Interview - Singapore Trusts And Foundations

1. What are the key advantages of your jurisdiction in terms of privacy & asset protection for a Chinese HNWI or Family (etc.) looking to succeed their assets to the next generation?

We work with the top countries for ease of doing business and high on the corruption perception index (no corruption): New Zealand, Singapore and the Netherlands.

All these traditional jurisdictions can offer advantages of asset protections and estate planning to the next generation.

Dutch Foundations (Stichtings) can offer them an excellent solution to protect and preserve their wealth in a confidential manner. It is easy to create and Chinese HNWI or Families are very conscious about confidentiality. In our opinion if to structure the Foundation properly it can give the full range of advantages from freedom to invest to confidentiality of individuals involved.

2. In terms of cost, how is the cost of a setting up a trust/foundation in your jurisdiction compare to other jurisdictions? If it’s more expensive, what is the additional value that a client receives for this?

The costs of setting up a vehicle cannot be the main question in making decision of choosing a jurisdiction. Apart from traditional list of points in choosing a right jurisdiction there are solutions values and personal attitude of the advisors.

The Dutch Foundation is not the cheapest vehicle to setup but the running costs and the reporting requirements makes this structure very attractive.

3. Are trusts or foundations in your jurisdiction the preferred structure for clients? Why do you believe that is? Do you expect any changes in that preference in the future?

What do clients normally want to achieve:

• To protect their assets against claims from creditors such as suppliers, governments, certain family members and general and business creditors
• To maximise their earnings and growth
• To allow them to use their assets and income whenever and wherever they decide to do so.
• To streamline the transfer of assets from one generation to the next.

4. What are some of the biggest issues & challenges you come across when planning for Chinese or Asian clients in general? What are the solutions that your jurisdiction provides for these issues?

In our practice we have found ways to place the assets in a legal structure that is outside the legal ownership of our clients.

Basically we manage the difference between ownership and control.

Many people have found that when they control an asset they do not need to own it. As a famous QC from London once said:

“If you control it, why bother owning it?”

5. We understand that some jurisdictions focus on asset protection, while others focus on asset succession products. Does your jurisdiction have a better solution for asset protection or asset succession?

We concentrate more on the asset protection issues.

In our practice, we use Stichtings as managers of pension funds i.e. its objects would be to manage capital and it has a contractual arrangement with people who are entitled to a pension.

The object is not to pay pensions but to manage a pension fund.

Under the Dutch Civil law code the beneficiaries of such “pension funds” can be called members. This is an exception to the general rule (refer book 2 clause 304 of the Dutch Civil Law code).

The funds that are held by the Stichting belong to it until it agrees to pay a pension. Members of the Stichting have the right to be considered for a pension but nothing more. The funds held by the Stichting cannot be claimed by anybody else.

Contributed by Dr Irina Francken, IN Fiduciary Services Group