If your family is global, your estate planning should be too. Preserve your assets by setting up international trusts for your loved ones.
In today’s increasingly interconnected world, blended families are on the rise, with children often spread across multiple countries. As a result, managing a family’s estate and ensuring their long-term goals are met can be a challenge.
The situation is further complicated by complex family relationships, international boundaries and the need to comply with the legal and tax rules of multiple jurisdictions. Navigating this intricate landscape requires careful planning, expertise and a deep understanding of the laws and regulations governing estate organisation across countries.
One example of cross-jurisdictional wealth planning that was managed at RBC is a family who had members and professional advisers located in Switzerland, Costa Rica, Canada and the U.S.
“In this example, the family originally built its wealth in Switzerland. The son of the original wealth creator inherited the estate, then significantly grew his inheritance through astute investing while living in Canada, before then moving to Costa Rica,” says Chris Nutter, director, Fiduciary Specialist Team at RBC Wealth Management Europe. “The son had a daughter in the U.S. from his first marriage and had a second marriage in Costa Rica, thereby creating a global blended family.”
“When the son’s health started deteriorating, he wanted to ensure he had succession plans in place to distribute his assets fairly,” says Nutter. “He wanted to discuss settling a trust with assets held by RBC Wealth Management for the benefit of his daughter in New York. His plan was to leave all other assets to his second wife in Costa Rica. RBC worked with the son’s advisers to facilitate a solution, whereby Canadian assets were settled into a Jersey trust for the benefit of his daughter.”
“This involved legal and tax experts in the U.S., Costa Rica and Canada. The key to successful implementation of the solution was to ensure the son and RBC were compliant in each of the three jurisdictions. For this case, RBC engaged a UK-based law firm that had offices across the U.S., Europe and Asia-Pacific and who were therefore well placed to coordinate the requisite advice across all three jurisdictions.”
Families are increasingly global and therefore the need for wealth solutions that help to efficiently manage their wealth across borders, while allowing them the flexibility that they need to be mobile, is essential.
“It’s not uncommon for children of global families to attend college outside of their country of residence, for example in the U.S. or Canada, following which they often establish careers and residency in those countries. In such cases, there may be use for a U.S. domestic trust to manage the passing of wealth into the U.S., or in the case of Canadian resident beneficiaries, the use of offshore trust structuring can be an effective way to pass wealth into Canada,” says Elizabeth Epifanio, director, Fiduciary Specialist Team at RBC Wealth Management Europe.
A trust structure is often preferred to other wealth structuring vehicles for several reasons, particularly for preserving assets or wealth for future generations.
For estate planning purposes, wealth creators are usually keen to make their wealth accessible to family members around the globe, both during their lifetime and beyond. In many instances, as part of their estate planning considerations, they need to take into account that passing wealth directly to their heirs may be overwhelming for their inheritors, and also on that heir’s death there are likely to be estate duties or tax to pay, which reduce the value of the family wealth.
For these reasons, many wealth creators like the idea of a dynastic wealth structure such as a trust to manage the passing of wealth to the next generation. These structures not only reduce the anxiety of inheriting large sums of money, but they also ensure proper stewardship of the wealth and support global tax compliance for the family through the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS).
Working with a professional trust service provider that can help facilitate the creation of trust structures in more than one jurisdiction can be hugely beneficial. Referring to the example above, where children move to the U.S. or Canada for schooling only to remain there to start their careers and families; establishing domestic structures that complement the global structures that manage their family’s estate is hugely advantageous. It ensures that individual needs are catered for without adversely impacting the wider family wealth planning arrangements. It should be noted of course that all countries view the use of trusts in different ways; for this reason, working with advisers to ensure any proposed structure is appropriate and robust is paramount.
Managing the complexities that come with estate planning for global blended families can be a challenge, however working with a professional trustee or wealth manager, in conjunction with wealth planners, tax and legal advisers, can ensure robust management, especially where structuring is recommended as part of the wealth solution.
This article was updated in Dec. 2024.
We want to talk about your financial future.
This publication has been issued by RBC’s Wealth Management international division in the United Kingdom and the Channel Islands which is comprised of an international network of RBC® companies located in these jurisdictions and includes RBC Europe Limited and Royal Bank of Canada (Channel Islands) Limited. You should carefully read any risk warnings or regulatory disclosures in this publication or in any other literature accompanying this publication or transmitted to you by RBC’s Wealth Management international division.
This publication has been compiled from sources believed to be reliable, but no representation or warranty, express or implied is made to its accuracy, completeness or correctness. All opinions and estimates contained in this report are judgements as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. This report is not an offer to sell or a solicitation of an offer to buy any securities. Past performance is not a guide to future performance, the value of investments and income arising can go down, future returns are not guaranteed, and an investor may not get back the amount originally invested. Countries throughout the world have their own laws regulating the types of securities and other investment products and services which may be offered to their residents, as well as the process for doing so. As a result, any securities or services discussed in this report may not be eligible for sale in some jurisdictions. This report is not, and under no circumstances should be construed as, a solicitation to act as a securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. Nothing in this report constitutes legal, accounting or tax advice or individually tailored investment advice.
This material is prepared for general circulation and does not have regard to the particular circumstances or needs of any specific person who may read it. The investments or services contained in this report may not be suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about the suitability of such investments or services. To the full extent permitted by law none of the entities which comprise the international division of RBC Wealth Management nor any of their affiliates, nor any other person, accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. No matter contained in this document may be reproduced or copied by any means without the prior consent of RBC Wealth Management.
Clients of RBC Europe Limited may be entitled to compensation from the UK Financial Services Compensation Scheme (FSCS) if it cannot meet its obligations. This depends on the type of business and the circumstances of the claim. Most types of investment business are covered for up to a total of £85,000. For further information about the compensation provided by the FSCS scheme (including the amounts covered and eligibility to claim) please refer to the FSCS website FSCS.org.uk. Please note only compensation related queries should be directed to the FSCS. Royal Bank of Canada (Channel Islands) Limited is not covered by the UK Financial Services Compensation Scheme.
RBC Europe Limited is registered in England and Wales with company number 995939. Its registered office is 100 Bishopsgate, London EC2N 4AA. RBC Europe Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Royal Bank of Canada (Channel Islands) Limited (“the Bank”) is regulated by the Jersey Financial Services Commission in the conduct of deposit taking, fund services and investment business in Jersey. The Bank’s general terms and conditions are updated from time to time and can be found at https://www.rbcwealthmanagement.com/en-eu/terms-and-conditions. Registered office: Gaspé House, 66-72 Esplanade, St. Helier, Jersey JE2 3QT, Channel Islands. Deposits made with Royal Bank of Canada (Channel Islands) Limited in Jersey are not covered by the UK Financial Services Compensation Scheme. Royal Bank of Canada (Channel Islands) Limited is a participant in the Jersey Bank Depositors Compensation Scheme. The Scheme offers protection for ‘eligible deposits’ up to £50,000 per individual claimant, subject to certain limitations. The maximum total amount of compensation is capped at £100,000,000 in any 5 year period. Full details of the Scheme and banking groups covered are available on the Government of Jersey’s website http://www.gov.je/dcs or on request.
Investment services offered by the Bank are not covered by an investor compensation scheme as there is currently no such scheme operating in Jersey, however ‘eligible deposits’ held pursuant to investment services may be protected under the Bank Depositors Compensation Scheme described above – for more information see the Bank’s general terms and conditions. Some of the products that the Bank might recommend to you could be registered overseas and may be covered by a local compensation scheme. Your investment counsellor will provide you with the details of any overseas compensation schemes (where applicable) at the time of making an investment recommendation.
Copies of the latest audited accounts are available upon request from the registered office. ® / ™ Trademark(s) of Royal Bank of Canada. Used under licence.