TRUST
Oct 22, 2022
Table of Contents
The history of Trust in Hong Kong
Key Takeaways
English Law Roots – Hong Kong’s trust law, introduced in 1934, is based on the English Trustee Act 1925.
2013 Modernisation – Major reforms clarified trustee duties, strengthened beneficiary protection, allowed perpetual trusts, permitted settlor control of investments, and rejected foreign forced heirship claims.
Global Tax Advantage – Trusts benefit from Hong Kong’s extensive double taxation treaty network.
Strong Market Growth – By end-2021, Hong Kong trusts held HK$4,719 billion in assets, with 87% managed by licensed institutions.
Global Reach – Investments span Hong Kong (35%), North America (21%), and Europe (14%), with 24% held by family offices, charities, and corporates.
Future Outlook – With 100+ years of stability and no trustee bankruptcies, Hong Kong is set to remain a leading global trust hub through collaboration and expertise.
Trusts are a system of property administration for the benefit of others that originated in English law and has been widely used in the United Kingdom and the United States for a long time.
Hong Kong’s trust legislation originated in 1934 and is based on English trust law
The trust law in Hong Kong is essentially based on the English Trustee Act 1925, which was introduced in Hong Kong in 1934. The amendment to the Hong Kong Trustee Ordinance (HKTO) and related legislation was passed and came into force on December 1, 2013, which was a milestone for the trust industry since trust legislation in Hong Kong had not been updated for almost 80 years. As a result, Hong Kong's trust regime was modernized and the territory was positioned as a critical trust jurisdiction once again.
Modernisation of Hong Kong trust law in 2013
A thorough modernization of the trust legislation has enabled Hong Kong to become one of the leading trust hubs in the world. The benefits of the modernisation of Hong Kong trust law include:
Clarification of trustees’ duties and power
Better protection of beneficiaries’ interests
Trusts can be set up in perpetuity
Settlors can reserve the power of investment and management of the trust assets for themselves
Forced heirship rules of foreign jurisdictions cannot be enforced
Trusts will benefit from Hong Kong’s extensive network of double taxation agreements
The size of the current Hong Kong Trust market
The trust industry in Hong Kong continues to grow. According to the SFC’s latest Asset and Wealth Management Activities Survey 2021, assets held under trusts in Hong Kong amounted to HK$4,719 billion (US$605 billion) as at the end of 2021, up 5% from a year earlier. Of this, 87% (or HK$4,116 billion) was managed by licensed corporations or registered institutions.
Of this total, in terms of the geographical distribution of investments, 35% was located in Hong Kong, 21% was located in North America and 14% was located in Europe (including the UK).
A total of 24% of Hong Kong trust funds are held by family offices, private trusts, charities, and other corporations.
The future of Hong Kong's trust industry
Hong Kong Trust has a long history of over 100 years without a single case of collapse or bankruptcy of the trustees in the territory during the period. For Hong Kong's trust industry to thrive and maintain its position as an international financial center, industry collaboration will be critical to developing a strong trust foundation and deep knowledge base.
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