Singapore

Singapore has developed into one of the leading jurisdictions for the establishment and administration of trusts, particularly for cross-border and private wealth management purposes. Its robust legal framework, modern trust legislation, and strong regulatory oversight have made it an attractive destination for families, high-net-worth individuals, and institutions seeking to structure wealth and assets offshore.

Trusts in Singapore are governed primarily by the Trustees Act (Cap. 337), which is supplemented by various statutory amendments and common law principles. The legislation allows for the creation of both private and charitable trusts and provides the flexibility to tailor trust structures to suit a wide range of estate planning, asset protection, and succession objectives.

The Monetary Authority of Singapore (MAS) regulates trust companies under the Trust Companies Act (Cap. 336), requiring trust service providers—other than exempt entities such as law firms and accounting practices—to be licensed and to adhere to anti-money laundering (AML) and counter-financing of terrorism (CFT) standards. All trust companies must carry out due diligence, maintain proper records, and report suspicious transactions.

The most common types of trusts used in Singapore for offshore and private purposes include:

• Discretionary Trusts: These allow trustees to determine the distribution of income or capital among beneficiaries, offering a high level of flexibility.
• Fixed Trusts: Beneficiaries have predetermined rights to income or capital from the trust.
• Purpose Trusts: Established for non-charitable purposes, these are less common and generally require careful structuring.
• Charitable Trusts: Used for philanthropic objectives and must comply with Singapore’s legal definitions of charitable purposes.

Singapore law also permits the creation of revocable or irrevocable trusts. In most asset protection and offshore planning cases, irrevocable discretionary trusts are preferred because they remove ownership and control from the settlor, enhancing the structure’s integrity.

Singapore trusts are often employed in offshore contexts for a variety of reasons:

• Asset Protection: Irrevocable trusts can shield assets from creditors, litigation, or forced heirship rules in the settlor’s home jurisdiction.
• Succession Planning: Trusts facilitate the orderly transfer of wealth across generations without the need for probate, often in line with the settlor’s wishes and outside the public record.
• Tax Neutrality: Singapore does not impose capital gains tax, inheritance tax, or estate duties. Furthermore, income earned by the trust from foreign sources is generally not taxed in Singapore unless received in the country.
• Wealth Consolidation and Control: Trusts offer a centralised structure for managing international assets, particularly useful for globally mobile families.
• Confidentiality: While Singapore enforces strong compliance and AML/CFT regulations, it also respects confidentiality within the bounds of the law. Trust deeds are not publicly registered.

The trustee of a trust may be a regulated trust company supervised by the Monetary Authority of Singapore, or otherwise a private trust company. A Private Trust Company is a special-purpose entity established to act as trustee for one or more trusts, typically for a single family or related group of individuals. A PTC is not required to be licensed under the Trust Companies Act provided it acts only as trustee for specified trusts and does not offer services to the general public.

A typical PTC is incorporated as a private limited company in Singapore. Its shareholders are often family members or a purpose foundation (possibly offshore), while directors may include professional advisors, family office representatives, or trusted individuals.

The administration of the trust and compliance requirements are usually outsourced to a licensed trust company or legal/accounting firm in Singapore. This model combines the flexibility and control of in-house governance with the regulatory compliance of professional oversight.

PTCs are often employed in high-value estate planning arrangements where the settlor or family wants to retain involvement in trust management decisions. They also facilitate continuity of trustee services, particularly in jurisdictions where professional trust companies may face regulatory or political risk.

Singapore adopts a territorial tax system. Trust income sourced outside Singapore and not remitted into the country is generally exempt from Singapore tax. For income received in Singapore to be exempt, the trust must qualify as an “eligible trust” under Section 13G, 13O, or 13U of the Income Tax Act, depending on its structure and qualifying conditions.

It is also essential to distinguish between tax treatment of the trust itself and that of its beneficiaries. In general, distributions made to beneficiaries are not subject to additional tax in Singapore, unless they are sourced from taxable income within Singapore.

Singapore’s trust regime is both modern and robust, offering considerable benefits for offshore wealth planning, asset protection, and intergenerational wealth transfer. The availability of private trust companies further enhances flexibility for families seeking greater control over their estate planning vehicles. Nevertheless, the establishment and administration of trusts in Singapore should be carried out with careful legal and tax planning, particularly in light of international compliance requirements and evolving regulatory standards.