Private Client Update: 2015 Review and 2016 Forecast

Todd Beutler, Foreign Legal Consultant, DLA Piper Hong Kong

To get an overview of the major private client-related developments in 2015 and a prediction of how the landscape may shift in 2016, Hong Kong Lawyer reached out to Todd Beutler, a foreign legal consultant at DLA Piper Hong Kong, who represents US, Asian and European companies with multinational operations on tax and corporate matters, as well as regularly represents clients in tax controversy matters and fiduciary litigation.

2015 Review

For international tax, trusts and business succession for ultra-high net worth families, the biggest developments in 2015 include: 

  • The growing trust market in Hong Kong with the prior year's modernisation and improvement of Hong Kong trust law.
  • The growing trend away from nominees and other fraudulent "hidden" or "secret" structures in favour of transparent structures that comply with the law.
  • A growing awareness of the penalties for violating tax and regulatory laws based on reported prosecutions in the US, Asia and Europe, including China's crackdown on graft.
  • Major changes in the law affecting global private wealth include tax and property law changes making it more difficult or expensive to acquire residential real estate in popular locations like the UK, Australia, Hong Kong and Singapore.
  • In Asia, and globally, continued and escalating fights among family members over the control of family fortunes serve to highlight the need for proper lifetime planning. There were also numerous divorce-related attacks on trusts, foundations, companies and other structuring misused to hide wealth from one spouse.

Looking Ahead to 2016

In 2016, one of the biggest developments will be the effect of implementation of Common Reporting Standards (“CRS”) and increased information exchange overall, coupled with FATCA. Will the wealth being stashed illegally in Asia and elsewhere finally come to light with increased civil and criminal enforcement actions against recalcitrant taxpayers? Will there be enforcement action against the numerous enablers in the market, who encourage taxpayers to cheat and otherwise defraud tax authorities?

With billions passing from the senior generation, will the junior generation engage in proper planning or embrace failed strategies based on nominees, lack of transparency, and other opaque planning? Regardless fighting among family members will increase and there will be more and more court cases in the traditional trust jurisdictions. The prevalence of divorce will lead to further attacks on improper offshore planning as spouses fight over hidden wealth.