Family Trust

Family Trust

The Family Trust: The Essential Instrument for Wealth Succession and Asset Protection

Will vs. Trust

Last Will & Testament

  • One-time distribution event
  • Lacks ongoing management capability
  • Subject to complex Probate processes
  • Public record (No privacy)

Family Trust

A fiduciary arrangement where the settlor transfers legal title to a trustee, who manages assets per the Letter of Wishes.

  • Asset segregation (Legal Firewall)
  • Strict privacy and confidentiality
  • Avoids Probate entirely
  • Contingent/Needs-based distribution
  • Perpetual/Long-term planning

Why Establish a Trust?

9 Strategic Reasons

1
Asset Independence / Debt Isolation

Trust assets are legally separated from the settlor, remaining unaffected by personal solvency issues.

2
Long-Horizon Estate Planning

Circumvent forced heirship laws and protect family welfare in perpetuity according to your wishes.

3
Confidentiality

Asset details and distribution plans remain strictly private.

4
Dispute Mitigation

Avoid the acrimony of probate and potential family inheritance battles.

5
Tax / Pre-Immigration Planning

Divestment of assets prior to becoming a tax resident in high-tax jurisdictions.

6
Matrimonial Risk Insulation

Ensure generational wealth is not diluted by divorce settlements.

7
Spendthrift Protection

Safeguard assets for minors or beneficiaries who require financial oversight.

8
Multi-Jurisdictional Planning

Optimize tax exposure for family members across different tax residencies.

9
Retained Control

Settlors can retain investment powers through specific structures (e.g., VISTA Trusts).

Case Studies

Lydia Shum

Lydia Shum

Background: Passed away in 2008, leaving a 20-year-old daughter, Joyce Cheng.

Structure: Established a trust where the daughter received a fixed monthly stipend of HK$20,000, inheriting the corpus only at age 35.

Outcome: Protected the young beneficiary from squandering wealth or fraud, allowing her to mature into a self-reliant professional.

Anita Mui

Anita Mui

Structure: To prevent rapid depletion of assets, a trust was set up to cover her mother's living costs, a nephew's education, and charitable giving.

Outcome: Despite legal challenges, the trust successfully maintained asset integrity, preventing immediate dissipation.

Rockefeller / Rothschild

Dynastic Wealth

Structure: Implemented strict non-litigation clauses and utilized trust funds to cyclically purchase life insurance.

Outcome: Achieved sustained, exponential intergenerational wealth growth.

Jurisdictional Comparison

Feature Hong Kong Singapore BVI Cayman Islands Jersey Delaware, USA
Legal Framework English Common Law English Common Law English Common Law (VISTA Act) English Common Law Jersey Customary Law Delaware Statutory Trust Act
Trust Duration Perpetual 100 years 360 years (Purpose Trusts: Perpetual) 150 years Perpetual Perpetual
Reserved Powers Limited (Investment/Mgmt) Limited Extensive (VISTA) Permitted Permitted Permitted
Asset Protection Moderate Strong Robust (Limits foreign judgments) Robust (Limits foreign judgments) Strong Strong
Private Trust Company (PTC) Permitted Licensing/Exemption Required Permitted (Restricted Purpose) Permitted (Restricted Purpose) - -
Language Chinese/English Chinese/English English English English English
Hong Kong / Singapore

Ideal for Asian clients desiring proximity, cultural alignment, and time-zone convenience.

BVI / Cayman

Preferred for clients requiring maximum confidentiality, robust asset protection, and retained control over corporate operations (BVI VISTA).

Trust Structures

Structure 1: Financial Asset Holding

  1. Settlor → Establishes Trust
  2. Trustee (Yuzhong) → Holds BVI Holding Co. (100% Equity)
  3. BVI Holding Co. → Holds Bank/Investment Accounts

Client retains 'Limited Power of Attorney (LPOA)' to execute trading instructions directly with the bank.

Structure 2: Pre-IPO Holding

  1. Settlor (Founder) → Establishes Pre-IPO Trust
  2. Trustee → Holds BVI Holding Co. (100%)
  3. BVI Holding Co. → Holds Pre-IPO Entity (99%)

Client serves as Director, retaining operational control. Note: Compliance with China's 'Circular 37' and tax regulations is mandatory.

Establishment Process

10-Week Roadmap

1-2

Consultation

Needs assessment and solution proposal.

3-4

Engagement

Signing of Trust Engagement Letter, payment of setup fees, and KYC/Due Diligence clearance.

5-6

Documentation

Drafting/Revision of Trust Deed and incorporation of BVI Holding Company.

7-8

Banking

Opening of bank accounts under the trust structure.

9-10

Inception

Formal execution of Trust Deed, Asset Injection (Funding), and finalization of Letter of Wishes.

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