Trustee Services
MPH fiduciary offers a broad range of trust services to individuals, families, closely held family business owners and Trusts. We facilitate the accomplishment of our clients’ lifetime goals including the accumulation, preservation, and transmission of their wealth.
We work with each client to develop a close personal relationship founded on the full understanding of the client’s goals and values. Armed with this knowledge, we advise our clients on how to perpetuate their goals and values for their respective families. MPH will provide complete asset management services by working in collaboration with professional investment managers to ensure the effective discharge of this aspect of their fiduciary duty.
Our trustee specialists have substantial experience in trust administration, accounting and preparation of tax returns gained primarily under the trust laws of England & Wales, Ireland, Isle of Man and Gibraltar.
Trusteeships
MPH can provide both corporate and personal trusteeships to its clients, working on the ethical principals directed by the Society Trust & Estate Practitioners "STEP". This Code of Professional Conduct has been drawn up under the aegis of the Ethics and Discipline Committee of STEP.Our in-house trust company are available to act as trustee. We can also provide and operate a managed trust service for professional intermediaries. As well as providing trusteeships to private trust companies for particularly high net worth clients.
Our personal trustees have gained substantial experience in trust administration, accounting and taxation primarily under the trust laws of England & Wales, Ireland, Isle of Man, Jersey and Gibraltar. trust is a legal arrangement where an individual known as the ‘Settlor’ transfers assets to another person known as the ‘trustees’ for them to deal with in a predetermined manner for the benefit of nominated person known as the ‘beneficiaries.
Our Trust department creates and administer trusts, which can be used to hold a variety of assets, from simple shareholdings in a company to a complete estate. MPH team consists of qualified trustee professionals who have worked within this sector for many years on a variety of Trusts. The use of Trust structures provides many opportunities for tax and estate planning. The trust is a concept becoming more and more widely known and used outside its traditional English speaking common law countries, because of its considerable benefits in tax mitigation, asset protection and inheritance planning.
We provide a full administration service including arranging trustee meetings, maintenance of records and provision of accounts. With the legal expertise at our disposal, we can also provide independent advice on trust related matters.
Uses of a Trust
Asset protection
Trusts can be used very effectively to protect assets. In simple terms, assets transferred to a trust no longer form part of the property owned by the settlor and therefore if the settlor experiences financial problems the trust assets cannot be grabbed by the creditors of the settlor. Those assets would therefore be protected if the settlor experienced financial difficulties due to bankruptcy, dissolution of marriage or a court award made as a result of, for example, a professional negligence claim. Thus, although the settlor may be declared insolvent a portion of his assets might be safeguarded by the trust structure and could therefore be used to maintain the family of the settlor otherwise. This premise is legally correct but is an over-simplification of the law. Under certain circumstances it is possible for an aggrieved creditor to have the transfer of the assets into trust set aside by showing that the settlor set up the trust with the intention of avoiding a current or future liability or because the relevant debt arose within a specified time after the transfer into trust. In effect, it has hitherto been difficult to know that the assets transferred into trust are completely safe from creditor attack. It was for this reason that many of the more astute offshore jurisdictions created what is generally referred to as the concept of the "asset protection trust" by initiating legislation which provides that as long as the transfer into trust is made at a time when the settlor does not have notice of any impending claim against those assets then as soon as the assets are correctly placed into trust they are absolutely safe from future attack. By choosing an offshore jurisdiction, which has initiated “asset protection legislation”, it is possible to gain a degree of additional protection over and above the already considerable asset protection inherent in a normal trust structure. It is therefore important to set up the trust in an offshore jurisdiction, which has initiated such legislation in order to guarantee the maximum security for the trust assets.
Tax planning
Assets transferred into a suitably drafted offshore trust structure are, in simple terms, no longer considered as belonging to the settlor and therefore the income and capital
gains generated by those assets are taxed according to the rules in the country of residence of the legal owners - the trustees. Inheritance tax would normally be eliminated because the trustees would not die upon the death of the settlor. Anti-avoidance legislation in the home country of the settlor or in the situs of the trust assets may operate to reduce the effectiveness of a trust for tax planning purposes but, generally speaking, trusts can be extremely effective for tax planning purposes and a correctly structured and administered trust will produce substantial savings in income tax, capital gains tax and inheritance tax/estate duty.
Avoiding the expense and delays of probate
The death of the head of the family will usually result in major disruption of the family estate whether or not there is a will. In most common law jurisdictions the estate must go through the probate procedure with much consequential delay, expense, publicity and upheaval. By establishing a trust probate can be avoided because the fact of death will have no effect on the trust property, which will continue to be held and managed in confidence by the trustees in accordance with the terms of the trust.
Confidentiality
The probate procedure mentioned above is, essentially, a public procedure. The relevant home country tax authorities will need to receive a complete list of all the property owned by the deceased in order that that property can be assessed for estate duty and in order that the property can be legally transferred to the executors who may then distribute to the legal heirs of the deceased according to the will. This procedure is therefore entirely unsuitable for those who wish to keep details of their assets confidential. If a confidential offshore structure has been set up during lifetime then revealing the existence of that offshore structure during the probate procedure may have considerable negative tax consequences. It may therefore be wholly inappropriate to include those offshore assets within the will. If a will is not to be used to transfer assets then the only other legal form of transfer is via a trust, which would generally serve to save estate duty and to keep the trust assets confidential.
Avoiding forced heirship
In non-common law jurisdictions there will often be questions of forced heirship to consider i.e. the deceased will not be permitted to leave his property to anyone he wishes on his death. This is a particular problem in continental European countries and other civil law jurisdictions as well as in countries of Islamic tradition. A trust can be used to overcome the problem of forced heirship but care is needed in selecting a jurisdiction for the trust, which has an appropriate trust law.
Estate planning
Many people do not want their assets to pass outright to their heirs, whether chosen by them or as prescribed by law, and prefer to make more complicated arrangements. These might involve providing a source of income for a widow for life, making provision for the education of children or providing a fund to protect members of the family in the event of sudden illness or other disasters. A trust is probably the most satisfactory and flexible way of making arrangements of this kind.
Protecting the weak
A trust provides a vehicle by which a person can provide for those who may be unable to manage their own affairs such as infant children, the aged, the disabled and persons suffering from certain illnesses.
Preserving family assets
Preserving the family assets or increasing them is often a motive for setting up a trust. Thus, an individual may wish to ensure that wealth accumulated over a lifetime is not divided up amongst the heirs but retained as one fund to accumulate further, with provision for payments to members of the family as the need arises while preserving some assets for later generations.
Continuing a family business
A person who has built up a business during a lifetime will often be concerned to ensure that it continues after death. If the shares in the company are transferred to trustees prior to death a trust can be used to prevent the unnecessary liquidation of a family company. The terms of the trust will ensure that the individual's wishes are observed. These might include provision for payments to be made to members of the family from dividend income received by the trustees but that the trustees retain the shares and keep the company running save in special circumstances justifying sale of control or liquidation. This may be particularly advantageous where the family members have little business experience of their own or where they are unlikely to agree on the correct way to manage the business.
Gaining flexibility
The best laid plans can, in a changing world, rapidly become obsolete. A discretionary trust can, however, be structured to provide for a system of management of property that is capable of rapid change as circumstances demand.
Trustees accountability
The practical advantages of a trust are derived from the fact that a distinction is drawn between the formal or "legal" owner of property and the person who in reality has the use or benefit of the property - the "beneficial" owner. Thus for formal legal purposes the trustee is recognised as the owner whereas the person who has the use or benefit of the property (the beneficiaries) are protected by a body of legal rules which impose very strict duties on trustees and the way in which they administer the trust property. It is possible for the settlor to retain an interest in the trust and, for example, to be an actual or potential beneficiary. However, in many jurisdictions this can have estate duty and tax disadvantages. Where the settlor retains an interest directly or indirectly in trust property it is important that the trustees remain independent and exercise proper control over the trust property. If the person who sets up the trust continues to exercise control over the trust assets this may render the trust void.
Types of Trusts used by MPH
Cash Holding Trust
“Where a trust portfolio consists of cash only on a discretionary basis”
A Cash only Trust holds bank balances passively in several currencies under a trust arrangement (at least initially). Because of the modest Fee scales, often combined with a modest value of assets, it is targeted at situations where there will be little activity. Where a client falls into the parameters of a cash only trust, but a higher level of service is required, such as frequent refixing and changing of deposits and foreign exchange conversions undertaken directly by the trustees, the basic cash only trust fee scale does not apply and a Universal Investment Trust fee scale will apply.
Company Holding Trust
“Where a trust portfolio holds the shares in a private limited company managed and administered by MPH Limited on a discretionary basis”
The object of a Company Holding Trust is to hold shares and loan accounts in offshore companies where MPH provides directors and management services or, selectively, companies where the investment is a passive one
Universal Investment Trust
“Where a trust portfolio consists of any combination of assets on a discretionary basis”
The Trust is designed to hold any combination of assets, including portfolios managed by MPH Group or any external (approved) manager, an execution only account, bank accounts in a range of currencies, share and loan accounts in offshore companies managed by MPH or otherwise, insurance policies or any other assets acceptable to the trustees, where the value exceeds £250,000.00.