By James Ho, Business Development Director (Private Wealth), Greater China
Across Asia today, there’s a growing interest in structured approaches to intergenerational wealth planning and succession. It’s easy to see why – around US$6.1 trillion in wealth is expected to transfer across generations in Asia by 2030, meaning that the region is on the cusp of the largest and most complex wealth transfer in history.
Amid this increased interest in wealth transition strategies, trusts are coming into focus. Not only are these structures effective tools for wealth preservation, but they can also play a role in continuity, family harmony, and legacy planning, helping families navigate the challenges associated with managing wealth across generations and jurisdictions.
The practical advantages of trusts
More sophisticated than wills (which have their limitations), trusts offer a range of practical advantages when it comes to intergenerational wealth planning. For a start, they can ensure that assets are not only transferred to future generations but also protected, managed and grown. With these structures, assets can be ring-fenced so they are sheltered from creditors and legal claims. This is particularly valuable for business owners and those in high-risk professions. Meanwhile, they can be set up to ensure that long-term capital remains invested for future growth. For example, a trust could stipulate that income from a real estate portfolio is distributed to beneficiaries, but the property itself is held in the trust in perpetuity, ensuring that there is wealth for future generations.
Trusts also offer a high level of clarity, supporting family governance. This is due to the fact that they establish a detailed, legally binding framework for the management and distribution of assets. With this type of structure, one can include very specific instructions for how assets should be distributed. For example, you could specify that beneficiaries receive staggered payments at different ages, or set conditions for distributions, such as requiring a beneficiary to graduate from university.
Additionally, they can play a key role in philanthropy. Via a trust, a family can formalise charitable giving, aligning their wealth transfer with family values. Note that today, family offices in Asia are increasingly integrating philanthropy into their legacy strategies. According to BNP Paribas’ Asia-Pacific Family Office Report 2024, 74% of APAC family offices now engage in philanthropy – the highest rate globally. It’s worth pointing out that Singapore recently introduced the Philanthropy Tax Incentive Scheme (PTIS) to encourage regional giving, particularly from single family offices (SFOs). Designed to help establish Singapore as a hub for global and regional philanthropy, it allows approved donors to claim a 100% tax deduction for eligible overseas donations.
Emotional resilience
There are more to trusts than just practical advantages though; they also offer emotional benefits. Peace of mind is one such benefit. Trusts can ensure that complicated family situations are handled with care and that your wishes as settlor are carried out exactly as you intended. This is invaluable in situations where you might be concerned about beneficiaries’ financial maturity or the complexities of a blended family. Trusts can also help to ensure assets are kept within the family for a specified period of time and not sold or otherwise let go of. This can prevent ‘sideways disinheritance’ – where assets intended for your children are accidentally passed to a third party and out of the family lineage.
Another benefit here is that trusts can reduce the risk of family conflict. This is particularly relevant in Asia, where succession planning is often shaped by values of harmony, respect and collective decision-making. One thing that can help on this front is the appointment of a professional trustee. This type of trustee can make difficult decisions without the emotional bias that a family member might have, helping to prevent family disputes and ensure the trust’s terms are followed to the letter.
Additionally, trusts can be used to help preserve legacy values, as they allow a family to embed their core beliefs and principles directly into the legal framework that governs their wealth. For example, a trust could be set up to promote education, support entrepreneurship, foster financial responsibility or encourage philanthropy. Ultimately, a trust allows you to create a personalised plan that ensures your wealth is distributed to the right people, under the right conditions, long after you are no longer able to manage it yourself.
The different types of trusts for wealth transfer
In recent decades, the trust landscape across Asia has evolved significantly, with many jurisdictions modernising their trust laws to make them more attractive and user-friendly. As a result, there’s a range of trust structures available today, including:
- Discretionary (family) trusts: Offering long-term stability and flexibility, these enable trustees to manage and distribute assets in line with the evolving needs and objectives of the family
- Reserved powers trusts: These enable the settlor to retain specific powers while still benefitting from the trust structure. While the extent of these powers varies by jurisdiction, these structures can be appealing to entrepreneurs in Asia
- Revocable vs irrevocable trusts: Irrevocable trusts are generally intended to remain unchanged once established, making them suitable where stability and certainty are priorities. However, the ability to amend terms may depend on the wording of the trust deed. In some cases, amendments can be made by the trustee, sometimes with the approval of a protector or possibly with the beneficiaries’ agreement if the change is substantial
- Charitable provisions within trusts: Charitable objectives can be incorporated into discretionary trusts. However, purely charitable trusts are less common and are subject to local legal frameworks
- Non-charitable purpose trusts: Commonly used to hold shares in private trust companies (PTCs) or to support governance structures, these trusts can help ensure continuity and control in business succession planning.
Interest from family offices
Given their advantages, and the range of different structures available, trusts are very well suited to modern-day intergenerational wealth planning in Asia. The rapid accumulation of wealth among entrepreneurs and business founders in Asia has created an urgent need for formal structures to manage and transfer assets to the next generation. Meanwhile, affluent Asian families are increasingly becoming more global and fragmented, with members often residing in different countries. This complexity requires flexible, cross-jurisdictional wealth management solutions, which trusts can provide.
It’s worth noting that the proliferation of family offices across Asia has led to a high level of interest in, and increased adoption of, trust structures in recent years. In 2024, Hong Kong was home to around 2,700 family offices, more than double the number in 2019. Meanwhile, at the end of 2024, Singapore had surpassed 2,000 family offices, a 10-fold increase on the number in 2019. Recent regulatory developments, such as Hong Kong’s Inland Revenue (Amendment) (Tax Concessions for Family-owned Investment Holding Vehicles) Ordinance 2023, have also played a role in the popularity of trusts as they have strengthened ecosystems for family offices and trust planning.
Navigating the intergenerational landscape smoothly
With the Asia-Pacific region accounting for nearly 40% of global wealth today, intergenerational planning is likely to be a key wealth management theme in the years ahead. Especially when you consider that populations across many countries in Asia are rapidly ageing and many families are underprepared for wealth transfer and succession.
Trusts are one option that families across Asia may wish to consider to pass on and preserve wealth for future generations. These structures support continuity, governance and legacy building, enabling families to navigate the intergenerational wealth management landscape smoothly.
How we can help
At IQ-EQ, we help family offices and their advisers across Asia manage succession, governance and family business continuity through tailored structures and strategies, including trusts, holding vehicles and other legacy planning solutions.
Through our global network we’re able to structure trusts in key jurisdictions worldwide and together we bring deep experience in cross-border estate planning and intergenerational wealth transfer.
To explore how we could support your family’s long-term goals with bespoke solutions to meet your business and wealth planning needs, please get in touch with our specialist team.
And for more information on trust structures in Asia and beyond, click here to download our global guide to succession planning.
