A trust is a legal arrangement in which the settlor transfers assets to a trustee, who manages them for the benefit of the beneficiaries in accordance with the agreed terms. The assets are independent of the trustee’s personal estate and are protected under Hong Kong law.
They include fixed trusts (where beneficiaries’ interests are predetermined), discretionary trusts (where the trustee decides the distribution), charitable trusts (for public or charitable purposes), and asset protection trusts (to safeguard assets from creditors).
A trust is established through a written trust deed that clearly defines the assets, beneficiaries, and management arrangements. The settlor must transfer the assets—such as cash, stocks, or real estate—to the trustee.
Any individual with legal capacity or a licensed trust company can serve as a trustee. The trustee must manage the assets with loyalty and prudence, and is usually a professional institution or a family member.
Trust income in Hong Kong may be subject to tax, such as property or salary income, while foreign-sourced income is generally exempt. Charitable trusts may enjoy tax benefits.
Any lawful assets, such as cash, stocks, real estate, or intellectual property, can be included, provided they are clearly transferred to the trustee.
In Hong Kong, trusts are allowed to exist indefinitely, making them suitable for long-term wealth planning.
Trustees usually charge a fixed or percentage-based management fee based on the value of the trust assets, as specified in the trust deed.
A trust may be terminated according to the terms of the trust deed or with the consent of the beneficiaries. The trust ends once the assets have been distributed.