Why You May Want to Consider Establishing a Trust in Hong Kong

3 min readAug 30, 2023

5 advantages of setting up a trust account in Hong Kong

As an international metropolis, Hong Kong is renowned worldwide for its modernized trust services. Hong Kong Trusts offer comprehensive options for trust control, making it the preferred choice for settlors. As of December 31st, 2021, the total value of assets held by Hong Kong Trusts reached an impressive HKD 4,719 billion, surpassing even the city’s foreign exchange reserves. This raises a crucial question: Why are people from around the world so enthusiastic about establishing trusts in Hong Kong? Below are the five key advantages of setting up a trust in Hong Kong:

1. Settlors can have greater control over their trusts

In most jurisdictions, settlors don’t have broad default powers over their trust administration and operation. However, Hong Kong grants a wide range of control to settlors.

Settlor’s Reserve Investment Powers Hong Kong law permits the settlor of a trust to reserve investment management powers without invalidating a Hong Kong trust. As a result, settlors can maintain a high degree of control over how the trust invests its assets. It offers Settlors additional piece of mind in the unlikely event of a loss occurring. In contrast, in some jurisdictions, a settlor of a trust cannot retain any control over the day-to-day operation of the trust.
Power to appoint agents, nominees, and custodians to perform duties on their behalf Hong Kong has a pool of professionals in the financial service area such as trust service, accountancy, banking, investment, legal counseling, etc.
Removal Of Trustees A court-free process is available for beneficiaries who are of full age and capacity and who are absolutely entitled under a trust to replace existing trustees with new ones without terminating the trust.

2. Hong Kong trusts enjoy a range of multiple tax benefits

Hong Kong is a favored tax jurisdiction for private trusts. Hong Kong does not treat trusts like businesses, so any estate held in trust is not taxable unless you generate income from rent from Hong Kong real estate. Income derived by a trust from assets outside Hong Kong is not taxable to the trustee, the beneficiaries, or the trust entity itself. With this rule in mind, assets and profits from the trust will not be subjected to:

Income Tax on pension distributions
Capital Gains Tax
Inheritance Tax
No Dividends Tax
Tax on Interest Deposits

3. Total protection from forced heirship

Hong Kong has no forced heirship laws. This means the settlor has full freedom to make arrangements for the division of assets. The protection from forced heirship laws makes Hong Kong a more attractive trust domicile, especially for settlors from jurisdictions that have forced heirship laws (e.g. France, Japan). The properties in trusts are also beyond the reach of any other jurisdiction and creditors.

4. Hong Kong Trust is perpetual

Trusts typically have a duration that depends on the jurisdiction in which the trust is established.

For example, in New Zealand, the maximum perpetual duration for a trust is 80 years, while in Singapore, it is 100 years. In the British Virgin Islands, it is 360 years. In contrast, Hong Kong does not have such limitations, allowing trusts to exist indefinitely. This makes Hong Kong an ideal choice for long-term planning, asset protection, and multi-generational wealth management, as it allows for extended planning periods without the constraint of a fixed time limit.

5. Hundred years of history

The Hong Kong trust has a history of over 100 years. Among the 160 trustees in Hong Kong, there have been no reported closings or bankruptcies.

When it comes to establishing and managing trusts, Hong Kong shines as an exceptional destination. The legal environment is supportive, with tax laws often favoring the objectives of trusts. Moreover, there is significant freedom to customize trust arrangements according to your preferences, without any interference from mandatory inheritance rights or laws imposing permanent restrictions. Choosing to establish a trust in Hong Kong is a wise decision that offers you a world of possibilities and unparalleled flexibility.