General FAQ

A Trust is a fiduciary relationship in which one party, known as a settlor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. The trustee can professionally manage the settlor’s property in accordance with his or her instructions.

Trust is widely recognized around the world. Overseas courts and prestigious financial institutions also recognize such structure. In Hong Kong, a trustee is not only bounded by Hong Kong Trust Law (Trustee Ordinance Cap.29 and Recognition of Trusts Ordinance Cap. 76) but also the Hague Convention of International Law.

The Law of Trust developed in the United Kingdom hundreds of years ago. In the past, it was constructed as part of the equity which helped to reduce the strictness of the Common Law. Nowadays, all these past judgements have become the main source of law in Hong Kong and other Commonwealth countries.

1) High compliance regulation

Trust service in Hong Kong has a history of more than 100 years and are regulated by the Hong Kong Trustee Ordinance, which mirrors British Trust Law. Hong Kong trusts are also protected by the Hong Kong Recognition of Trusts Ordinance of which The Hague Convention also applies to it. Trust licensed companies in Hong Kong are directly monitored by the Financial Secretary of the Hong Kong Special Administrative Region.

2) Independence of the trust asset

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.

UniTrust Global Limited is regulated by a high standard legal and compliance department and fulfills all legal requirements. In accordance with Section 2(1), Chapter 1 Section 2(a), of the Trust Recognition Ordinance (Cap. 76), the assets of the trust are an independent fund, held in the name of the trustee, and the client and asset information is confidential. All trust management and operation will be carried out in the name of the trustee (UniTrust Global Limited), the assets and contents of the trust are strictly confidential and will not be disclosed to any third parties.

The custodial trust service provided by UniTrust Global Limited can act as a firewall of property. According to Section 89 of Chapter 29 of the Trustee Ordinance, the trust assets are a separate fund that is not part of the Trust Company's property. Furthermore, the legal title of trust assets is the trustee, who is responsible for managing the trust assets in accordance with the terms and special duties imposed on him. If the purpose of the trust is not illegal and the trust period is more than 5 years, the chance of the trust assets being claimed is low.

Family trust is a type of private trust. A family trust is any trust vehicle that you've set up to benefit members of your family. The family trust is a popular vehicle in estate planning. You know your family best, and a family trust can help you customize how you provide for your family, both during your lifetime and after your death.

The initial trust property of a family trust can be:

· Current assets (e.g. cash, securities, fund units)

· Fixed assets (e.g. land and real estate, art, antiques and collectibles)

· Contracts and agreements (e.g. including insurance contracts, private contracts, commercial agreements)

Benefits of a Family Trust:

· Avoid expensive court certification procedures for probate of the Will while the estate might be being frozen during the probate period.

· High confidentiality. Estate information does not become a public record like a Will.

· Promote family harmony since family trust is very difficult to refute or challenge.

· Prevent squandering money for pleasure in the next generations. Family trust can distribute the property exactly as you want to avoid future generations being profligate.

· Scalable. the establishment can increase assets at any time as needed, and the establishment of a "durable power of attorney" to designate someone to deal with in times when they cannot manage the transaction.

· When the establishment loses the legal physical and will judgment ability, it is not necessary to appoint an asset manager through a certified court.

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.

Anyone. You, as a settlor of the trust, can also be the beneficiary of your own trust. According to Section 2(c) Recognition of Trusts Ordinance (Cap. 76), if you have not decided who will be the beneficiary/beneficiaries of your trust, you can always assign a class of persons as your beneficiaries. For instance, your children or grandchildren.

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).

Under section 41Y of the Trustee Ordinance (Cap. 29), the validity of transfer of movable assets would not be affected by the foreign law of succession. For immovable property, clients should make a transfer in accordance with the law of the country where the property is situated.

Yes. You can assign a class of persons as your beneficiaries. For instance, your children or grandchildren. Under s46 Trustee Ordinance (Cap. 29), where any interest in land is subject to a contingent right in an unborn person or class of unborn persons who, on coming into existence would, in respect thereof, become entitled to or possessed of that interest on any trust, the court may make an order releasing the land or interest therein from the contingent right, or may make an order vesting in any person the estate or interest to or of which the unborn person or class of unborn persons would, on coming into existence, be entitled or possessed in the land.

The Law of China strictly restricts transfer of assets to other countries. In most cases, assets held in China cannot be transferred to an offshore family trust directly. If these assets are held or will be held by an overseas company, you can consider having your trustee hold that overseas company on trust for and on behalf of you. Our legal department will assess whether or not that is feasible and provide alternatives which fit your situation.

The custodial trust service provided by UniTrust Global Limited can act as a firewall of property. According to Section 89 of Chapter 29 of the Trustee Ordinance, the trust assets are a separate fund that is not part of the Trust Company's property. Furthermore, the legal title of trust assets is the trustee, who is responsible for managing the trust assets in accordance with the terms and special duties imposed on him. Therefore, if you are involved in matrimonial proceedings, the assets which are held in your trust account will not form part of your matrimonial property. Furthermore, if the purpose of the trust is not illegal and the trust period is more than 5 years, the chance of the trust assets being claimed is low.

Your assets will then be distributed in accordance to s4 Intestates’ Estates Ordinance (Cap. 73). The family members of the deceased have to apply for a death certificate and then they can apply for a grant of probate at the high court. Rule 21 Non-contentious Probate Rules (Cap 10A) provides that where a person dies wholly intestate, the persons having a beneficial interest in the estate shall be entitled to a grant to administration. For instance, the surviving spouse, children or parents of the deceased.

If you have set up a trust which is managed by a licensed trust company, the trustee will distribute the trust assets in accordance to his or her wishes when the settlor dies. The beneficiaries do not need to go through all kinds of expensive and long statutory procedures. You also do not have to choose an executor(s). To avoid any dispute in the future, you are advised to make arrangements when you are of sound mind.

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.

Background

Walter Kwok was a Hong Kong real estate developer. He was the eldest son of Kwok Tak-seng, founder of Sun Hung Kai Properties, and his wife Kwong Siu-hing. Following their father's death in 1990, he and his brothers Thomas and Raymond inherited Sun Hung Kai Properties. To protect HK$246.6 billion Sun Hung Kai Properties empire, Kwok Tak-seng set up a family trust before his death. The beneficiaries are his sons and his wife who is also the protector of the family trust.

Until Walter Kwok’s mother figured out the relationship between and Kwok and Kwok’s mistress, Ida Tong Kam-hing, she decided to remove Kwok as a beneficiary out of the family trust in order to protect the family asset.

Benefit of Trust

Integrate assets into a robust legal framework helps to separate trust assets from personal assets. The legal ownership of trust assets does not belong to the settlor or beneficiary. Under a specific trust structure, if the settlor encounters a debt crisis or divorce, etc., it will not affect the ownership of the trust property.

There is no public disclosure requirement for family trusts and the actual beneficiaries will not be threatened by security.

Law Reference

1) Section 2(1) of the Trust Recognition Ordinance

2) Note that section 43(1a) of Chapter 6 of the Bankruptcy Ordinance, Chapter 32 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance and Chapter 219 of the Conveyancing and Property Ordinance, stating that the liquidator has the right to recover Certain situations of unfair transactions, for example, if the deployment takes place within a certain period of time before the bankruptcy or liquidation process begins.

News Reference

Walter Kwok puts faith in original family trust deal

Background

Jolin Tsai is a Taiwanese Mandopop star and a well-known billionaire. She has been in a steady relationship with New Zealand-born model beau Vivian Dawson for the past four years and wedding rumour have been rife. However, the singer’s father is reportedly worried about incompatibility in status between the pair and that they could end up in a divorce if they decide to get married. As a result, Tsai has trusted Jolin’s NT$2 billion (approximately S$84.4million) assets to the bank as a precaution.

Benefit of Trust

Trust protects assets from divorce proceedings, and restricts the beneficiary of the trust through “conditional distribution” to avoid disputes arising from the division of property.

Note: The establishment of a trust does not completely avoid assets disputes. If the settlor has thought of divorcing a few years after establishing the trust, the trust scheme or arrangement which is, or is likely to be treated by the court to be, a fraudulent attempt by one spouse to defeat the other spouse’s ancillary relief or financial remedy claims.

Law Reference

Section 11c of Chapter 76 of the Trust Recognition Ordinance

News Reference

Jolin Tsai’s assets reportedly trusted to bank

Background

Mr Vadim Schmidt sought disclosure of accounts and information in relation to two trusts set up by his father, who had died intestate. Rosewood Trustee Ltd was the trustee of the two relevant trusts. The defendant trustee argued that Schmidt was not entitled to the disclosure of the trust documents because he did not have a proprietary interest under the trust. Nor had his father been the settlor under the trust, which had been executed by Pacquerette Ltd as settlor (the nominee of Mr Schmidt).

Benefit of Trust

Trust is a high-standard legal arrangement, inheritance information does not become public records like a will, and the wealth will be kept in a legal, safe and private structure. After the establishment of a family trust, the management and use of the trust property are carried out in the name of the trustee. Except for special circumstances, the trustee has no right to disclose the operation of the family trust property any extreme party.

Note: The beneficiary has the right to request the disclosure of the trust file, but it is best to treat this right as an exchange of the court's inherent jurisdiction. , the court supervises and intervenes in trust management as appropriate.

Law Reference

Section 11c of Chapter 76 of the Trust Recognition Ordinance

Court Case Reference

Beneficiaries' rights to trust information in the light of Schmidt v Rosewood Trust Limited

Background

If there is a Will, the Registry would validate the Will and issue a legal document called the 'Grant of Probate'. One of the reasons is to prevent someone from forging the will. Usually it takes a long time to receive it before having access to the assets. Hence, the family may not be able to meet the immediate financial needs, such as mortgage payment, children's living expenses and school tuition fees, family living expenses, etc.

Benefit of Trust

Clients can consider a testamentary trust to arrange Hong Kong properties to be transferred to the trust after the client passes away without paying stamp duty. Trustee can also facilitate the family’s (if beneficiary to trust) immediate needs.

Law Reference

Section 2a of Chapter 76 of the Trust Recognition Ordinance

Court Case Reference

Late tycoon Nina Wang’s charitable foundation files bankruptcy petition against former ‘lover’ Peter Chan, jailed for forging her will

Background

Anita Mui was a popular Hong Kong singer and actress making major contributions to the Cantopop music scene. She had set up a trust fund that had prevented her mother and elder brother from misusing her inhe­ritance by providing them monthly allowance.

Benefit of Trust

Beneficiaries are chosen by the settlor and the list of beneficiaries can always be amended. Distribution of assets can be done in different ways. For instance, one-off distribution and regular distribution can be selected. Settlor may even set conditions in the distribution of assets over time.

News Reference

Pop diva Anita Mui's mother to get allowance from trust
Anita Mui’s mum gets RM130,000 for party

Background

Emily, 45 years old, runs an online cosmetic shop for many years. She has 3 offices in Hong Kong, Zhuhai and Shenzhen with staff of around 20. She was divorced two years ago. She is now living with her son of 5 years old and her mother. She gained reputation by word of mouth, now her shop has over 50,000 members. The business brings her monthly revenue of about HK$200,000, and can be up to HK$400,000 during peak season. She accumulates her wealth to HK$5,000,000 which includes stocks and cash. She recently is in love with a gentleman while concerning the consequences of her wealth and child if someday she gets married and the marriage ends up unwell.

Solution from UniTrust:

• Set up a private trust for Emily for asset protection and estate planning.
• Manage her assets with our platform, allowing her to trade and transfer freely
• Manage her securities account, assist for to trade stock without any delay
• UniTrust’s solution solves all problems for Emily and are able to meet her needs

Background

Mr Xu is 40 years old, holding a HKID card and PRC passport. He has lived in Hong Kong with his wife for over 10 years. He is an IT expert working in a multinational company. His work hour is long, sometimes he works until mid-night. They are financially independent. He has a high interest in trading of stock. His accumulated wealth is around HK$12M. He seeks for asset privacy and a platform allowing him to have fund flow flexibility.

Solution from UniTrust:

• Set up a custodian trust for Mr Xu
• Trustee acts according to his instruction to transact crypto or stock trading
• Monthly statement is available for Mr Xu to view his assets and trade history via our online platform
• The Trust structure provides a certain level of asset protection to benefit his wife as beneficiary of the trust
• Mr Xu can freely enjoy one platform to fit his investment goal

Background

Mr Yeung is a business owner. He is 55 years old, while his wife is a housewife, 40 years old. They both are Hong Kong tax residents. They have two daughters at the age of 10 and 12 living in Hong Kong as well. He owns a factory in Guangzhou and a trading company in Hong Kong. His wealth is around HK$40M consisting of properties, stock and cash. He is a frequent traveler but due to Covid-19, he is compelled to stay in Hong Kong. Last year, he was diagnosed with stroke. He is worried that his wife has no experience to manage the wealth if he has any accident one day. Therefore, Mr Yeung seeks for UniTrust service to provide wealth planning solution to solve his concern.

Solution from UniTrust:

• Set up a private trust for Mr Yeung for succession planning. Mr Yeung is the Settlor, his wife is the Protector and the Beneficiaries are his wife and two daughters
• Work with a lawyer to prepare a Will for Mr Yeung. The properties will transfer into the trust once Mr Yeung demises. This avoids the payment of stamp duty on transfer of ownership in the current stage
• Arrange bill payment for his company so as to ease his administration burden
• Maintain his securities account to let Mr Yeung focus on his business
• Arrange for remittance to assist the salary payment to his employees in China
• UniTrust provides one-stop solution to fix Mr Yeung’s various concerns