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  • Writer's picturecaleb chern

What is a Trust?

Wealth protection, succession planning and tax planning; these are just a few of the many reasons trusts have been created. A parent may want to protect their life savings for their spouse, children and a charity organisation and creates a trust to hold their savings that is managed by a trustee. The trustee may distribute funds and manage real estate as instructed by the parent.




Trusts are a useful tool as it shifts the legal right to the assets from the parent to the trust. This would result in the assets being protected from creditors, bankruptcy and asset disputes. The design of a trust also avoids forced inheritances, instead the assets will be distributed according to the parent’s will and in Singapore, some taxes may not apply to the distribution of trusts.


In the scenario mentioned, the parent(also termed the settlor)creates a trust that holds their life savings or any asset that they own. The trustee will then be responsible for the assets within the trust and must ensure that it is for the benefit of their family or any individual or entities named. These individuals or corporate entities a real so termed the beneficiaries. Trustees must make decisions for the benefit of the beneficiaries and according to the wishes of the settlor. Some settlors may require specific instructions to the trustee on how much of the trust’s funds should be distributed to each beneficiary and when these funds can be disbursed. Settlors, trustees and beneficiaries may be individuals or corporate entities. Trustees are not limited to one individual and may include multiple trustees to manage the trust.


Trusts can be created by will, deed or declaration and must be done in writing. Assets held within a trust must be owned by the settlor and may include cash, land, shares, businesses, jewellery and artwork. The life of a trust can be determined by the settlor and often the duration of a trust is dependent on the asset it holds and the beneficiaries it serves. Trusts may cease to exist when all assets are distributed or the beneficiaries consent to the winding up of a trust. In Singapore, trusts can exist for a maximum of 100 years.


To find out more about how easy it is to protect your family’s asset, visit digitrustsg.com for more information and get in contact with our team.





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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

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