A gif of man in an office called Panama Privacy Protection. Characters arrive and open a safe full of trust deeds

Trusts – Ironically Something That Is Not That Trusted by the Public.

Posted on: 29 Jul, 22

In reality a concept that no one understands very well. Some of us have them. Some of us don’t even know we have one. But whatever the situation, you now need to declare them on a new Trust Register. Oury and Clark are on the case to unriddle. What is a Trust, and why this new Trust register is something you need to be aware of.

oury angry

It’s over God damn it

clark angry

What’s “Over”?

oury normal

Our British ability to be completely transparent, yet utterly secretive at the same time. The Swiss just straight up admit it – that they hide people’s money and “No. we won’t tell you whose it is”

clark rolls_eyes

Oh yes … “”non. Nous ne vous dirons pas de qui il s’agit”

oury normal

Well, they could be Swiss German or Swiss Italian.

clark positive

Oh yes… well the Italian would be “no. Non ti diremo chi è”

oury normal

Well done. You can officially use google translate. But yes. Unlike the Swiss who somehow have managed to project this squeaky-clean image through filling our airports with triangle chocolate and Swatches. The Brits had a more cunning plan – we will be absolute transparent. Except if it’s in a trust – which in that case – no you can’t find out anything.

clark confusion

What the hell is a trust Clark? I pretend I know. But I don’t.

oury normal

Ultimately my financial friend it’s a contract. Usually a document signed in deed (means it’s witnessed) that says … I am taking this asset, or money or whatever I own (the “settlor”), and I am putting it under the trust of these three people (“trustee”) who need to look after it for the benefit of these other people (“beneficiaries”).

clark positive

Oh nice. It’s like a complicated IOU note. Or the pub version would be… I am not taking my wallet while I go to the shops for some cigarettes. I am putting it in the trust of my friend Terry who is going to buy a round for any guests that arrive while I am busy angrily shouting at google for leading me to a corner shop that closed during Covid.

oury positive

Exactly. When you return you expect your wallet back in your scenario, which is actually very similar to how they were used when they were invented in English Law. During the Crusades in the 12th and 13th centuries – when a landowner left to fight, he would put his lands in the trust of a keeper, who got the income, and had to look after the land, but when he got back obviously, he wanted his land back.

clark nervous

Did they get it back?

oury normal

No, often not. They didn’t because English law at the time said they were now owned by the trustee. So, they had to petition the King, and get referred to the Lord Chancellor, who just decided as he wished. This went on for a while until people got pissed enough, that something was done – and the concept of “equity” was born in English law.

clark confusion

Didn’t we nick that of Aristotle ?

oury normal

I am pretty sure everything the Greeks did we plagiarised – including the word plagiarised!

clark confusion

Oh right. I thought trusts were invented by rich MP’s to be able to leave money to their illegitimate children because everyone had mistresses back then…

oury positive

Ah very good – that’s actually known as a “Secret trust” and is to be fair, a fairly reasonable use for them. You might not agree with the Mistress, but ultimately what’s done is done, and it isn’t fair either that someone wasn’t able to leave money to their children because they would have got into trouble with their other half. Life isn’t all peaches and cream, and sometimes you have to burn gasoline to build your future dreams – as someone once said.

clark doubt

Who said that?

oury blush

Oh okay, I just came up with it – but you take my point?

clark normal

Yes. Basically, trusts are a way of taking something you have, and of putting some people in charge of ‘sort of’ giving it to someone else in the future, but not necessarily being able to get it back or know whether they will get it.

oury normal

Pretty much. They are unpredictable. A good analogy is you are throwing a ball. The ball representing the asset or money. You can choose where to throw it, you can aim really carefully. But the moment it leaves your hand it’s out of your control. You have these trustees there to try and make sure it goes where you wanted, guiding it in the air if you like, but they are pretty limited and aren’t necessarily that good at the job.

clark positive

Nice. Okay – so I’m clear on a Trust. So, what’s happened? What’s “over” ?

oury angry

Well, somehow – all of the trusts that are out there – all of them – now need to be put on a register.

clark uncertain

Is that bad?

oury normal

Well, it’s probably fair enough ultimately, but it’s an absolute bloody nightmare to work out who has one. Trusts are just contracts. Sat in drawers, or not even in a drawer because it could be your grandmother set up an investment trust no-one knows about. In any case – forgotten about. How the hell are we going to know where they are, how many there are, and get people to put them on the register?

clark angry

Yeah, and guess who gets the blame if we haven’t registered it. Your friendly professional adviser. Who’s looking at this register anyway?

oury rolls_eyes

Well surprise surprise your friends at HMRC!

clark angry

HMRC ! Of course. I knew it ! Trusts must drive them mad, never knowing who actually owns anything. They must be loving this. Are you saying that if you don ’t put it on the register, HMRC could try and refuse that it existed?

oury normal

Well, it would seem unsurprising if that was the case. Ultimately, it’s a public register we believe. They are trying to get Britain squeaky clean because well, if you are not a country with common law (former colony mostly) – then you don’t have a concept of trusts.

clark uncertain

Europe doesn’t do trusts?

oury normal

Goodness no. Napoleon would have hated them. He wanted everything stamped and approved and controlled. They have no concept of them, they think they are some bonkers dodgy British thing like pickled eggs.

clark angry

Nothing wrong with a pickled egg. Do off shore territories need to follow these rules?

oury normal

It applies to overseas trusts if they have a UK tax charge, own UK Land and Property OR if they have a UK Trustee with business relationship with a UK Advisor.

clark angry

Woof what a strange rule – that just put some lawyers out of work in London

oury normal

Perhaps ! Anyway, it’s probably for the best the way public sentiment is on these things. But here is the thing. No-one is even talking about it in the press… the public is dead to it. Think how many messages there were about Brexit… and still no-one did anything … Now we’ve got to tell everyone to dig out their trusts deeds or be damned… You know sometimes I wonder whether we really even need trusts anymore, are they really a good idea at all?

clark normal

Whoa whoa – chill your boots Mrs Legal beagle. There are a couple of really important uses of trusts for tax…

oury confusion

Like what?

clark laugh

Well. That would be telling!

Disclaimer

We are but two fictitious characters throwing out ideas and comment to stimulate debate and collect information. As professional service firms, we are open-minded people and think independent thought and debate are essential to help us understand as well as navigate complex problems. By joves – doing business across Europe (and the world) is set to become a whole lot more complex in light of recent seismic political events. As businesses – we provide information and hopefully some wisdom – and we see this blog and its caricatures merely as a much more fun, perhaps slightly controversial, way of stimulating debate and collecting ideas. We’re searching for some true pearls of wisdom, and as we find them, we’ll share them with you.

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