Trust
A Trust is an entity where the donor give parts of his/her assets into and set in the Trust Deeds details of beneficiaries, donors and assets to be held in the Trust. Assets are allocated and distributed as per the donors’ wishes stated in Memorandum of Wishes. The Trust exists independently of and survives the donor to the trust. By giving the assets to the Trust, the donor gives up lawful ownership to the Trustee/s and beneficiary ownership to the Beneficiaries, therefore separates these assets from himself. The maximum period during which a trust can continue is 100 years.
A Singapore Trust is a legitimate, tax-efficient and safe way to protect global assets, including property, bank accounts, shares in companies, insurance policies and intellectual property. A Singapore Trust is integral part of estate and succession planning as it is a stable, long-term asset protection option.
A Singapore Trust benefits from Singapore’s strict client confidentiality laws while complying strictly with Organization for Economic Cooperation and Development (OECD) guidelines.
Furthermore, a Singapore Trust benefits from Singapore’s highly regulated Trust laws as well as economic, financial and political stability. Trustee Companies in Singapore are closely bound by the Trust Companies Act, the enforcement of which is supervised closely by the Monetary Authority of Singapore.
There are neither capital gains taxes, nor estate duty nor withholding tax imposed on income and capital distributions to the beneficiaries of a Singapore Trust. Successors of a Singapore Trust can be included as Beneficiaries during their lifetime without any estate duty implications. Non-Singapore residents may enjoy home country legal tax (income, estate, etc) exemption on Trust income. A tax accountant should work with the financial adviser to provide comprehensive advise.
There is no requirement for a Singapore Trust to be registered with the Singapore Government or any other authority in Singapore. The terms of a Singapore Trust are determined by the Trust Deeds and Memorandum of Wishes are adhered to throughout the existence of the Trust, therefore these assets will not be subject to forced heirship or inheritance laws.
In accordance with the Singapore Trustees Act, every Singapore Trust shall have at least one Trustee, and a maximum of four Trustees. The Trustee must be a Singapore-licensed Trust company or individual.
Uses of Trusts
Trust can be structured to meet many different purposes, even to influencing certain decisions and behaviours of Beneficiaries. Simply speaking a Trust is used set aside assets, segregated from exposure and potential risks to the client. The funds are to be managed by the Trustee/s with the assistance of Financial Advisers for various purposes, some stated below, the Donors set out to achieve.
Examples
Investment and/or Asset Trusts for Descendants
Funds are set aside to be managed by the Trustee, usually a Trust company, with the assistance of Financial Advisors to focus on wealth accumulation for the client’s family Legacy. The settlor wish to keep the family wealth within the family and transferable through generations.
Also called a family trust, the trust can make distributions of trust income only to beneficiaries of the trust who are within the ‘family group’. Family trust is used to assist in protecting the family group’s assets from the liabilities of one or more of the family members. Family trust provides a means of accessing favourable taxation treatment by ensuring all family members use their income tax “tax-free thresholds”. Most importantly it keeps the wealth and family businesses from being divided among individual members and lost eventually.
The right process can help a family that own and manage a business together to prepare for transitions. With the forming of family council and family business governance, family trust can help to solve succession problems in family businesses and maintain family shareholder unity and emotional commitment
This involves a shift in mentality from focusing on individuals to a collective ownership and responsibility over the family wealth for the benefit of the next generation. A family employment policy can help avoid arguments about who in the next generation is competent and qualified to work in the family business.
Philanthropy/charity Trust
Life has been good to the Settlor and he has accumulated enough to give his children enough money so that they could do anything, but not so much that they can do nothing at all. Philanthropy/charity trusts are set up for the purpose of giving to charity or a cause on longer term basis than a one time gift.
Trusts can be structured to facilitate the donation of money or goods to support a charitable cause or maintain philanthropic purposes over the long term of up to 100 years. Investing monies in income-producing investments or universal life policy will ensure the charitable trust be more meaningful. A trust council can also be setup involving the family or whom the settlor wishes, this gives the family incentive and opportunity to work together on a meaningful cause. Although the trust is irrevocable, you still have the power to change or add charitable beneficiaries at any time.
