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Singapore Private Trust Company Setup Guide

8 min read|Last Updated: August 31, 2022|
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Trust was traditionally offered to the aristocrats or ultra-wealthy family for legacy planning. However, as time goes by, finance institutions found that trust can also be relevant to the everyday people as well.

To set up a Singapore Private Trust Company (PTC), you should know the requirements and responsibilities involved.

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Private Trust Companies

Private trust company is established to act as corporate trustee to a trust, created by the appointed settlor connected to the settlor.

Each beneficiary of the trust is a connected person in relation towards the settlor of such trust. Such a person can be described as:

  • Spouse
  • Descendants
  • Parents
  • Grandparents

What are the Benefits of Setting Up a Singapore Private Trust Company?

There is a list of benefits the trustee can gain by engaging Singapore private trust company:

  • Confidentiality – Compared to independent professional trustee, private trust company is deemed to be more trustworthy and private

  • Control and influence – Board of a Singapore private trust company consists of settlor, members of the family as well as trusted advisor. Settlor and family members are directly involved with the decision-making process

  • Continuity – The agent may change but the private trust company will remain as trustee providing continuation of asset ownership

  • Diversified underlying assets – Singapore private trust company allows better choice to which investments can be made with the trust fund based on current knowledge of the economy and market

  • Ownership succession – private trust company can be owned by settlor or family members appointed.

Will vs Trust

Will

A person’s will be a legal declaration of a person’s wish regarding the succession of the owner assets in a legally bind document after the person’s death.

Private Trust

A private trust is where the beneficiaries are definite and specific individuals which are already mentioned in the legally bind document. It can be owned even when the owner is still alive.

Who are the People Involved Within a Singapore Private Trust Company?

Here are the people who are involved when you setup a Singapore PTC.

  • Settlor – The person in charge to create the trust by transfer assets into PTC. It can be either an individual or a corporate entity

  • Professional administrator – Is basically the licensed trust Company in Singapore

  • Board of Directors – Normally involved the settlor, family members as well as advisors

  • Trustee – The person who acts as trustee of a private trust

  • Enforcer of Purpose Trust – This person is appointed to ensure the Professional Trustee acts in accordance with the terms of the trust. This cannot be the same person as Professional Trustee to avoid conflict of interest.

  • Professional Trustee – The person that holds the shares of PTC to overcome succession issues upon demise of settlor

Key Requirements for Singapore Private Trust Company Setup

The purpose of PTC is to provide trust services to the family and is prohibited from soliciting trust business from and provide trust services to the public.

  • Exempted under Trust Companies Act (TCA) from holding trust business license

  • Required under regulation 4(2) of Trust Companies (Exemption) Regulations to engage a licensed trust company to carry out trust administration services for the purpose of conducting necessary checks to comply with any written direction issued by Monetary Authority of Singapore (MAS) on the prevention of money laundering or countering the financing of terrorism
  • May only provide trust services to private trust

Trust for Family members

Rising popularity

In recent years, the trusts are becoming more well-known due to its features that can override inheritance tax and gift tax which is otherwise is taxable against the beneficiaries under certain jurisdiction if it is transferred via will.

In lieu of this, aristocrats often choses to pass on their inheritance to their children via trusts instead of will. Even though venturing into trust involves recurring cost such as service fees, however it is still considered cost effective as it provides more benefits such as tax savings and confidentiality.

Asset protection

Those who are considered as high-risk profiles, protecting their accumulated wealth from being attached to any litigation is a normal concern. Hence, placing their wealth in trust will indirectly alienate the assets from such claims as the ownership is transferred to the trust and settlor does not have any legal rights over the assets.

Business continuance

As for family businesses, placing their shares in the form of trust will ensure its continuance despite any potential disputes amongst the family members as well as bankruptcy. Hence, placing the shares in the form of trust will not on benefit the family members as beneficiaries but will also preserve the family business for generations to come.

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FAQs

Should I start a company in Singapore or Malaysia?2021-09-17T19:21:47+08:00

There are pros and cons to incorporating a company in both countries. Read more about it here!

What are the visas available in Singapore and can I apply for one if I set up a company here?2021-09-17T19:21:25+08:00

There are Employment pass, Entrepass, Personalised Employment pass, S Pass, and Work Permit. Each visa has its requirements, and you can find more about it here.

Why are investors setting up businesses in Singapore?2021-09-17T19:18:09+08:00

There are some reasons why investors are setting up businesses in Singapore. These reason include:

  • #1 in the Best Business Environment 2020 by The Economist Intelligence Unit
  • #1 in the Human Capital Index 2020 by World Bank Group
  • #1 in the Economic Freedom Index 2021 by The Heritage Foundation
  • #2 in the Ease of Doing Business Ranking 2021 by The World Bank
  • #3 in the Corruption Perceptions Index 2020 by Transparency International
  • #4 in the Starting A Business Ranking 2021 by The World Bank
  • #5 in the World Competitiveness Ranking 2021 by Institute for Management Development

Find out more reasons why here!

What is the tax rate in Singapore?2021-09-17T19:17:12+08:00

The corporate tax rate in Singapore is 17%. The personal income tax rate is capped at a maximum of 20%

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