Establishment of a trust in Singapore
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.

Looking to set up a trust in Singapore? Need advice on establishing a trust in Singapore? Why not contact YB Case?

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