Trust Estate
INTERVIEW: Estate Planning In The Bahamas With BEE

WealthBriefing recently covered the launch of the Bahamas Executive Entity – or “BEE” – which helped put this jurisdiction in the limelight. We caught up with Andrew Law, founder and chief executive of the International Protector Group and Kevin Clerey, managing director, IPG Switzerland, to talk about the Bahamas.
Could you both tell us a bit about yourselves and background?
Andrew Law: Before founding IPG seven years ago in Nassau I worked for some twenty-five years in the international fiduciary services industry. Most of my experience was gained in Guernsey, Switzerland and the Bahamas while working for Credit Suisse. At the moment, I serve on a number of government and private sector industry working groups which were established by the Bahamas Financial Services Board, and I have previously been chairman of the Association of International Banks and Trust Companies in The Bahamas. I am British, but love living out here with my family in the Bahamas.
Kevin Clerey: I met Andrew when we both worked with Credit Suisse – with my time there stacking up to over 25 years in total. I've lived in Switzerland for the last thirteen years, and I currently oversee IPG's development in Europe, helping with the launch of the new Swiss office earlier this year in Zurich and with supporting IPG’s Bahamas Executive Entity services in the wealth management market.
Why set up IPG? What were the particular circumstances/factors that led you to found it?
Andrew Law: I set up IPG in 2005, with the intention of filling a vital niche in estate planning by providing professional protector and related services to trusts and foundations. It was a time of marked expansion of the trust industry into offshore centres and we could see a lot of opportunities to address new issues which were beginning to become clear within the industry.
Kevin Clerey: Exactly. One fundamental issue was where trustees were based in a remote jurisdiction too far away to be involved closely in the needs of the beneficiaries. What was needed was a trust protector who was on hand to oversee the activities of the trust and the trustees and to ensure that the interests of the settlor and the beneficiaries were understood and correctly regarded. This was a niche market, but in many cases a very important one.
How would you describe IPG and its clients? What are its distinctive characteristics?
Andrew Law: In the seven years we've been going so far, the business has evolved, and by choosing to focus on a niche market we've become specialists with greater in-depth knowledge. We offer dedicated international business expertise which is backed up by our strong experience of working with our private clients and their professional intermediaries. Our clients come from all over the world.
Kevin Clerey: We've made sure that our approach is very focused and research-driven, which means that we have a complete understanding right from inception of each client's individual requirements. This in turn enables us to offer bespoke, tailored solutions to suit very specific needs.
In broader terms, how would you describe the general state of the sector you are in? Which jurisdictions are good for business at the moment and which are less promising, and why?
Andrew Law: In our experience, the sector is growing very rapidly and many high net worth individuals still don't know that our kind of offering is available to them.
We are seeing a lot of business coming from Latin America, where we have a growing number of clients from Brazil and Colombia, two markets which are growing extremely rapidly. The challenge is now to capitalise on that growth and we are able to differentiate ourselves in the market by providing a very exciting alternative in the world of wealth management.
When did you decide that a firm like IPG was necessary?
Andrew Law: About seven years ago when the number of international trust companies were growing rapidly and the increasing complexity in the field brought about a growing need for our specialist service.
Who works with you?
Kevin Clerey: Our team is made up of a group of highly experienced professionals who are well versed in international trust business and estate planning generally. We cover very diverse disciplines which span fiduciary services and wealth management, law, accounting and marketing – this means that our clients get expert assistance on the whole process, not just from a technical or financial point of view, but with input on all aspects of the process.
The BEE - can you outline what it is and why it is important?
Andrew Law: The Bahamas Executive Entities Act is a unique and ground-breaking piece of legislation which has been designed specifically to resolve complex governance issues in fiduciary and wealth management structures. It is essentially designed to encapsulate the powers currently in existing wealth management and estate planning structures within a new form of legal entity.
Kevin Clerey: Once incorporated as a legal entity, this means that it can exercise as a power holder on decisions in its name. It has similarities in its standalone nature to a foundation, but it is equipped with more functions, including the ability to act as a protector, settlor, founder or investment advisor of any trust or foundation. It can also act as shareholder of a private trust company, so it's very versatile and comprehensive.
Who do you think will use BEE? Why?
Andrew Law: One group of people who can use the BEE effectively are those involved in trusts where there is a greater likelihood of family disputes or litigation. The BEE can hold the role, responsibility and powers over certain functions through a legal entity rather than by individuals. Family members can often become reluctant to take on a role of acting as trustee and protector within a trust structure, and the BEE is able to alleviate these concerns by removing unnecessary layers of ownership and administration within these structures for the benefit of all concerned. It also facilitates the application of best practice and family and corporate governance principles in order to protect against both internal and external conflicts, which is of course vitally important!
When do you see a significant number of people using the BEE?
AL: The BEE is incredibly new, and while it's still too early to judge what its most popular uses will be, it has already attracted interest from wealthy families and their advisors who are looking to strengthen, and at the same time simplify, their wealth management structures. People want solutions that simplify, and the BEE does just that.
Kevin Clerey: These are important decisions with, in many cases, very long-term implications. BEEs are already receiving a great deal of consideration from professional advisers and their clients and we are confident that there will be a steady build up. Some roles that have already become apparent are those of owning a private trust company, acting as director of a company, and acting as an investment advisor. Other options include being the owner or proposer of a single premium life insurance policy.
How do you explain the BEE to clients?
Andrew Law: When talking with clients, we try to explain the history of the BEE and why it was created. The Act is the first of its kind and I think it's essential to stress that it was created in response to a need to enable high net worth individuals to establish greater control over the administration and security of their wealth.
Kevin Clerey: One of the key things to remember also is that it allows the client to appoint himself or other individuals, on whom he can depend, to be officers or council members, in order to safeguard his interests. This element of choice is really important.
What other Bahamas-based structures would you mention that deserve particular attention, besides the BEE, and why?
SMART Funds: These are designed to provide the private wealth management industry with a flexible fund concept that allows practitioners to design innovative structures akin to special purpose vehicles.
Private Trust Companies: Many wealthy families today hold a highly diversified range of assets and interests, both in terms of their location and composition. As such, it can be a challenge to find a company willing to act as trustee and to ensure their proper management, both for the present and for the long-term. One viable solution is the Family Private Trust Company.
PTCs are compatible with the family office concept and they often evolve into a family office. They can be a good vehicle for introducing the next generation to the diverse range of the family's interests and investments.
Foundations: The Bahamas pioneered the use of foundations, being the first common law jurisdiction to introduce them specifically for the cross-border asset holding business. Bahamian foundations benefit from the country's rigorous asset protection and inheritance laws. They provide a variety of uses which include among other things, estate planning and tax planning. Bahamian foundations can be transferred to other service providers and even to other jurisdictions.
Of all the jurisdictions you have worked in, which one do you like the most?
Andrew Law: For me, that question's easy! The Bahamas! Apart from the stunning country which it is, it offers several huge advantages when it comes to wealth management and the industry which we work in. As evidenced by the enactment of the BEE legislation, it has progressive legislation, a very stable political and economic environment in which that legislation can thrive, as well as a variety of wealth and asset management options.
Kevin Clerey: The Bahamas is also a great location at the crossroads of the Americas, but I have already voted with my feet for Switzerland!