Dovetailing the robust growth of private banking and wealth management industries and strong growth in Singapore trust services, Singapore strengthened its status as an international financial centre.
Singapore is seen as an enticing base for trusts based on its;
- Political stability
- Common law legal framework
- Internationally compliant regulation
- Economic stability
- The highly competitive tax regime
- excellent infrastructure
- Multiple comprehensive double tax agreements (DTAs), including with many of its Asian neighbours.
Asian Family Businesses
Asian family businesses form the backbone of the economy in the Asia Pacific region, with 85% of companies owned by a family group.
A research study found that 20% of the top 750 global family businesses are Asia-based, with combined revenue of USD2 trillion.
Many family businesses will be undergoing a transition in the next five years. It is anticipated that over 30% will undergo a generational change.
Trusts
A well-planned trust structure is a flexible vehicle ensuring a smooth succession of assets and protecting wealth for the next generation.
It allows you to maintain confidentiality while ensuring that your wealth will be well cared for.
Pre-IPO trusts are also valuable for securing wealth and liquidity created during an IPO.
Trusts are not legal entities. It is best described as an arrangement where the asset is transferred to a trustee who then holds that asset for
the gain of specified people or objects.
The lack of formal requirements for trusts, and the flexibility of a trust, make them uniquely useful for estate and succession planning.
Singapore Trusts
In Singapore, trusts are regulated principally by the Trustees Act. The Act was significantly revised in 2004. Singapore trust laws are primarily based on English trust law.
Here are the essential features of Singapore trust law:
- No registration is required to establish a trust in Singapore.
- No currency restrictions on the remittance of capital or profits in or out of Singapore.
- Powers of investment reserved for the settlor, which permits a settlor to retain some or all abilities of investment or asset management functions.
- Although Singapore has anti-forced heirship provisions, foreign forced heirship laws are not generally enforceable.
- As a trustee, you have a statutory duty of care in exercising your powers.
Many Singaporean and foreign High Net Worth Individuals are choosing Singapore trusts as their preferred vehicle for succession planning and wealth management because of the advantages Singapore offers as a trust jurisdiction.
Next steps
If you have any general queries about this article on Singapore Trusts or Singapore tax matters, please do not hesitate to get in touch.