Learn the Different Types of Trust in Singapore Today to Manage Your Assets and Property
We know that you put mighty effort to acquire and manage your hard-earned assets. But what happens to them after your passing? Assets and wealth are an essential part of your legacy that needs to be preserved with the utmost care. That’s why more and more people are planning their wills thoroughly in the course of an unpredictable, unfortunate event. There are a few types of trust in Singapore for you to consider in managing your assets.
But First, What is a Trust?
Trust is a legal document that is created during the lifetime of a person and is designed to survive the person’s death. It is a three-party fiduciary relationship and involves the trustor, trustee and the beneficiary. How a trust works is a trustor, will entrust their trustee to hold certain assets, property, or sum for the recipient. To make it simple, the first party transfers property upon the second party, for the benefit of the third party.
Why Is Trust Important?
Having a trust made during your lifetime gives you the peace of mind of who will get what and when after your demise. Not only that, but trust is also a black and white document that contains all the terms and conditions of how your belongings will be distributed after you die, clearly for you and your beneficiary. Besides, it also reduces estate and gift taxes and protects your assets from lawsuits or creditors. With a trust, your heirs can smoothly acquire your assets without involving cost, delay and publicity of probate court. Therefore, it is essential for you to know the different types of trust in Singapore so that you can pick the most suitable one fitted for your needs.
Types of Trust in Singapore
These are a few types of trust in Singapore:
- Testamentary trust
Testamentary trust or will trust, is a trust which is only valid after the passing of the trustor. Through the will, the assets of the trustor who has passed away will flow to the testamentary trust and are subject to the terms, conditions and duration of the Grant of Probate process. One key thing to remember about testamentary trusts is that in an event where the trustor’s mental capacity has severely deteriorated due to medical conditions, including dementia or a coma, the distribution of the trust cannot be carried out. Testamentary trust has the lowest set-up rate; only an annual fee is applied after the trust is activated after the probate process.
- Intervivos Trust
Intervivos trust or living trust is a trust that is created during the lifetime of a person and is a legal entity from the beginning. The property or assets of the person is placed in them during their lifetime and allows the Central Provident Fund (CPF) nominations and insurance plans assignment. How this trust works is the trustee will look after the trustor’s dependants, in an even where the trustor has mental incapacity and upon death. The Intervivos trust allows the trustor to revise the Letter of Wishes at any time, which contains the information of the distribution of assets or sum of money. The good thing about this trust is that it is safeguards assets from creditors and unnecessary tax. This type of trust requires higher fees to set up; stamp duties and charges apply as well. Not only that, but annual administration fees for the trust can also be paid right after the trust is made.
- Standby Trust
Standby trust a fusion of the testamentary and Intervivos trusts. This hybrid trust is popular as you can get the best of the two previous trusts. The standby trust has little, or no assets placed in it during the trustor’s lifetime. It also contains a provision for mental incapacity and allowing for CPF nominations and insurance policies assignments. Not only that, but the standby trust is also created without the fees applied to the assets transfer and ongoing administration. The fee for the standby trust is affordable and is lower than the Intervivos trusts. Annual fees are minimal, as long as the trust is dormant.
How Can I Create My Own Trust?
We understand that your assets and property inheritance are crucial for your family’s future. That’s why 3E Accounting Singapore offers you plenty of trust planning services, such as will writing and translation, a private trust set up, trust management, trust planning services and more. We are a global network of trained experts in the field of taxation, secretarial and accounting who strive to deliver above and beyond for our clients. Consult us today and start your will planning now!