TEAM Up For Relocations

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TEAM Up For Relocations

Thomas Serizay - Senior Wealth Planner, LO Patrimonia

Thomas Serizay

Senior Wealth Planner, LO Patrimonia

Article published in STEP Journal, issue 4 2021

The events of the last two years put many wealthy individuals’ travel plans on hold. Yet despite the Covid-19 crisis, or in some cases because of it, relocation is a topic that private clients continue to discuss with their advisors.

The desire to move can be fuelled by many reasons. Some pre-date the Covid-19 crisis (e.g. personal choices, business ventures abroad). Nowadays, tax considerations are also increasingly on clients’ minds. The increase in fiscal spending to safeguard economies has led many to fear a significant increase in their overall tax charge. A recent survey we commissioned among UK entrepreneurs showed 72% are concerned about rises in income or capital gains levies1. Many private wealth advisors also expect tax rises ahead. For now, the G7 has targeted the corporate tax rate. But will that be sufficient? And given the global effects of the crisis, will any country be spared tough decisions on taxes?

Whatever the answers, private clients are considering moving. This can bring not only personal challenges, but also professional ones for their advisors.

Many private wealth advisors also expect tax rises ahead. For now, the G7 has targeted the corporate tax rate. But will that be sufficient?

Challenges for the Trustee

Regardless of the entity that is under the administration of a professional (e.g. trust, holding company), the administrator will need to understand the legal framework of the new jurisdiction. Depending on the jurisdiction of destination and the assimilation rules of an entity (most probably offshore) to this new system of law, the situation can be challenging. These challenges can rapidly multiply if you add in the different locations of the assets held, the number of family members and their locations, the underlying entities etc.

 

Challenges for the Estate Planner

If a client has been resident for a long time in a particular country, the estate planning advice given has probably been designed to comply with this particular set of rules. If the client moves to another country, how should the domestic advisor approach the planning? Key factors to consider include the length of stay, the type of planning in place (“structured” or not), and the remaining links with the country of departure. Here, pre-planning is key and accessing the local specificities and practices may be a challenge in itself.

…pre-planning is key and accessing the local specificities and practices may be a challenge in itself

Challenges for the Asset Manager

For many domestic banks, a client leaving for a new jurisdiction can reveal limitations in the services that can be offered to non-resident clients. Is the asset manager aware of the new tax constraints to which the client’s portfolio(s) will be subject? Will the assets selected comply with the new taxation rules? Will the financial institution be able to report the income and gains according to the new country’s standards?

The knowledge and expertise needed to secure the client’s position is sizeable. In these situations, the simpler the approach the better. There is a real trend to harmonise, simplify and centralise the management of a private client’s wealth. One way to succeed is to TEAM2 up various expertise.

There is a real trend to harmonise, simplify and centralise the management of a private client’s wealth. One way to succeed is to TEAM3 up various expertise
  • The Trustee should team up with an Asset Manager who can provide them with a global view of the client’s wealth, its composition and location, and help the Trustee consolidate that view. This should help overcome the tax and regulatory reporting challenges, without having to modify the place of custody of financial assets, should the client not wish this.
  • The Asset Manager should team up with an institution that can provide an IT tool to assist with the tax constraints to be complied with, and the selection of financial assets to be managed in a tax-efficient way.
  • The Trustee should team up with an Estate Planner with global wealth planning expertise, to identify the gaps in planning in anticipation of the move.

Finding trusted partners that encompass these three approaches can be a challenge. But solutions are available, and we believe that teaming up can bring significant benefits for your clients.

 

1 Entrepreneurs’ Views 2021: Business Lessons, Wealth and the UK Outlook, Lombard Odier, June 2021
2 Trust, Estate and Asset Management
3 Trust, Estate and Asset Management

Important information

This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

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