What is Trust?
Have you ever heard of global private trusts?
You often hear about wealthy individuals using private trusts to safeguard their assets, minimize taxes, and even wealth inheritance. But what exactly is a trust? Is it something that only the “rich” need to establish? Let’s provide a simple explanation of what a trust is, and you’ll discover that private trusts have powerful benefits that are not limited to the affluent. Even the general public can utilize trusts for flexible long-term planning.
What is Trust?
A private trust is a private arrangement between two parties: the settlor and the trustee. The settlor is the person who creates trust. A trustee is the person or trust company that holds and administers property or assets for the benefit of the third party who is called the beneficiary, the person or persons who have entitled the beneficial ownership of the trust assets.
Here is the basic trust structure:
Who can be the settlor? Who can set up a trust?
An Individual
A single person can set up a trust account. It’s just like your bank account.
Any two people
Similar to a joint bank account, a trust account can also be held by one individual and a spouse, partner, family member, or business partner. Assets in joint trust accounts belong to both owners.
A Corporate
Similar to business accounts, companies of any size can set up a corporate trust account.
Who can be the beneficiary?
Choosing Beneficiaries — Determining who gets what and when
Generally speaking, there are no restrictions as to who can be a beneficiary of a trust
A beneficiary can be
• a person
• a described group of people (a class of beneficiaries). An example of a class of beneficiaries is
• “the grandchildren of A”. Describing the beneficiaries as a class will not make the
• trust invalid provided that at some point members of the class will be able to be
• specifically identified.
• a minor
• a person under a mental disability
• unborn children
• a charity
• a company
What types of assets I can inject into the trust?
Financial assets
• Cash in multiple currencies (we also offer offshore bank accounts)
• Stocks, bonds, and other investment
• Precious metal
• Large life insurance policies (if the beneficiary is a child, the insurance trust can store the policy compensation in the trust, managed by the Trust Company for the child, until the child reaches adulthood before allocating assets, avoiding possible family disputes)
• SME ownership and income (small business shares, partnership income, or limited liability company ownership)
Non-financial assets
• Works of art, aircraft, yachts
• Automobile
• Real estate
Moreover, the Hong Kong High Court confirmed on March 31, 2023, that cryptocurrencies can be held in trusts. This means that settlors can also transfer digital assets into trusts for secure custody or investment purposes, protecting them against potential losses resulting from hacking incidents or collapse of platforms.
In addition to asset protection, settlors can utilize trusts for compliant tax planning, reducing tax burdens. Trust assets benefit from legal protection and segregation worldwide, ensuring a high level of privacy. Trusts are not solely reserved for the wealthy; individuals from all walks of life, including those with digital assets, can utilize trusts for safeguarding their wealth.
If you want to learn more about trusts, stay tuned for our upcoming article in Knowledge of Trust.
For e further guidance regarding trust establishment or any related topics, please feel free to reach out to us at info@unitrustglobal.com
Or visit our website at https://www.unitrustglobal.com
You can stay updated by following us on
Instagram https://www.instagram.com/unitrustglobal
Twitter https://twitter.com/unitrustglobal
Facebook https://www.facebook.com/unitrustglobal
YouTube https://www.youtube.com/@unitrustglobal2703
LinkedIn https://www.linkedin.com/company/unitrust-global-limited
