Question

Hi, can you answer this question in more detail?

Subject: Hong Kong Taxation and Estate Planning

Q2. A

Trust is an important tool in estate planning. It is a mechanism to separate the power of execution over a property from the beneficial owner of a property. Critically analyze the six advantages of trust.

Make a critical analysis based on information about the following six advantages:

1.      Flexibility

2.      Less likely to be challenged

3.      Protection of Assets

4.      Succession Planning

5.      Confidentiality

6.      Assets Management

(Words: 700 Don’t direct copy)

Answer 1

1. It is very flexible to form a trust in the context of number of trustees, benefial owners and executors. It is flexible to give the required powers to the trustees considering the welfare of the beneficial owners.

2. Unlike a Will, a trust is less likely to be challenged because it is registered under the law in the presence of the witnesses and society members.

3. A trust structure provides protection to assests in the absence of the trust settlors and for the benefit of the beneficial owners. The property is protected because all the decisions are taken in the welfare of the beneficial owner with the consent of all the trustees.

4. A trust structure is the greatest tool in succession planning as trust comes into force after the death of settlors.

5. All the provisions of trust deed are kept confidential as it is a private trust unlike a public trust where all the income statements and balance sheets need to be disclosed to the public.

6. Trust is the greatest tool in assests management as assets are handed over to trustees for management purpsoe for the benefits of the beneficial owners.