Why Do We Need A Trust?
This is because the Trust is an excellent solution for many different kinds of problems regarding wealth accumulation, wealth protection, wealth preservation and wealth distribution. A trust is ideal for example when your children are too young and you are concerned that the guardian may not do a good job of safeguarding the assets meant for their university education and life needs.
Having A Will Be Sufficient Without Having A Trust?
Marriage will not revoke a Trust.
Would Marriage Revoke A Trust?
Without a doubt, having a Will written is important. However, unlike a Will, a Trust can serve many purposes to complete estate planning. For instance, a Trust allows wealth protection and preservation which a Will cannot do.
Question & Answer
What is a Trust?
A Trust is a legal arrangement whereby the owner (the Settlor) entrusts another party (the Trustee) to take care of his asset/s for the benefit of the beneficiaries he has chosen under instructions in the form of a trust deed that the Trustee follows.
Who is A Trustee?
A Trustee can be a trust corporation or a person chosen by the settlor to carry out the instructions as contained in the trust. As a Trustee, he has a fiduciary duty to act in the best interest of the beneficiaries.
Can Illegitimate Children Be The Beneficiary?
Yes, anyone can be the beneficiary.
Does A Trust Deed Need To Be Stamped?
No, unless the instrument itself is the document evidencing the transfer of land or shares.
How Many Witnesses Are Required During The Attestation of the Trust Instrument?
Only one witness is required to be part of the process of execution.
How Long Can A Trust Last?
Section 32 Civil Law Act (Cap. 43) - the trust can last for up to 100 years.
Is The Trust Arrangement Subject To The Application of Grant of Probate Or Letters of Administration?
No, the Trust settlement is effective once it is executed by the Settlor and the Trustee unlike a Will.
What Type of Assets Can Be Used to Fund the Set Up of a Trust?
Any asset that legally belongs to the Settler except those under joint ownership of which written consent must be obtained from the joint owner.
Can I Make Revoke/Amend the Trust?
You can revoke/ amend it as long as it is a Revocable Trust. In the case of an Irrevocable Trust, you would need the consent of the Beneficiaries.
What happens if the beneficiary under the Trust predeceases me?
Interests of such deceased Beneficiary can be dealt with accordingly under the terms of the Trust.
I want to give everything to my children, but I may have one or two more children in future. Does it mean that I have to amend the Trust Deed each time I have a new baby?
If it is your intention that all your children should be part of the Beneficiaries under the Trust, with the right wording, it is not necessary to amend the Trust Deed.
At what age will my children inherit my property?
A person is legally capable of holding property upon attaining the age of 21. If you want your children to inherit later then it should be expressly stated in the trust deed the age which they should inherit.
Can Protector remove and appoint Trustee?
If expressly provided under the Trust Deed, the Protector may remove and replace the Trustee subject to such conditions as may be stipulated.
What does the Trust do?
The Trust can be one of the effective legal tools to help you manage your wealth or financial planning.
How does it work?
It requires the Settlor to give away his assets such as shares, money and property to Rockwills Trustee Ltd to hold on trust for the benefit and enjoyment of the beneficiary(ies).
The Settlor may impose conditions for the Trustee to follow, such as releasing monies only for a certain purpose or in a staggered manner.
What does it mean by giving away the Settlor's assets?
It simply means the transfer of the legal title of the Settler's assets to Rockwills Trustee Ltd. Therefore, Rockwills Trustee Ltd will become the legal but not the beneficial owner of the settlor’s assets.
What does the Settler own after the transfer of title?
The settlor does not own the assets thereafter since these are no longer under his name. However, the Settlor can enjoy the benefits of those assets if he is one of the beneficiaries.
Can the Settlor be a Beneficiary?
The Settlor can appoint anybody he desires as Beneficiary which includes himself.
Is the property under the Trust subject to the procedure of grant of probate or letter of administration?
The properties or their distribution under the Trust (hereinafter referred to as Living Trust) are not the subject of any order from the Court as they do not form part of the Will.
What's a Living Trust?
A Trust created during the Settlor’s lifetime is a Living Trust. Ordinarily by way of a document (i.e, a trust deed or a declaration of trust) executed by the Settlor.
What's a Testamentary Trust?
Testamentary Trust arises from a clause in a Will after the death of the Testator and is subject to the estate administration process.
Would the properties under the Testamentary Trust be subjected to the order from the Court regarding the distribution?
Yes. the Testamentary Trust forms part of the Will. Therefore, upon the death of the Testator, the properties in the Will and in the Testamentary Trust will be frozen. Grant of Probate or Letters of Administration must first be obtained.
What is the characteristic of a Trust?
There is an actual transfer of the properties to the Trust at the time it is created.
If a Trust has so many advantages as compared to a Will, should we have a Will or a Trust?
Wills and Trusts are not mutually exclusive. Even those who are very wealthy are unlikely to transfer everything they have into a Trust during their lifetime. The Will then covers all residual assets that remain upon death.
What are the Requirements for a valid Trust?
- Certainty of intention to create a Trust
- Certainty of the subject matter (property of the Trust)
- Certainty of the objects (Beneficiaries) of the Trust
What happens if I have put the same properties in the will and in the Living Trust?
The Living Trust prevails over the Will and the properties fall within the realm of the Living Trust.
As my will has an embedded testamentary trust, Why would I need another trust to carry out my instructions?
Your instructions in the Testamentary Trust will only be carried out upon death and it is also subject to the waiting period of the administration process. Whereas the Living Trust is already set up and your instructions can be administered immediately.
What's the difference between a revocable trust other than the Settlor?
A revocable Trust is one where the Settlor reserves a power or right to amend or terminate the Trust. An irrevocable Trust is a Trust where the Settlor does not have such power.
Who else can revoke a Revocable trust other than the settlor?
We would recommend that it be revocable only by the Settlor.
What's the consequence of revoking the Trust?
In the event that the Settlor exercises his power of revocation, the Trust will come to an end and the Trustee will be under an obligation to transfer all the property of the Trust back to the Settlor.
Why would the client create an irrevocable trust and not on a revocable basis?
To have his assets protected from creditors. This is because, in the event of the Settlor’s bankruptcy, all rights and powers exercisable by him in relation to the provisions of a trust deed, including the right to revoke the Trust, will be assigned to the Official Assignee.
As long as the trust is irrevocable, will it prevent creditors from claiming?
Yes, if the Trust is irrevocable, subject to rules applicable in the case of bankruptcy, it will prevent the client’s estate creditors from claiming the trust property.
How to prevent a bankrupt client's properties from going to the official assignee?
The Living Trust created needs to be irrevocable and the settlement made subject to compliance with bankruptcy laws.
What is the difference between the fixed trust and discretionary trust?
A Fixed Trust is one in which the amount or proportions to be distributed to the Beneficiaries have been determined. The beneficial interest of each Beneficiary has been clearly defined. A Discretionary Trust on the other hand is a Trust in which the amount or proportions to the Beneficiary(ies) are not fixed but left to the discretion of the Trustee, although he may be guided by the Settlor through a Letter of Wishes.
Can a living trust and a testamentary trust be fixed or discretionary?
Yes, they both can be either Fixed or Discretionary.
Why would anyone want to create a discretionary trust?
There are various reasons why they create such Trust but most notably is that it is created to prevent the Beneficiaries’ creditors from claiming the Trust assets.
Since the discretionary trust is subject to the discretion of the trustee in terms of distribution, would there be a possibility that such power be abused by the trustee?
Abuse is possible especially if the Trustee is an individual but such will be difficult or not possible in the case of a professionally-run Trustee company where the Trustee is bound to observe the Settlor’s Letter of Wishes and where the corporate governance and internal controls are strong and the Trustee is overseen by MAS(Monetary Authority of Singapore).
What's a letter of wishes?
It is a written document made by the Settlor and addressed to the Trustee expressing the Settlor’s wishes as to how certain aspects of the Trust are to be administered. The wishes are, however, not binding on the Trustee but the Trustee as a professional trust company in business is bound to follow the wishes unless these are against the law or where carrying out the wishes will expose the Trustee to liability litigation.
What kind of trust should be created to avoid creditors of the settlor and beneficiaries?
An Irrevocable Discretionary Trust. It protects the Trust property from creditors, whether the bankruptcy is that of the Settlor or the Beneficiaries subject to certain conditions under bankruptcy laws.
What is the effect of a trustee's bankruptcy?
Whatever interest or whatever property a Trustee holds on trust does not belong to him but to the benefit of the Beneficiaries. Therefore, in the event of a Trustee’s bankruptcy, the Trust property will not be vested in the Official Assignee.
What's the use of a protector for a trust?
A Protector is the person appointed by the Settlor to oversee and give consent to certain actions of Trustee or to perform certain functions stated in the Trustee. The Protector acts like a watch-dog in the restraint of the Trustee’s powers and to safeguard against a Trustee who may become incompetent, uninterested or abuse its powers.
What's the power of a protector?
The duties or powers of a Protector are specified in the Trust Deed. A Protector cannot revoke a Trust even though the Settlor has given such a right. The ultimate power of Protector is to remove a non-performing Trustee and appoint a new one.
Is having a protector compulsory for creating a trust?
The appointment of a Protector is optional but it is highly encouraged.
Who can be the protector?
Anybody who has reached legal maturity and is of sound mind whom the Settlor trusts.
What's an insurance trust?
A Living Trust created using life insurance as trust property for the purpose of providing liquidity for liability cancellation or living needs or for equalisation of distribution in estate planning.