The growth of 'mid-shore' (as opposed to 'offshore') in the wealth planning industry has been an often-recited trend since at least 2012. This global shift has benefited 'mid shore' jurisdictions such as Singapore and Hong Kong. However, recently we have seen an increase of clients seeking to change the governing law of their trusts to that of Singapore law in particular.
The relative safety and stability of Singapore is becoming increasingly compelling. In part Singapore's dynamic wealth planning industry and reliable legal and political infrastructure with innovative trust laws founded on the common law are considerable attractions.
No doubt recent global disruptions, both onshore (Brexit) and amongst Singapore's competitors, for example, New Zealand changing its tax laws to make New Zealand foreign trusts less attractive have helped to make Singapore arguably the obvious mid shore choice. Ranked as one of the world's easiest place to do business (Doing Business 2019 report by the World Bank) and with almost all of the traditional offshore service providers having offices in Singapore, it is easier than ever for foreigners to use Singapore for wealth management.
The starting point is to determine whether a trustee can change the proper law of a trust and the terms of the trust deed. Most modern trust deeds will provide for this ability, subject to some restrictions. These restrictions may include that the trust will need to be valid under the new proper law, including the duration of the trust (although often minor amendments to ensure validity are permitted), together with an overriding test requiring that the trustee is acting in the best interests of the beneficiaries in making the decision.
As noted, the trust deed is only the starting point. An important point to consider is who has the power to change the proper law. It may be the trustees, but alternatively it may e another power holder, such as the Settlor or a Protector.
Another point is whether in changing the proper law of the trust, it may also be necessary to consider a new service provider. Whilst the present trustee may be suitable, changing the proper law is often a catalyst for considering someone new.
Hawksford Trust Services are a well-regarded, regulated trustee and its team of highly experienced trust professionals are able to assist to determine whether the Trust is capable of shifting to Singapore, and with a priority to ensure a seamless transition between one jurisdiction and the next, Hawksford is able to determine the steps you need to take.
There may be tax implications for your transfer - for instance, companies will need to be aware if the transfer will be treated in terms of tax and stamp duties. Clients may also like to seek tax and legal advice on the impact of changing the proper law of their Trust in both its new host country, as well as its original country governing the trust. Of course, changing the law doesn't usually create a tax trigger by itself - it usually requires a change of control and management of the trust - but this is often the case where a new trustee in the new proper law is appointed.
Hawksford's award-winning teams are recognised by peers and industry bodies for our technical skills and impeccable client service. We've recently been awarded Trust Company of the Year at the Citywealth Magic Circle Awards in 2019 and have also been consistently recognised as EPrivateClient's Top 25 Trust Companies from 2015 to 2019.
Our strong Trust team in Singapore is led by our head of private client services in Asia, Marcus Hinkley. Marcus brings over 20-years of experience as a private client lawyer from top tier law firms. Hawksford has also recently appointed a new private client services director in Singapore, Alice Quek who brings over 15 years of experience in the banking and fiduciary services sector across Asia.
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This article is intended for general information only and is not intended to apply to any specific situations or to constitute legal advice.
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