World trend for services dedicated to family assets has evolved progressively in the last few years; if previously the requests to set up trusts were focused on opacity, now the main interest is the family need for planning and protection.

OPACITY vs COMPLEXITY

Substantially the purpose of the “old” asset protection services was almost exclusively an attempt to conceal the assets from national or residencial jurisdictions. Today, with the help of the Commo Reporting Standard agreements “CRS” this world of opaque services has come to an end.

Regardless of its recent popularity, the increasingly globalised families need to access international cross boarding services has grown in order to find answers that guarantee:

  • Concentration and simplification in the administrative and legal management of assets located in several different national jurisdictions;
  • The creation of “family offices/ management centres”, also from a fiscal point of view, that can guarantee a legitimacy and sustainability with regards to the relevant national administrations of the founders, beneficiaries and respect properties located in “captive” jurisdictions from a fiscal point of view;
  • The possibility to regulate the legal relationships amongst extended families, with several branches, which are divided into different jurisdictions;
  • The lack of international agreements or effective transnational rules, even among European counties, concerning generation changeover taxes, families must plan for their inheritances in advance to avoid jurisdictional conflicts and double taxations;
  • Furthermore, even if many countries recognise same gender couple’s rights, the protection and generational changeover in these cases represent a challenge to face with foresight.

This evolutionary trend for the demand of complex services is particularly evident in the Mediterranean and “Latin” world: traditionally “the head of the family” has always managed the generational changeover exclusively from a national domestic point of view, and, basically, with a single-family branch. Today, thanks also to transfers linked to economic activities, study or lifestyle choices (often towards the United Kingdom, the United States, or some European countries such as Monaco or even Italy) the assets have gradually become internationalized and therefore also the administrative and legal problems related became complex and difficult to manage in a single jurisdiction.

Inspired and enriched by the Italian experience, mainly developed within the association “Trust In Italy” and in notarial firms, since 2005 the Republic of San Marino has adopted a very linear model but simultaneously very complex and effective, focusing on family assets and its handover towards the descendants: while in Anglo-Saxon countries the trust was created as a legal institution to manage various economic and financial aspects, in the “Mediterranean” model the focus of regulation and practice is UNIQUELY THE FAMILY AND ITS ASSETS.

TRUST IN SAN MARINO

FAMILY COMPLEXITY

Today families with international characteristics, require instruments of a new complexity, able to combine the attributes of the institutions conceived in the “Latin” template with the peculiarities of assets with elements of crossborder situations, and in particular:

  • Planning instruments must be based on a clear, linear LAW that focuses only on the family and its needs.
  • The decline of opacity has led to a progressively growing demand for “control” of these instruments, both by the private individuals involved in their foundation and by supervisory bodies, with the help of administrative, vigilance and compliance structures, as well as judicial institutions, aim to protect the rights of the families involved.
  • Any instrument must have legitimacy and credibility from a fiscal point of view: as well as clear and precise legal rules, the new planning instruments must be regulated from a fiscal point of view, mainly with a “SUBJECTIVATION” of the same, which allows, where possible, their international recognition, since they may be qualified as a PERSON RESIDENT in a specific tax jurisdiction, which is now virtually impossible without specific legislation or for the old off shore systems.
  • Financial intermediaries, and banks in particular, don’t rely on non-transparent systems, very difficult to legally evaluate from the risk management related to the legal and fiscal aspects.