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HSM LAW

13/05/2020 | hsmoffice

HSM Acquires Higgs & Johnson’s Operations in the Cayman Islands

The HSM Group will be acquiring the Cayman operations of Higgs & Johnson, with whom we have had a long established relationship. Further announcements will be made as the transaction progresses and once the necessary regulatory approvals are obtained.

01/05/2020 | hsmoffice

Changes to Cayman Regulations Concerning COVID-19 Prevention, Control and Suppression

With recent developments concerning the global spread of COVID-19 and the impact it has had on the economy, the Cayman Islands Government (CIG) has implemented a series of regulations under the Public Health Law (2002 Revision). Amongst these have been Read more +

01/05/2020 | hsmoffice

5 Tips for Estate Planning During COVID-19

There is no doubt the COVID-19 pandemic has turned the world — and many lives — upside down. Certainty has been replaced by uncertainty, and many plans for the future are now in doubt. One may feel a loss of Read more +

28/04/2020 | hsmoffice

A Look into the Recent and Impending Changes to Cayman’s Immigration Regime

With recent developments concerning the global spread of COVID-19 and the impact it has had on the economy, the Cayman Islands Government (CIG) has implemented a series of amendments to what is commonly referred to as the Islands’ Immigration Regime. Read more +

5 Tips for Estate Planning During COVID-19

There is no doubt the COVID-19 pandemic has turned the world — and many lives — upside down. Certainty has been replaced by uncertainty, and many plans for the future are now in doubt. One may feel a loss of control and helplessness as the pandemic continues to wreak havoc on finances, relationships, employment, and just about every other thing imaginable.

While some things are outside our control, we should all take comfort in knowing that we still have powerful things within our control, such as (finally) getting our estate plan in order.

Robert Mack, HSM’s Head of Private Client & Trusts, provides his top five recommendations for getting your estate plan in tip-top condition. Robert also recently gave a presentation on this (in partnership with the Cayman Islands Chamber of Commerce) and provided further guidance on the private client industry by discussing wills, estates and succession planning with COVID-19 in mind. You can watch a recording of this presentation here.

Tip 1: What’s the plan?
The first question to ask yourself is whether there’s a plan in place; if so, does it reflect your current wishes? As a basic, a Will is a key part of any estate plan. Failure to have a valid Will means the law decides who gets your property and in what shares after you die (known as an “intestacy”). In some cases the intestacy formula can work well as the law seeks to distribute your assets equitably to the persons most closely related by blood or marriage. However, in many cases the intestacy formula does not produce the result one would have wanted and intestacy does not deal with the issue of guardianship of minor children.

Although a Will is a vital tool to ensure your wishes are respected there are alternatives to Wills, including placing assets/property into joint names so they pass outside of your estate automatically on death. Life insurance, trusts, and foundation companies are also powerful tools which can allow you to implement more complex estate plans so you can be confident your loved ones will benefit precisely as you wish them to.

Whatever your plan is, review it. If there is no plan, there is no time like the present to put one in place. Illness, whether caused by COVID-19 or otherwise, can sometimes impair your mental faculties, which can prevent you from taking the necessary steps to put your affairs in order so it’s best not to delay.

Tip 2: Where are your assets located?
If you have valuable assets located outside of the Cayman Islands, then its best to speak to an estate practitioner in that place, in addition to a Cayman-based attorney to ensure your foreign assets pass the way you want them to. Often it is necessary to have multiple Wills in each country as each country will have its own rules and regulations on succession.

If you’re unsure of how to find a foreign estate lawyer, a good place to start is the Society of Trust and Estate Practitioners, which is a global association of professionals who specialise in this type of work (www.step.org/for-the-public).

Your local Cayman trust and estates attorney should also be able to recommend a suitable foreign estate attorney to assist and both attorneys should work in tandem to ensure your global estate passes in the way you want it to.

Tip 3: How much are your assets actually worth?
Global personal wealth has taken a collective nosedive across the entire spectrum. As a result, the value of estates will inevitably suffer.

Therefore, it’s a good idea to review your Will (if you have one) to see whether any gifts to loved ones are now in need of adjustment, as gifts that were highly valuable just a few months ago (eg, quoted shares) may be less valuable now. This is important in order to achieve a sense of balance and fairness with loved ones, and to stave off any estate disputes from those who feel they were not treated fairly, which is one of the primary causes of estate litigation.

Although nobody has a crystal ball, it is more likely than not global markets will improve over the course of time, and ‘paper losses’ may be recovered. Until that happens, however, those who are seeking to spread their wealth fairly amongst their loved ones should take a sober look at their current net wealth and adjust their plans accordingly. Those who do not yet have a succession plan should take this into consideration when creating their estate plan.

Tip 4: Who are you?
This may seem an odd question to ask, but it’s important to understand what sort of connections you may have with other countries as this could affect payable taxes (outside of the Cayman Islands only), and claims on your estate.

For example, in Cayman it is not uncommon for persons, especially the older generations, to have been born in the United States despite never living there or never obtaining a US passport. The United States assigns citizenship to any person born on its soil, and since it also taxes its citizens no matter where they reside it’s very important that your estate attorney takes that point into consideration and works in tandem with a US-based estates attorney to ensure your estate is as tax-efficient as possible and that all necessary IRS forms are filed.

Also, your estates attorney will need to ascertain your ‘domicile’ status, which is a technical legal test which requires your advisor to identify connections to other countries (including but not limited to citizenship) to ascertain whether (or not) the laws of that country may affect your estate. This can often be an issue for expatriate workers in the Cayman Islands on work permits who maintain strong links to their country of origin, as some expatriate workers may remain ‘domiciled’ abroad despite residing in Cayman and therefore may subject to tax and succession laws in those countries.

In addition, many countries such as the United States seek to tax individuals if they spend a certain number of days within the country. It is therefore possible for a non-US taxpayer to inadvertently fall into the US tax net through no fault of your own if they happen to be stranded in the US due to travel restrictions imposed by COVID-19. This could have a knock-on effect on estates if such individuals die while tax resident in a foreign country. If such persons are concerned, they should consult a local tax professional and take such legal steps as soon as possible to lessen the tax payable, and if necessary, adjust their succession plan accordingly.

Tip 5: Be kind, be charitable
For those fortunate enough to have preserved their wealth throughout this crisis, there is a great opportunity to make a social impact by making a gift to worthy causes for those most impacted by COVID-19. It is a sad reality that many people are suffering in the Cayman Islands and many will continue to suffer as the pandemic unfurls and employment becomes scarce. There are a multitude of good charities to choose from in Cayman which could deploy such gifts for the benefit of the wider community, or you could select charities which focus on particular types of charitable activities such as provision of food for persons who are failing to make ends meet, or even animal charities for our furry friends. A charitable legacy is one of the noblest gestures an individual can make, and the world needs such selfless gestures at this moment to remain hopeful and optimistic in these most challenging of times.