I am pleased to announce that we are now in business as Garnham Family Office Services. In particular our attention will focus on succession and estate planning.
For our long time UK residents clients who are non UK domiciled we will undertake a review of their excluded property settlements. I will instruct the appropriate professionals to take on the work and will monitor them closely for progress and feedback reports.
Gregor is a long term UK resident non UK domiciled individual who lives in Hampstead with his family. He set up his trust fifteen years ago. We went through the trust documentation and I asked him whether he received any benefits from the trust or remittances and from what source they were paid. We instructed a firm of accountants to do a forensic audit of the payments with the trustees. There were a number of remittances which had not been declared. I told Gregor’s accountant to declare the remittances and pay such tax as was due.
We then looked at any changes to the trust and found that an appointment of half the trust had been made onto new trusts, but luckily they were made when he had been fifteen years resident so it still qualified as an excluded property trust. If however, the appointment had been made after he had been resident for seventeen years it would have not qualified as an excluded property settlement and would be within his estate for tax purposes.
I asked Gregor what he would have done if he had discovered that his trust was not an excluded property trust. He said that his brother who was also a long term resident non dom, had set up his trust but it was when he was deemed to be UK domiciled and was now engaging in litigation against the solicitor who set it up.
This could be a very worrying time for many succession practitioners as well as many trustees. There were a lot of offshore trusts set up decades ago, when there was little thought given to a review by HMRC. The stock answer was ‘How will it ever find out?’ The harsh truth is that following April 2017 it will find out and anyone who has not taken care in the set up or has not declared all remittance or benefits will be in danger of a full investigation, a fine or even worse - probed for tax evasion.
The second area where we are providing family office services is for owners of prime UK properties which now seem riddled with taxes. Last week we went to see Frank, a family office property expert. He said that the upper end of the market was frozen with a spike of interest for property to rent. From the perspective of people he knows in Asia, London prime property is now considered expensive and buyers can negotiate discounts.
The main culprit is the hike in stamp duty land tax. My neighbour Richard said last week 'who wants to drop a million pounds?' Although there are ways in which this tax can be mitigated, the market is now of the opinion that London is expensive and are simply no longer interested.
The third area where our family office services are of interest are on UK doms or non doms looking to mitigate their exposure to inheritance tax, which at 40% is considered excessive. Estate planning must always be viewed as an ongoing exercise. It is not just for the elderly in God’s waiting room. Younger people also die unexpectedly and if they do not want to pay more tax than they need they need to have a plan and review it regularly. Laws and family circumstances change and when they do the estate plan also need to be reviewed and amended.
Alice is third generation in a family of significant wealth. She recently inherited shares in an estate agent business from her uncle and came to see me as to what she should do with them. I made it very clear that I could not advise her on the business as an investment, but could introduce her to people who could. However I was able to point out the tax advantages of owning shares in a private ongoing business which were considerable.
Of course our family office services are not limited to people who are alive. We can also provide solutions for post death planning and we had an opportunity to do so last week with Martin who came to us on the death of his father. Post death planning is of course limited. Either you have some tools to play with or you do not. For example Martin’s father’s estate did not have any assets which qualified for business property relief so we needed to look elsewhere and came up with a good solution for him.
Last week we were also approached by William. He said he had not done any estate planning because he did not know who to go to – he only knew business professionals and did not know anyone for his personal needs. Again I was able to point him in the right direction, instruct the professionals on his behalf and keep a check on progress on his behalf.
If you have a situation like Gregor, William, Richard, Alice or Martin and would benefit from our services please contact firstname.lastname@example.org or on 020 3740 7423.