Caroline Garnham
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Understanding how a trust can protect wealth
Mohammed has five children, one wife and lives in the Middle East. He built up a fortune on oil related businesses
Many years ago he had been told by a man in the desert that he would live to an old age and therefore was slow to put in place a trust for his business empire worth many billions of dollars.
To his mind the primary purpose of the trust was the smooth transition of his empire to his children – he did not see it as protection for his considerable wealth
Then his father in law died, and his brothers in law started an action in New York and to sue him for fraud.
They were successful and took the order to the Cayman Islands which was then successful in freezing his assets worldwide.
Over the next ten years he had his passport removed, the banks withdrew their facilities and he lost four fifths of his fortune.
If he had set up a trust when I advised, his wealth would have been protected and he would have saved himself and his family years of misery.
Assisting with a succession plan
My client, Maria was a beneficiary of a Liechtenstein Trust set up for her and her children by her famous actor husband.
The trust was for her four children and thereafter for Maria to the extent that she needed funds to maintain her standard of living.
Unbeknown to Maria, a banker at the Liechtenstein bank which managed the trust, stole the financial details of the clients of the bank and sold them first to the German tax authorities, and then to the British, and others.
The UK tax authorities used this information to pursue the clients of the bank for tax including Maria
Maria first took the matter to a lawyer who spent the next two years arguing with HMRC that it had no basis for recharacterizing the trust.
She finally took the work away from the lawyer and took it to an accountant who had been a former HMRC inspector who accepted the recharacterisation and persuaded her to pay millions in tax. I was brought in to work on a succession plan for Maria and her children thereafter
Regularising business and personal assets
My client Jo had a trust in Guernsey. He did business the ‘old fashioned‘ way.
He used his children as nominees as well as his advisers to hold his business interests.
I was in the process of ‘regularising‘ his business and personal assets, so it was clear who owned what and for whose benefit, when he unexpectedly and suddenly died in 2006.
Of course, the children who had ownership of considerable and valuable business assets claimed that they held them beneficially whereas their siblings argued that in most cases the ownership was merely in name only.
As you can imagine the dispute could not be resolved and is still ongoing with the only beneficiaries not being the children or charities, but the professionals involved in fighting the case which is depriving the estate of millions – a modern day Jarndice v Jarndice – see Dickens‘ Bleak House!