Estate Planning June 2018 Prepared by BTG Consulting Limited - - PowerPoint PPT Presentation

June 2018

Prepared by BTG Consulting Limited

Offshore Estate Planning

Offshore Estate Planning

▪ Onshore and Offshore Assets ▪ Heirs in different jurisdictions ▪ Matrimonial Property Regime ▪ Domestic and Foreign Succession Law ▪ Local and Foreign Taxation

Decide on the Objectives Spouse Accountant Attorney Financial Advisor Starting an Offshore Estate Plan Asset Protection Death Research Foreign Law Foreign Tax Decide on Planning Tools Offshore Will & Bequests Offshore Trust/ Foundation Gifts Asset Disposal Life Insurance Matrimonial Property Regime Execute the Plan Finish Formulate & Document Appoint the Advisors

Review Annually

Offshore Estate Planning

Offshore Estate Planning

Planner Assets Assets Assets Planner s Family Family Member

Kenya UK USA Switzerland

Assets Advisor Advisor Advisor Advisor Local Will & Testament Income Tax Capital Gains Tax Stamp Duty Creditors Forced Heirship CRS Inheritance Tax Capital Gains Tax Inheritance Tax Capital Gains Tax CRS Heirs Extended Family Income Tax FATCA Caters for local and offshore assets

Foreign Inheritance

 United States

 IHT and Gift Tax  0-40%  Significant exemptions apply to US citizens and residents, but are inapplicable or reduced for non-US residents.

 United Kingdom

 Unified estate and gift tax - IHT and Gift Tax  0-40%  IHT applies to the value of an individual’s estate when he or she dies (in which case he or she is deemed to make a transfer of the whole estate immediately before such time) and to certain transfers or gifts made during the individual’s lifetime.  Non- domiciled and resident.

 Switzerland

 IHT and Gift Tax  0-50%  IHT and gift taxes are levied at the cantonal/communal level and are not harmonized. Furthermore, the tax rate generally depends on the relationship between transferor and recipient.

 Mauritius

 No IHT or Gift Tax

Offshore and Onshore Planning

▪ Offshore-Onshore Wills

▪ Last Will and Testament covers local assets, the executor may have to apply for foreign orders to recognise his right to deal with the property. ▪ Result in delays, problems with foreign language and additional administration costs. ▪ Separate foreign Will dealing with offshore assets, as this will address jurisdiction specific requirements and different legal systems and simplify the administration of the offshore estate.

▪ Offshore-Onshore Trusts/Foundations

▪ Trusts follow more or less the same principles ▪ Foundations not well known – treated as a trust or company

▪ Executors, Trustees/Council

▪ Separate from local providers ▪ Tax issues

▪ Businesses

▪ Company, partnership ▪ Pre-emptions, dissolution

Offshore-Onshore Planning

Planner UK Assets USA Assets Swiss Assets Planner s Family Family Member

Kenya

Assets Advisor Local Will & Testament Local Trust

International

Private Foundation No forced heirship Local assets outside succession law Will covers

• ther assets

Single advisor Family offshore benefit as per the Charter No US IHT No UK IHT Family benefit as Per trust deed

Offshore Estate Planning Tools

▪ Foreign Trusts

▪ Discretionary and testamentary ▪ Taxation

▪ Private Foundations

▪ Private and charitable ▪ Taxation

▪ Foreign Companies or Partnerships

▪ Limited liability ▪ Taxation

Parties to a Trust

Discretionary Trust Administer Trustee: To administer assets and carry out objectives. Protector: Takes reasonable steps to ensure trustee carries out its functions. Beneficiaries: To benefit persons or to carry

• ut purposes or both.

Benefit or purpose Enforcement Activity Settlement Settlor: Instructions for formation. Formation & Deed Registrar General: Stamping of the Deed. Activity Global Investment. Notification Operation

Parties to a Foundation

Foundation Incorporated vehicle. A foundation is brought into existence following completion of an official registration process. Legal personality. A foundation is a separate legal entity which can hold assets, enter into contracts, sue and be sued in its own name. Sham Principle. No sham argument principles apply to

• foundations. The registration of a foundation by a

competent authority is conclusive proof that the foundation exists.

• Beneficiaries. A foundation does not have to have
• beneficiaries. It can be established for a particular purpose
• r objective.

Indefinite existence. A foundation can exist for an indefinite period. A statutory body. A foundation is a creature of statute and thus owes its existence to legislation passed by a competent body. Public record. A foundation’s existence can be determined as a matter of public record. Rights to information. Under a Mauritian foundation there are rights to information by the beneficiaries. Initial settled funds. A Foundation does not need initial settled funds to exist. Records not available for public inspection except upon authorisation by the secretary, FSC or through Court Order. Trust A trust is a legal arrangement between the parties. A trust is not an entity in its own right. It transacts through its trustees rather than in its own name. The principle of sham applies to trusts which can determine whether a trust relationship indeed exists. A trust needs beneficiaries in order to be valid (with the exception of non-charitable purpose trusts and other types

• f trusts that are creatures of statute).

Other than a purpose trust, a Mauritian trust is subject to a perpetuity period. A trust is historically a product of the common law and equitable principles. In Mauritius there is no public record for trusts. A beneficiary of a Mauritian trust does not have rights to information unless this is provided for in the trust deed and is

• wned a fiduciary duty.

A Mauritian trust needs initial settled funds in order to come into existence. Records disclosed as permitted in the Trust Deed or upon Court order.

Differences - Trust v Foundation

Offshore Planning Scenarios

Offshore Planning Scenarios

Offshore Planning Scenarios

Family Office

▪ A family-owned

• rganization

that manages private wealth and other family affairs in the most effective and efficient way. ▪ There is an alignment of family interests and wealth. ▪ Centralization

• f

business services, proper management and governance structures. ▪ It creates a family legacy for generations to come. ▪ Allows for growth in assets and ensures there is a proper distribution of wealth between the family. ▪ It provides increased privacy and confidentiality

• f financial dealings, which can help protect

family members from unwanted attention. ▪ It acts as a gatekeeper that protects family members from unwanted solicitations for a myriad of matters. ▪ Delivers services in coordinated and customized manner to the individual family members being served.

Investment Company Protected Cell Company, GBC1, Mauritius Cell 1 Cell 2 Family Business (Subsidiary)

Ords

Family Business (Subsidiary)

Ords

Family Foundation

Corporate Council Member Founder Council Members (Family) Cell Shares Mauritius Africa Directors Manager Manager

Other Planning Considerations

 FATCA/CRS and Automatic Exchange of Tax Information  Amnesty

BTG Consulting Limited 1st Floor, Bld. B, Nautica Commercial Centre Royal Road Black River Mauritius Tel +230 483 1212 Fax +230 483 1313 www.btg-mauritius.com

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