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  • Writer's picturecaleb chern

Types of Trusts

Generally, most trusts fall into two broad categories, “fixed” and “discretionary” trusts. These are defined by the intentions of the settlor on whether the beneficiaries’ entitlements are fixed or up to the discretion of the trustee. Fixed trusts occur when the beneficiaries’ entitlement is fixed, while a beneficiaries’ entitlement under a discretionary trust is up to the discretion of the trustee.


Within these categories of fixed and discretionary trusts are various trusts that are defined by their purpose, their beneficiary or their assets the trust is designed to protect. The design of these trusts are made to satisfy a need of a settlor, whether it be to protect their assets for their beneficiaries or for the transfer of assets within a family. A brief overview of common trusts in Singapore are shown in the table below.



Trust types

Descriptions

Advantages

Disadvantages

Irrevocable Trust

The trust cannot be changed unless all beneficiaries unanimously agree to it

• Protected from creditors

• The settlor is not able to reclaim the assets

Revocable or (Living) Trust

If the settlor is still alive, the trust can be changed

• Settlor has control of their assets within the trust

• May be subject to estate duty and may not be protected from creditors if the settlor is bankrupt

Insurance Trust

An irrevocable trust with an insurance policy placed within the trust

• May not be subject to certain taxes like estate taxes

Charitable Trust

An irrevocable trust with the charity organisation as the beneficiary

• Tax relief and exemptions

Private Family Trust

A trust for the succession of assets within a family

• Protected from creditors

To find out more about which trust is best for you and your family, visit digitrustsg.com for more information and get in contact with our team.

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