Trusts are often preferred when it comes to protecting investment assets for the next generation, but setting them up right can be tricky. Extra complications come into play when Shariah compliance is to be factored into the structuring.
This has become a big problem for many high net-worth individuals (HNWIs) around the world, especially when they have assets in multiple locations and several scions to be considered, Suntera Global Associate Director Jade Fellowes told IFN Investor.
As regulations governing trusts also vary across jurisdictions, ring-fencing these assets to ensure they pass on as desired — without intrinsic values being diminished by inflation, taxes and external factors — would need specialized expertise.
Citing how a HNWI with a portfolio of hotels, luxury assets and other investments in Hong Kong and Singapore wanted a Shariah compliant succession plan, Jade said the solution entailed setting up discretionary trusts in faraway Jersey for the client’s children.
“A global perspective is needed for better solutions, especially given how there are still differences in how Islamic rules are applied in other countries. This perspective is needed as very often, domestic laws end up being very detrimental to the trusts that clients envision.”
Jade said the extent of this problem will continue to grow unless and until there is some consistency in Shariah rules, noting that many queries on this matter are already coming from the GCC. “We are also getting requests from other nations like Indonesia and Malaysia, especially as the asset-rich parents there get older and are concerned about how their wealth will be passed on.”
