Setting up a trust must be on the to-do list of all wealthy families as it secures and protects their valuable assets, which can be passed down to younger generations. This blog will help you understand the concept of creating a trust in Singapore and familiarise you with the duties and powers of trustees.
What is a Trust?
A trust refers to a legal arrangement wherein the ownership of properties is divided between two parties, involving the person entrusted with the legal title to the property (the trustee) and the other person known as the beneficiary who retains the beneficial or equitable property ownership. The settlor is the original owner of the property who is responsible for creating the trust arrangement and enters into said arrangement, allowing the trustee to control, manage and administer the said property/properties as they are assured that the economic benefits received from the property will be accrued to the beneficiary. The property entailed within the trust can vary from real estate belongings, cash, investment portfolios, business shares, jewellery, art collections or other valuable items like patent copyright.
Who is the Trustee?
The trustee is appointed by the settlor and refers to the person who holds the trust property’s legal title and performs the various duties allotted to the trustee. It is critical to remember that the Executor and The trustee are two distinct roles.
In Singapore, an executor holds statutory powers of sale for administration purposes. These powers cease after the completion of these duties. The individual to whom probate has been granted then comes into power as the trustee.
In some situations, the settlor can be the trustee, and in such cases, the settlor declares themselves to be holding the trust property on trust for the said beneficiary.
Duties of The Trustee
If the trust does not have a solid legal framework, unforeseen situations might arise where the trustee is entirely powerless. In such cases, neither the Trust instrument nor the Trustees Act can give the trustee the power they seek.
Let’s take a look at the primary duties of the trustee:
- The Duty To Pay Debts
- The Duty To Keep Accounts
- The Duty to distribute the Trust Assets following the Trust/Will legal framework or the laws of Intestacy
- The Statutory Duty of care under s3A Trustees Act
- The Duty to make and optimise Returns on the investment under the s4-6 Trustees Act (if directed)
- The Duty to prepare and maintain estate accounts under the s78 Trustees Act
- The Duty to collect and release assets
Powers of The Trustee
The Trustees Act expressly confers critical powers on the trustees. The powers, however, are only applied if they are not contrary to the terms of the trust instrument. A trust protector can also be appointed to ensure that the trustee exercises their powers according to the trust’s terms.
Let’s take a look at the significant powers of the trustee:
Power to Invest
Trustees in Singapore have the power to invest as per the guidelines mentioned in the Trustees Act. The trustee has the power to invest the trust fund in investment-linked policies and a myriad of a low-risk unit trust.
Power to Delegate
According to the Trustee’s Act, the trustee has the power to delegate the execution of the trust or any other powers or discretions vested in him, either alone or jointly with any other persons.
Power of Insurance
Trustees in Singapore are empowered to ensure against losses or damages to any buildings by a fire up to the full value of the property. The Trustee’s Act states that they can pay the insurance premiums out of the income of the property subject to the same trusts, and can do so without the consent of other individuals who may be entitled to such income.
Trust Service Singapore
Lighthouse Legacy Planners offer the best trust services in Singapore. Our mission involves helping and assisting our clients in passing down their legacy effectively and responsibly.
Our expert consultants begin by thoroughly analysing the client’s relationships with their family and organisation before creating a trust framework. Our vision is to create a lasting legacy from our client’s assets, and we offer the best trust planning Singapore services.