Trusts can be many things. Well run trusts can provide long-term inter-generational asset protection. When the pie does not get split on the death of each generation, there can be greater potential for wealth generation. Trusts are also generally very private. Trust ownership is not noted on land titles or in the Companies Office. But will this continue to be the case?
This week France announced that the register of beneficial ownership of trusts that was established in 2013 will soon be made public. See “France’s trust ownership registry to be opened to the public.” Also see Creation in France of a Public Register of Trusts.
The French trusts register was established in December 2013 to address “tax fraud and serious economic and financial crime.” Following the establishment of the register trustees are required to make annual or event-triggered reports to the tax authorities if a trustee, settlor or a beneficiary are French tax residents, or if any of the trust assets are located in France. Failure to comply is punishable by a fine of at least EUR20,000, or 12.5 per cent of trust assets.
In the wake of the Panama Papers matter increasing scrutiny of trusts must be expected. One practical response might be to review trust beneficiaries (where this is possible) to consider what the consequences of public disclosure might be.
The matter is complex and their are many considerations. The reality is, is that the times, they are a changing and it will be wise for many to guage the direction the wind is taking and to consider the options.