A profession in rude health

In the midst of market meltdowns and health pandemics, we are pleased to provide some new planning opportunities (as well as the customary cautions) to trust and estate practitioners.

Most people would not consider the US a popular tax planning jurisdiction, but several states have implemented decidedly taxpayer-friendly regimes for both taxation and trust planning. Although it may not be surprising that there are planning opportunities in Nevada (not just in Las Vegas), who knew the landlocked states of North and South Dakota were becoming  popular for domestic US and international trust planning? We can now add Connecticut to the list, with its new legislation allowing legacy/dynasty trusts and asset protection trusts. Some 80 new trust rules have been adopted, as described by author Carolyn A Reers TEP.

One of the sad statistics we face daily is litigation involving ownership and control of trust assets. Courts are increasingly being asked to review trustee decisions, especially where there is a question about the basis for that decision, and to consider the role of the beneficiaries. Two articles address such issues in this edition of the TQR.

First, Damian Evans offers an analysis of a recent decision in Jersey where the court was asked to exercise its discretion in providing relief where action had been taken on mistaken advice. In ultimately providing relief, the court emphasised that it could not take ‘a positive step to improve the tax position’ of the applicant.

In a second Jersey case, the court had to consider a number of factors to determine whether and how to exercise its discretion in response to mistaken advice. The legislation required the mistake to be ‘of serious character’; in determining this, the court considered both the size of the mistake and the timeliness of the application to correct its impact. The court also considered whether alternative remedies were more appropriate.

Moving to England and Wales, David E Grant TEP reverts to the concept of ‘fraudulent calumny’, a situation that often arises in bitter family feuds. This could become the modern version of Jarndyce v Jarndyce, where accusations thrown by family members are unprovable, courts are put in impossible situations and all beneficiaries suffer. The gauntlet has been thrown down for new sources of litigation.

Then we turn to a situation in Italy where the fiscal authorities have taken positions contrary to its courts. Raul-Angelo Papotti TEP and Lorenzo Ferro explain the impact on transfers of assets to trust and indirect taxation.

Another sad statistic of our age is the divorce rate. As more spouses satisfy their destiny to be divorce statistics, they remain committed to maximising access to assets acquired during marriage. Can trusts be useful in matrimonial planning? Can they replace (or supplement) pre-nuptial agreements? Elizabeth Field TEP, Neil Smyth, Frances Bailey and Lucy Mitchell examine how trusts can be used in England and Wales in the course of pre- and post-matrimonial planning. In our next issue, they will turn their minds to how trusts can be used in international asset protection.

Last, we offer a review by Bill Ahern TEP of the fourth edition of Equity & Trusts Law in Hong Kong, a welcome update to the seminal work on this topic. This version has been expanded to include recent cases from Australia and other jurisdictions, anti-money laundering issues and critical non-trust issues. Perhaps the greatest contribution of this latest edition is that it shows how the Hong Kong courts, in particular the Final Appeal Court, are playing an increasingly important role in the development of the rules of equity and the law of trusts globally.

We look forward to our readers’ comments and suggestions, and wish you all a healthy spring.