South African individuals and families have traditionally used offshore structures to protect their assets from the uncertainties and volatilities of their own country. These structures and succession planning needs have evolved, and asset protection is not necessarily the principal driver.
As individuals and families become more internationally mobile and the complexity of cross-border succession planning increases, it is not uncommon for second or third generations to move to new countries. Addressing this is especially important as increased distances between family members can, if not properly managed, lead to dilution. This is where the next step to a more sophisticated family office structure becomes more appropriate.
In such circumstances, structures need to be tax-efficient to prevent future tax leakage and reduction in assets. Therefore, tax advisers will advise that assets need to be transferred from your own name into a trust or foundation.
There are similarities between trusts and foundations, with assets being settled into each by a settlor or founder for either the trustees or council members to manage on behalf of the beneficiaries. A trust does not have legal personality, so the trustee will be the legal owner of the assets, whereas a foundation has separate legal personality and therefore legal title of the assets.
Trusts are more established because they have been recognised in law and tax for longer and are therefore more familiar. The first hurdle, particularly for new clients, is the concept of having to donate or settle funds or assets out of their own legal name, effectively giving away your assets. So, you will want control being passed to a trusted professional who will continue to manage them as per your wishes and to the benefit of the beneficiaries.
So, why Guernsey? We have a proven record of over 50 years providing trustee services, building up internationally recognised legislation that has evolved with the changing world. We have built a deep pool of professional and experienced specialist advisers, and, furthermore, the Guernsey regulator protects our highly-regarded reputation.
Every family office is unique, requiring different combinations of services. Guernsey trustees are experienced in dealing with this, will have controls and governance already in place, with a professionally qualified and well-respected team providing a range of wealth management services to numerous HNW families and individuals. Therefore, much of the core structure is already in place for new families to leverage and plug into.
We already work with South African banks and other companies that have a Guernsey presence, and we see the affinity with Guernsey continuing to develop.