‘Amicorp Is Among Top 10 Trust Companies’
ON COMPLETING nearly six years of business in India, specialising in estate and succession planning for large business houses, listed companies and multiple family offices, Amicorp is considered as one of the most reputed privately held Trust companies. Tariq Aboobaker, MD of Amicorp, shares his experience and vision about the trust business in India with Bhaktvatsal Sharma. Edited excerpts:
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Q: What are the challenges faced by clients in succession planning?
Absence of succession planning or an inappropriate advice could lead to larger problems, which could also lead to family disputes. We all are perishable and a right succession plan is important, without which the assets will be distributed as per natural laws of succession.
As much as we all believe that we are perishable, we still keep deferring the topic of succession and try to retain control till the last breath.
Retaining control of the wealth is most important in Indian families. By using the right tool to plan a succession you can accomplish your desire, derive benefit during your lifetime and then pass on the wealth to the next generation in amicable manner.
Lack of awareness and understanding of the subject is one of the biggest challenges faced by most families. It also becomes difficult to identify a successor for running your business or to identify which family member will get which assets. Succession planning requires a lot of thinking which delays the process.
Q: What are the best practices that go into a succession plan through a trust?
Having clarity of mind before getting into implementation is the key. Doing an open discussion with the family members always helps but a lot of us prefer to do it otherwise. Different asset classes could have different tools for succession. Wills, and now also Family Trusts, being the most commonly used.
As much as a Will is a static document which comes into play on demise, a trust can run parallel with you which carries the expression of your wishes. One has to keep under consideration many factors while deciding who shall inherit the assets, such as the company shares going to one family member or to several members, distribution of real estate and other assets among family members. For listed company shares the takeover code and other SEBI regulations need to be considered.
Q: Could you explain how forming a Family Trust can be beneficial?
The trust can be customised as per ones needs and the share of the beneficiaries can be defined as per one’s wishes in the trust. The trust runs parallel with you. It is a separate entity, having its own identity and a separate PAN. The assets that are moved to the trust during your lifetime are considered as the assets of the trust and is not considered as part of your estate on your demise. If structured correctly, you could provide asset protection during your lifetime and prevent your estate from any duties, if introduced in future.
Q: What are the basics one has to keep in mind while structuring a trust?
A trust shall be structured keeping in mind the objectives of the client, the tax and legal implications. One should understand the role and powers of different parties of the trust. It is advisable to keep the trustee separate from beneficiary. One should identify right set of people to manage the trust who understand their role and responsibility. A professional trustee can bring in expertise and add value.
Q: What are the strengths that Amicorp brings to the table for its clients?
Amicorp group is globally present from last of two-and-a-half decades with a strong team and setup. Being an internationally licensed trust company, we understand trust laws and implement the same in India.
In India we have presence in Mumbai, Delhi and Bengaluru. We have an 18-member legal team, 25-membercompliance team, 25-member fund administration team, 60-membertrust operations team, and another 12-member client facing team. Having a total team strength of more than 300 members in India, Amicorp is one of the largest setup for trust business.
We have 40+ offices in more than 28 countries. We have the ability to provide domestic as well as offshore solutions. We have hands on experience on planning succession for large business families and HNIs.
Q: Could you give us an idea of the types of fees you charge clients?
For plain vanilla structure for nuclear family, the fees would be standard. For large business families with joint holdings, or assets in different geographies the fees would depend upon the complexity. The fee is divided into two parts. One is for the setup of the trust and other is for the annual management of the trust as a trustee. We have expertise to cater right from initial advisory, to the setup, to its management and distributing assets to beneficiaries.
Q: Who requires a succession plan?
It doesn’t matter how much wealth a person has. Succession planning is important for everyone to pass on their wealth to the next generation.
One needs to plan for their own retirement, incapacitation or any unforeseen contingency before passing their wealth to the next generation.
In case of nuclear families, one shall consider who will take care of the minor children or manage the wealth in absence of both parents. Couples with children with disability will need to decide on the guardianship for the children and the management of the assets for the benefit of the disabled child.
With cross holding structures and business shares one needs to decide about transfer of ownership and management. In India joint family structures are prevalent and one would need to provide for one’s own family within the larger setup. For NRI children inheriting the assets, overseas laws cannot be ignored.For listed company shares the takeover code and SEBI regulations need to be considered.
While transferring assets to children one can create trusts to provide asset protection to them from creditors, protection in case of divorce and protection from inheritance tax if introduced.
Q: What are the expansion plans for Amicorp in India?
We operate from three locations: Mumbai, Delhi and Bengaluru. Initially, when we set up the company, we concentrated on providing succession-planning solutions for families. In 2016 we started setting up Alternative Investment Funds (AIFs).We are a SEBI registered trustee to large number of AIFs. At the start of 2018, we are looking at getting into the debenture-trustee space. We will then be known as a full-fledged trust company in India. From a private family trustee to AIF trustee to debenture trustee in a span of six years, is a large transition for us. By early 2018 we will apply to SEBI for a debenture-trustee license.
Q: How would you compare your clients in India with those overseas?
Overseas market is refined and way ahead. It has well accepted trust structures for holding wealth and to provide for succession. In India the market is still virgin but there is great acceptance over last ten years. We see a huge potential in India. On a broad scale only 5- 7 per cent of HNIs would have planned their succession.