Trust Estate

Trusts: Upheavals And Innovations

Dr Alon Kaplan 30 March 2020

Trusts: Upheavals And Innovations

A senior international figure in the trusts sector, with a close understanding of the industry in countries such as Israel, discusses trends at work in a number of countries.

A prime mover in the world of trusts and estate planning is Dr Alon Kaplan. Among his many accomplishments is that he is the founder and president of the Israeli branch of the Society of Trust and Estate Practitioners, or STEP.

Dr Kaplan is the editor of "Trusts in Prime Jurisdictions, 5th edition". The first edition was published in 2000 and it has been updated once every four to five years since. As in previous editions, professionals in the area of trusts from various countries, such as Canada, Cyprus, Germany, England, Japan, Luxembourg, Malta, Liechtenstein, and Switzerland have contributed. This publications provides a guide to the world of trusts, allowing the reader to access professional, up-to-date and reliable information about various countries in one source. 

In this article, produced in a question-and-answer form, Dr Kaplan talks about the innovations and breakthroughs in the field of trusts, such as in Israel and Switzerland. 

The editors are pleased to share these views and invite readers’ replies. To respond, email and

What developments have occurred in the trust world since the fourth edition of the book was published in 2016?
Since the publication of the fourth edition [of the book], many changes have occurred in the world of private law and banking. One of the important changes relates to the taxation of companies and other entities established in places known as "tax havens". Today such places as the British Virgin Islands and Cyprus, require companies to have a more "significant presence" in order to be considered residents of the same place (country) and to benefit from its attractive tax system, and a company must not have been incorporated in the same country previously. Such a significant presence is achieved through the conduct of business in that country, including having an office and employees.

What important developments in the field of trusts do you expect to occur in Israel?
A, Regulation of Trustees in Israel - The practice of trusts, and in particular acting as trustees, will require compliance with professional standards obtaining a licence, like other countries in the world. In this way, the Registrar of Companies will not approve registration of a company with the word "trustee" in its name without presentation of an appropriate licence.

B, Disclosure of an Ultimate Beneficial Owners and establishment of a Registrar who will keep a register of the ultimate beneficiaries who are not necessarily the registered owners of these assets. Today, many OECD member states have adopted the Fourth and Fifth Directives on the Prohibition of Money Laundering by the Organization, which require the establishment of such a register.

C, Revocation of the exemption from reporting for new immigrants - Today the law exempts new immigrants from reporting and payment of taxes for 10 years on all of their foreign sourced income. Mr Eran Jacob, the head of the Israel Tax authority who spoke at the STEP Israel conference in June 2019, announced his intention to revoke the exemption from reporting.

You will find more details about trusts in Israel and their uses in a chapter I wrote together with Attorney Lyat Eyal and Attorney Meytal Liberman, both of whom deal with Israeli Trust and succession laws from different perspectives.

What important changes are likely to take place in 2020 in the area of trusts in the world?
One of the expected changes will be the regulation of trustees and trust companies. Thus, Switzerland recently enacted a special law for the licensing and supervision of trustees and trust companies, and even in these days legislation of fiduciary law is also being discussed.

It can also be expected that various countries that do not yet have trustee regulations (such as Israel) will work to enact such laws, which will also be adapted to laws and regulations designed to deal with money laundering and terrorist financing.

The new book on Trusts in Prime Jurisdictions has a special chapter on this subject written by Attorney Yehuda Sheffer, who was the head of the Money Laundering and Terror Prohibition Authority (IMPA), as well as the Deputy Attorney General.

Which country would you recommend for establishing trusts under its laws?
It is difficult to answer this question. Although trust laws in different countries are based on the same principle, each state also has its own unique characteristics. Thus, the costs of establishing and operating a trust, tradition and history of law, judicial rulings on trusts and dealing with " forced heirship " claims in continental countries such as France and Italy, should be considered. It is also important to consider the specific requirements of the customer, his needs and his assets. This is a complex issue and it is advisable to consult a professional on each individual issue.

There are some topics in the book, especially in the fifth edition, which examine these issues. The issue of "forced heirship" is discussed in the chapters relating to Bermuda, Germany and Italy.

What tax developments are expected for 2020?
Tax authorities of various countries cooperate with each other in order to obtain information on taxpayers worldwide. The best examples of this are the FATCA and CRS agreements, and other agreements for automatic exchange of information, which Israel is a party to. Thus, today, it is common practice for banks around the world to transmit information to Israel about Israeli residents holding bank accounts in their countries.

Trusts are no exception to this phenomenon, and reporting obligations also exist for them especially if they hold real estate or financial assets. The fifth edition of the book addresses this extensively, and the chapters on taxation in the United Kingdom and the United States shed important light on the subject.

In conclusion, what do you think will surprise readers to find out about trusts today?
It is mistakenly believed that the purpose of trusts is to avoid or eliminate taxes. Today, there is extensive regulation on this; automatic exchange of information between tax authorities around the world, directives on money laundering strictly implemented in OECD countries, and others, and today, trust is a legitimate and effective tool for asset planning. The book also has a comprehensive chapter on disclosure obligations which apply to trusts under the OECD directives.

Another mistaken assumption is that the role of the trustee does not require special skills, and that anyone can be a trustee. In reality, this is a role that requires a great deal of professionalism and knowledge in the field of trusts, which involves a heavy burden of responsibility not only for the settlor of the trust and its beneficiaries, but also for third parties who come into contact with the trustees and the trust assets.

Surprisingly, it is difficult to find higher education institutions that offer a degree in trusts. However, STEP – (Society of Trusts and Estate Practitioners) International, has long understood the need for appropriate training of people dealing in trusts, and holds courses in many countries around the world in collaboration with the University of Manchester, and even requires those who wish to join as members of the organization (STEP) to pass a professional ethics examination .

About the author:

Alon Kaplan, Attorney and Notary: Dr Alon Kaplan, Attorney and Notary, Member of the Israel Bar Association (1970), New York (1990) and Frankfurt (2010). He is the founder and president of the Israeli branch of the Society of Trust and Estate Practitioners (STEP). Dr Kaplan is the author of the books "Trust in Israel: In Practice" (2017), and "Trusts and Estate Planning in Israel" (2016). He is also the general editor of the fifth edition of the book "Trusts in Prime Jurisdictions" (2019).

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