Vietnam is a remarkable development success story. The economic reforms, known as Doi Moi, launched in 1986, coupled with favourable global trends, helped transform Vietnam from one of the world’s poorest countries to a middle-income economy in a single generation.
GDP per capita has risen from less than USD700 in 1986 to almost USD4,500 in 2023, while foreign investment continues to flow steadily into the country despite ongoing fluctuations in the global economy, reaching USD18.4 billion in the first five months of 2025, a 51% increase year-on-year.
This economic success has seen the emergence of a new generation of entrepreneurs, with Vietnam becoming a hotspot for start-up activity in Southeast Asia. Vietnam boasts over 930,000 active enterprises, with 98% classified as small and medium-sized enterprises (SMEs). The private sector contributes about 60% of GDP and employs 85% of the workforce.
At the same time, the rate of growth of personal financial assets (PFA) has outpaced that of other Asian countries in the past ten years. Vietnam’s wealth creation is booming. According to Henley & Partners, the number of millionaires nearly doubled to 19,400 between 2013 and 2023, which was the fastest growth worldwide. Knight Frank’s Wealth Report 2025 estimates that Vietnam now has 5,459 individuals worth over USD10 million.
As this sector matures, however, families are beginning to confront a more complex challenge — how to protect what they have built up and pass it on smoothly to the next generation. Estate planning and succession in Vietnam can be a difficult and complex area, particularly with so many high-net-worth families owning operating businesses.
The succession challenge
Vietnam’s first-generation wealth creators are now in their 50s and 60s. Many own successful family businesses or substantial real estate portfolios, but few have formalised plans for succession. Most rely on wills, informal understandings, or company shareholdings held in personal names — all of which can become complicated when families grow, relocate or hold assets overseas.
Vietnam’s Civil Code includes forced heirship provisions that guarantee ‘reserved shares’ for close relatives, regardless of testamentary wishes. While this protects dependants, it can also fragment business ownership or create disputes among heirs.
Although Vietnam has no distinct Inheritance Tax, inheritance is considered a form of taxable personal income under the Personal Income Tax (PIT) Law. PIT applies at a rate of 10% on taxable inherited assets valued at VND10 million (c. USD400) or more per transaction. It is worth noting that the Ministry of Finance is proposing to double the value threshold to VND 20 million. If this proposal is accepted, the increased threshold may be applicable from 1 January 2026.
Inheritance tax is determined and assessed when the beneficiary registers ownership or usage rights for the inherited assets according to type:
- Real Estate – when the beneficiary registers ownership at the Land Registry Office.
- Securities (stocks, bonds and other financial investments) – when ownership is transferred at a depository or on a trading platform.
- Business shares or capital contributions – when the beneficiary updates shareholder records in the company’s business registration.
- Cash and other financial assets – when the beneficiary formally receives the inheritance in Vietnam through legal documentation.
In the case of real estate inheritances only, certain close family members are exempt from inheritance tax including spouses, siblings, biological or adopted children, parents, parents-in-law and children-in-law, grandparents and grandchildren.
An added complication is that foreigners face restrictions on property ownership in Vietnam. Foreigners are not entitled to hold ownership of land or buildings in Vietnam, except in cases permitted by the 2023 Law on Housing and the 2024 Law on Land, which established rules under which foreigners can now acquire land-use rights or own assets like houses or apartments subject to specific regulations.
For real estate that does not meet the conditions, the immovable property must either be sold, in which case the foreign beneficiaries can only inherit the amount equal to the value of the property, or the ownership can be converted into an allocation for residential land or a lease for commercial land for a maximum term of 50 years, which is renewable.
However, Vietnam’s government is working to make things easier for overseas Vietnamese. The amended Land Law 2024, effective in 2025, grants overseas Vietnamese full property ownership rights, equal to that enjoyed by domestic citizens, thus simplifying transactions and encouraging investment in local real estate.
The legal system of Vietnam is fundamentally a civil law system and trusts are not recognised under Vietnamese law. The lack of a domestic trust framework means families have limited tools to plan beyond simple inheritance. As a result, many Vietnamese families are now looking beyond their borders for more flexible and internationally recognised solutions.
Trusts: a global structure for modern families
The best alternative to a will is to set up a trust during lifetime. A trust is established when an individual, known as the ‘settlor’ makes a transfer of assets to a trustee, who then holds and manages these assets for the benefit of chosen family members or other beneficiaries.
The practical advantages of a trust are gained from the distinction that is drawn between the legal owner of property, the trustee, and those people that have the use or benefit of the property, the beneficiaries. Importantly, the assets transferred into trust are no longer regarded as being the personal possessions of the settlor.
Trusts provide a highly effective mechanism for families to protect their assets, ensure smooth succession and manage family dynamics. A well-constructed trust can place the right assets, in the right hands, at the right time. They offer the flexibility, creativity and control that a will cannot, and allow the settlor to organise their wealth to ensure that they can maximise its effectiveness during their lifetime and beyond.
Generally, the trust terms are set out in a trust deed, which will include the names of the beneficiaries and how they can benefit from the trust fund. The standard form is a ‘fixed interest trust’, where the beneficiaries may be given a right to income and/or capital, perhaps on the occurrence of a specified event.
However, a ‘discretionary trust’ can provide a mechanism for managing property that can adapt as conditions or family circumstances evolve. No beneficiary has any fixed or absolute interest in the trust assets, allowing the trustees to adapt distributions based on beneficiaries’ changing circumstances, such as financial needs or personal situations.
The settlor can guide the trustee in relation to his intentions by a ‘letter of wishes’. This is used to guide trustees on how the income and assets should be used – to support future generations, to support business expansion, or for education or philanthropy. The letter of wishes can be updated throughout the settlor’s lifetime without having to amend the trust deed.
If settlors are not comfortable with the idea of handing over complete control over their assets to a third party, a number of trust jurisdictions, including Singapore, have legislated to reserve powers generally given to the trustee. A common reserved power, particularly in Asia, is the ‘reserved power over investments’, which enables the trustee’s role in investing the trust fund to be divested to the settlor or another third party. This offers a practical solution in situations where a settlor is more knowledgeable or experienced in managing their investments and wants to continue to do so even after they cease to be the legal owner of the trust assets.
Private Trust Companies (PTCs) also provides a mechanism for the settlor and their family to retain influence over the management of trust assets without compromising the validity of the trust. A PTC is a company that is formed solely for the purpose of acting as trustee of a single trust or a group of related trusts.
This structure gives the family control over asset management, succession planning and distribution policies, ensuring that the trust aligns with their long-term interests. Family members can hold a majority of board positions and roles can be created for the next generation to learn stewardship skills.
Offshore vs. Onshore considerations
Given the absence of recognition of trusts under Vietnamese law, Vietnam-resident expatriates and Vietnamese nationals with foreign assets will need to assess the different countries worldwide that have enacted trust legislation, which can vary in quality and suitability.
When selecting the best offshore jurisdiction for establishing a trust it is important that it should offer:
- A strong tradition of enforcing trusts.
- An English common law system.
- An established reputation for trust business.
- Modern legislation, including contemporary trust concepts.
- Low or no taxation for trusts.
Hong Kong and Singapore score highly in all these areas and both have the added benefit of a convenient location in Southeast Asia. Further afield, Sovereign generally recommends Cyprus, Gibraltar, Guernsey, the Isle of Man, Malta and Mauritius as among the best available options. Sovereign is fully licensed to act as professional trustees in all these jurisdictions.
Beyond wealth transfer: preserving family legacy
For families who have worked hard to build success, the question is how best to ensure that their legacy endures. A lifetime of work can be jeopardised by inadequate succession arrangements, fragmented ownership or disputes between heirs. Trusts offer a framework to consolidate assets, manage transitions and preserve family unity.
An offshore trust that is set up in a tax neutral jurisdiction may offer substantial tax efficiencies, but for Vietnamese families with assets or investments abroad, the principal a properly structured offshore trust offers many advantages:
- Cross-border flexibility – Trusts can hold diverse assets, from company shares to real estate and investment portfolios, across multiple jurisdictions under one legal structure.
- Continuity and control – a trust allows assets to be managed and distributed according to the settlor’s wishes, without the delays or complications of probate in multiple countries.
- Continuing a family business – placing shares of a family business in a trust prevents the unnecessary liquidation of a family company on the owner’s death and ensures that their wishes are observed.
- Confidentiality: Unlike wills, which become public on death, trusts are private arrangements between the family and the trustees.
- Asset protection: as the legal ownership lies with the trustees, the trust assets are generally insulated from claims by creditors, litigants and divorcing spouses by providing a layer of protection against third-party claims.
By appointing independent trustees, founders can ensure that their businesses and investments continue to be managed professionally, even after they step back. Family members who are not directly involved in the business can still benefit financially through trust distributions, while operational control remains stable.
Why choose Sovereign Group?
As the Asian region continues to grow as a hub for HNWIs, the need for sophisticated wealth management and preservation strategies has never been greater. Sovereign Group is well-positioned to assist HNWIs and families in navigating the complexities of wealth management and legacy planning in this dynamic region.
Sovereign has more than 30 years’ experience of setting up and managing various types of trust around the world. We offer trustee, wealth management, succession planning and tax advisory services to internationally mobile families and entrepreneurs, with an emphasis on cross-border asset management and family governance.
Choosing the right trustee is a crucial part of setting up a trust. Corporate trustees that are appropriately licensed, like Sovereign, are held to a standard of providing responsible ethical conduct, careful exercise of discretionary powers, competent investment management, expertise in tax and legal matters, and continuity in the administration of the trust for its duration.
We can review your circumstances and provide bespoke trust planning to Vietnamese clients to ensure your wealth is managed and preserved in the most effective way possible. Contact us today to learn more about how we can help you achieve your legacy goals.
