Establishment of a trust in Singapore

Being one of the leading financial centers in the world, Singapore is an excellent jurisdiction for the establishment of a trust fund. The main advantages of setting up a trust fund in Singapore include:

• investor-friendly business policies;
• business-friendly tax regime;
• presence of global financial institutions.

Establishment of a Trust Fund in Singapore

A trust is a legal contract, according to which a right to property is transferred from one party to the other. Beneficiaries, in their turn, benefit from assets managed by a trust fund.

Singapore Trust Law

According to Singapore trust law:

• a trust founder has a right to make investment decisions;
• foreign laws are not enforceable against trusts in Singapore;
• proxies must be extremely cautious while executing their duties.

Advantages of registering trusts in Singapore include:

• no requirements for registering a trust in Singapore;
• privacy laws;
• a founder has a right to reserve certain powers;
• a founder also has a right to determine people who will control proxies’ actions;
• no tax on capital gains, inheritance or gifts;
• international trusts may qualify for tax cuts.

Establishment of a Trust in Singapore

The most popular trust type in Singapore is a family trust. By establishing a trust, its founder(s) achieve reliable asset protection and get to keep their assets in their families.

Opening of a Family Trust in Singapore

A trust is established on the basis of an agreement containing:

• description of a founder’s intention to establish a trust fund in Singapore;
• description of assets managed by a trust;
• description of a founder’s intentions with regard to transferring authority to manage a trust’s property to managers
• description of beneficiaries.

When establishing a Singapore trust, a founder can transfer management of the following types of property: stocks, land, real estate and other property, money, family wealth, business, etc.

Duration of a Trust

Trusts established in Singapore after 12/15/04 can exist for up to 100 years. Their duration is determined by:

• contractual provisions;
• distribution of assets between beneficiaries (when funds are distributed, a trust ceases to exist);
• a beneficiary agreement on liquidation of a trust.

Taxation of International Trusts in Singapore

An international trust is an entity whose founder and beneficiaries are foreigners. International trusts may be exempt from taxes on:

• dividends and interest earned outside of Singapore;
• royalty and similar profits arising from property located outside of Singapore;
• investment profit;
• distributions from foreign funds.

Please keep in mind that Singapore has no currency controls.