How to Set Up a Trust in Hong Kong – Step-by-Step Guide
Setting up a trust in Hong Kong is a straightforward process with the right guidance. This step-by-step guide covers how to set up a trust in Hong Kong efficiently and legally.
Hong Kong has over 550,000 registered trusts, making it a top trust place globally. Setting up a trust there is easy with the right help. This guide shows you how to set up a trust in Hong Kong step by step.
If you want to safeguard your assets, grow your wealth, or plan for your family’s future, this guide is for you. It includes all you need to know about trust setup. You will learn how to set your goals, pick a trustee, write a trust deed, complete the trust registration, add funds, and meet legal rules.
Key Takeaways
- Hong Kong is a leading global trust jurisdiction with over 550,000 registered trusts.
- The process of setting up a trust in Hong Kong is straightforward with the right guidance.
- Key steps include defining your objectives, choosing a trustee, drafting a trust deed, registering the trust, funding the account, and ensuring regulatory compliance.
- Trusts in Hong Kong can be used for asset protection, wealth management, estate planning, tax optimisation, and succession planning.
- Hong Kong’s robust legal framework and business-friendly environment make it an attractive location for trust formation.
Understanding Trusts in Hong Kong
In Hong Kong, a trust involves three parties. The trustor puts assets into a trustee’s care for the beneficiary. This system exists under the Trust Law Ordinance, the Trustee Ordinance, and common law.
Benefits of Setting Up a Trust in Hong Kong
Setting up a trust in Hong Kong has a lot of perks. You get asset and wealth protection, ease in estate and tax plans, and good succession planning options. Hong Kong’s laws are flexible, letting you have control on investments and allowing perpetual trusts.
Legal Framework for Trusts in Hong Kong
Hong Kong follows English common law in its trust system. It uses the Trust Law Ordinance and Trustee Ordinance as well. These laws make setting up and managing trusts clear and strong. Various trust types are allowed, providing for the interests of both settlers and beneficiaries.
Types of Trust Accounts in Hong Kong
Hong Kong has many trust account options for different needs. These include discretionary trusts, fixed trusts, living trusts, and testamentary trusts.
Discretionary Trusts
In a discretionary trust, the trustee decides who gets trust assets, when, and how much. This is based on the guidelines in the trust deed. Beneficiaries have no right to demand assets.
Fixed Trusts
Fixed trusts differ as beneficiaries are clearly named, with set entitlements. The trustee must follow the trust deed’s instructions exactly, with no power to change how assets are distributed.
Living Trusts
A living trust starts when the settlor places assets within it while alive. This allows beneficiaries to access assets without waiting for the settlor’s passing. The settlor and their dependents are often named as beneficiaries.
Testamentary Trusts
A testamentary trust is set by a will’s terms after the settlor’s passing. Until then, the settlor owns the trust assets. The will appoints the trustee, often the will’s executor. This type of trust looks after family post settlor’s death.
How to Set Up a Trust in Hong Kong
The first step to set up a trust in Hong Kong is to know your goals. Think about why you want a trust and what things you’ll put in it. It might be for looking after your money for the future or keeping it safe. Knowing your aims is key.
Define Your Objectives
It’s vital to pin down your aims when creating a trust in Hong Kong. This helps you figure out what the trust is for. It makes sure your financial and life goals match the trust’s purpose.
Choose a Trustee
Picking the right person or organisation to manage the trust is crucial. This trustee will make sure your money in the trust is taken care of as you wish. You can go with someone you know, a company that does this job, or a bank. Just choose someone you trust completely.
Draft a Trust Deed
A trust deed is like a rulebook for your trust. It lays out who the trust is for, what the trustee can do, and how the money should be shared. It’s really important because it explains how your trust will work. Getting a lawyer to help write the trust deed is a good idea.
Register the Trust
In Hong Kong, your trust needs to be registered with the government’s tax office. You have to tell them what the trust is about, who it’s for, and what things are in it. Registering is needed to follow tax laws and to be clear about the trust.
Fund the Trust Account
After registering, put your assets or savings into the trust, following the trust deed’s rules. Make sure to have all the correct paperwork. This keeps the trust running well.
Comply with Regulatory Requirements
Know and follow all laws and tax duties in Hong Kong related to trusts. Keeping up with the legal side is vital for your trust’s success in the long run.
What is a Hong Kong Trust Company?
A trust company in Hong Kong helps people and groups with trust and fiduciary services. These include safeguarding and managing their assets in an effective way. It acts as a trustworthy agent for clients or as a trustee.
Their services extend to estate planning, stock transfers, and more. They help with custodial arrangements, beneficial ownership registration, and business succession planning.
Benefits of Setting Up a Trust Company in Hong Kong
Hong Kong is a great place for trust companies thanks to its strong financial sector. It has clear regulations and skilled professionals. This makes it easier for companies to do business.
There is a growing demand for trust services locally, as Hong Kong’s wealth increases. Trust companies can also reach out to clients globally. This is especially true in places like Mainland China and other Asian areas.
Eligibility Requirements for Registering a Trust Company
To provide trust services in Hong Kong, a company needs proper incorporation. It can’t be a private company, following the requirements to register a trust company in hong kong. The company should meet these key points:
- The company’s aims must fit within Section 81 of the Trustee Ordinance.
- It should have more than HK$3 million as its share capital. Of this, at least HK$3 million should be paid up.
- At least two directors must be properly appointed to the board.
- The company needs to put down HK$1.5 million with the Director of Accounting Services. Or, it can offer a bank guarantee instead.
- Without counting the deposited funds, the trust company should handle its duties well.
Also, no single member should own more than one-fifth of the company’s issued shares. But this rule doesn’t apply if the company is a subsidiary of a bank.
Steps to Open a Hong Kong Trust Company
Opening a trust company in Hong Kong follows several important steps. These steps ensure you meet the region’s legal requirements. Now, let’s look at how to start a trust company in Hong Kong.
Incorporate a Hong Kong Company
To start, you need to create a company in Hong Kong. You will pick the right structure, not a private one, and name the company. Then, choose an address and make company rules. You also apply for important certificates.
Obtain Necessary Licenses from the SFC
In Hong Kong, trust companies need a special license from the SFC. It lets them manage assets and investments for others. Getting this license means the company must share its plans, finances, and rules with the SFC.
Register as a Trust Company
With your licenses in place, you can register as a trust company. This gets done at the Companies Registry. You fill out a form either online or by paper and pay the necessary fees, which includes an application fee. You also pay for the Certificate of Registration.
Receive Approval and Certificate
After registering, wait for the Companies Registry’s approval. If they agree, you get a Certificate of Registration. This certificate can come electronically or by post. You can also collect it in person.
How to Set Up a Trust in Hong Kong
In conclusion, setting up a trust in Hong Kong is quite simple. First, you need to figure out your aims. Then, pick someone to be the trustee. Next, you write down the trust’s details and sign it. After that, you officially create the trust.
Then, you put money or assets into the trust. Make sure you also follow the rules. Hong Kong has a good system for trusts. It’s good for protecting what you own, looking after your money, and planning ahead.
Hong Kong started using new trust laws in 2013. Since then, it’s been helping people in Hong Kong and Asia with trusts for over 25 years. Lutea (Hong Kong) Limited is one of the best at this. They have offices all over offering many services.
FATF, a global group against money laundering, includes Hong Kong. Trusts in the city can last forever. Plus, people who benefit from trusts don’t pay certain taxes. Income taxes are only on what’s earned in Hong Kong.
Lutea made sure they can still work well even during the pandemic. They have plans that keep their services going smoothly for their customers.
