Jersey structures are ideal vehicles for ensuring that assets
are protected and for enabling wealthy individuals to determine
exactly who inherits which assets going forward.
In Hong Kong, when you mention the high profile names of Dr
Stanley Ho and Nina Wang, almost everyone will be able to regale
you with stories about how Dr Ho allegedly lost his $3bn casino
empire and how Nina Wang's feng shui expert purportedly tried
to claim her $4.2bn fortune. In Dr Ho's case, it is suggested
that the main cause of the trouble was when he fell ill, his share
of SJM Holdings was fought over and divided up amongst his family
comprising at least 4 wives and 17 children. It had reportedly been
Dr Ho's intention to pass his share of SJM to his second and
third wives. For Nina Wang, her feng shui expert allegedly claimed
that they had had an affair for years and it was Nina Wang's
intention to leave him a substantial share of her wealth rather
than have her family inherit it.
Supposedly the problems arose in Nina Wang's case because
her will made no provision for the feng shui expert. In Dr Ho's
case the ownership of the assets were in personal names rather than
through a more established asset protection structure.
The benefits of trusts and companies
The most commonly used asset protection structures for ensuring
that assets are protected are trusts and companies.
At a basic level, assets are separated and therefore
protected by placing them into different companies. Each
company is owned by a trust. This structure works from an asset
protection perspective and offers the underlying client many
Because the assets are separated into different holding
companies the risk of losing all assets simultaneously is
limited. If an asset is going to be attacked and the
company is sued, only the assets held in that particular company
are under threat.
With a trust owning all the assets and the underlying
client becoming a beneficiary of the trust, legal and beneficial
ownership is separated. Therefore it makes it difficult to
take legal action against an individual who has settled their
assets in this manner.
Jersey trust law does not recognise forced heirship
regimes, therefore it is only the named beneficiaries or class of
beneficiaries who will ultimately benefit from the trust's
assets. It is also possible under Jersey trust law for a
settlor to reserve the power to change the beneficial class and
therefore rule individuals in and out from receiving trust
The benefits of this type of asset protection are clear. Jersey,
a leading international finance centre, is ideally placed to
provide sophisticated structures to Asian clients. It is essential
that tax and legal advice is taken, in all circumstances, to ensure
that personal circumstances are properly reviewed.
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.
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Many people are baffled by trusts, the purpose of which they don't fully comprehend. Some even regard them with suspicion, as tools of of opaque tax evasion strategies of a type favoured by wealthy individuals.
We were recently instructed by a Bank in relation to a regulatory matter. The Bank had made a suspicious activity report to the Financial Investigation Unit ("FIU") due to their concerns about the potential source of funds in an account.
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