What is Trust? A Guide for Singapore Residents

A trust is a legal structure in which one party (the trustee) holds and manages assets on behalf of another party (the beneficiary), according to the instructions of the person who set up the trust (the settlor).

The key feature of a trust is separation of ownership and benefit. The trustee legally owns the assets but must manage them exclusively for the benefit of the beneficiaries, in accordance with the trust document. The trustee cannot use the assets for their own benefit.

In Singapore

Trusts in Singapore are governed primarily by the Trustees Act and common law trust principles. The Monetary Authority of Singapore (MAS) regulates trust companies that act as corporate trustees.

Common types of trusts used in Singapore estate planning:

Living trusts (inter vivos): Created during the settlor’s lifetime. Assets are transferred into the trust while the settlor is alive, and the trust continues to operate after death. Can potentially avoid probate for the assets held within it.

Testamentary trusts: Created within a will, taking effect at death. Assets pass through probate first, then into the trust structure. Common for protecting assets for minor children.

Discretionary trusts: A trust type where the trustee has discretion over how and when to distribute to beneficiaries within a defined class. Used when flexibility in distributions over time is important.

Why Trusts Are Used in Estate Planning

A trust provides control that a simple outright bequest does not. Rather than leaving S$1 million to an 18-year-old, a trust can specify:

• Distributions for education and living expenses until age 25
• A lump sum at 30
• Discretionary payments for extraordinary needs at the trustee’s judgment

Trusts are also used when:

• A beneficiary has a disability and needs managed, ongoing support
• The settlor wants to protect assets from creditors or divorce proceedings
• The family includes blended relationships and the settlor wants to ensure assets reach specific people
• Business succession requires a holding structure

What Trusts Cannot Do in Singapore

• HDB flats cannot be held in trust (HDB eligibility rules require individual ownership)
• CPF savings cannot be nominated to a trust directly
• Trusts do not eliminate all tax obligations (though Singapore has no estate duty)

Advisor Perspective

The question “do I need a trust” usually comes after I have mapped the estate — what assets exist, who the intended beneficiaries are, and what the family dynamics look like. For most clients, the answer is that a will with a testamentary trust provision covers the core need at far lower cost and complexity than a standalone living trust. Corporate trust structures become relevant when the estate is more complex, when there are business assets, or when there is a need for ongoing professional management across generations.

Common Mistakes

Assuming trusts are only for the very wealthy. A testamentary trust in a will can be set up for relatively modest cost and provides meaningful protection for minor children or vulnerable beneficiaries.

Confusing the trustee and executor roles. They are different: the executor administers the estate through probate; the trustee manages the trust assets after probate. Sometimes the same person holds both roles, sometimes not.

Not choosing a trustee carefully. The trustee has significant power over the assets and beneficiaries. Choosing an unsuitable individual trustee — or not planning for what happens if the individual trustee becomes incapacitated — is a common failure point.