February 28, 2018 Vibha Vallabh

HAVE YOU CONSIDERED A SUCCESSOR TRUSTEE?

BY VIBHA VALLABH

How to protect your assets is a fundamental question you should be discussing with your wealth advisor when considering your investment options. Because we all have different needs there will always be different advice regarding how best to achieve this, but a good planner should always include diversification. This will be a familiar tenet from your investment advisor when discussing your investments, the same also applies to asset protection and wealth planning. Diversification of your asset protection can come in a number of ways:

– by location of your assets;

– by ownership structure or vehicles holding those assets; and

– the location of jurisdictions that are used to achieve the first two.

Jurisdiction? Not all laws and countries are equal. The cliché is that history is a good indicator of the future. There will always be absurd rules, rogue governments, legal challenges from would be creditors, economic instability, wars, natural disasters and financial insecurity, all of which are out of our control but you can mitigate these effects with good asset protection planning.

A simple way to do this would be to move your assets offshore and have them held in an offshore trust by an independent trustee. A Southpac Trust can provide such a structure and give you comfort and surety whether you are planning your immediate or legacy needs.

In order to keep this option open as a possibility, at the time of establishing your domestic trust, or through an amendment to your current deed you may include an offshore trustee as the successor trustee upon their agreement. For example, John has established a domestic trust and named Southpac the successor trustee. Southpac does not act as a co- trustee but only becomes trustee upon a triggering event where your domestic trust is moved to another jurisdiction.

At that point John is replaced by Southpac who, after carrying out the required due diligence, becomes the managing trustee at the time the jurisdiction and governing law of the trust is changed.

It is critical that the successor trustee becomes the managing trustee in advance of the event to ensure that it can act as trustee as it may not be able to accept the appointment if a legal challenge has gone to far or if there is a significant change in status of a settlor or officer of the trust. The inclusion of a successor trustee into your deeds generally incurs a one off nominal fee payable at the time the successor trustee agrees to act and then full fees only become payable only if the successor trustee becomes the trustee. Therefore, if Southpac becomes trustee then full fees become payable. While a successor trustee provision in your current deed is not as safe as a full offshore trust it certainly gives you added protection over and above a standard domestic trust and provides insurance for a worse case scenario.

Vibha Vallabh

Vibha Vallabh is the General Counsel for Southpac Group and is responsible for the oversight of all client affairs and the legal and client services teams.
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