Wealth Structuring in a Changing Global Environment

Before selecting a legal vehicle, the family should agree on what the structure is intended to achieve. Tax is relevant, but it should follow the family’s commercial and succession objectives rather than drive them. 

A useful decision sequence

• Define the family’s objectives and non-negotiables. 
• Map the family members, assets and relevant jurisdictions. 
• Select the ownership structure and decision-making framework. 
• Model tax and reporting outcomes before assets are transferred. 
• Document roles, conflict procedures, distribution principles and succession arrangements. 
• Review the structure whenever family circumstances, business operations or applicable laws change materially. 

Practical point: Different assets need not sit in one vehicle. Families often separate operating businesses, real estate and financial portfolios to improve risk management, governance and administration. 

The comparison below is a guide, not a ranking. The suitability of each option depends on the trust terms, the company’s constitution and shareholder arrangements, the location of the assets and the family’s personal circumstances. 

Important nuance: Asset protection is not automatic. Transfers may be challenged under applicable insolvency, matrimonial, succession or anti-avoidance laws. The settlor must genuinely part with ownership to the extent required by the structure, and the trustee and company must act consistently with their legal duties.

Private trust company: Involvement with the structure

A private trust company (PTC) is a company established to act as trustee for one family or a connected group of family trusts. Its board can include family members and trusted advisers, allowing the family to participate in governance while trustee decisions remain subject to the trust terms and directors' duties.

A PTC may be useful where the trust will hold a family business, specialist assets or a significant portfolio requiring informed and timely decisions. It also introduces an additional entity, board processes, compliance responsibilities and succession planning for the PTC itself. The ownership of the PTC therefore requires careful consideration.

Reserved powers: Influence without blurring responsibility

Singapore law recognises that a trust is not invalid merely because specified investment or asset-management powers are reserved to the settlor. The scope of any retained powers should be drafted precisely and coordinated with the trustee's duties and the tax treatment in each relevant jurisdiction.

Common governance mechanisms may include:

• a power to appoint or remove trustees;
• a protector or advisory committee for defined strategic matters;
• an investment committee or investment policy statement;
• consent rights for major disposals or changes in business direction; and
• a non-binding letter of wishes explaining the family's values and distribution priorities.

Retaining too much control may weaken the intended legal, tax or asset-protection outcomes. The structure should not leave the trustee as a mere nominee or create uncertainty over who truly makes decisions.

Family governance beyond the legal documents 

The trust deed and company constitution are only part of the framework. A family constitution, council or charter can address participation in the family business, investment principles, education of the next generation, distribution expectations, conflicts and leadership succession. These arrangements should complement, not contradict, the binding legal documents.  

For families that wish to centralise investment management in Singapore, a trust may sit at the ownership and succession level while a separate fund vehicle holds the investment portfolio and appoints the SFO to manage it.

Section 13O and Section 13U tax incentive schemes

The Monetary Authority of Singapore (MAS) administers the tax incentive schemes under Sections 13O and 13U of the Singapore Income Tax Act, which provide tax exemption for specified income from designated investments derived by qualifying funds operating under an SFO structure in Singapore. An ordinary IHC should not automatically be described as a qualifying fund. Eligibility for the tax exemption depends on the fund’s ability to meet all relevant conditions. 

The relevant conditions that SFO funds must meet to qualify for MAS tax exemption include maintaining the required amount of assets under management in designated investments at each year-end, employing the required number of investment professionals (including at least one non-family member), meeting capital deployment requirements for qualifying investments and satisfying local business spending requirements. These conditions must be assessed against the proposed structure and monitored throughout the tax incentive period. 

The SFO fund incentive should be presented as one component of the structure, not the reason for creating it.

When an SFO overlay may be worth exploring

• The family has a sufficiently substantial and diversified investment portfolio. 
• There is a genuine need for professional, centralised investment management. 
• The family is prepared to maintain the necessary personnel, spending, governance and compliance arrangements in Singapore. 
• The expected benefits justify the outgoing costs and operational requirements. 

Internationally connected families should assume that the structure will be visible to financial institutions and tax authorities. The objective should be a defensible and well-administered arrangement, not secrecy.

Under Singapore’s Common Reporting Standard (CRS) framework, a Reporting Singaporean Financial Institution must file annual returns, including a nil return where applicable. CRS is a global standard developed by the OECD that enables more than 100 jurisdictions to automatically share financial account information based on the account holder’s tax residence. 

The Foreign Account Tax Compliance Act (FATCA), a U.S. law, separately requires Reporting Singaporean Financial Institutions to register, perform due diligence and report relevant financial accounts or assets held by U.S. Persons, as applicable.  

Recent developments involving China's approach to offshore trust arrangements have attracted significant attention among wealth owners and advisers throughout Asia.

Under China’s 24 July 2026 rules, a Chinese resident individual who transfers assets to an offshore trust may be subject to individual income tax on the relevant gains arising from the transfer. During the trust’s lifetime, specific income generated by the trust and entities it holds, controls or manages may also be attributed to the resident individual, whether or not actually distributed. The rules also address trust termination and changes from resident to non-resident status.

For families with connections to China, an offshore trust should not be viewed simply as a structure sitting outside the Chinese tax and reporting environment. High-net-worth individuals whose major assets, business operations or income sources remain concentrated in China may not rely solely on offshore residency or citizenship planning. Emigration or obtaining a foreign passport or permanent residence may not by itself be sufficient to eliminate Chinese tax residence risks. Tax treatment may be assessed based on a number of factors, including the residence and circumstances of the settlor and beneficiaries, how the trust and its underlying companies are structured and managed, the extent of control retained by the founder, how income and gains arise, and whether distributions or other benefits are provided to family members. 

Similar considerations arise in many other jurisdictions. Tax authorities are increasingly looking beyond the legal form of an offshore trust and examining the underlying person(s), residence status, location of assets, beneficial ownership, substance issue and the actual exercise of control.  With greater international tax transparency and information exchange, families should therefore consider the offshore trust together with the tax, reporting and succession positions of the individuals behind it, rather than looking only at the jurisdiction in which the trust or holding company has been established.

China’s newly introduced rules do not necessarily signal the end of offshore trust planning. Rather, they reinforce the importance of ensuring that structures are established for legitimate succession and governance purposes and administered consistently with those objectives.  

Before implementing any structure, families should consider the following key questions.

There is no universal solution for wealth preservation and succession planning.

Trusts continue to play a valuable role where long-term succession certainty, family governance and asset protection are primary concerns. Investment holding companies can be effective where simplicity and operational flexibility are the driving objectives.

For larger families, a combination of a trust and an investment holding company structure may provide the most balanced outcome. Such a structure can support family governance, facilitate intergenerational wealth transfer, centralise investment management and potentially form the foundation of a single family office setup in Singapore and enjoy the tax exemption status obtainable from MAS, subject to meeting the relevant eligibility requirements.

As global tax transparency expands and regulatory scrutiny increases, successful wealth planning is becoming less about tax-driven structures and more about establishing arrangements supported by genuine commercial, governance and succession objectives.

Ultimately, the most effective structure is not necessarily the most sophisticated one, but the one that best supports the family's long-term vision for preserving and transferring wealth across generations while remaining resilient as family circumstances and cross-border rules evolve.