Trust in trusts
By Nikki Cheong, SingAlliance Pte Ltd
Trusts have adapted to suit the everchanging global financial and legal landscape, gaining popularity as family wealth becomes increasingly complex, with assets being held in multiple jurisdictions.
When assets are injected into a trust, legal ownership is transferred to the trustees who have the fiduciary duty to act in good faith for the benefit of the beneficiaries. Such an important role can be assumed by a person or a firm. An individual may find it hard not to yield to the emotional demands of family members, while a corporate trustee may be more objective and can provide continuity across generations.
Relinquishing control of hard-earned money to an external party requires a leap of faith. It is therefore unsurprising that some settlors may wish to retain a degree of control. There are various ways to do so, such as having a letter of wishes to guide the trust administration, setting up oneself as a beneficiary, appointing a protector to serve as a check on the power of trustees, or in the case of ultra-high-net-worth families, establishing private trust companies. However, it is critical to note that if the trustees are rendered as mere nominees, the validity of the trust may be challenged, thus losing the many benefits of setting it up in the first place. When set up correctly, trusts can ensure a smooth transfer of assets, reduce family strife, ease business succession, protect assets against creditors or certain family extensions, and optimise tax considerations as well as facilitate philanthropy.
It is crucial that the trust assets are put to work to cover ongoing costs and to serve the needs of future generations. The trustees can appoint an investment manager and other service providers to help generate a stable income. Ultimately, everything boils down to one word – “trust”. It is as much a noun as it is a verb. At the end of one’s life, it is important to have the enduring assurance that one has placed trust in the right people who will act in the best interest of their loved ones.
Nikki CheongGGI member firm
SingAlliance Pte Ltd
Advisory, Fiduciary and Estate Planning
T: +65 6303 5050
SingAlliance is an independent asset manager with presence in Singapore, Hong Kong, and Geneva, specialising in providing wealth management solutions to HNW individuals, families, and institutions. In Singapore, SingAlliance holds a Capital Market Services licence for Fund Management issued by the MAS.
Nikki Cheong is a Senior Relationship Manager at SingAlliance Singapore with more than 12 years of private wealth management experience in Hong Kong, Geneva, and Singapore. She first joined SingAlliance as a Portfolio Manager specialising in equities, before switching roles in early 2020 to service HNW clients in Asia.
Published: Trust & Estate Planning Newsletter, No. 07, Spring 2021 l Photo: wirojsid - stock.adobe.com