Platinum Financial Services are affiliate
members of the Society of Will Writers
One of the biggest objectives set by today’s investors is to make sure that their portfolios work hard for them at all times and through all market conditions. This is made possible by sophisticated strategies and fast moving markets but very often investors overlook one very important factor that may have a damaging or even negative effect on all of the good work and results achieved along the way.
Keeping hold of the wealth created is just as important as creating it in the first place – in fact some would argue more so. It is for this reason that serious thought should be given to the correct holding structure of any portfolio at outset and that additional consideration is given to ensure that assets are distributed correctly and in line with their owners’wishes in the event of a catastrophe, or even worse, death.
Platinum Fiduciary is our specialist asset protection division which was established to make sure that the assets of clients and their loved ones are appropriately sheltered and efficiently passed to their nominated beneficiaries. With the above in mind we offer three levels of assurance which start with the most basic and fundamental of documents – the Will.
Three Steps to Financial Protection
Step 1: Make a Will
Make a Will for all your local and international assets. No matter the size of your estate everyone should have a valid Will.A Will is a legally recognized document that allows you to instruct somebody else(your Executor(s)) to distribute your assets in accordance with your wishes and ensure that your children are lovingly cared for when you die.
If you die without a Will then asset distribution will be held up by the government of the country in which you die and your assets will ultimately be distributed in line with the law of that country rather than in keeping with your wishes. This delay will cause unnecessary burden, financial hardship and stress for your loved ones. Furthermore your children may be taken into care rather than being looked after by a friend, a loved one or a relative as you would have wanted.
If you are married or own assets jointly with somebody outside of your immediate family then your spouse and/or partner should also make a Will.
In addition to a Will your Consultant will talk to you about the need for a Power of Attorney (POA) and a Living Will which take care of ‘end of life’ decisions about care, medical treatment etc. when most needed. These enduring POA’s comes into effect if you are unable to make decisions for yourself and remain in effect until you die.
Once you have made a Will and signed POA’s, your basic asset protection needs have been taken care of and youare on the way to making life so much simpler for your loved ones. The next step of asset protection is to consider the creation of a Trust.
Step 2: The use of a Trust
Assets such as investment portfolios and property may be put under a Trust. This Trust is legally owned by the Trustees, who you appoint and give direction to. With you as the Settlor, and whoever you want to have the asset as the ultimate Beneficiary/Beneficiaries, this structure will guarantee that your assets are passed to the rightful heirs and avoid the many potential problems that often arise as a result of insufficient planning. The Trust can also make sure that your assets are kept away from governments, lawyers, ex-partners and prying eyes. In summary a Trust allows a good measure of asset control and protection as well as the mitigation ofInheritance Tax(IHT).
Basic examples of this are: assets being held in Trust for your children until they reach the age of 18 whilst supporting their higher education in line with the terms of your ‘expressed wishes’ to the Trustees. An income may be paid to your widow, while holding unsavory predators at bay.
In addition, you may use your Trust to reduce home-country tax liability by putting appreciating assets into Trust before they breach higher income tax or capital-gains tax bands.
Trustees come steeped in tradition and are oftenlarge financial groups established hundreds of years ago. They oversee, look after and direct billions of Dollars’ worth of client assets, and are likely to be around for generations after you and your heirs. Confidentiality and investor protection are just two of the phrases closely aligned to the word Trust.
The third and final part of the Asset Protection jigsaw is the consideration of a Hong Kong ORSO
Step 3: Consider establishing a Hong Kong ORSO
ORSO or Occupational Retirement Scheme Ordinance offers a tax exempt Hong Kong pension vehicle which works in a similar way as the Trust described above. The ORSO goes even further and is a solution for anybody who has UK or OECD assets.
Created under British rule in 1993, the ORSO is recognized and quoted on Her Majesty’s Revenue & Customs (HMRC) website as a tax exempt pension. The ORSO is able to hold UK and overseas property and exempt it from Capital Gains (CGT) and Inheritance Tax (IHT) which is now more crucial than ever following the introduction of CGT from April 2015 for anyone who owns UK investment property. The UK is also bringing in an annual tax on properties valued over £500,000 and owned by a non-natural person. In addition, UK IHT, which is charged at 40% on estate values over £325,000, can be legitimately mitigated by using an ORSO.