nature and attributes. Here is a very simplified comparison of some general aspects.
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The Trust
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The Civil Law Foundation |
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WHAT IT IS (NOT)
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A trust can be defined as a relationship of equity. It is not a legal entity, nor a contract. The trust is usually defined in a document, known as the "Trust Deed", or "Settlement". The basic principle underlying the trust is that assets are conveyed by a person (the "Settlor") to another person (the "Trustee").
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The foundation is a full-fledged legal entity, but it is not a company. Therefore, a foundation does not issue shares or any other legal title of ownership. A foundation is governed by a Board in observance of Articles and/or By-laws.
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WHOM DO ASSETS BELONG TO?
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The trustee, not the trust, holds the assets in question for the benefit of individuals or entities, known as the beneficiaries. The trustees will legally own and hold in their own name the assets received from the settlor.
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Assets donated by a settlor / founder to the foundation are owned by the foundation in its own name. These assets may be held directly by the foundation, or consist of shares of an underlying company.
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THE SETTLOR / FOUNDER
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The Settlor separates himself from the assets he previously owned. The Settlor expresses his wishes as to administration and beneficiaries to the trustees. He cannot formally instruct the trustees.
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Traditionally, the founder keeps control over the foundation though a written mandate. The founder frequently acts as a principal and instructs the foundation board on all relevant matters.
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MANAGEMENT
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The trustee can be a natural person, but it is usually preferable to appoint a professional corporate trustee. The trustee should be resident in a jurisdiction where the legal system recognises trusts. This may also apply to the situs of the assets. The trustee acts not in the interests of the settlor but in the interests of the beneficiaries.
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The foundation is managed and administered by a foundation board appointed by the founder. Such board can comprise natural or corporate members. Residence and nationality requirements vary depending on the jurisdiction. The foundation board acts in the interests of the founder and beneficiaries.
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BENEFICIARIES
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The settlor may be a beneficiary. Beneficiaries are defined in the trust deed and may be natural persons, companies, or charities. In a discretionary trust a beneficiary cannot compel a trustee to make a distribution.
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The founder may be a beneficiary. Beneficiaries are appointed by the foundation board and may be natural persons, companies, or charities. Distributions are typically made in accordance with the instructions of the founder.
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WATCHDOGS
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It is not unusual that the settlor appoints a protector. His main duties are to supervise the activities of the trustees in the interest of the beneficiaries.
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A founder may appoint a curator to control the actions of the foundation board to ensure compliance with the founder’s instructions.
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REVOCABILITY
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A trust may be either revocable or irrevocable. Irrevocable trusts mean relinquishment of control over assets in favour of the trustees. Revocability, on the other hand, implies retention of control by he settlor.
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In the presence of a civil law type mandate, revocability is assured, as the foundation can be dissolved and liquidated. The founder’s post mortem instructions may be irrevocable in form, but might be overridden by the heirs.
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THE UNLOVED FAMILY
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If correctly planned, trusts can present a way of escaping the forced heirship provisions of civil law countries. Situs of assets and place of effective trusteeship are of crucial importance.
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With few exceptions, civil law foundation jurisdictions will generally respect forced heirship laws of the founder’’ domicile.
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ENDING IT ALL
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An irrevocable trust can be effectively terminated when the trustee has distributed all assets to the beneficiaries.
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A civil law foundation can be dissolved and liquidated after the distribution of its assets.
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Vistra’s Imagery
In sourcing our website imagery, we wanted representations to truly reflect Vistra’s ethos of crossing borders, creating solutions.
We found our own solution in Yann Arthus Bertrand who specialises in aerial photography and has won the French Legion D’Honneur for his photographic work on the environment. Most of the images on the website are taken from his work, and those of his photographic colleagues. His talent for taking complicated subjects – often unappealing from the ground - and providing a new point of view that highlights their innate stability and beauty fits perfectly with Vistra’s new vision. More
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