It’s Never Too Early to Start Planning the Future of Your Assets
A Singapore trust is responsible for managing your assets and property for your beneficiaries once you are no longer around. This guide explains how to do it.
Why You Need a Singapore Trust
Because sometimes, sorting out your administrative details on your estate can be costly. Administrative costs are around 4% of the total estate value. Sorting out the details could result in long delays, sometimes taking as long as one year. At the end of that, you will be left with a very large tax bill, including inheritance or estate duty tax if applicable.
That is why trust is your best option. With some careful planning and the right guidance, you can get rid of delays and minimise the costs you incur. A trust gives you the added benefit of anonymity from future creditors.
Other reasons why you need a Singapore trust include:
- Better financial management. The trust will ensure that your assets are distributed to your next of kin the way you prescribed in your will.
- Better management and preservation of your assets until your beneficiaries are ready.
- Better financial planning to avoid waiting until the last minute to sort out your affairs.
- Your assets are protected by a heavily regulated industry.
- Some trusts allow you to use them for investment purposes.
- It secures your company’s assets in a tangible and intangible manner.
- Trusts are commonly used by charities to ensure assets are being utilised the right way.
- Having a trust could reduce your tax liability.
The Benefits of Having a Singapore Trust
Having a trust is going to save your next of from a lot of problems when you’re not here anymore. Some of these problems, like tax liabilities, can be very costly. Plus, your next of kin is going to be in a very emotional and vulnerable state. It is not the best time for them to be trying to sort out your financial affairs. The main purpose of having a trust is for better asset preservation and wealth control. It protects your assets from lawsuits and creditors.
Therefore, Singapore trust is the way to go. A trust is not a legal entity. It is a relationship where you transfer your property from one person to the next (trustee). The trustee will later distribute your assets to your beneficiaries per your terms and conditions. A person of your choice. Your trust will have all the terms and conditions about how the assets should be distributed.
You don’t have to worry about your property being in the hands of a trustee. English common law has a clear distinction between legal ownership and beneficial ownership. A trustee should be professional with an excellent reputation within the jurisdiction. For example, in Singapore, 3E Accounting has a reputation for being the best in the business, professional and trustworthy all the way. In Singapore, all trustees must be licensed, further adding to the security measures.
Under the Singapore trust law, there is strict confidentiality when it comes to assets and banking. You will be well-protected from false heirship claims. You also don’t need to pay any capital gains, estate duty, or inheritance taxes. Trusts in Singapore also have a very strong reputation and sound infrastructure. This is the most secure place in the world for business and all financial-related matters.
Who Will License the Trustees?
The Trustees Act in Singapore mandates the duties and responsibilities per the English trust law principles. Singapore’s trust laws are modern, but they are also conservative. The 2005 Trust Companies Act (TCA) governs all of Singapore’s trusts and acts as the regulatory and legislative framework.
A professional trustee company must be licensed by the Monetary Authority of Singapore (MAS) under the TCA. The TCA has very strict confidentiality rules that must be followed. Therefore, you can rest easy knowing that this is one of the most well-regulated industries in the world.
What Type of Trusts Should I Use?
You will have several options for Singapore trust to choose from:
- Private Family – If you intend to protect your wealth for your family, then this is the trust for you. It can be done using a deed, will or declaration. It will protect your assets from creditors in the case of bankruptcy, government authorities, probate proceedings and exchange controls.
- Collective Investment – This is for investment purposes only. It includes business, unit and real estate trusts under this category. This is a risky one and there are high fees and costs involved.
- Testamentary – This can be done by using a will and will be effective once the settlor passes away. It is a useful one to have if you have young children or a dependant with special needs. It is an irrevocable trust.
- Revocable – This type of trust can be terminated, cancelled or changed. However, this option means you are subject to estate duty. Your assets are also not protected from creditors if you become bankrupt.
- Irrevocable – If you go with this option, you cannot reclaim your assets. This will protect you from creditors if you have made the trust more than five years before your bankruptcy.
- Charitable – Under this option, you don’t need to comply with the rules of making a trust. For example, perpetuity and certainty of the object are not a requirement. This has tax relief and tax exemptions, but you can’t specify who your beneficiaries are under this option.
- Asset Protection – This option protects your assets from business or investment loss. While under protection your assets will not be considered part of your estate. If you become bankrupt, your assets will be protected. Assets will be distributed after you have passed on.
- Discretionary – Your chosen trustee will have complete discretion under this option. They will get to decide who the assets get distributed to. Your assets are protected in the event you become bankrupt.
How to Create a Singapore Trust
A trust is made by using either a will, contract, or deed. You will need to abide by the following conditions when preparing your trust:
- You must have the legal and mental capacity to create this trust at the time of creation.
- Set an intention to create a trust.
- Be certain with your specific assets.
- Create the trust for the benefit of the legal person (unless there is no beneficiary).
- Your trust must comply with the local laws
A trust comes into effect once the assets have been transferred to the chosen trustees.
Need to Establish a Trust in Singapore?
We’re here to help. We are the most trustworthy name in the business. Our years of experience ensure that your best interests will always be looked after. Protect your future and secure it for your next of kin by contacting us today.