Singapore-based Lawyer Tan Woon Hum Surveys Key Trends in Estate & Legacy Structuring in the UAE

Is the UAE evolving well to encourage more wealthy clients to conduct their wealth and legacy planning in the region? What are the multi jurisdiction solutions favoured today? What role should the younger generations play in this type of planning? Is the proposed corporate tax likely to help or hinder the development of wealth and succession structuring in the Middle East? What new regulations of structures are available locally to help boost the market? Tan Woon Hum, Partner, Head of Trust, Asset & Wealth Management Practice at Shook Lin & Bok in Singapore, and covering the Middle East, offered his insights.

Tan is a partner with major Singapore law firm Shook Lin & Bok and has garnered more than 26 years of experience as a lawyer. He heads the Trust, Asset & Wealth Management practice and is widely regarded as one of the market leaders specialising in investment funds, REITs, trusts and private wealth.

He advises numerous fund managers, wealth managers and EAMs, setting up Singapore and Cayman funds, getting CMS licences, RFMC & VCFMC approvals, setting up family offices and private trusts, including Sections 13O & 13U (formerly known as 13R & 13X) structures. He holds a law degree as well as an MBA (Finance). He also advises clients in the UAE, or involved in the UAE, and advises many of them on connectivity and solutions that might span both Singapore or Asia and the Middle East.

Tan explained the firm mainly advises the professional investment and wealth advisors as well the EAMs or IAMs, independent asset managers, the private banks and the trustees. And he reported they also help the family offices, and UHNWIs and private clients as well. He said the institutional side covers discretionary and non-discretionary mandates, and they might set up funds, private label structures, and also family offices, family trusts, and which may use Private Placement Life Insurance, or PPLI, as well.

“Clients sometimes set up a multi-family office and then help single family offices that do not want to set up full team and hire a full team on their own,” he explained. “They might often let the second or even third generations into the offices to learn the ropes, like apprentices, enabling them to move on later and help the patriarchs and matriarchs watch over the family assets and their core investment strategies.”

He explained that when a family’s assets are more than roughly USD200 million, the single family office is more viable, and more sophisticated structures are put in place, involving perhaps multiple private family funds either using the Cayman segregated portfolio companies or the variable capital company (VCC) structure from Singapore, often then segregated legally for different members, and different branches of the family.

“Amidst all of this, we are seeing a lot more onshoring, as people seek to shift their offshore structures and vehicles to more transparent, compliant, and robust onshore structures to comply with the new substance and other regulations,” he explained.

Tan expanded on this line of commentary, noting that these days clients who think there is still somewhere to hide their wealth are mistaken.

“If you are not structured in a transparent manner already, you will need to be very soon, because there is nowhere to hide that’s safe, so let's not even go down that path,” he cautioned. “What worked 10 to 20 years ago over multiple jurisdictions, with hidden trusts, and nominees and tonnes of SPVs, that's no good because from a law firm’s perspective that's a red flag straightaway. So, from our perspective, we might either reject those types of clients, or reject the structure or have to conduct enhanced due diligence.”

But he also remarked that clients can remediate their planning and structures, working closely with good and experienced lawyers and bankers and a team of professional advisors to cover all the bases.

“We can't help what's in the past, but if we can fix it for the future, we will try to fix it,” he said.

“We always advise the clients to understand that we must make everything robust, compliant and future ready. It is not only the substance rules to consider, and those keep evolving, but also the key tax and other issues. Pay to Caesar what is due to Caesar, and then structure transparently and compliantly to protect the assets for the family’s future.”

Tan added that in recent years, more and more of the clients from Europe and Asia, and including Greater China and Indonesian Chinese clients, ask him to help them find viable solutions so that they can pay their corporate taxes, perhaps in Singapore or elsewhere, so that they are comfortable in being completely compliant. “They are happy, for example, if they are declared Singapore tax residents, they are happy to declare and pay their taxes and rest easy in being fully compliant,” he said.

He concluded his observations by remarking that as a prominent law firm they strive to offer as much empathy as possible to their clients and help the families open up to conversations that might in the past have been considered off limits or taboo. “It is heartening to have these types of conversations,” Tan concluded, “as this is an important part of heading towards the right types of structures and plans. In the past, such conversations would have been much more difficult.”