Family offices have long relied on offshore trusts and foundations to manage wealth across borders, preserve privacy, and ensure generational continuity. But sweeping changes in global transparency regimes, driven by tax justice movements, anti-money laundering initiatives, and geopolitical pressures, are reshaping the legal landscape. New obligations like the UK’s Trust Registration Service, the US Corporate Transparency Act, and the EU’s DAC6 are challenging traditional strategies. In this article, we explore how these regulations are affecting trust planning, where jurisdictions differ, and what legal professionals are doing to adapt.
Strategic Context – The Global Push for Disclosure
The post-2008 regulatory climate has given rise to an era of transparency-first lawmaking. High-profile leaks (Panama Papers, Paradise Papers, Pandora Papers) triggered a global backlash against secrecy jurisdictions, prompting the OECD, FATF, EU, and national governments to create beneficial ownership registries and reporting frameworks targeting trusts and similar structures.
Key developments include:
- Common Reporting Standard (CRS): Over 100 jurisdictions now automatically exchange financial account information on trusts and their beneficiaries.
- EU DAC6/DAC7: Mandates disclosure of aggressive cross-border tax arrangements and digital platform activity.
- UK Trust Registration Service (TRS): All express trusts with UK connections must register unless specifically exempt, even if non-taxable.
- US Corporate Transparency Act (2024): For the first time, this Act requires disclosure of beneficial owners of entities, potentially impacting US-based trust and LLC structures.
- UAE UBO Rules & ESR: Offshore structures operating in the UAE must identify and report beneficial owners and prove economic substance.
These changes reflect a policy shift: the legal veil once afforded by trusts is no longer opaque by default. Family offices must now proactively restructure or reposition their trust arrangements to balance compliance with confidentiality.
Practical Implications for Family Offices
1. Transparency Is No Longer Optional
Beneficial ownership registries are becoming interconnected. The EU Beneficial Ownership Directive and OECD’s Tax Administration 3.0 envision a world where regulators exchange real-time data on UBOs, settlors, and beneficiaries. As a result, many once “invisible” trusts are now on regulators’ radars, particularly if they:
- Hold UK or EU property;
- Involve cross-border investments; and/or
- Are linked to politically exposed persons (PEPs)
2. Offshore Jurisdictions Are Under Pressure
Even jurisdictions like Jersey, Guernsey, BVI, and the Cayman Islands have implemented local UBO rules and joined CRS. Some (like Guernsey) now participate in DAC6-style reporting. The BVI’s 2023 Economic Substance Rulebook increased compliance demands, leading many family offices to:
- Migrate to “mid-shore” jurisdictions like Singapore or the UAE (DIFC/ADGM)
- Decentralise asset ownership using layered structures across multiple countries
- Reassess the use of nominee directors and protectors under new disclosure thresholds
3. TRS & ROE Are Traps for the Unwary
The UK TRS now captures not just domestic trusts but also non-UK trusts that:
- Acquire UK land or property
- Enter into UK business relationships
Failure to register can result in fines, and professional advisors (including law firms) can be held liable for non-compliance. Likewise, the Register of Overseas Entities (ROE) requires foreign entities holding UK property to disclose their beneficial owners. Structures designed pre-2021 must now be re-examined for compliance.
Case Study – Restructuring in Response to Transparency
Case: A UAE-based family office had established a discretionary trust in Jersey with corporate ownership layers in the BVI and held UK commercial property.
Challenge:
- TRS and ROE requirements exposed the trust’s details, undermining the family’s desire for privacy.
- CRS reporting created jurisdictional risk as some beneficiaries were based in high-tax jurisdictions.
Action:
- The trust was converted into a foundation structure under ADGM law (which doesn’t require UBO disclosure under CRS if certain conditions are met).
- Assets were restructured under a holding vehicle in Singapore, known for its strong privacy protections and tax treaties.
- The UK property was transferred into a UK LLP to comply with ROE and reduce tax leakage while maintaining operational control.
Outcome:
The family preserved confidentiality within the bounds of law, reduced cross-reporting risk, and complied with UK and UAE law, demonstrating that with skilled legal guidance, transparency can be navigated without total exposure.
Legal Recommendations for Family Offices
To protect confidentiality while maintaining compliance, family offices should:
- Audit All Existing Trust Structures
Review which trusts are reportable under TRS, CRS, DAC6, or US CTA and where they intersect. - Review Jurisdictional Risk
Map where settlors, beneficiaries, and trustees are located, and whether any structures involve flagged jurisdictions. - Adopt Forward-Looking Jurisdictions
Consider the UAE, Singapore, or Switzerland for private foundations or purpose trusts with robust but compliant privacy regimes. - Revisit Governance Documents
Ensure trust deeds, protector roles, and control provisions align with new disclosure obligations and don’t trigger unanticipated liabilities. - Use Legal Privilege Wisely
Where sensitive restructures are required, route communications through law firms to maintain confidentiality under legal privilege. - Educate Beneficiaries and Trustees
Ensure all parties understand the new transparency obligations and what will be reported on their behalf.
Concerned about how new transparency laws affect your trusts?
Book a confidential legal review with Linkilaw’s private client team to explore compliant alternatives tailored to your family’s structure and jurisdictional profile.
