Author: Alfred Liu

Next Generation Buyers – Supporting your family onto the property ladder

  • 7 March 2025
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Terraced houses in brick stand in a row, featuring black doors and white-framed windows. A street lamp with hanging flowers sits in front, and a sign reads "Shouldham Street W1".

You might like to think, as a parent, that having seen your son or daughter through school and university (often at huge expense) you can sit back and relax a little and plan for your own retirement. Unfortunately, all too often that is not the case and instead you face the next significant financial hurdle; helping him or her onto the housing ladder. While the current generation of 50-somethings might have been able to get to acquire their first property with minimal or no help from their parents that is now nigh-on impossible for the current generation, unless they are either extremely successful financially or are prepared to wait to buy their first home until they are in their mid to late 30s. So, the solution for those fortunate enough to be able to do so is to resort to the so- called “bank of mum and dad” or the “bank of family”.

For those who are considering embarking on that process what are the legal and financial pitfalls and how best should they proceed? This article seeks to provide some guidance on those points.

If parents (or grandparents) are going to assist with the purchase of a property, there are a number of questions that need to be considered before proceeding. These include: whose name is the property going to be in, how much do you trust them, what restrictions should you put on the title, if any, how are you/they going to finance it, can you or they get a mortgage, how do you minimise stamp duty and other taxes and, even, what happens in the event of their death, to name a few. Unsurprisingly there is no simple answer to any of these questions and no simple one-size-fits-all solution. Each family is likely to have its own circumstances. Having said that there are some general points and advice that can be given.

Ownership

Generally, if the purpose of the exercise is to help the next generation to acquire a property then it makes sense for the property to be in their name, whether it be in the individual name of one son or daughter or the joint names of siblings. By putting the property in their name you ensure that any increase in value accumulates to them rather than the parent, and if they are able to show it is their principal residence they will potentially benefit from the principal residence exemption from Capital Gains Tax (CGT). They may also benefit from the first-time buyer’s exemption from Stamp Duty Land Tax (SDLT). If they are able to obtain a mortgage the lender is likely to expect and require the property to be in their name.

But all this potentially comes at the price of a loss of control. Do you really trust your young and inexperienced son or daughter to have complete control over the property and to be able to sell it and dissipate your hard-earned savings without reference to you? Even if you trust them, what influence might they fall under from others? Similar questions do of course arise in relation to marriage where the solution may lie in a prenup agreement. Fortunately, in the case of property, a relatively easy solution is at hand in the form of a legal charge. While the parents may give part of the cost of the property to the son or daughter outright some or all of the funds can be provided, at least initially, by way of a loan. A loan does not necessarily have to bear interest, and probably would not do so in these circumstances. Over time the loan can be reduced or written off by further gifts from the parent. The existence of the loan will be noted on the legal title to the property making it impossible for the property to be sold or charged further without the consent of the parent.

An alternative might be for the parent themselves to purchase the property. Except where the children are very young this is unlikely to be so attractive. Any increase in value of the property belongs to the parent and is liable to CGT and/or IHT accordingly, and the parent is almost certainly going to have to pay the SDLT surcharge of 5% payable on the acquisition of second homes. While full control is retained and you will have succeeded in providing a home for your offspring you will not really have helped them to progress onto the property ladder.

Financing the Purchase

If your son or daughter has reached the stage where they are able to obtain a mortgage themselves then clearly it may make sense for them to do so. However, that is not easy for those who have only recently joined the labour market and is much more difficult for them than it was for previous generations. While mortgage companies are not supposed to take into account student debt when assessing eligibility for a mortgage, it is hard to see how they can ignore it and in most cases it seems that they do not. Consequently, anyone who has not been working for several years is going to find it difficult to get a mortgage and even when they do it may not go very far towards financing the purchase of the property, particularly if it is in London.

So how else might it be financed if borrowing is required? One solution may be for the parent to take out or increase the mortgage on their own property and then lend the money, back-to-back, to their son or daughter with or without an interest charge. While this may not be very tax efficient (the interest charges will bear income tax for the parent) it may be a convenient and possibly less expensive way of borrowing money. An alternative may be for the parent to be a co-borrower or guarantor but that is not as easy to organise as it once was.

Minors

What if your son or daughter (or one or more of them) is under 18, the legal age at which they can own property in their own name? Normally a parent or someone else will stand in for them as “bare trustee”, that is they hold the property as nominee for the minor and once the minor reaches 18 he or she can ask the trustee to transfer title to him or her. This may be the situation if, for example, the child has received an inheritance so has the funds but not the legal capacity to purchase a property. In itself this does not cause a problem were it not for a quirk in the SDLT legislation relating to the 5% surcharge. This states that if a property is purchased on behalf of a minor it will be considered for the purpose of SDLT to be acquired by the parent of that minor. That means that if the parent already owns another residential property anywhere in the world (which is very likely) the purchase will be treated as a purchase of a second home for SDLT purposes, and the 5% surcharge will be payable even though the minor does not have any other property held for them. In other words, an 18-year-old can benefit from not having to pay the 5% surcharge while a minor never can. With the correct structuring it may be possible to avoid this charge particularly if at least one of the children has already reached 18 by the use of legal charges. Alternatively, it may be best to wait until one or all of the children for whom the property is being purchased have reached 18.

Inheritance Tax Considerations

Any gift from parent to child is potentially subject to Inheritance Tax (IHT). Once the personal allowance (currently £325,000) has been used up, tax is charged on death at the rate of 40% with gifts made in the preceding seven-year period being brought into consideration. It is therefore quite easy to avoid the charge if gifts are made seven years or more before death, known as a Potentially Exempt Transfer (PET). The trick therefore is not to leave it too late; the later you leave it to pass on assets the greater the risk of a charge. In the context of assisting children with their first property purchase there should therefore be a good chance of avoiding IHT entirely, given that parents are likely to be in their 50s or 60s when the issue arises. It is also possible to take out life insurance which will pay the tax in the event of the donor’s death within the seven year period. Do, however, bear in mind that different IHT rules apply for those who are not UK domiciled and that the law in this area is currently changing.

Children who become the owners of property (or have other assets) should also make a will. There are many reasons why it is always a good idea to have a will but one of them is that it will prevent the deceased’s assets passing back to the parents on death, which is what happens if there is no will. It may be better for them to pass to a surviving sibling (note, different rules apply if the deceased is married).

A few final points

As said above there is no one-size-fits-all solution but here are a few points worth considering:

  • A gift to your child in their late 20s to help them get onto the property ladder may have more long-term benefits than a larger gift to them at a later date.
  • Plan for grandparents to skip a generation when deciding on who will inherit. There is less chance of a charge to IHT if money is passed from grandparent to grandchild rather than via a parent. And, sadly, the timing of a grandparent’s death may be at a time when a grandchild is ready to step onto the property ladder for the first time.
  • Early gifts are more likely to be successful in saving IHT.
  • You can’t take it with you!
  • And, finally, you probably don’t want your children still living with you when they are in their 30s!
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Labour presses ahead with non-dom abolition

  • 31 October 2024
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A round stone balances atop a larger sphere beside a beige, hollow ceramic sculpture. The background features a purple and yellow geometric pattern.

In her first budget held on 30 October, the new Chancellor, Rachel Reeves, confirmed that the government will press ahead with the abolition of the non-dom tax regime.

Draft legislation has been published setting out the detail of the new rules, which will apply from 6 April 2025.

The proposals are broadly in line with those announced by the previous government in March. The information released yesterday brings some clarifications, and significant further detail in relation to the reforms to inheritance tax (IHT).

Income and gains – the FIG regime

A new four-year foreign income and gains (FIG) regime will apply from 6 April 2025. Those who qualify for the FIG regime will benefit from a complete exemption from UK tax on their foreign income and gains, whether or not they remit them to the UK. Anyone wishing to avail themselves of the regime will need to declare their global earnings on a tax return that will need to be submitted to the UK tax authority (HMRC).

Eligibility for the new regime

The four-year FIG regime will be available to anyone in their first four years of UK residence, provided they have not been UK resident in the previous 10 years.

This means that those who are already UK resident will only be eligible for the new regime if they became UK resident on or after 6 April 2022 and were non-UK resident in the preceding 10 tax years. Subject to the residence criteria, the four-year FIG regime will be available to UK citizens and UK domiciliaries.

Trusts

The FIG regime will apply to non-UK resident trusts. Settlors who are within the FIG regime will not be taxed on the foreign income and gains of trusts they have created. Beneficiaries will not be taxed on distributions that are matched with income and gains of the trust while they are eligible for the regime.

Exceptions

Those individuals who are not in the FIG regime will be subject to income tax and capital gains tax (CGT) on their worldwide income and gains. Settlors will generally be taxed on the worldwide income and gains of trusts from which they can benefit. Currently, there are exceptions from the automatic attribution of income and gains for those who have funded overseas companies (including companies owned by non-resident trusts) where the avoidance of UK tax was not a reason for creating the structure. These exceptions – the so-called “motive defences” – will continue to apply although the rules of which the motive defences form part will be subject to government review in the course of 2025.

Transitional rules

There are two transitional rules for individuals who were already UK resident:

  • Temporary Repatriation Facility

The Temporary Repatriation Facility (TRF) will allow those who have previously been taxed on the remittance basis and who have unremitted income and gains to remit them and pay tax at a reduced rate. The TRF will be available for three years from 6 April 2025 (i.e., until 5 April 2028).

The reduced rates will be as follows:

    • 12% in the 2025/2026 and 2026/2027 tax years; and
    • 15% in the 2027/2028 tax year

The TRF will also apply to unremitted income and gains arising in non-UK resident trusts and non-UK resident companies before 6 April 2025, and also income and gains arising within such a structure that has been attributed to them before this date under the UK’s anti-avoidance rules. In addition, the TRF will cover pre-6 April 2025 income and gains within such structures that have not been attributed to the individual to the extent that the income and gains “matches” to benefits received by the individual during the TRF window. However, the TRF will not be available for distributions of post-6 April 2025 income.

  • Capital gains tax rebasing

This will allow current and past remittance basis users to rebase foreign assets to their market value as at 6 April 2017. This could reduce the chargeable gain if an asset is disposed of on or after 6 April 2025 and the individual is not eligible for the FIG regime.

This CGT rebasing will not be available to individuals who are already UK domiciled or deemed UK domiciled, or become so prior to 6 April 2025.

Inheritance tax

From 6 April 2025, a person will be within the scope of IHT once they have become a ‘long-term resident’ of the UK. Domicile will cease to be relevant. An individual will become liable to IHT on their worldwide assets once they have been UK resident for at least 10 out of the immediately preceding 20 tax years. This will be determined based on the existing residence rules – the statutory residence test (SRT) from the 2013/2014 tax year onwards; and the pre-SRT rules for earlier years.

UK situated assets and non-UK situated assets that derive their value from UK residential property will remain within the scope of IHT, regardless of other factors.

The “tail period”

It had previously been proposed that, once within the scope of worldwide IHT, an individual would remain so for 10 years after ceasing UK residence. That will be the case for an individual who has been UK resident for at least 20 years, but the “tail” period will be reduced where the individual has been UK resident for between 10 and 19 years, on a taper basis. For example, an individual who has been UK resident for 13 out of 20 tax years, will only need three years of non-UK residence to fall outside the scope of IHT.

“Excluded property” trusts

Buried in the budget announcements, there was some limited good news for non-doms with existing “excluded property” trusts. Currently, non-doms who settled non-UK assets into trust are protected from IHT on death. The government had announced previously that this protection would be lost. In response to widespread lobbying, the government has decided that excluded property trusts settled before 30 October 2024 should continue to be exempt from IHT on the death of the settlor.

Non-UK situated property held within a discretionary trust will no longer be excluded property where, and for so long as, the settlor is a long-term resident within the scope of IHT. If the settlor loses their long-term residence status, then the trust can reacquire excluded property status and this will trigger an exit charge for IHT. Settlements that currently have a UK domiciled settlor (under current rules) who will not be a long-term resident (under the new rules) on 6 April 2025, will be facing an unexpected exit charge. Many trusts will be in a situation where the settlor is non-domiciled (under current rules) but will be a long-term resident (under the new rules) and will become subject to the ongoing IHT charging regime with periodic and exit charges.

Commentary

The government has placed growth and wealth creation at the centre of its agenda. It has promoted the FIG regime as “internationally competitive”. The assumption seems to be that those who move to the UK to take advantage of the regime will remain beyond the four-year period and accept UK tax on their worldwide assets thereafter.

The appeal of what is (in effect) a four-year tax haven has drawn speculation. The obligation on those availing themselves of the FIG regime to report their global assets to the UK tax authority may add to the doubt.

The government appears to have heard at least part of the message that has been delivered over recent months. Subjecting existing UK resident non-doms to IHT at 40% on assets settled into trust under the current rules has been widely reported as a deal-breaker for those considering their options. While this was a step too far for many non-doms who were waiting for this clarification, it remains to be seen how those who are left will respond.

Next steps

We will be working closely with our clients and contacts to work out what the detail of the changes will mean to them and to their plans going forward.

Labour presses ahead with non-dom abolition

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Alfred Liu speaks to Citywealth on NextGens and bridging the generation gap

  • 23 April 2024
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Chair rows face large windows; outside, an aeroplane ascends over the airport runway. Sunlight floods the seating area, casting long shadows on the carpeted floor.

Private Client Partner, Alfred Liu, has provided his insight to Citywealth on how families and their advisors can bridge the gap between generations to transfer wealth successfully and harmoniously.

In the article, ‘The nexus of NextGen’, industry professionals discuss the key issues, and potential solutions, for connecting with the next generation of UHNW individuals. Alfred’s key takeaways are as follows:

  1. Generational Differences:
    • Advisers working with multigenerational families must be aware of deeply ingrained generational differences.
    • These differences can lead to intrafamily disputes and disharmony, risking the fragmentation and dissipation of family wealth.
    • Advisers should help families establish common ground, identify potential generational differences, and develop constructive ways to bridge the divide.
  2. Dynamic Wealth Transfer:
    • The “Big Wealth Transfer” should not be treated as a one-off event.
    • Viewing it as a process rather than an isolated event prevents complacency.
    • Strategies and frameworks must adapt to macro issues, geopolitical changes, and evolving circumstances.
    • The planning for wealth transfer should be dynamic, regularly reviewed, and capable of evolution.
  3. Next Gen Considerations:
    • Next Gens (younger generations) have distinct experiences and relationships with wealth compared to their parents or grandparents.
    • They are often more internationally mobile, exposed to diverse cultures, and seek independence.
    • Advisers must be sensitive to these differences and support families in avoiding disputes.

Alfred reminds readers that wealth transfer is a process not a single event, and understanding the psychology of Next Gens is critical during intergenerational transitions.

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Forsters promotes four Senior Associates in annual promotions round

  • 10 April 2024
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Two women sit and converse on sofas in a modern, open office space. A staircase with glass railings leads to the upper floor, with a person working at a laptop nearby.

Forsters, the leading London firm, announces today the promotion of four Senior Associates to new roles with effect from 1 April 2024.

The promotions are as follows:

  • Private Client Senior Associate Alfred Liu has joined the Forsters partnership
  • Commercial Real Estate Senior Associates Joanna Brown and Andrew McEwan are promoted to Counsel
  • Rural Land & Business Senior Associate Victoria Salter-Galbraith is also promoted to Counsel.

Natasha Rees, Senior Partner at Forsters, said: ‘We have promoted four outstanding Senior Associates this year. They are all talented individuals who have consistently demonstrated exceptional legal expertise and a relentless focus on delivering results for our clients. They will all continue to contribute greatly to the success of the firm in their new roles. These promotions demonstrate the ongoing growth of and investment in the firm following our recent move to Marylebone and the arrival of Employment & Partnership partner Jo Keddie, Counsel Danielle Crawford and Senior Associate Daniel Parker’.

Alfred Liu joined Forsters in 2017 from Gowling WLG. Nominated as a Rising Star in The Legal 500, he was also named as one of ePrivateclient’s Top 35 under 35 in 2020. He advises high net worth individuals, fiduciaries and family offices on a diverse range of private wealth matters, particularly where there are international and multigenerational complexities. With family roots in Hong Kong, Asia is his second home and he has focused a large part of business on growing client relationships in the region.

Joanna Brown joined Forsters in 2020 as part of a team from Orrick. Her practice focuses on commercial real estate, including landlord and tenant matters with a focus on the retail sector. With a long track record of advising shopping centre clients, Joanna brings extensive expertise to the table in respect of major shopping centre developments, commercial office space and prime retail real estate across the UK.

Andrew McEwan trained at Forsters before qualifying into the Commercial Real Estate team in 2014. He has developed broad commercial real estate expertise but enjoys complex development work in particular. Alongside this practice focus, he plays a leading role at Forsters in shaping the use of generative AI and technology in relation to real estate transactions.

Victoria Salter-Galbraith joined Forsters in 2018 from Bircham Dyson Bell. Victoria was made a Fellow of the Agricultural Law Association in 2024. Named in ePrivateclient’s Top 35 under 35 in 2021, in addition to appearing in the CityWealth Leaders List since 2020 for Landed Estates & Property, she regularly acts on all aspects of agricultural and rural property matters (with particular expertise in historic property and viticulture).

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Moving to the UK

  • 8 November 2023
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Chair rows face large windows; outside, an aeroplane ascends over the airport runway. Sunlight floods the seating area, casting long shadows on the carpeted floor.

Explore our hub for everything you need to know about relocating to the UK and discover how our Private Wealth team can advise you on making the move as seamless as possible.

Moving to the UK is an exciting life event whether it be a short-term move for work to explore business prospects or a more permanent relocation with the whole family; the UK offers an eclectic range of options to live, work and learn, from the cityscapes of London to vineyards in the English countryside and historic university towns in-between. Setting up life in a new country can feel daunting too and it can be difficult to know where to start.

Wherever you are on your journey to the UK the Private Wealth team at Forsters are here to guide you through the process and to advise you on how to make the move as seamless as possible. From Singapore to Brazil, the US to the Middle East – we also have in-depth experience of integrating UK issues into a global cross-border wealth plan.

Our Moving to the UK hub provides you with an introductory resource to understand the need to know issues, including the *UK’s approach to income tax, visas and buying property, along with key terminology and FAQs.

View our Moving To The UK Hub

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Wealth that works: Alfred Liu joins other private wealth experts for an ESG-focussed STEP Journal roundtable discussion

  • 1 September 2023
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Skyscrapers, illuminated brightly, stand along a harbour with boats; the cityscape is framed by distant mountains under a vibrant sunset sky.

Private Client Senior Associate, Alfred Liu, shared his views as a Family Governance and Next Gen adviser at the latest STEP Journal roundtable discussion, sponsored by Hawksford.

The conversation focused on sustainable investing, examining who the responsibility sits with and how trustees and advisors can manage their fiduciary duty as they balance environmental, social and governance (ESG) factors and return on investment.

When asked how ESG values and sustainable legacy considerations develop in his family governance and business advisory experience Alfred comments:

“It’s incumbent on us as advisors not to be static and to be very aware that families evolve. In turn, structures and investment strategies need to be updated. What does it take for families to consider sustainability? It tends to be the second or third generations that are driving those discussions because they’re the ones considering the implications of the structures the first or predecessor generation has picked. It’s important for us to be able to discuss and educate, help families find where the common values and disparities lie, and get consensus to preserve harmony – which is a big part of any meaningful family governance exercise”.

Click here to read more about the roundtable discussion in the STEP Journal, Issue 4 2023.

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A guide for British Expats in Singapore: Estate & Wealth Planning Post-Divorce

  • 23 May 2022
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Skyscrapers, illuminated brightly, stand along a harbour with boats; the cityscape is framed by distant mountains under a vibrant sunset sky.

Your divorce is now final. What next? The last thing on your mind may be to consider your estate and wealth planning, and the prospect of dealing with lawyers again so soon after your divorce can quite understandably be unappealing for some!

However, there is a good chance that your existing planning arrangements (if any) are no longer appropriate for your post-divorce circumstances. They may be overly reliant on your ex-spouse, or too intertwined with their planning and not reflective of your individual wishes. Perhaps they do not cater for any post-divorce obligations you may owe to your ex-spouse or are wholly inadequate for the significant windfall you received from them.

Doing nothing or waiting too long to redress these sorts of issues may lead to serious and unintended consequences that could adversely affect any or all of your children and the rest of your immediate family in the event of your death or loss of mental capacity. Now is therefore the most critical and opportune time to start afresh with your estate and wealth planning and give yourself peace of mind after going through such a major life event.

This article serves to highlight the key areas of planning to consider, which are equally applicable to either party to a divorce and to British expats residing in jurisdictions other than Singapore. UK tax considerations in a divorce scenario are also critical given that estate planning and tax (particularly UK inheritance tax if a person is UK domiciled) go hand-in-hand and cannot be compartmentalised. Further details of such considerations can be found here but suffice to say tax advice should always be sought when embarking on any aspect of estate and wealth planning.

Please note that references in this article to England or English law should be understood to also include Wales but not Scotland and Northern Ireland whose laws differ to that of England and Wales.

The first step – review your estate

Your estate may have significantly changed as a result of the dissolution of your marriage. Therefore, the best starting point is to review it, and prepare a general inventory of your current worldwide assets and liabilities.

Not only will this help to identify what is in your estate, but it will also focus your mind on your succession objectives and help to establish your thoughts on important issues, such as:

  • any particular wishes you have regarding the devolution of specific assets;
  • assets of sufficiently high value that require bespoke succession arrangements;
  • how to deal effectively with any digital assets or cryptocurrency you own;
  • any family inheritance you are due to receive; and
  • liabilities (particularly any owed to your ex-spouse pursuant to the divorce) and how they may need to be dealt with following your death.

Such a review should also establish if you have a life insurance policy or pension (either privately or through your employment in Singapore or elsewhere) and whether pay-outs to nominated beneficiaries require updating if you had previously nominated your ex-spouse.

Cross-border estates

Living in Singapore, you may have an international lifestyle and perhaps own assets located in multiple jurisdictions. You may even have acquired a foreign asset from your ex-spouse as part of the divorce settlement.

In these circumstances, you have a cross-border estate, which will add a level of complexity to your wealth and succession planning if ‘conflict of law’ issues arise. Broadly, conflicts may arise between the laws of different countries when determining which law should ultimately govern the succession of your assets at death. To resolve such conflicts, countries have developed domestic ‘private international law’ rules to determine which law should apply in different circumstances. This is a particularly complicated area of law and beyond the scope of this article, so formal legal advice should be sought if such rules may be relevant to you.

As a general overview, if you are domiciled in England at the time of your death, then English private international law rules will apply to the succession of your estate. Having British nationality and a British passport does not automatically mean you have a domicile within one of the countries of the UK. The concept of ‘domicile’ under English law is rather nebulous and made up of a variety of relevant factors that seek to draw out a person’s strength of connections to a particular jurisdiction and their current and future intentions. It is important to bear in mind that domicile can differ for succession purposes and UK taxation purposes.

If you have an English domicile, the general rule is that ‘moveable’ assets (e.g. paintings, jewellery, shares etc.) devolve in accordance with English law, whereas the succession of ‘immoveable’ assets (e.g. real estate) is governed by the local laws in which the asset is situated. Under English law, a person generally has complete testamentary freedom to dispose of their entire estate on death provided they have a valid and effective English Will in place. This widely contrasts with the rules in civil law jurisdictions (such as countries in Europe) where a system of ‘forced heirship’ operates which dictate that a certain portion of a person’s estate must devolve to certain family members in prescribed percentages and cannot be altered by a Will.

A situation could occur where your English Will governs the succession of your worldwide estate, but it does not when it comes to your holiday home in France, for example. The EU Succession Regulations were introduced in 2015 to avoid these types of situations and harmonise succession laws for cross-border estates involving EU countries by enabling a person to choose whether the law applicable to their whole estate wherever situate and whether moveable or immoveable should be that of either their habitual residence at the time of their death (the default position) or their nationality, which must be elected in a Will to override the default position. Therefore, if you own real estate in an EU country, you have the option to elect in your Will that English law governs the succession of that property on the basis of your British nationality. Brexit has had no impact on your ability to make such an election.

Nonetheless, this only applies to assets situated in EU countries. Conflict of law issues will still exist if you own assets in other civil law countries with forced heirship such as Vietnam, the Philippines and Japan. Careful planning will be necessary for such assets, particularly if they are valuable

Wills

Both England and Singapore are common law jurisdictions and therefore provide for testamentary freedom facilitated by a valid and effective Will. If a person dies without one, then the relevant intestacy rules will apply to the succession of their estate. Such rules dictate who can inherit from the estate and in what manner, which are likely to be contrary to the deceased’s wishes. To avoid this situation occurring, it is vital that a person has a Will regardless of their circumstances.

Being newly divorced, it is critical that you update your Will if you have one already. For example, it may leave everything to your ex-spouse and appoint them as an executor of your estate, which is a common and appropriate arrangement for married couples but not for divorcees.

If you are domiciled in England and have an existing English Will, divorce does not revoke it. Your ex-spouse is treated as if they had died at the date of the decree absolute. This could inadvertently result in an intestacy situation if your existing Will leaves everything to your ex-spouse but is silent on what should happen in the event of their death. Problems can also arise if your ex-spouse is named as the sole appointed executor and trustee in your existing Will and fails to appoint substitute executors and trustees in the event of their death.

If you are not domiciled in England, then your Will could create a discretionary trust over your estate for the benefit of your children (but not for your ex-spouse). This may be very useful in long term tax planning for any of your children (and successive generations) who may live in the UK in the future and therefore have a UK domicile; it avoids your assets and wealth your children may not immediately need from falling into their own individual estates for UK inheritance tax purposes.

Minor children

If you have minor children, an important question will be: who should be their guardian(s) if both you and your ex-spouse pass away while they are still minors? This can be a tricky and highly emotive issue but if you and your ex-spouse are able to agree on a guardian in this scenario it is best to record this in a separate document signed by you both rather than leaving it to be stated in your respective Wills (which is common practice), one of which could be changed without the other’s involvement or knowledge.

Another important consideration is that if your ex-spouse does become your children’s sole guardian following your death, they could have absolute control over any wealth your children inherit directly from your estate until they reach 18 years old. Any risk that your ex-spouse may abuse their position and enrich themselves from your wealth may be mitigated if under the terms of your Will, you create a trust over it for the benefit of your children to be managed and controlled by independent trustees appointed in your Will.

Lifetime trusts

Singapore has a thriving and robust professional trusts and fiduciary services industry and a modern trust law. If your estate is of significant value with surplus wealth, you might wish to create a discretionary trust during your lifetime as part of your estate planning. A discretionary trust is so-called because it is made by the ‘settlor’ (you) in favour of a class of potential beneficiaries (for example your children and immediate family). The appointed trustee(s) have absolute discretion to determine how much (if anything), when and in what manner potential beneficiaries receive funds from the trust.

Discretionary trusts are flexible and enable the trustees to take into account the changing circumstances of the beneficiaries. It is usual for the settlor to write a non-legally binding letter of wishes to the trustee(s) to provide guidance on how the trustee(s) should consider exercising their discretion and manage the trust. This is a flexible mechanism, as a letter of wishes can be changed from time to time without any legal formality.

Holding assets through a trust structure can be advantageous for a number of reasons:

  • it allows you to plan for the succession of assets for the benefit of future generations of your family;
  • it avoids the need to go through the probate process on death for assets held in the trust;
  • it may assist with asset protection and tax planning for your family; and
  • it may help in family governance or business succession planning.

Trusts are not appropriate in every case for particular reasons. For example:

  • a core feature of a trust is that the settlor gives up a significant degree of control over the trust assets, which some may not find comfortable (although there may be ways to mitigate this to some extent);
  • the creation of a trust is likely to give rise to UK inheritance tax consequences if you are UK domiciled (or deemed to be so domiciled for tax purposes), or if you are non-UK domiciled but transfer UK assets (or non-UK companies owning UK residential property) into a trust; and
  • other rules regarding the UK taxation of offshore trusts may apply if beneficiaries of the trust are UK tax resident (for example, children being educated in the UK) or you plan to relocate to the UK in the future. These rules can be complex, and you may decide that the cost and effort of navigating the complexities is disproportionate to the non-tax advantages of a trust.

Incapacity planning

A growing feature of estate planning is to ensure arrangements are in place to deal with the eventuality of a person becoming mentally incapable. Given your connections to the UK and Singapore, you may have created Lasting Powers of Attorney (LPAs) in each jurisdiction already, whereby you appoint someone as your attorney to make decisions on your behalf regarding the management of your personal affairs if you lose mental capacity.

There are two forms of LPA available in England, one relating to property and financial affairs, and the other dealing with health and personal welfare. During your marriage, you may have created one or both types of LPA, and perhaps appointed your ex-spouse as an attorney. Your divorce will have had the effect of terminating their appointment, which could have the wider knock-on effect of terminating the LPAs entirely depending on how attorneys are appointed. For this reason, it is advisable to review and update your existing English LPAs following your divorce. This is also advisable if you have an LPA in Singapore or its equivalent in any other jurisdiction where you have assets.

The article was first published on 25 April 2022 by Expatriate Law as part of their ‘Guide to British Expats in Singapore’ e-book.

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New Podcast: Generation Now – Disrupting Perceptions

  • 9 March 2022
  • News
Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

A Forsters podcast series that delves into the minds of some of today’s most ambitious and successful entrepreneurs. They have grown businesses that are disrupting the way we live, how we buy, and the way businesses are run. How have the life experiences of this generation informed their success and what can we learn from them?

In this series, Forsters’ Commercial Real Estate Partner, Katherine Ekers, along with up-and-coming lawyers from across the firm, talk to five different trailblazing entrepreneurs. Discover how they rolled with the punches, how they took an existing market or business model and innovated it to suit changing needs and how they disrupted the status quo to reflect and even affect the world we live in today.

We hear the phrase ‘next generation’ a lot – but we wanted to talk to people who are facing these challenges right now. Not the ‘next generation’ but Generation Now.

Listen now!

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Generation Now – Episode Five: Freddie’s Flowers founder Freddie Garland on revolutionising flower deliveries

  • 9 March 2022
  • Podcasts and videos
Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Katherine talks to Freddie Garland, founder of the subscription service, Freddie’s Flowers.

They’re joined by Alfred Liu, Senior Associate in the Private Client team at Forsters.

To continue the conversation on social media, use #ForstersGenNow.

Listen to more episodes and subscribe

Listen on Spotify
Listen on Google Podcasts

You can listen to more episodes of Generation Now – Disrupting Perceptions here on our website, as well as subscribe on your favourite podcast services, including:

Take 5 with Alfred Liu

In this five minute interview Alfred provides an honest review of talking to Freddie Garland, as well as sharing his own career journey. What were his key takeaways, what surprised him the most, and what kind of advice does he provide to next-gen clients?

What is your key takeaway from the episode?

How fundamental it is for any business to avoid complacency and keep critically evaluating ways to improve how they operate. It’s a big reason behind the success of Freddie’s Flowers and their drive for innovative practices is exemplified by the new idea Freddie mentioned of collecting customers’ old flowers to recycle them and avoid wastage. That type of progressive thinking really resonates with people and I think is why so many are drawn to using the business’ subscription service.

What surprised you the most?

I had no idea or concept of how far in advance and meticulously Freddie has to plan with flower growers! Hearing him talk about the experimental methods involved with finding new varieties of flowers, getting growers to commit to planting them and how it can all take 5-7 years was enlightening.

What kind of advice/ legal services do you provide to next-gen clients?

At the core of my work for Next Gen Private Clients is estate and succession planning. This can take many forms, ranging from the quintessential Wills drafting (usually prompted by the birth of their first child) and personal tax advice, to the more sophisticated Family Governance work which is triggered by a recognition by those clients (often with their parents) that their family needs to have proper processes and structures to ensure the smooth transfer of wealth between multiple generations. This work is multi-faceted and can involve crafting family charters, setting up family councils and trusts structures as well as corporate considerations such as preparing bespoke shareholders’ agreements covering a family’s trading business.

What piece of advice would you provide to next-gen clients?

Don’t be afraid to have your own advisers independent from your parents when it comes to your family’s wealth succession and business transition planning. Next Gen Private Clients frequently struggle with this especially those coming from Confucian cultures where filial piety is ingrained. Having independent advisers and being respectful of older generations are not mutually exclusive, and can often help to maintain harmony for larger families with several branches each with their own unique and sometimes diverging set of circumstances, mentalities and objectives.

Tell us a bit about your career journey

Leaving school I had an inkling that a career in law was for me but I studied English at the University of Nottingham first as I loved the subject at A-Level and knew I could always do a law conversion course afterwards. I went on to do my GDL and LPC at Nottingham Law School with the help of a bank loan; I was quite lucky to get this as few banks were offering such loans in the wake of the 2007/2008 credit crunch. I felt even luckier that during my LPC year I was offered a training contract at Lawrence Graham LLP. Before starting it in September 2012, I took a gap year working as a runner and location assistant for a TV production company (which was a fun experience and where I learnt how to make a good cuppa!) and travelled around the US and China. During the first few years of being a qualified solicitor I experienced not only one but two law firm mergers and also a whole team move when Gowling WLG (UK) LLP’s private client team joined Forsters LLP in May 2017.

What is the biggest difference between gen x (baby boomers) and gen y (millennials)?

Gen Y clients tend to be more willing to talk and be open about things than their parents who are more guarded and take a ‘need-to-know’ approach. This intergenerational communication gap is one of, if not the, biggest issue we help families deal with when developing their governance arrangements. If left unresolved, it can lead to relationship breakdowns between both generations and create feuds that jeopardise family assets and businesses. Our philosophy and approach with Family Governance work is to really understand these sorts of psychological issues and differences between Generations X and Y within a family and how to bridge the divide, otherwise the legal documents and frameworks put in place for them are superficial.

What is your millennial stereotype pet peeve?

That we’re “lazy” and like to have everything handed to us on a plate! I’m sure this is a stereotype predecessor generations always ascribe to their successors.

Related links

Episode One: Appear Here founder, Ross Bailey on trailblazing flexible retail spaces

Katherine talks to entrepreneur and wunderkind Ross Bailey – the founder and CEO of Appear Here – an online marketplace for short term retail space.

Generation Now - Disrupting Perceptions: Episode 1

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Jeremy Robertson and Alfred Liu to present on UK pre-arrival planning for Swiss private clients to the Geneva branch of STEP

  • 3 August 2021
  • News
Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Private Client Partner, Jeremy Robertson, and Senior Associate, Alfred Liu, will deliver an online presentation to the Geneva branch of STEP entitled ‘UK pre-arrival planning for Swiss private clients’.

The presentation will concentrate on the following areas:

  • UK immigration – Jeremy and Alfred will summarise the new UK immigration post-Bexit rules for Swiss/EU nationals and will set out the two principal UK visa routes available to Swiss private clients relocating to the UK.
  • UK tax – They will briefly summarise the UK residence test and provide an overview of the UK tax rules that apply to UK resident non-domiciliaries, although the focus of this section will be on providing a ‘checklist’ of practical planning points for clients who are considering relocating to the UK.

The presentation will take place on 26 August 2021, to register please click here.

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Statement of changes in Immigration Rules – Implications for Tier 1 (Investor) Visa applicants and holders

  • 8 March 2019
  • News
Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

On Thursday 7 March, the Home Office released its Statement of Changes setting out proposed changes to the UK Immigration Rules. It contains the long-awaited details of changes to the Tier 1 (Investor) Visa (the “Investor Visa”) that were announced in December 2018 (shortly after the Home Office backtracked from its announcement that the visa was about to be suspended). The changes to the Investor Visa will come into effect on 29 March 2019 (conveniently the same day as Brexit – at least for now!).

In this note we look at the proposed changes to the Investor Visa only. Changes are also proposed to the Tier 1 (Graduate Entrepreneur) Visa and Tier 1 (Entrepreneur) Visa – they are to be replaced respectively with new “Start-up” and “Innovator” categories of visa. However, these changes are beyond the scope of this note.

What is the Tier 1 (Investor) Visa?

The Investor Visa was originally introduced to encourage wealthy people from outside the EU to invest and eventually settle in the UK.

Among other requirements, an applicant has to invest at least £2 million in certain qualifying UK investments. These include UK Government bonds, share capital or loan capital in active and trading UK registered companies. Investment in property investment, management or development companies is not permitted.

An investment of £2 million allows an individual to apply for indefinite leave to remain in the UK after five years, an investment of at least £5 million reduces that period to three years and an investment of at least £10 million reduces it still further to two years.

What are the proposed changes?

  • With effect from 29 March 2019, applicants for an Investor Visa will need to have held the funds they will invest in the UK (£2 million or over) for at least two years before making their application. If they have not held the funds for at least two years, they will have to provide evidence of the funds’ source as part of the application. This does not change the substance of the existing rule; rather it extends the required pre-investment holding period for funds from 90 days to two years. In practice however, this is likely to create a rise in applicants needing to disclose to the Home Office the source of funds.
  • Under the existing rules for Investor Visa applications, applicants are required to open a UK bank account for the purpose of making their investment before making an initial application. This requirement is being tightened so that UK banks will need to carry out all due diligence and “Know Your Client” checks on an applicant, and provide a statement confirming that these have been done in the bank letter required for the application.
    No doubt this is in response to the practice of some financial institutions offering ‘pre-accounts’ to applicants, which involved opening a bank account before completing due diligence checks on applicants.
  • In order to increase the economic benefits of UK investments qualifying under the Investor Visa, the following changes are also being made:
    • Investments into UK Government bonds will no longer qualify as permitted UK investments under the visa. This is unsurprising as the Home Office had indicated that it regarded such investments as bringing no meaningful economic benefits to the UK. This change is therefore intended to incentivise Investor Visa applicants toward other forms of investment which have a greater need to attract additional investment funds.
    • Among other new rules are those relating to the use of intermediary vehicles, which are intended to increase transparency with regard to the investment of applicants’ funds. Such vehicles will be required to be regulated by the Financial Conduct Authority (“FCA”), and applicants will need to provide evidence of the final investment destination and how funds are transferred to this destination. This will apply regardless of the length of the chain of intermediary vehicles.
    • The rules with regard to the definition of “active and trading” UK companies are being tightened. Stronger evidence will be required that a company has substantial presence in the UK, including having to be registered with Companies House, and HMRC for corporation tax and PAYE purposes. Interestingly, the company must have at least two UK-based employees who are not its directors.
    • The rules will be clarified to confirm that “price of the investments” means the price actually paid for investments rather than their face value. This is to ensure that an applicant has actually invested at least £2 million in the UK as the rules require.
    • Pooled investment vehicles may be able to qualify as permitted UK investments under the visa, provided that the vehicles receive funding from a UK or devolved government department or one of its agencies (e.g. the British Business Bank or the Scottish Investment Bank).

This is because such vehicles will have been assessed as being of benefit to the UK economy by the department or agency providing the funding. Other types of pooled investments will continue to be excluded as the Home Office cannot be satisfied that the applicants’ funds are being invested to the benefit of the UK economy.

Transitional arrangements

Transitional arrangements will be introduced to ensure that the changes proposed to the Investor Visa do not adversely affect investors who entered the visa category under the rules in place before 29 March 2019. The transitional rules will mean that the current rules continue to apply to existing investors until 5 April 2023 for extension applications, and 5 April 2025 for settlement applications.

However, the proposed changes will apply to any extension and settlement applications made after 5 April 2023 or 5 April 2025 respectively by pre-29 March 2019 Investor Visa holders. The element of retrospectivity which this introduces for existing investors in this category will primarily affect those who either are unable to satisfy the additional requirements for indefinite leave to remain and need to apply for further leave to remain, or who simply do not wish to apply for indefinite leave to remain.

However, there appears to be a potential internal contradiction within the Statement of Changes regarding investments in UK Government bonds. One statement appears that investments in UK Government bonds will not qualify as UK investments from 6 April 2023 and 6 April 2025 for investors under Tables 8A and Tables 9A of the Immigration Rules Appendix A respectively. These parts of the Immigration Rules only apply to investors who entered the visa category on or after 6 November 2014 (when the investment threshold increased to £2 million from £1 million). There is no such equivalent statement applying to investors under Tables 8B and 9B of the Immigration Rules Appendix A (those investors who entered the visa category pre-6 November 2014).

It could be inferred that those investors should not be affected at all by the proposed changes to the visa if they wish to apply for leave to remain after 5 April 2023 or settlement after 5 April 2025. Yet another part of the Statement of Changes throws this into doubt with a general statement that paragraph 65(f) of the Immigration Rules Appendix A will be amended so that UK Government bonds will no longer count as UK investments for applications on or after 6 April 2023 and 6 April 2025. The problem with this is that paragraph 65(f) applies to Table 8A to Table 9B (inclusive) of the Immigration Rules Appendix A, meaning all existing Investor Visa holders including those who obtained the visa pre-6 November 2014. The natural assumption is to chalk this inconsistency down to poor drafting, and it remains to be seen whether this will be rectified when the Immigration Rules are updated on 29 March 2019.

What next?

When the Home Office initially announced that it would be reforming the rules for an Investor Visa, their proposals included the introduction of an audit process, involving a detailed audit of an applicant’s financial and business interests. This proposal was widely regarded as introducing an extra burden for applicants that would be of dubious value given significant changes made to the rules in November 2014 with the aim of improving transparency and vetting of applicants. Therefore, it is welcome that the Home Office has dropped this proposal in the new Statement of Changes.

Nevertheless, the proposed changes are significant and we will seek clarity with regard to the application of the transitional rules discussed above.

In the meantime, anyone who is currently making an application for an Investor Visa may wish to complete the process before 29 March 2019, if possible. Anyone who holds an Investor Visa and may wish to apply for an extension of that visa or for indefinite leave to remain at some point in the future, should seek advice as to their likely position under the new rules.

If you have any questions in relation to the Investor Visa rules and the changes proposed, please do get in touch.

Alfred is an associate in our Private Client team.

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