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5 advantages of setting up a trust account in Hong Kong
As Asia's World City, Hong Kong Trusts are among the most modern in the world, giving Settlors (you) wide control options over their trusts. Discover the benefits of setting up a trust account in Hong Kong below.
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
What is forced heirship? Forced heirship is a civil law system. It is the requirement that a portion of a person’s estate must be left to his or her children, who under the law are known as forced heirs.
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
Hong Kong trusts have no expiry, which is conducive to the perpetual protection of wealth and intergenerational inheritance. Unlike fixed-term trusts, Malaysian trusts last 80 years, Singaporean trusts last 100 years, while the United Kingdom trusts last 125 years.
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.
香港信託近五千億美元持有
