What is a trust?

Private Wealth Solutions

Private Wealth Solutions is a business line within HSBC Private Bank providing wealth planning solutions for high net worth individuals, entrepreneurs and their families all over the world.

A trust is a legal relationship whereby one individual (the “settlor”) transfers his or her assets (the “trust fund”) to another individual or company (the “trustee”) who holds and manages these assets for the benefit of others (the “beneficiaries”) named by the settlor. The trustees are bound by the terms of the trust deed.

A trust can be established during your lifetime (“inter vivos trust”) or upon your death under the terms of your will (“testamentary trust”).

Trusts have different characteristics depending on the provisions included in a trust deed. For example, a trust may be revocable or irrevocable; discretionary or specific. To allow for maximum flexibility, most people establish a discretionary trust, which gives the trustee discretionary power to react swiftly to changed circumstances.

Typical trust structure

What can I transfer to a trust?
	You may transfer to a trust any type of assets, such as cash, securities, real properties, shareholdings in a trading or investment holding company or virtually any assets located anywhere in the world.

What are the benefits of having a trust?

Trusts are confidential, tax-efficient and highly flexible financial planning instruments to provide for specified beneficiaries, during and after your lifetime. The major advantages are:

PrivacyAssets are held in the trustee’s name, therefore the identity and interests of the beneficiaries are kept confidential continuously until the trust terminates. Tax planning A trust may be used to reduce tax liabilities. Assets owned by a trust will not be dealt with in the estate of a deceased person. Hence, estate or inheritance tax may be minimised or eliminated. Asset protectionA trust may protect assets from claims of future creditors to the extent permitted by law. Succession planning Trusts are effective tools for succession planning. They enable you to make provisions for your family members, relatives and friends, charities and other organisations in the way you desire. Hence, they allow flexibility in situations where domestic inheritance rules may otherwise be imposed. They also enable efficient distribution of trust assets to beneficiaries, without consuming the time and money associated with lengthy and complicated procedures and formalities required for probate.  Asset consolidation and management Trusts are a convenient means of placing your worldwide assets in one holding vehicle, simplifying both asset management and centralised financial reporting. A family office should be customised to achieve critical goals and address the concerns that matter most to a family. In addition to establishing holding structures for wealth protection, growth and transition, the family office can be a tool to implement broader succession, leadership and governance plans. For some, the family office also acts as a forum to ensure that family values, traditions and legacy endure. As needs change, it is important that the family office structure and functions evolve with them.

Dedicated services for advisers

In addition to enhanced levels of privacy, service and control, many families require specialised services that transcend the traditional capabilities of any local provider. At HSBC Private Bank, we call upon our global network of in-house and external family wealth experts to offer access to specialist advice.

“In Asia, we are the first private bank to establish an independent family office platform,” explains Agnes Au-Yeung, Head of Family Office in Hong Kong. “Our teams work both independently and with family advisers on issues such as consolidated reporting and analytics, and can serve as a conduit to a broad range of advisory solutions. Our independence and open architecture allows us to fashion solutions to exactly fit the needs of each family.”

Solutions range from complex and complete to simple and partial – we can complement a family’s existing arrangements, provide a holistic service or simply act as advisers, retaining other providers to implement a family’s wishes.

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