In Hong Kong, there is no registration requirement for trusts. We think this is the key advantage of our jurisdiction which helps privacy. During our practice, although there are some Chinese HNWIs have expressed their concern over the uncertainty arising from the enforcement of Hong Kong basic law after 2047, we believe this is not an issue since the trust can be re-domiciled to other jurisdiction always.
The cost of setting up a trust is normally based on the complexities of the trust rather than jurisdictional concerns. In general, the cost of setting up a trust in Hong Kong is less costly when compared to Jersey and Seychelles, etc.
Owing to the common law framework adopted by Hong Kong, we consider trusts are the preferred structure for our clients. We do not expect any changes in the future.
Succession to the next generation is the biggest issue and challenge that we come across when planning for Chinese and Asian clients in usual practice. For instance, an increased number of kids of settlors being sent abroad for education in overseas countries such as the States and United Kingdom and subsequently working over there. Detailed tax planning and structuring are needed to be done carefully for this kind of client. Thanks to Hong Kong’s well-established legal system and stable political environment as well as its proximity to China, wealth and trust planning are more easily implemented with practical steps.
Given the newly introduced anti-forced heirship provisions of Hong Kong trust law, it is advantageous to the settlors as they shall have more flexibility and freedom in allocating their assets by virtue of their wishes, which is very different to the other jurisdictions that have compulsory heir provisions.
Contributed by Masson de Morfontaine Ltd.
