The concept of trusts dates back to medieval England, where landowners would convey property to a trustee to manage for the benefit of a third party (the beneficiary). This arrangement allowed for greater flexibility in managing assets, particularly during times of war or political instability.
Trusts are established under a legal framework that involves three main parties:
Settlor: The person who creates the trust and transfers assets into it.
Trustee: The individual or institution that holds and manages the trust assets according to the terms of the trust deed.
Beneficiary: The person or entity that benefits from the trust, receiving income or assets as specified in the trust deed.
Trusts are designed to hold and manage assets for the benefit of beneficiaries, with the trustee legally obligated to act in the best interests of the beneficiaries. This structure can be used for a variety of purposes, including estate planning, asset protection, and charitable giving.
Trusts can shield assets from creditors, lawsuits, and other claims, particularly through Asset Protection Trusts. By transferring ownership of assets to a trust, the settlor can protect their wealth from potential legal challenges.
Trusts are a powerful tool for managing and distributing assets after death. They allow for precise control over how and when beneficiaries receive assets, helping to preserve wealth across generations.
Depending on the jurisdiction and type of trust, there can be significant tax benefits, such as reduced inheritance taxes, income tax deferral, and charitable deductions.
Trusts offer a level of privacy that other legal structures might not. The details of the trust, including the identity of the beneficiaries and the assets held, are not typically made public.
Trusts allow for continued management of assets beyond the lifetime of the settlor. This ensures that the settlor’s wishes are respected and provides for the long-term care of beneficiaries, such as minor children or individuals with special needs.
Trusts, especially Discretionary Trusts, offer flexibility in asset distribution. The trustee can adjust distributions based on the beneficiaries' circumstances and needs, ensuring they are supported appropriately.
The trustee has the discretion to decide how to distribute income and capital among the beneficiaries. The beneficiaries have no fixed entitlement to the trust’s assets.
Often used in family trusts to provide flexibility in how assets are distributed based on beneficiaries' needs.
The terms of the trust specify exactly how the income or capital will be distributed among the beneficiaries. The trustee has no discretion in these decisions.
Suitable when the settlor wants to ensure that beneficiaries receive a specific amount or proportion of the trust’s assets.
The trust’s assets are divided into units, with each unit holder (beneficiary) having a fixed interest in the trust proportional to the number of units they hold.
Common in collective investment schemes, such as mutual funds, where multiple investors pool their resources.
Established for charitable purposes, this type of trust benefits the public or a segment of the public. Charitable trusts often receive favorable tax treatment.
Ideal for individuals or organizations looking to support charitable causes while enjoying tax benefits.
The beneficiary has an immediate and absolute right to both the income and capital of the trust. The trustee’s role is limited to holding and managing the assets until the beneficiary directs otherwise.
Often used for holding assets on behalf of minors until they reach a certain age.
Designed to protect assets from creditors, legal claims, or divorce settlements. The assets are held in trust and are not considered the property of the settlor.
Commonly used by high-net-worth individuals to safeguard personal or family wealth from potential claims.
Created as part of a will, this trust only comes into effect upon the death of the settlor. It’s used to manage and distribute the deceased’s assets according to their wishes.
Useful in estate planning, especially for managing the inheritance of minors or dependents.
Revocable Trust: The settlor retains the right to amend or revoke the trust during their lifetime. It offers flexibility but may not provide the same level of asset protection as an irrevocable trust.
Irrevocable Trust: Once established, the settlor cannot change or terminate the trust without the beneficiaries' consent. This type of trust offers greater asset protection and potential tax benefits.
The trustee has only nominal title to the property and does not have any interest in the owner of the property, and furthermore, the trustee's creditors are not permitted to tamper with the trust assets. In addition, the trustee's creditors are prohibited from tampering with the trust assets. However, the trustee is required to fulfil management and countermeasure obligations in accordance with the status and duties of the owner of the property. Under a trust structure, the ownership, management and benefit of the assets are separated and the property is passed on through the hands of the trustee.
A trust is a legally recognised and protected method of managing and distributing personal property in an efficient, expeditious, smooth and orderly manner by transferring ownership of property at no cost to the next generation, relatives, friends and charitable organisations to the maximum extent possible.
The greatest advantage of a trust is the existence of a living framework that meets the needs of different assets for isolation and protection, while ensuring that the assets are managed and executed within a unified framework.
From the creation to the termination of a trust, each step of the process is a full expression of the intention of the creator. The settlor does not have to worry that the assets under the name of the trust are out of his control.
The choice of the location of the trust and the application of the law are essential to the safe operation of the trust.
The core foundation of an independent jurisdiction and a well-established body of trust law and legal provisions are the natural safeguards for the judicial independence in dealing with the trust, and the existence of the trusteeship of Ziyan and Fu Cheng are the core foundations for the independence of the judiciary and the independence of the trusteeship of Hong Kong.
The mission of Fu Cheng is to provide continuity and stability to the trust from the day it is created, continuity to perpetuate the life of the trust, and stability to preserve the quality of the trust.
As the assets have been transferred to the Trustee, the personal data and interests of the beneficiaries are absolutely protected until the termination of the Trust.