2021 Review

2021 REVIEW

And it looks like we might have made it...

2021

THE YEAR ESG INVESTING BECAME MAINSTREAM

DIVORCE PROOFING TRUSTS A STEP TOO FAR?

And it looks like we might

by David Bell, Founder | PCD Club

At the end of a tumultuous year such as this, it seems only appropriate to open my welcome with a Winston Churchill quote: Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.

As Omicron takes hold in the UK, we are braced for a difficult winter but optimistic about 2022 and what it has in store. We have all become accustomed to a level of uncertainty and resilience that would have seemed overwhelming prior to this crisis. We will have to keep adapting and changing as the story unfolds.

2022

We have a full live event calendar planned for 2022 and are looking forward to the prospect of being out on the road with our members and sponsors once again.

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In the course of reflecting on the year, I caught up with a number of 2021 sponsors who shared some thoughts on what 2022 looks like for them and their business.

have made it...

Michael

tact to help firm relationships and demonstrate a strong commitment to the region. We look forward to continuing to build on these recent experiences, and it will likely remain an area of keen focus Strachan, for us going forward.

Founder of IAM Advisory and one of the

sponsors of PCD Guernsey in 2021, is bullish about the future: 2022 will be a year of development for IAM Advisory. Developing our market-leading proprietary software, Active Management Performance Standards (AMps) with some exciting announcements to come, developing our Sustainable Investment Framework across our client base, and ensuring it incorporates all of the latest ESG developments as ESG investing becomes more and more mainstream, and continuing to develop our senior team to be market leaders in the investment advisory space.

The team at Creechurch

Capital,

who sponsored PCD Dubai in 2021, are equally positive and encouraged by the response to their services in the Region.

Following the PCD Dubai dinner, we are really encouraged by the event which allowed us to increase brand awareness and successfully expand our network of private wealth professionals within the Middle East, as well as other jurisdictions. It also reinforced the importance of in-person con-

From

the

tax

world,

Andy Wood, Founder of ETC Tax and

sponsors of PCD Manchester for many years, said this: As the tax world becomes more and more difficult to navigate; the tax burden placed on our entrepreneurial private clients and small business’ continues to increase; and HMRC continue to exert new and more powerful influence with more frequent forays into retrospective legislation and nudge letters, demand for our services has continued to grow during 2021.

Looking forward, Andy also reflected on the journey his business has been on: We hope to continue to build on the strong foundations we have laid over the last 6 years, and for the ETC brand to become synonymous with practical, solutions focused, high quality tax advice and excellent client service. Having recently introduced a growth share scheme to allow our staff to share in our success, we are now also keen to do more to give back to the local community, through CSR and charitable efforts.

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We give sincere thanks to our Sponsors, Members & Supporters over 2021 and wish you all the best for Christmas & New Year.

See you on the road in 2022!

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DINNER DESTINATIONS

FOR 2022 LONDON - 24 MARCH GENEVA - 17 MAY JERSEY - 14 JUNE LONDON - 16 JUNE ISLE OF MAN - 23 JUNE ZURICH - 15 SEPTEMBER GUERNSEY - 29 SEPTEMBER MANCHESTER - 12 OCTOBER MIAMI - 20 OCTOBER DUBAI - 3 NOVEMBER SINGAPORE - 15 NOVEMBER LONDON - 24 NOVEMBER

Book tickets at www.pcd.club

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Divorce Proofing Trusts A Step too Far?

Damian Evans, Partner

George Yates, Associate

James Campbell, Partner

Representation re The V Trust The W Trust amend the terms of the Trusts to mitiThe X Trust and The Y Trust [2021] JRC 208 gate the risks of further litigation for the

benefit of current and future beneficiaries.

Introduction

The trustees of four trusts, known as the Y, V, W and X Trusts (together the Trusts) approached the Jersey Royal Court (the Court) to seek its blessing in respect of a momentous decision to (i) exclude from the beneficial class the future spouses, widows and widowers of beneficiaries of the Trusts and (ii) to establish a separate trust in which spouses, widows and widowers would be included in the beneficial class. The Trusts had been subject to a history of litigation involving wider family members and it was in this context that the trustees of the Trusts (the Trustees) sought the Court’s blessing for its decision to

Although the judgment is focused on the role of the Court in blessing a trustee’s momentous decision, the judgment also clarifies the relevant considerations for a trustee when exercising a power of exclusion. Fundamentally, any trustee exercising a power of exclusion needs to have properly taken into consideration the interests of those being excluded, otherwise a decision to exclude is vulnerable to being struck down.

The judgment also highlights some of the practical difficulties for trustees and their legal advisers when seeking to “divorce proof ” a trust structure against future claims by spouses of beneficiaries on any future divorce. In this case, the proposed steps to “divorce proof ” the structure removed a large degree of the flexibility of the trusts to meet chang-

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ing circumstances and crucially left a number of key questions unanswered.

If trustees and their legal advisers are looking to protect a trust or trusts against the possibility of future divorce claims then the proposed structuring steps must be carefully considered and, if a blessing of the Court is sought to the momentous decision, then the full rationale for the structuring steps needs to be presented to the Court.

Facts

The Trusts were established for the benefit of a husband (B), wife (C) and their two children (D and E) and their remoter issue and future spouses. As such the Trustees were bound to consider the interests of B,C D, E and all of the unborn remoter issue and unascertained and unborn future spouses when making its decision regarding the amendment to the Trusts.

The amendments to the Trusts proposed by the Trustees were motivated by a desire to mitigate the risk to the Trusts of future litigation. It was considered that claims brought against the Trusts in the context of matrimonial litigation presented the greatest risk. The Trustees instructed English counsel (Counsel) to advise on steps proposed to protect the Trusts. The opinion provided by Counsel advised that future spouses should be irrevocably excluded from benefit under the Trusts and that the power to

add beneficiaries to the Trusts should also be removed. This advice was provided with regard to the powers of English matrimonial courts and in particular with respect to the risk of an English court deeming the Trusts to be so called “nuptial settlements”.

In addition to the exclusion of future spouses, widows and widowers, Counsel advised that an additional trust should be established under which such spouses, widows and widowers were not excluded from the beneficial class.

The principle purpose of this separate trust was to set aside certain assets that could be used to satisfy pre-agreed nuptial agreements without bringing the initial Trusts within the scope of any potential matrimonial settlement. This separate trust was to be funded with a significantly lower financial value than the existing Trusts.

The Law - Blessing a Momentous Decision

The case of Representation of Otto Poon Trust [2015] JCA 109 sets out the well-established test for the Royal Court to follow when considering the blessing of a momentous decision. This test can be briefly summarised as requiring...

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To read in full click here

2021: The year ESG investing became mainstream

by Michael Strachan, Managing Director | IAM Advisory

ESG, the tectonic plates are shifting to ensure that in 2021 ESG has become mainstream.

Fund Managers

ESG, Environmentalism, Responsible Investing, Sustainability, and the myriad of associated acronyms, which are only increasing after the COP26 UN International Climate Conference, can make it complicated to understand the ESG landscape. It can be useful to look at the bigger picture, and in doing so one is led to the conclusion that despite the complex and systemic nature of solving the many challenges within

Unsurprisingly, within the ESG investment approach, there is considerable focus on climate, simply because this is the biggest and most immediate problem. As an investment advisor, we help investors to structure, manage and control their investments, thereby meeting a wide range of fund managers and products for private investors. While fund managers have been, and continue to be criticised for facilitating investment into fossil fuel-based investments, the truth on the ground is that, as an

“IAM Advisory was delighted to be a sponsor of the most recent PCD Dinner in Guernsey.

We found it was an extremely useful format which provides really effective practical networking, allowing colleagues to meet other experts in the private client environment.

Our sponsorship allowed us time to address the dinner guest, while benefiting from PCD’s social media, thereby extending our reach WATCH GUERNSEY HIGHLIGHTS beyond our own network.”

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industry, they have made huge strides in the past three years to incorporate ESG principles into specific products.

In doing so, they demonstrate their deep thinking about how to identify the emerging innovations that will support the transition from a brown to a green economy and how to avoid the resulting risks. The industry is well ahead of the regulators in this regard. Most major investment managers now have firm-wide sustainable investment approaches, realising that the risks and opportunities will apply to their entire portfolios .

Regulators

Investors

Investor surveys demonstrate that there is a clear appetite for doing good with their investments. It is interesting to note that asset owners are nevertheless still some way behind, with demand not keeping up with the range of products on offer. Explanations for low ESG related portfolio take up include “Clients have not raised this” and “too much risk of intergenerational disputes”. There are also concerns about the impact on investment returns or approaches that curiously treat ESG like a diversification strategy by allocating 5-20% to the area.

Our approach as investment advisors is that investors are either in or out. We believe that owners are catching up as they increasingly realise that there are significant risks to investment returns and reputations in not properly addressing ESG. It is no longer a tick box exercise to feel good. Moreover, there is a risk of missing out on investment opportunity in a time of major disruption and exposure to exogenous factors that are as yet difficult to discern (such as carbon tax, orphan assets, waste and plastic taxes).

In general, regulators have been behind the curve. Companies are innovating and providing investment opportunities well ahead of the regulatory environment. Investment risks from stranded assets will be evident when the regulators catch up. Forward thinking companies are pushing the regulators to create a level playing field when they compete against companies who pollute and extract with no regulation or cost.

While the regulators have taken some first steps, membership organisations such as the UN PRI and the newly created ISSB are leading the charge.

ESG performance and impact Perhaps the largest drag to acceptance But the problem is that these approach- of ESG investment principles... es are not consistent with one another or internationally, and it is questionable To read in full click here to what extent they have teeth.

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QUIZ

Quiz Cryptic Cartoon: Traditional festive game

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