What is a trust?
A trust is a legal mechanism for transferring specific assets to particular beneficiaries, often while circumventing lengthy probate procedures. It allows you to manage your assets for a specific purpose or recipient (the beneficiary).
How do trusts work?
Singapore law recognises two types of rights ("interests") in any asset or property:
- Legal interest — formal ownership, what it means to own something "on paper"
- Equitable interest — the entitlement to benefit from an asset without necessarily holding legal ownership
Within a trust structure, the settlor (you) transfers property legally to a designated trustee. The settlor provides instructions to direct the property's benefits to a beneficiary. The trustee maintains legal ownership and manages the property, while the beneficiary receives income or value according to your directives.
Trusts and children
Trusts deserve particular consideration for parents — and they aren't exclusively for wealthy individuals. Depending on your children's ages, they may lack the capacity for sound financial decision-making. Trusts prevent premature asset depletion or misuse by restricting direct property access.
Trustees may invest or expand trust funds per your instructions while providing consistent support for your children's care, potentially growing assets during your absence.
Trusts need not permanently restrict ownership. They can terminate when beneficiaries reach specified ages — commonly 18, 21, or 25 — with property transferred to them thereafter.
How do I choose a trustee?
Selecting a trustee who acts in your beneficiary's best interests is essential. Consider these qualities:
- Financial and asset management competency
- Understanding of your intentions and beneficiary relationships
- Beneficiary's trust and confidence in the trustee
- Associated expenses and costs
Simple or easily managed assets may suit a relative or friend as trustee. Professional trust companies or specialised law firms better serve larger or complex asset portfolios.
Want to set up a trust in your will?
MakeGoodwill helps you plan for your children's future. Start today.
Start my will