In the next few decades, our generation will experience a great transfer of wealth. The trust will feature in much of this wealth transfer. The trust is a very resilient and flexible tool for the holding and distribution of family wealth and assets. How should you plan for your family trust? A starting point would be to look into these aspects:
THE ASSETS AS THE SUBJECT OF THE TRUST
Ask if there is a need to safeguard and avoid the wasting of your assets. A good example is a family business. Without a trust, family businesses are vulnerable to fragmentation and dilution of interests in the hands of descendants after the death of the founder. There are many questions one can ask about family wealth. Would you want your moneys and investments to continue to be invested and accumulated over time for long term gains and benefits? How do you wish to deal with your insurance policies that could potentially make your children overnight millionaires? Would you want to secure the long term capital growth of your real estate by keeping them under a trust for years to come?
Consider drawing up a long term legacy plan for moneys to be held as a resource, and reserve for the rainy day for the family. Do recognise the old adage, which is that wealth does not often pass through three generations. Hence, a trust with the right objectives to deal with the family’s wealth would go a long way to keep wealth and values in the family for many generations.
Leave your good name behind by providing a long term meaningful legacy so that your descendants will remember you in years to come. Finally, with a trust, your family wealth is sheltered away from the direct hands of your descendants so that they could build up meaningful lives on their own and not simply rely on inheritances at their free disposal.
BUSINESS ARISING FROM WILLS AND EXECUTORSHIPS
We have more than 150,000 clients to date, and several thousand of trusts have been set up with us. There are more than 30,000 executorship appointments under Wills where we will be engaged in future estate administration in the next couple of decades.
SUSTAINABLE LONG-TERM BUSINESS
Trust business is in its infancy. With the growth and accumulation of wealth in Singapore, there will be a lot of trust planning surrounding wealth and properties that will be passed down to the next generation.
THE ACCUMULATION OF TRUST BUSINESS
Trust business continues to grow steadily from year to year. A trust created today can be expected to return to the trust provider a continuous stream of trust administration income for many years to come. The life of the trust and its termination could be decades away. By nature of the longevity of the trust, trust companies will also have an equal longevity.
AS A PROFESSIONAL ORGANIZATION AND THE RISKS
A trust company as a professional organisation is like a law firm or accounting firm. From a risk aspect, there are no intensive capital or maintenance costs. The fees that we earn are primarily from the services that we provide in trust administration. In comparison, other financial institutions may focus on strong investment growth of the moneys they manage and entail taking on higher risk to generate higher returns. Unlike such institutions, we are conservative in our approach to investments, and our key focus is on preservation of capital.
CHECKS AND CONTROLS
Trust Companies are licensed and supervised by MAS and are bound by the Trust Companies Act. There are provisions which requires handling of trust funds such as segregation of Trustee’s own monies from the funds of trusts, which they are appointed as trustees. There are guidelines that have to be adhered to for the appointment of the trust company’s officers. This requires them to be persons of financial soundness, persons that have proper track records, of honesty and integrity. The trust company is also subjected to stringent audit requirements. Auditors of Riverside Trustees Limited also have to submit their audit reports to MAS. Trust Companies need to maintain minimum Net Asset Values and in place Professional Indemnity Insurance in relation to their business.
We hope the above helps clients to have a peace of mind, should they wish to set up their trust and have it administered by Riverside Trustees Limited for the long term.