“Navigating The Winds Of Change” Conference

October 16, 2015

[Written by Kensley McDowall]

In keeping with the theme of the Louis Vuitton America’s Cup World Series Race Weekend in Bermuda, the 2015 Society of Trust and Estate Practitioners [STEP] Bermuda Conference, which was held at the Bermuda Underwater Exploration Institute [BUEI] on Thursday 15th October, was called “Navigating the winds of Change”.

This was a most fitting title as the various speakers, both local and international, identified and forecasted the many head winds that are currently prevailing upon the Trust Industry and offered practical solutions to navigate these and other treacherous conditions.

In his opening address, Dr. the Hon. Grant Gibbons, Minister of Economic Development spoke about Bermuda’s attractive regulatory conditions, the many progressive yet measured changes that Bermuda has made to its legislation such as inclusion of Reserve Powers, its legislative Hastings-Bass response, dealing with the old perpetuity rule and the many Tax Treaties.

He also pointed out that Bermuda is currently working on the means for the protection of personal information to make Bermuda a more desirable Trust Jurisdiction and to position the island to become a Family Office jurisdiction of choice. In closing, he invited attendees to watch the weekend’s races.

The first speaker of the day was Paola Fudakowaska of Withers, London. Noting that Trustees have a duty to account, she gave a very illuminating talk on the topic of disclosing information to beneficiaries. She looked at the pitfalls and offered solutions to Trustees on this very delicate issue as to what and how much ought to be disclosed especially in this electronic age.

Oliver Court of Macfarlanes, London, evidently well versed on the subject, gave a most informative update and analysis on the UK Budget based on the 8th July, 2015 Budget Statement. There will be a new “Deemed Domicile” rule. This should be enacted in the Financial Act 2016 and brought into effect on the 6th April 2017. He highlighted the issues as they may relate to and may benefit Trust and Trustees in Bermuda.

Rose Chamberlayne of Wiggin Osborne Fullerlove, London gave a practical perspective on succession structuring for international business families. She stressed the importance of having an effective structure and of having good governance.

Often settlors try to retain control over the Trust Settlement. Gemma Willingham of Baker & McKenzie and Keith Robinson of Appleby looked at the risk of too much settlor control and provided practical solutions for managing these risks.

Over a scrumptious lunch sponsored by Meritus Trust, Tash Perrin of Christies, New York addressed all of the many issues that accompany having art and other tangible collections as part of the assets of a trust, hats off to the staff at the Harbour Front Restaurant for the efficient, professional and unobtrusive way in which the served.

Mary Duke, Independent Advisor, New York gave an interesting update on what is happening with Family Offices around the world.

The troublesome issue of resignation and or removal of trustees were dealt with by Andrew Holden, XXIV Old Buildings, Lincoln’s Inn London. He provided practical tips for navigating the handover process of trusteeship.

Moz Afzal of EFG Asset Management, London predicted that higher interest rates are coming. He provided a global macro update as it relates to recent market turbulence and provided useful advice as to how fiduciaries should deal with the current market situation.

There were three breakout sessions. Scott Pearman of Conyers Dill & Pearman dealt with the problems that can arise in private trust companies or underlying corporations where trustees act as directors and directors act as trustees. Michael Mello and Vanessa Schrum of Appleby unravelled the mysteries of Stamp Duty in Bermuda and offered practical ways of using stamp duty exemptions.

David Veness of HSBC gave a very illuminating expose of the Common Reporting Standard [CRS], the OECD version of FATCA and or the UK Tax Reporting Exchange [TRE]. Bermuda has signed on and CRS becomes effective in January 2016 with a view of reporting in September of 2017. He explained what CRS means for Trustees and what trust companies in Bermuda need to do to effect its implementation.

The final session of the day was in the form of a panel discussion chaired by Sean Moran of the Bermuda Development Agency. Panellists who included Rose Chamberlayne, Randall Krebs, Paola Fudakowaska and Oliver Court looked at selling Bermuda. What is Bermuda doing well? What is it not doing well, what Bermuda can do better and how is Bermuda doing against its competitors in terms of attracting new business?

On the first question, one UK panellist who works with Bermuda firms, felt that the experience was good. Bermuda has experienced professionals and working with a Single Family Office, her experience was good. Another UK lawyer stated that Bermuda has top quality Trustees who are very professional. Bermuda is the originator of the Private Trust Company [PTC] and should maintain the lead. Bermudians are a fine bunch of people and that goes a long way with clients. Another panellist, who is on the litigation side of things, applauded Bermuda for its pragmatism. She felt that the court system was stable and applauded it for its quick turn around and flexibility. Randall, the local panellist, stated that as a Bermuda Trustee we work with high quality professionals.

On the question of what we should be doing better, it was felt that Bermuda can build on what it has done with Hastings-Bass. We need to develop arbitration in Trust for speed and privacy, cognisant of course, of the fact that it does not help the development of case law which is important. It was felt that Bermuda is doing a fine job with developing legislation but need to find balance because it does not need to look gimmicky. It was felt that Bermuda needs to market itself as a best practice family office jurisdiction. Randall felt that because Bermuda is small it has an advantage, people work together. However, small is a disadvantage as well since it does not have the large pool of professionals to promote new legislation.

On the question of what is the competition doing better, it was felt that the competition, being Guernsey, Jersey, Cayman, the Bahamas, BVI and Singapore, might be more prolific in the creation of legislation and perhaps they shout a little louder but that is not what it takes. Bermuda needs to review what is happening elsewhere but note that it is not the quantity, it is the quality and breath of what it does that is important. Some jurisdictions move too fast which can lead to becoming unstable and uncertain. Bermuda is stable. Bermuda has good legislation and protection and support from the judiciary and can build on that. Randall thought that in some larger jurisdiction professionals get together often to promote the jurisdiction. However, in Bermuda, except where there is new legislation, professionals tend to promote their own business and that Bermuda needs to target the top end of the industry. Oliver stated that the waters are choppy and jurisdictions need to position themselves. Bermuda is already doing that and he suggested it look at High Net Worth clients coming from London. Rose pointed out that there are three factors that set the stage for Family Office; structure, security and Tax. Bermuda’s stage is set and perhaps ought to shout a little louder.

His Excellency the Governor, Mr. George Fergusson gave some very interesting closing remarks. He congratulated the STEP committee for putting together a very good programme. He commented on the importance of the CRS and reporting. He made the point that the core of Bermuda’s brand, in whatever area, is respectability and the key for Bermuda to stay in front in transparency not just to become compliant. That will ensure that Bermuda remains a place where people, respectable families can proudly say I have a Family Trust in Bermuda.

The STEP Bermuda Conference had earlier in the year given way to the IBC Transcontinental Forum, but despite the fact that the conference was scaled down, it was a tremendous success. STEP Bermuda Chair and Chair of the Conference, Jonathan Dunlop was delighted with the attendance and expressed gratitude to the Bermuda Sponsors, many of whom had been sponsors of the IBC Transcontinental Forum in April of this year, who willingly stepped up again to help make the conference a success.

- Kensley McDowall is a Bermudian Attorney and Regulatory Compliance Specialist, MD and Consultant of Caribbean Compliance Consultants [Bermuda] .

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  1. Keepin' it Real!...4Real! says:

    Hmmm..? What a quite “illuminating” read that was…