A private trust refers to a trust where the beneficiaries are private and non-charitable beneficiaries. Each beneficiary of the trust will typically be connected to the settlor (i.e. the creator of the trust) of the trust in some manner, for example being the settlor’s family members such as his spouse, children, nieces and nephews, parents, grandparents, in-laws, or even descendants.

There are countless advantages in setting up a private trust, ranging from providing protection for your family members and loved ones, preserving your wealth, to preventing any potential claims against assets that are transferred to the trust. This will be especially beneficial for individuals dealing with high-risk businesses, thus reducing their exposure to potential creditor claims via a private trust that protects their assets. By setting up a private trust, the settlor can then ensure that his beneficiaries will be provided with sufficient funding for their various needs, for instance setting aside some funds in the trust for his parents’ medical expenses or his child’s school fees.

Most importantly, establishing a private trust would make sure that your assets are properly secured, managed and distributed in line with how you would want them to be done.

Benefits of setting up a PTC

Having a private trust company (PTC) can hold many advantages and unlike the common misconception, setting up a PTC is not a complicated process. Being one of the world’s major global financial hub, coupled with an attractive tax regime and strong regulatory frameworks, it is no surprise that Singapore has generated a strong demand for wealth management and wealth preservation for future generations through various vehicles, with PTCs being one of the most popular methods to do so.

Some benefits of establishing a PTC include:

• Having proper management of succession planning: the trust will help to hold and provide for the beneficiaries’ wealth and business interests, together with instructions on how to manage these assets.

• Choice and flexibility to diversify assets: having a PTC would allow its board members greater flexibility in deciding whether or not to enter into certain large transactions or hold any particular assets in the trust fund, without the need to wait a long period of time just for approval. This will also mean that a PTC can react quickly to address unexpected changing circumstances.

• Flexibility to decide the framework and guidelines for investment: the board members of a PTC who will be handling investment decisions can be family members, trusted individuals and even the settlor himself. As a result, these trusted members of the board will have a direct say when it comes to making crucial choices. Additionally, the beneficiaries can receive distributions in accordance with the settlor’s directions or wishes, including the time and method the distribution is received. The trust fund will then act as a vehicle to channel the monies to the settlor’s intended beneficiaries according to the criteria the settlor chooses to set.

• Certainty and continuity: the PTC will always be the one acting as a trustee.

• Confidentiality: having a PTC allows for a higher level of confidentiality as compared to using an independent professional trustee.

How do I set up a Private Trust Company?

In Singapore, PTCs are exempted from licensing requirements under the Trust Companies Act. This is because the purpose of a PTC is to provide trust services, therefore the PTC is prohibited from soliciting trust business, or providing any form of trust services to the public.

A PTC in Singapore is also required by law to appoint a licensed trust company to carry out due diligence and make sure that the PTC is complying with the Monetary Authority of Singapore’s anti-money laundering and prevention of financing of terrorism requirements. In conclusion, a PTC can be created to cater for a variety of purposes, depending on the specific requirements and wishes of the settlor. Our lawyer will be able to advise you on the proper process of setting up a PTC that will best suit your needs.