Guernsey: The Diverse Nature Of The Guernsey Trust Industry

Last Updated: 4 December 2017
Article by Marianne Domaille

Most Read Contributor in Guernsey, September 2018

Guernsey is London's closest offshore finance centre. With '2-REG', its recently established aircraft registry, aircraft can now be registered for both commercial and private flights. So, what makes Guernsey's trust industry so attractive? Here, Concept Group Director Marianne Domaille, amongst others, provides some explanation.

The weather, currency and its residents are distinctly British although Guernsey is not part of the UK or Europe. The main industry is finance and the island is a popular jurisdiction for high net worth families to place their wealth in the safe hands of one of the many sophisticated, secure and well-regulated trustee and family office firms.

"I dived straight into the trust industry in Guernsey after leaving full time education in 2001," explains Marianne Domaille of Concept Group, an independent provider of innovative offshore financial solutions.

"One of the reasons that I love being a trustee is the sheer diversity of the families, cultures and asset classes that we are privileged to be exposed to. It is unpredictable and an extremely rewarding career if you enjoy a generous dose of fast paced excitement."

2-REG

The recently established 2-REG aircraft registry has generated significant interest worldwide, including Asia and in particular China, which has one of the fastest growing business jet markets.

"A well-publicised client of ours is the HNA Group, who through its subsidiaries Deer Jet and Hongkong Jet, has partnered up with us to maintain a Guernsey AOC for a fleet of luxury jets, starting with 2-DEER, a 787 Dreamliner and currently the world's most expensive business jet," says Domaille.

Last September, another corporate Boeing 727 aircraft, 2-BASG, was added to BAS Guernsey (BASG) air operator certificate (AOC) and can now be offered for commercial charter. Hongkong Jet and BASG Chief Executive Denzil White said the Guernsey registry was very responsive and showed very high standards.

"Response times are critical to us as a business. When we were looking at registering the 787 in Hong Kong, we were told it would take 15 months. Guernsey did it in three days," said White.

"In addition to managing modern day business jets, as a commercial trustee, we are often involved in general aviation business such as setting up structures to buy aircraft, dismantle them and sell off the individual components," comments Domaille

"In fact, earlier this year I visited Mr Wolter Portier, a prospective client starting up such a business in Eindhoven and as a hobby, it transpired that he also owns and maintains vintage aircraft including a Spitfire, all of which are somehow still airworthy. These aircraft come with their own challenges, notwithstanding that they are constructed largely from linen and are kept in a secure Dutch Royal Airforce airbase facility," confides Marianne.

A tough nut to crack

For the Guernsey trust industry, the Asian market is a massive growth sector, albeit a difficult nut to crack.

"They are still learning about the Western culture of financial service business regulation and our requirement to obtain due diligence," says Domaille.

"If those obstacles can be overcome then Guernsey comes into its own in terms of its sophisticated asset holding solutions and to being unfazed with the Chinese's insatiable appetite for buying high value goods in volume. In recent weeks I met a Taiwanese private client in Shanghai who is setting up a trust and family office with us in Guernsey, having also successfully established a Guernsey captive insurance structure for a film financing venture. We attended ABACE and EBACE, to discuss investing in private jets and then we travelled to London to visit the Aktis Gallery. The gallery is directed by Anna Chalova who I have worked with for over a decade and specialises in artists living in Paris in the 1950s such as Zao Wou-Ki and Wang Keping. These are two strong names in the Asian art scene and my client had to resist the urge to buy up the entire display there and then. We visited Masterpiece together in July with a view to completing a number purchases and identifying additional potential works for his collection."

Unique assets

For a trustee, it is essential to have a good relationship with a reputable family lawyer who has experience of unique assets such as art.

"Often those items which you may perceive as ugly, or wouldn't give houseroom, are the most valuable. I would recommend Grosvenor Law in London who specialise in high profile divorce cases. They recognise that some spouses see this as an ideal opportunity to offload art they don't like or value onto the other spouse."

Sally Marsden of Grosvenor Law advises: "It is a fruitful ground for disputes as value is very subjective and art and collectibles are only worth something if someone is willing to pay for it. Warring spouses are often left with one side arguing the value down and the other side arguing the value up. We have also seen cases where parties haven't really appreciated the value of the art or a collectible as an asset, with some people not even bothering to list items in these categories.

"As a general rule, owners should ensure they keep all paperwork in relation to purchase and value at purchase and also track the value. Watches are a popular collectible, some men collect watches like women collect earrings. Values increase with original packaging and warranties, so people need to understand the importance of keeping all that. Books and stamps are also making a big comeback in terms of collectibles and again are often overlooked."

Marine offering

Being surrounded by the sea, Guernsey has a very established marine offering and it is a common part of life as a trustee to manage trust structures that own superyachts.

"I work closely with yacht managers such as Chris Dawson of Master Yachts to ensure that a family's expectations are met in terms of customising the superyacht, organising for crew, catering, and logistics. As with private jets, safety is of paramount importance. Sometimes it can be a challenge to meet the demands of a family where the two conflict.

"Yachts are fantastic for providing discrete downtime for their owners and family in comfortable surroundings. The contrast of being on the water, in new and interesting environments allows them to disconnect from their everyday lives and fully relax.

"Asia is a growth area for superyachts, just like with art and aviation, but it is unlike the rest of yachting ownership as the Asians have a different view of how these assets are used. First generation beneficial owners can see the use of the yacht for business entertaining but don´t really understand its use for holidays. The second generation are different, yhey have been brought up in Europe or America and are used to holidays and relaxation time. This second generation wealth will be the big driver of the Asian superyacht market in the coming years.

"Russians on the other hand, are experts in superyacht ownership and to using Guernsey trust structures such as private trust companies to hold them through. It's a highly sought after status symbol to have at least a 65metre vessel, although 85 metres and upwards are now seen to be the new 'acceptable' length. However, the waiting list for yacht construction in some shipyards, such as Lürssen can be in excess of five years and this has generated an over-inflated secondary market for vessels under 18 months old. I work with a number of banks providing yacht financing and one bank in Monaco has a lending book with a client base which is 100% Russian. Nonetheless, despite this being a regular transaction and client type for the bank, the conditions precedent and subsequent can take months of negotiating and it's our job as trustee to manage the dynamics between the family, the ship builder, the bank and the yacht manager, which is a minefield. It is not unusual for the bank to ask for 400% security either on some of these vessels, so the trustee really has to be prepared to scrape the barrel and cross collateralise using assets from other structures under the family trust umbrella such as property, private equity and investment portfolios.

"Sometimes owners combine other passions with their yachts, perhaps by bringing much loved pieces of art with them when they go on board or by maintaining a healthy stock of vintage wines to enjoy with their guests over exquisite dinners. As a platform to fulfil a person's desires yachts are hard to compete with. Classic cars, helicopters and submarines are all regularly incorporated into the design of these amazing vessels."

Trust industry development

It will be interesting to see how the trust industry develops over the next five to ten years.

"Traditional luxury assets such as art, yachts and jets will probably still be a large feature of the assets that we look after," concludes Domaille. But, she adds: "With second generation wealth pushing through from the Middle East, Far East and Russia, I predict that a trend towards luxury technology based products such as smart devices will emerge and that crypto-currencies will be used more widely."

An original version of this article was first published by Altitudes Magazine, November 2017.

For more information about Guernsey's finance industry please visit www.guernseyfinance.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions