Express Trusts

Express Trusts

Disclaimer: The material on this webpage does not constitute legal advice. The Government is not assuming, or taking on, any responsibility to any person who relies on the material stated on this website. If you wish to obtain legal advice on trusts and trust-like arrangements in Singapore, please engage a lawyer.

1. Basic Features Of Express Trusts

An express trust is formed when a settlor intentionally transfers property to a trustee, for the trustee to hold on trust for beneficiaries. A settlor can also declare himself to be a trustee for the beneficiaries.

The trustee is the legal owner of the property held under the trust. He holds and manages the trust property for the benefit of the beneficiaries, and distributes the income and capital of the trust property to them, according to the express terms as set out by the settlor.

The beneficiaries have a beneficial interest in the trust property. This means that they are entitled to benefit from the trust property.

The settlor also has the option to appoint a protector to supervise the trustee and prevent the trustee from abusing his powers. Protector(s), if appointed, typically have the power to veto or authorise the trustee in carrying out certain functions.  

Properties that are typically placed in trusts include cash, land, family businesses, shares, jewellery, art and more.

What Trusts Are For

Trusts may be set up for a number of reasons, including:

2. Setting Up An Express Trust

An express trust is typically, though not always, set up by way of a trust deed, which specifies the terms of a trust.

For a trust to be valid, it has to fulfil the “three certainties”, namely:

  • Certainty of intention: The settlor must have intended to create a trust.

  • Certainty of subject matter: The trust asset must be identified.

  • Certainty of objects: The beneficiary or beneficiaries must be identified or identifiable. [2]

Certain other formalities may be required. For example:

  •  A trust over immovable property has to be manifested and proved in writing, and signed by some person who is able to declare such a trust (section 7 of the Civil Law Act 1909). Further, the trust property must also be conveyed to the trustee(s) by deed in the English language (section 53 of the Conveyancing and Law of Property Act 1886).

  • A testamentary trust (i.e. a trust that takes effect on the settlor’s death) is typically declared by a testator in his will or codicil. Such a testamentary trust has to comply with the formalities in the Wills Act 1838.

The legal wording of a trust needs to be precise.

If the above-mentioned requirements are not met, the trust is invalid, and the purported beneficiaries will not be entitled to benefit from the trust property. Instead, ownership of the trust property will remain with the settlor.

It is therefore recommended that you consult a lawyer when setting up a trust. You may wish to use the Legal Services Regulatory Authority’s ("LSRA") website to find a suitable solicitor or law practice in Singapore.

Alternatively, you may also approach a licensed trust company or other professionals for trust-related services. Please refer to the section below.

3. Trustees in Singapore

The trustee manages the trust property for the benefit of the beneficiaries, and distributes the income and capital of the trust property to them. You should hence choose your trustee carefully if you wish to set up a trust. You may wish to consider the following:

  • Licensed Trust Company ("LTC"): In Singapore, persons who provide trust business are licensed and regulated by the Monetary Authority of Singapore ("MAS") under the Trust Companies Act 2005 unless specifically exempted. LTCs are able to act as trustees of express trusts, provide services in relation to the creation of an express trust, as well as provide trust administration services. You may wish to refer to MAS’ directory of financial institutions for a list of LTCs in Singapore.

  • Private Trust Company ("PTC"): You may wish to consider setting up a PTC. A PTC is typically established to act as a trustee to a trust or a number of trusts created by a settlor or settlors who are connected by blood or legal adoption. The beneficiaries of the trusts must also be connected to the settlor by familial ties. PTCs do not have to obtain a license from MAS, but have to engage a LTC to carry out certain trust administration services, including AML/CFT checks. You may wish to refer to the Trust Companies (Exemption) Regulations for further information. Please seek legal advice and/or advice from a LTC if you wish to set up a PTC.

  • Lawyers: Lawyers can also act as trustees. You may wish to use LSRA's website to find a suitable solicitor or law practice in Singapore.

  • Others: You can also consider choosing family members, close friends, or others who you know you can rely on to be a trustee. Think carefully about who to approach, and make sure that they are willing to take on the responsibility and duties involved in acting as a trustee (see next section).

4. Trustees’ Obligations & Duties

Trustees’ Duties Owed To The Beneficiaries

Trustees manage trust assets for the benefit of beneficiaries. They have certain obligations and duties, including:

  • Non-Fiduciary Duties: These include: (i) a duty to exercise reasonable care and skill; (ii) administrative duties, such as a duty to make inquiries regarding what constitutes the trust property when he is appointed; (iii) a duty to safeguard assets; and (iv) a duty to give proper, complete and accurate justification and documentation for his actions as a trustee.

    The trustee has to keep proper accounts of the trust (and the transactions made) and be prepared to furnish the accounts for inspection by the beneficiaries when requested.

  • Fiduciary Duties: A trustee’s fiduciary duties include: (i) a duty to act in good faith and for proper purposes; (ii) a duty not to make a profit out of the trust; and (iii) a duty to not place himself in a position of conflict.

Trustees should seek their own legal advice should they require more information as to the precise nature of their duties.

A breach of the above duties could potentially render a trustee liable to civil or criminal liabilities. For example, a beneficiary may sue the trustee in Court to seek legal or equitable remedies, such as for compensation or to recover profits that the trustee obtained from the breach. As another example, a trustee who has misappropriated trust property may have committed the offence of criminal breach of trust under the Penal Code 1871.

Transparency and Effective Control Requirements for Trustees (“AML/CFT requirements”)

Singapore is a member of the Financial Action Task Force (“FATF”) which establishes international standards for Anti-Money Laundering, Countering the Financing of Terrorism and Proliferation Financing (“AML/CFT”). Singapore is also a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes.

In line with these international standards, Singapore requires trustees to:

1. Obtain and verify information of relevant trust parties (i.e. all settlors, trustees, protectors, beneficiaries, and persons who have any power over the disposition of the trust);

2. Obtain and verify information about the effective controllers of relevant trust parties;

3. Obtain information about persons appointed or engaged as a service supplier to the relevant trust (i.e. an agent of, or a service provider to, the relevant trust including any investment adviser or manager, accountant or tax adviser);

4. Update information in (1) – (3) in a timely manner and maintain records for at least 5 years after the trustee ceases to be a trustee of the relevant trust; and

5. Keep accounting records.

Failure to comply with any of the obligations listed above is an offence.

The police may also require the trustee to produce the abovementioned information in a timely manner pursuant to powers of investigation under the Criminal Procedure Code 2010 (“CPC”), where it considers the information to be necessary or desirable for any investigation, inquiry, trial or other proceeding under the CPC.

These obligations apply under either:

For trustees whose obligations are stipulated in the Trustees Act and the Trustees Regulations, they are also required to inform certain “specified persons” that they are acting for a relevant trust before forming a business relationship, or entering a transaction of more than $20,000 (whether the transaction is carried out in a single operation or in multiple linked operations) with that “specified person”. “Specified person” would include financial institutions, licensed estate agents, and lawyers.

Report a Suspected Breach of a Trustee’s AML/CFT Obligations

If you suspect a trustee may have breached its respective obligations above, please write to us at this link. Should your concerns relate to LTCs or PTCs, please submit the details at this link on the MAS website.

As you may be contacted to assist in further investigations, please provide your name and contact details. Law enforcement agencies will follow up accordingly where it is decided that an investigation is warranted. Please be assured that your identity will be protected and kept confidential as far as possible. However, under certain circumstances, your identity may be revealed to other parties on a need-to-know basis.

Please note that unless you are contacted to provide further information, you will not be updated on how the information is dealt with, including on whether investigations are being conducted, and the status or outcome of the investigations in the event that the investigations are carried out.

If you suspect that a serious offence has been committed, such as fraud, misappropriation or money laundering, please make a police report at this link.

If you suspect that a serious offence has been committed that needs immediate action, please make a police report by calling 999 or SMS 71999.

5. Filing of Tax Returns

Trusts need to file a tax return with the Inland Revenue Authority of Singapore ("IRAS") to declare the amount of Singapore taxable income that was derived in the year preceding the year of assessment. Failure to do so may result in penalties. Please refer to IRAS’ website for more details, including requesting for a tax reference number.


[1] You may wish to approach the Special Needs Trust Company ("SNTC") to help you set up a trust for this purpose.

[2] There are certain exceptions to this, including when a charitable purpose trust is set up.  

[3] See Section 3 of the Trusts Companies Act 2005

[4] See Reg 2 of the Trust Companies (Exemption) Regulations

PREVIOUS

Trusts and Trust Like Arrangements in Singapore

NEXT

Charitable Purpose Trusts