What is a trust, and how do trusts work in Singapore?

A trust is one of the oldest ways to look after the people you love. At its simplest, it lets you set assets aside, put someone you trust in charge of them, and decide exactly how and when those assets reach the people they are meant for.

This guide explains what a trust is, how trusts work in Singapore, and how they sit alongside your will. It also covers something many parents overlook: what happens when a child under 21 is set to inherit property, and the simple step in your will that keeps things straightforward.

What is a trust?

A trust is a legal arrangement where one person holds and manages assets for the benefit of someone else. You decide the terms, someone you choose carries them out, and the people you name receive the benefit.

Three roles make a trust work:

• The settlor – that is you, the person who creates the trust and places assets into it.
• The trustee – the person or company you choose to hold and manage those assets, following your instructions.
• The beneficiary – the person who benefits from the assets, such as your child.

What makes a trust different from a simple gift is control over timing and conditions. Instead of handing everything over at once, you can set out when and how the benefit is released – for example, income to support a child each year, with the rest passed on when they are older.

How does a trust work?

In a trust, ownership splits into two parts. Singapore law recognises both:

• Legal ownership – formal ownership on paper. This sits with the trustee.
• Beneficial ownership – the right to actually enjoy or benefit from the asset. This sits with the beneficiary.

So when you create a trust, you transfer assets to the trustee, who becomes the legal owner. The trustee manages those assets and applies them for the beneficiary, exactly as your instructions set out. The beneficiary never has to manage the assets themselves – they simply receive the benefit.

The main types of trust in Singapore

There are two you are most likely to come across:

• A testamentary trust is created inside your will and only comes into effect when you pass away. Until then, you keep full ownership and control of everything. It is a common way to provide for young children, because the trust can hold their inheritance and release it gradually.
• A living trust (also called an inter vivos trust) is set up during your lifetime. You transfer assets into it now, and it can keep managing them even if you later lose mental capacity. It offers more flexibility, but it costs more to set up and run.

A family trust is not a separate legal category – it is simply a trust (usually a living trust) used to hold and pass on family wealth across generations. People sometimes call the assets inside any trust a trust fund.

Cost follows complexity. A testamentary trust written into your will is relatively inexpensive, because it only begins when you pass away. A living trust managed by a professional trustee involves set-up legal fees plus ongoing administration costs, and a professional trustee usually charges a percentage of the assets each year.

Why parents in Singapore consider a trust

Trusts are not only for the wealthy. For parents, the appeal is simple: control and protection.

In Singapore, a person reaches the age of majority at 21. Below that age, a child cannot manage a significant inheritance on their own. A trust lets you hold their share until they are old enough – at 21, or a later age you choose, such as 25 – while a trustee provides for their care in the meantime. It also guards against a large sum being spent too quickly, too young.

A trust can also be the right tool for a dependant with special needs, where lifelong, carefully managed support matters more than a one-off inheritance.

If your child will inherit property, name two executors

Here is a point many parents miss, and one where the right step in your will makes all the difference.

If you own property in Singapore and a beneficiary in your will is under 21, you should appoint two executors to act jointly. That is because when property is held on trust for a minor, Singapore law requires two trustees – or a trust corporation – to act together to give a valid receipt for the proceeds when that property is sold. With only one executor, selling the property to release your child's inheritance becomes far harder.

So in this situation, name two joint executors who share responsibility equally and make decisions together. In every other situation, a primary executor with a substitute is the standard, simpler set-up.

This is the one trust-related step you can take care of directly when you create your will – no separate trust structure needed.

How to choose a trustee

If you do set up a trust, choosing the right trustee matters more than almost anything else, because they will act for your beneficiary when you are not there to. Look for:

• the competence to manage money and assets sensibly
• a clear understanding of your intentions and your beneficiary's needs
• someone your beneficiary can genuinely trust
• a fair view of the costs and time involved

For simple assets, a reliable relative or friend may be enough. For larger or more complex estates, a professional trust company or a specialist law firm is usually the safer choice.

What about your CPF savings?

Your CPF savings do not pass through your will, and they cannot be placed in a trust through your will either. CPF monies do not form part of your estate. To decide who receives them, you make a separate CPF nomination with the CPF Board – and that is the only way to direct your CPF savings after you pass away.

If you make no nomination, your CPF is distributed by the Public Trustee's Office under the intestacy rules, which charges a fee. It takes a few minutes to nominate, and it sits neatly alongside your will as part of your wider plan.

Trusts and tax, in brief

Income earned by a trust is taxable in Singapore. Depending on the arrangement, tax is paid either by the trustee or by the beneficiary, and the trustee files an annual trust return (Form T) with IRAS, usually due by 15 April. The detail gets technical quickly, so for anything beyond the basics it is worth speaking to a tax adviser or lawyer.

Does MakeGoodwill set up trusts?

We want to be clear and honest here: MakeGoodwill does not currently offer testamentary trusts or other trust structures. Trusts are powerful in the right situations – providing for young children over time, planning for a dependant with special needs, or managing complex assets – and they deserve proper, tailored advice. For those, please consult a lawyer for independent legal advice.

What we do help you with is the foundation every plan rests on:

• Create your legally valid will, online and from home, designed to comply with Singapore law.
• Appoint guardians for your children, so the people you trust are ready to step in.
• Name two joint executors when a child under 21 is set to inherit property – the step above that keeps their inheritance straightforward.