Singapore Private Trust Company Setup Guide

Trust is traditionally offered to aristocrats or ultra-wealthy families for legacy planning. However, as time goes by, finance institutions found that trust can also be relevant to everyday people as well.

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

What are Private Trust Companies?

A private trust company has since its establishment acted as a corporate trustee to a trust, by the appointment settlor that connects to the settlor.

Each beneficiary of the trust is a connected person to the settlor of such trust. Such a person can be:

• 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 a Singapore private trust company:

1. Confidentiality – Compared to an independent professional trustee, a private trust company is deemed to be more trustworthy and private
2. Control and influence – Board of a Singapore private trust company consists of a settlor, members of the family as well as a trusted advisor. The settlor and family members are directly involved in the decision-making process
3. Continuity – The agent may change but the private trust company will remain as trustee providing continuation of asset ownership
4. Diversified underlying assets – Singapore private trust company allows better choices to which investments can be made with the trust fund based on current knowledge of the economy and market
5. Ownership succession – A private trust company can be owned by the settlor or family members.

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 bound document after the person’s death.

Private Trust

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

People Involved in a Singapore Private Trust Company (PTC)?

Here are the people who have an interest when you set up a Singapore PTC.

• Settlor – The person in charge of creating the trust by transferring assets into PTC. It can be either an individual or a corporate entity
• Professional Administrator – Is 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 set to ensure the Professional Trustee acts by the terms of the trust. This cannot be the same person as a Professional Trustee to avoid conflict of interest.
• Professional Trustee – The person that holds the shares of PTC to overcome succession issues upon the demise of the 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 providing 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 to conduct necessary checks to comply with any written direction issued by the Monetary Authority of Singapore (MAS) on the prevention of money laundering or countering the financing of terrorism
• May only provide trust services to a private trust

Trust for Family members

Rising popularity

In recent years, the trusts have become more well-known due to their features that can override inheritance tax and gift tax which is otherwise taxable against the beneficiaries under certain jurisdictions if it is transferrable via the will.

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

Asset protection

For those with high-risk profiles, protecting their accumulation of wealth from being in any litigation is a usual concern. Hence, placing their wealth in trust will indirectly alienate the assets from such claims as the ownership that is transferrable to the trust and the beneficiaries are secure income from the trust.

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.

Confidentiality

Another benefit a trust provides is confidentiality, as it can be overseas and privately. Furthermore, trust assets would not be liable to any probate proceedings when the settlor passes away, minimising exposure to the public eye.

How Long Does a Trust Last?

However, take note that trust is not perpetual. Trusts created after 2004 last for 100 years. Subject to these new laws, the duration of a trust can choose by:

• The provisions in the trust deed
• When trust assets have been fully spread to beneficiaries
• When all beneficiaries unanimously consent to the termination of the trust