SINGAPORE Law and Practice Contributed by: Sim Bock Eng, Josephine Choo, Aw Wen Ni and Vincent Ho, WongPartnership LLP
Trusts and Marriage The Singapore trust is equally robust against a chal - lenge upon the breakdown of a marriage; see the information on trusts in 2.4 Marital Property . The Women’s Charter Under Section 132 of the Women’s Charter, the Singa - pore court has the power to set aside any disposition of assets made within three years preceding the appli - cation of the divorce if the object of such disposition is to either reduce that party’s means to pay mainte - nance or deprive the spouse of any rights in relation to the property. Such disposition would include any settlement into a trust. 3.3 Tax Considerations: Fiduciary or Beneficiary Designation Singapore does not have capital gains or gift taxes, and levies income tax on income accrued in or derived from Singapore, or received in Singapore from outside Singapore. There are no specific tax implications that arise solely from a Singapore citizen being a fiduciary or a beneficiary, whether of a Singapore trust or a foreign trust. A fiduciary who receives income in such capacity will be subject to income tax, no different from other forms of income. This applies even if the settlor or donor of the trust, or beneficiary, is also the fiduciary. A trust can be granted tax transparency, depending on the type of income received by the trust and the tax residency of the beneficiaries. If income tax has been imposed on the trust, distributions by the trustee will be regarded as capital and not subject to further Sin - gapore income tax in the hands of the beneficiaries. However, if a trust has been granted tax transparency, the distributions received by the beneficiaries from the trust may be subject to Singapore income tax, unless this is specifically exempted. 3.4 Exercising Control Over Irrevocable Planning Vehicles Section 90 (5) of the Trustees Act 1967 specifically provides that a trust or settlement is not invalid “by reason only of the person creating the trust or making the settlement reserving to himself any or all powers of investment or asset management functions under the trust or settlement”. There is therefore no objection to
this structure is an option where the intention is to separate the legal ownership and economic owner - ship of investments or businesses. Singapore does not have foundations in the civil law sense – ie, a legal structure (distinct from companies or trusts) that is created for specific purposes. The foundations that are set up in Singapore tend to be charitable structures (either a society or a company limited by guarantee). In accordance with guidelines from the Commissioner of Charities, only organisa - tions that are self-funded by an individual, family or for-profit company to aid the organisation’s intended charitable purposes or that are financed by an endow - ment for said organisation can have the word “founda - tion” in their names. 3.2 Recognition of Trusts Singapore’s legal system is based on common law and recognises trusts. A valid trust requires certainty of intention to create the trust, certainty of objects and certainty of subjects. Singapore trusts have a perpetu - The validity and operation of the trust in Singapore are not affected by succession or forced heirship rules. Section 90 (2) of the Trustees Act 1967 provides that no rule relating to inheritance or succession affects the validity of a trust or the transfer of any property to be held on trust if the person creating the trust or transferring the property had the capacity to do so under the law applicable in Singapore or the law of their domicile or nationality or the proper law of the transfer. In Shafeeg bin Salim Talib v Fatimah bte Abud bin Talib [2010] 2 SLR 1123, the Singapore Court of Appeal opined that if the settlement of a Muslim’s assets into a trust was completed during the deceased’s lifetime, such assets would be treated as trust assets and would not be part of the estate and effects of the Muslim that would be subject to Islamic inheritance laws. The Singapore trust thus presents a considerable advantage in planning for individuals subject to forced heirship rules. ity period of 100 years. Validity and Operation
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