OWNING assets in different parts of the world may be a great thing for people when they are alive but after they die it can be a horror story for their heirs if correct financialplanning has been neglected. While trusts have long been used by the wealthy as methods of relieving inheritance tax for their heirs, a Hong Kong banker said it was important to look at long-term implications. 'This may seem very morbid but, frankly, it is something you have to talk about,' said Jonathan Hubbard, executive vice-president of the HSBC International Trustee Ltd. 'Whatever you do in trusts in terms of tax planning, you always have to look at the long term for the orderly succession of assets and wealth to the next generation. 'When someone dies, effectively all of their assets are frozen. To get the benefit of that wealth from one generation to the next, you have to go through probate [establish a document is genuine as in a will]. 'This can take over a year to achieve in Hong Kong. It is a public document so we never advise someone to leave money to their mistress in a will.' If a person has assets in different countries, the problem is compounded as probate will have to be obtained in each country. 'You have the complexity [of achieving probate], the time it takes, the public nature and expense. It is very traumatic when someone dies but those problems disappear as soon as you set up a trust as you no longer own anything.' Mr Hubbard said a trust cost between US$5,000 (HK$38,650) and $10,000 to set up and annual maintenance fees varied depending on the work carried out. He said US$1 million was a realistic figure for starting a trust. 'A trust doesn't solve investment problems. You still have an investment in a particular country. What you do is fold all of those assets into a trust,' he said. 'One of the dangers of people collecting assets from all over the world is they discover they are wealthy enough to have a problem and then transfer everything [to a trust]. If they had started from scratch and everything was owned by a trust it would be utopia.' As more people emigrate, Mr Hubbard discussed the implication of having a trust in a new domicile. Canada had recently implemented a reporting obligation for all trusts which could be interpreted as a sign of tightening up restrictions. He said this did not mean it was not tax effective but trust executors would need to be even more careful in protecting assets as tax assessors may target schemes that did not appear to work and tax them. 'In Canada, if a trust is properly set up before someone moves there, they can have up to five years exemption from income tax. If you calculate the offshore cash proceeds versus the Canadian income tax [roughly 50 per cent], it is easy to work out what the income would be and what the trust could save you.' Mr Hubbard said Australia had virtually closed down the use of offshore trust options for residents. 'If you are moving to Australia, it is difficult to use trusts for legitimate tax planning,' he said. In the US, people could undertake little such tax planning. 'You can still avoid the 55 per cent estate tax and make it an important savings in the long term,' he said. 'You have to pay the income tax every year but, if you get a savings of 55 per cent, on your death it doesn't benefit you but it does your family.' In Britain, a person of British origin cannot really use offshore trusts. It is a different situation for people moving to Britain. British domiciles who become residents can lead a tax-free existence for at least 15 years.