Author: Lawyer Zhang Jingxinyue, PRC-qualified Lawyer | Singapore Registered Foreign Lawyer
Editor's Note: In global asset allocation and wealth succession planning, trusts have become an indispensable tool for high-net-worth individuals. Singapore, with its sound trust regime and neutral and friendly tax system, has become the preferred jurisdiction for establishing family trusts globally. In the course of assisting clients with global asset allocation, the China-Singapore Legal News team provides trust structure advice, drafts and reviews trust deeds, etc., based on the client's circumstances and trust objectives. Drawing on practical experience, this article shares the operating mechanism, establishment process, fee standards and key advantages of the Singapore trust market, lifting the veil on Singapore trusts.
01 Overview of the Singapore Trust Market
In Singapore, any company engaged in trust business regulated under the Trust Companies Act (TCA) must hold a trust licence issued by the Monetary Authority of Singapore (MAS). Based on background and attributes, they can broadly be divided into two categories:
- Bank-affiliated trust companies: for example, trust institutions under major local and international banks in Singapore. These are suitable for clients with substantial bank assets, and the establishment process is relatively efficient.
- Independent trust companies: such as Vistra and Lion Trust. As independent third parties, they can serve clients' interests more flexibly and avoid potential conflicts with bank wealth management sales.
This segmented system provides diverse choices for high-net-worth clients with different needs.
02 Establishment Thresholds and Fee Overview
Many people often apply the domestic family trust threshold of RMB 10 million to Singapore. In fact, Singapore has no mandatory minimum asset threshold for establishing a family trust.
This is because the role of a Singapore trust company is to act as trustee, assisting clients in building a wealth structure and handling tax planning, rather than selling packaged wealth management products. Asset allocation and investment management are usually separately appointed to professional investment advisers, such as China-Singapore Legal News' licensed professional investment team.
As for fees, they mainly include:
- Set-up fees: usually ranging from several thousand to tens of thousands of US dollars, depending on the complexity of the trust structure and the scale of assets under management (AUM).
- Annual management fees: charged as a percentage of AUM, or under a fixed service fee model, depending on the trust company's policy and asset type.
03 Core Features of Singapore Trusts
(I) Discretionary Trust
Singapore family trusts are mostly discretionary trusts, meaning that the trustee has full discretion to manage, distribute and invest the trust property. This model ensures the independence and legal protection of trust assets.
It is important to note that settlors can generally retain the right to provide investment recommendations. Some clients also wish to act as protectors to indirectly manage the trust. This is a right that the settlor may retain, but the greater the powers retained, the weaker the asset segregation. We still advise clients to avoid excessive powers causing the trust to be invalidated as a sham trust.
(II) Perpetuity Period and Types of Trusts
The maximum duration of a Singapore trust can reach 100 years, sufficient to cover multi-generational succession goals. The types of trusts that can be established are very diverse, including but not limited to:
- Private Family Trust
- Flexible Grantor Trust (FGT)
- Private Trust Company (PTC) structures
- Charitable Trust
- Testamentary Trust
In recent years, particularly popular areas include: family office holding structure trust arrangements, family trust structures for Taiwan tax residents, and corporate equity trust planning, etc.
04 Basic Trust Establishment Process
The overall process is relatively standardised and mainly includes:
1. Client Due Diligence (KYC) and Trust Needs Questionnaire
Confirm the client's identity, source of wealth, purpose of establishment, etc.
2. Draft and Confirm the Terms of the Trust Deed
Although trust institutions have templates, it is recommended to instruct a lawyer to draft the trust deed and letter of wishes, and to repeatedly discuss and confirm details with the client.
3. Sign the Trust Deed and Related Documents
Formally establish the trust relationship.
4. Execution and Asset Injection
- Establish an associated holding company (if necessary)
- Open a dedicated bank account for the trust
- The client injects assets into the trust, and the trust formally begins operation
The entire establishment cycle generally takes 1–3 months, depending on the complexity of the structure and the client's readiness.
05 Why Choose a Singapore Trust?
As a leading global wealth management centre, Singapore has become the preferred destination for an increasing number of high-net-worth families and entrepreneurs to carry out wealth planning and succession, thanks to its sound legal system, tax-neutral policies and strict regulatory environment.
By properly establishing a trust, one can not only achieve asset segregation, tax optimisation and cross-generational succession, but also effectively enhance the overall risk resilience and compliance of wealth.
Summary:
Establishing a trust is not the exclusive preserve of the wealthy, but an option that anyone aspiring to manage wealth scientifically and realise their family vision can consider. Singapore's trust system provides global clients with a flexible, efficient and protected wealth management tool.
To learn more about establishing a Singapore trust and customising your trust solution, please contact the professional advisers at China-Singapore Legal News.
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This article is for informational reference only and does not constitute formal legal advice.
This article is general information and not legal advice. Specific matters require assessment by appropriately qualified professionals.