How US Trusts Can Benefit Hong Kong & Singapore Residents

Asset Protection Trusts (APT) can be used by anyone to protect their assets. There are many advantages to using APTs which include shielding assets from political instability in one’s home country, protection from litigation from creditors, protecting beneficiaries from wasting the assets and even providing protection against your assets being taken in a divorce.

The trust laws of the United States (US), Hong Kong & Singapore are based on the English common law system. Trusts in each of these nations provide the beneficiaries and settlor with privacy, asset protection and tax benefits. Commentators noted that Hong Kong Trusts, for example, were created for foreigners since the beneficiaries under the Trust must be non-residents of Hong Kong to assure tax exemptions. On the other hand, certain US Trusts provide all beneficiaries (US resident and non-resident) with tax benefits.

Although APTs in Hong Kong and Singapore offer similar benefits as American APTs, depending on the type of ATP you establish, there are some added benefits that American APTs provide that make an American APT attractive. This is discussed more below.

APTs Can Benefit Everyone
APTs are not just for ultra-wealthy individuals. They can benefit anyone who has any assets including property, securities, real estate. Even if you do not contemplate ever being in a position of liability, APTs can still offer advantages to its beneficiaries such as privacy and tax benefits.

Trusts created in the US offer the beneficiaries privacy. Assets held in a US trust (by any individual regardless of nationality) cannot be disclosed to any third party whether it is an individual, entity or government.

Protection from Wasting Assets
Moreover, Trusts, if properly established, can be an effective tool used to protect assets from being wasted quickly by the beneficiary(ies) and can be used to mitigate the effect of inheritance tax upon the death of the owner. The beneficiaries may be either children or adults. The effect on the amount of inheritance tax one would have to pay depends on the state/country one is residing (and in the case of real estate, in which jurisdiction the real estate property is located).

Protection from Divorce
APTs are especially favored by individuals wishing to protect their assets without having to sign and negotiate a prenuptial agreement. In fact, in some countries prenuptial agreements are unconstitutional and so unenforceable. However, with a properly constructed Trust, courts must abide by the Trust instrument.

Protecting Your Business
Aside from money and property, stocks/bonds, even a corporation (or your shares in a corporation) can be placed in a US trust to protect the beneficiary’s investment. Furthermore, all beneficiaries will be periodically informed of the status of the trust assets.

Understanding Trusts
There are several types of trusts available depending on your unique circumstances. Some popular types of trusts include discretionary trusts, fixed trusts, QTIP trusts, irrevocable trusts, and dynasty trusts (which are typically used to transfer assets to future generations and last for 365 years).

For assets to be unreachable to creditors, the assets must not be under the control of the grantor (the person handing the assets to the Trust). This is accomplished by placing the assets in an irrevocable Trust which gives the Trustee control over the assets. This does not have to be scary and a trust can be constructed in a manner that will simultaneously protect the grantor and allow the grantor to legally maintain some control over the trust assets.

Conclusion
Establishing a US trust is fairly simple and can be done quickly. For all types of trusts, a Trustee needs to be appointed to manage the Trust. Therefore, an experienced lawyer should be consulted to ensure that the assets are being properly transferred to the Trust and allowing for the maximum asset protection possible given your unique circumstances.