1. What is a Trust?
A trust is a way of managing assets (money, investments, land or buildings) for people. It is an arrangement, recognised under common law, by which property or assets are transferred from one person (the ‘settlor’) to another person (the ‘trustee’) to hold the property for the benefit of a specified list or class of persons (the ‘beneficiaries’).
A trust can be created solely by verbal agreement but it is usual for a written document (the ‘trust deed’) to be prepared. This evidences the creation of the trust, sets out the terms and conditions upon which the trustees hold the trust assets and outlines the rights of the beneficiaries.
Unlike a company, a trust is not a legal person; it is a relationship. The practical advantages of a trust are gained from the distinction that is drawn between the formal or legal owner of property, the trustee, and those people that have the use or benefit of the property, the beneficiaries.
2. Who should set up a Trust?
APAC Wealth Creators – Asia’s Economic Growth in 2025 proved unexpectedly resilient, weathering tariffs and uncertainty, and will remain the biggest driver of global growth, contributing about 60% this year and next. The shock from trade tensions has been cushioned by a front-loading of exports ahead of new levies, stronger-than-expected investment in artificial intelligence, ongoing supply-chain reconfiguration within the region, and policy easing in some countries.
2025 saw Asia Pacific IPO proceeds surge to USD90 billion (+73% year-on-year), with Hong Kong/China and India accounting for over half of the region’s activity. Hong Kong led with 32% of IPO volumes, while India posted its highest annual tally ever at 25%, delivering five USD1 billion+ IPOs.
According to McKinsey analysis, between 2023 and 2030, ultra-high-net-worth (UHNW) families with personal financial assets more than USD50 million and high-net-worth (HNW) families with personal financial assets between USD1 million and USD50 million in the Asia–Pacific region are set to undergo an intergenerational wealth transfer estimated at USD5.8 trillion. UHNW families are expected to account for about 60% of the total wealth transfer.
With many such families in the Asia-Pacific region owning operating businesses, effective succession planning is even more essential for preserving wealth and ensuring a smooth transition of assets across generations.
3. Why would you set up a Trust?
Trusts are set up for a number of reasons, including:
- Wealth preservation – to control and protect family assets.
- Succession planning – to pass on assets while a settlor is still alive.
- Estate planning without public probate – to pass on assets when a settlor dies (a ‘will trust’) with enhanced confidentiality.
- Business continuity – allows a business to continue functioning normally, while beneficiaries continue receiving benefits from the business.
- Avoidance of forced heirship laws.
- Tax efficiency and futureproofing.
- Asset protection – litigation/divorce.
- Caring for vulnerable beneficiaries – minors or incapacitated.
- Family governance.
- Philanthropy.
- Legacy planning.
When assets are spread across different countries, a trust can eliminate the complexities of managing multiple probate processes across different jurisdictions, which can be time-consuming and costly, with each country’s legal system imposing its own requirements. The trustees can immediately act to distribute the assets according to the deceased’s wishes.
Trusts also provide a centralised asset management platform, allowing settlors to consolidate their global assets under one legal structure. This simplifies the management of these assets, reduces administrative burdens and ensures they can be managed and distributed from a single jurisdiction. It also ensures that wealth accumulated over a lifetime can be retained as one fund to accumulate further.
If the assets are centralised in a politically and economically stable jurisdiction, and denominated in hard currencies, it provides security from volatility in the home country as well as providing flexibility and potential for diversification.
Assets held in trust do not necessarily need to be liquidated upon the settlor’s death. This can be advantageous during market downturns, because the trust structure allows assets to be retained rather than sold at a loss, preserving their value and benefiting the beneficiaries in the long term.
For business owners, the trust structure is particularly effective in avoiding disruption during a generational handover of a business. By transferring ownership and control of the business into a trust, founders can ensure that the enterprise remains within the family while safeguarding it from personal financial issues, divorce or external threats.
A trust also introduces the option of professional oversight. Trustees with commercial expertise can be appointed to manage or co-manage the business alongside family members, ensuring operational competence even where successors may lack experience.
4. When should you set up a Trust?
It’s never too early. An effective succession plan enables a smooth transition of both ownership and management while maintaining segregation of business assets and personal wealth. Early leadership transition helps family enterprises stay relevant and grow as the next generation introduce new ideas while still benefiting from the older generation’s experience and guidance.
The direct transfer of business ownership via shares not only grants dividend rights but also voting control, which can create shareholder disagreements or impede business operations. Trusts, which hold the company shares, can provide a useful mechanism for separating legal ownership, control and management, and economic benefits. In this way, only family members actively involved in the business will have control over business decisions, but passive family members will still receive economic benefits through trust distributions.
Alternatives to intergenerational succession of the business – a sale or public offering – may provide a more suitable path forward if the next generation is keen to pursue interests outside the business. It is critical to establish an estate plan early in the sale or IPO planning phase because the opportunities will generally diminish as a deal moves toward closing.
Families should also consider succession plans for their personal wealth, which may be very different from the succession plans for business assets, especially if there may be plans to appoint heirs to be business successors.
Families may also choose to consolidate their financial asset holdings through a private investment company (PIC) or family office that allows family members to be involved through bespoke shareholding and directorship structures. Holding the PIC through a trust can be useful to help address issues like incapacity planning, tax planning, wealth management and protection, and confidentiality.
5. Where should you set up a Trust?
When selecting the best offshore jurisdiction for establishing a trust it is important that it should offer:
- Politically, economically and socially stable
- A strong tradition of enforcing trusts.
- An English common law system.
- An established reputation for trust business.
- Modern trust legislation, including contemporary trust concepts.
- Tax neutrality – low or no taxation for trusts.
- Good international reputation that is aligned with your family’s long-term interests.
- International connectivity.
- Privacy and confidentiality.
- Deep professional sector.
- Access to global investment opportunities.
Hong Kong and Singapore score highly in all these areas and both have the added benefit of a convenient location in Southeast Asia. However, there can be many reasons – security, confidentiality, discretion, legal protections – to position your trust further away from your place of residence or doing business. Sovereign generally recommends Guernsey, the Isle of Man, Gibraltar, Cyprus, Malta and Mauritius as among the best available trust jurisdictions.
Guernsey’s proximity to London and continental Europe offers a powerful strategic advantage, while modern legislative and regulatory framework accommodates a wide range of structures that can be tailored to a client’s specific requirements, including:
- Trusts and private trust companies (PTCs): Discretionary trusts, non-charitable purpose trusts and charitable trusts support succession planning and asset protection, while customary protective mechanisms (e.g. reserved powers and protector roles) are well understood and respected
- Foundations and private trust foundations (PTFs): These structures provide legal personality and offer an alternative to trusts for families from civil law countries seeking more control than a traditional trust provides. Governance can be tailored to the family’s unique requirements
- Corporate/investment vehicles: Guernsey supports private investment funds, family limited partnerships and family investment companies (FICs) to hold investments in a corporate structure. This allows families to crystallise their investment strategies into entities they control, which is especially useful for ESG or impact portfolios
- Custom hybrids: Families often create bespoke structures made up of more than one trust or entity, with each holding different asset types or benefitting different parts of a family.
6. Other questions you need to ask
Families today are facing increasingly complex questions around how to protect their wealth, preserve their values and empower future generations. Trusts offer a powerful solution, but before setting up any trust it’s essential to ask the right questions.
- Who do you wish to ultimately benefit from the Trust and under what circumstances?
- How much control are you willing to give up now to ensure stability for tomorrow?
- Are you clear about whether the trust is purposed for your own interests, for current or future family members or for charitable causes?
- Is the trust purely a financial mechanism, or do you also want to also encourage education, hard work, entrepreneurship, philanthropy, family life or family leadership?
- Have you considered issues of fairness and managing expectations among heirs?
- Are you truly comfortable letting trustees make decisions according to the trust deed and any guidance you have provided by way of a letter of wishes?
- Does the trust allow for mechanisms like protectors, powers of appointment or the ability to amend?
- Do you understand the different types of Trust – ‘fixed interest trusts’, discretionary trusts, reserved powers trusts and purpose trusts)
- Who should serve as the trustees of the Trust?
Choosing the right trustee(s) is a crucial part of setting up a trust because trust law imposes strict obligations and rules on trustees. 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.
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.
Sovereign is fully licensed to act as professional trustee in Singapore and Hong Kong, Guernsey, the Isle of Man, Gibraltar, Cyprus, Malta and Mauritius.
