By Serene Tan TEP, Business Development Senior Manager, Equiom Singapore
It was another thought-provoking STEP Asia Conference this month. Taking place at the Marina Bay Sands in Singapore, the conference served as a meeting place for private client and trust professionals from across Asia and around the world. The focus this year was on the evolving wealth planning landscape, which is particularly interesting in Singapore, a jurisdiction recognised as a key financial centre for a growing number of family offices and high net worth families. To summarise the event, here are the main themes I observed.
1. The complexities of trust arrangements
There is still much discussion about the ‘proper’ operation of trust structures and the challenges of historic trust arrangements set up largely to allow clients to manage the structures on their own. There were several discussions about how to manage settlors who desire to retain a level of control over the trust assets. Reserved powers trusts (RPT) are popular among Asian families where the settlor reserves the power of investments to himself. Much of the discussion focused around a recent Hong Kong case where a bank trustee was held responsible for breach of trust and fiduciary duty regarding investment losses despite having anti-Bartlett provisions in the trust deed. This has caused trustees to take a long hard look at how RPTs ought to be actively managed and to intervene where necessary as trustees have a high-level supervisory duty and an irreducible core of obligations owed to the beneficiaries.
2. Demand for quality in the sector
There was a great deal of comment about the need for quality trustees. Some of this stems from the increasing use of trustees to manage family wealth and business succession across generations. It is appreciated that a knowledgeable trustee is key to the success of the structure into the future.
3. The growing need to consider tax implications
There is increasing awareness around taxation when setting up trusts and a recurring message was to engage competent tax advisors early on.
4. The ongoing debate over the impact of recent legislation
Discussions about economic substance and automatic exchange of information (AEOI) were a recurring theme. There is still a general sentiment that the British Virgin Islands (BVI) is likely to find itself facing more requirements to fulfil. However, a mass exodus of business from the BVI and Cayman is not expected any time soon. The number of BVI and Cayman lawyers in Asia still makes them the favoured jurisdictions for high net worth individuals (HNWIs).
5. Family Offices are very much a talking point
With the number of family offices on the increase in Singapore, we as trust practitioners need to be able to cater to their needs more specifically, anticipating the changing landscape and evolving needs of HNWIs. Singapore is a preferred financial centre for wealth management due to its sound legal framework, political and economic stability and established financial regulation. Singapore also has a financial ecosystem and infrastructure which provides these HNWIs access to global and regional financial markets, supported by a diverse talent pool of financial professionals.
6. The Singapore Variable Capital Companies (VCC) presents new opportunities
The introduction of the Singapore VCC could be a game-changer for the wealth management industry in Singapore and Asia. It could be set up as a stand-alone or an umbrella entity with multiple sub-funds or a master-feeder structure, for both open-end and closed-end funds. This vehicle could be used for traditional funds, hedge funds, real estate funds or for multi-family offices, and managed by a Singapore based licensed fund manager (unless exempted under the regulations). The benefits of the VCC is the segregation of the sub-funds’ assets and liabilities. The fund may also enjoy certain tax incentives in Singapore under the Enhanced Tier Fund Scheme and Singapore Resident Fund Scheme under the Income Tax Act.
The general mood in the private client space is a positive one. Businesses in the sector are reporting successes and growth. As the global HNW population grows, I am excited to be part of this vibrant industry and promoting Asia as a centre of excellence for trust and estate planning solutions.
Contact Serene Tan for further information on the topics discussed in this article.
This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Equiom to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.