No. All the investment powers and asset management functions will be reserved by you. You are also obliged to assign a new trustee or revoke the trust deed anytime provided that you are the settlor of a revocable trust.
Yes. Trust regulation has predominantly evolved upon Common Law and equitable principles where fiduciary duty is the overarching requirement. In contrast, banking regulation is typically based on well formulated rules and regulations which govern almost all actions and reporting requirements which banking institutions need to follow to the letter.
Arguably, trust regulation provides the trustee with greater flexibility in terms of actions which it can execute on management of trust assets and in its reporting requirements. Trust regulation will often allow settlor and beneficiaries to maintain a significantly higher level of discretion.
From application of Common Law and equitable principles, the legal title of assets vested under trust (subject to certain timeline constraints) will no longer be in the name of the original contributor but be transferred to the trustee. Hence, personal creditors of the settlor or claimants under matrimonial, family feudal or other civil litigation will not be able to claim the assets under trust. Unlike under banking regulation, customers’ assets are under personal or corporate legal title which means there will be less legal protection from any legal challenge or claimant against the assets of the person or corporate.
s95(1) Trustee Ordinance provides that the Financial Secretary may at any time appoint an inspector to investigate the affairs and management of any trust company if it appears to the Financial Secretary that there are circumstances suggesting that the Trust Corporation is in breach of trust, persons concerned with its formation or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards it or towards its members or the Trust Corporation is insolvent etc.
s95(2) further provides that all officers and servants of the company have the duty to produce all books, accounts, vouchers and other documents in their custody or control in relation to matters under investigation, and to answer truly all inquiries addressed to them respecting any matter affecting the affairs of the company.
A trust set up in Hong Kong can last forever if you do not terminate it, which means your assets would be protected by a trust for an unlimited period. However, you can always terminate it if you are subject to a revocable trust (s3A Perpetuities and Accumulations Ordinance Cap. 257).
Section 89 of Chapter 29 of the Trustee Ordinance stipulates that all money, property and securities received or held by any trust company as a trustee shall always be kept separately from the money, property and securities of the company. Each trust is marked in the account book to distinguish it from any other money, property and securities in the company’s register and other account books. Therefore, no trust money shall form part of the company’s assets or be mixed with the company’s assets at any time . The client's assets will never be used to repay the debts of the trust company according to the Article 11 of Cap. 76 Recognition of Trusts Ordinance. Therefore, the trust assets are protected in law and not affected by the collapse of the Trust Company.