Secured Communication Portal Built for Professional Interactions

The modern-day law practice’s need to improve productivity is an ever-challenging issue. While the Covid-19 pandemic has accelerated digital adoption across industries, the quick adoption of technological solutions often require time to review new work processes. As lawyers are trusted advisors for their clients and often hold confidential personal data, more attention should be paid to how information and data are shared especially when it comes to client information. The issues are further exacerbated by the loss of information with any departure of partner lawyers or staff. Steps ought to be taken to ensure that there is the retention and retrievability of such professional communications and instructions.

As in the case of any adoption of digital platforms for professionals, of utmost concern is data privacy and ease of use by stakeholders. Not only do law firms have to be assured of data and information going to only intended recipients, there should also be permanence of information for integrity and accountability.

Are your communication platforms secured enough for managing personal or confidential information? Are pieces of information dispersed or cluttered across various platforms?

The Bondle Solution 

Bondle, an enterprise-level secured communication application, yet highly affordable, can address many modern-day workplace problems faced by professional consultancy and law firms.

All interactions through Bondle, which may not be the case of other messaging apps, are secured through dual-encryption and the documents shared can be organised within the conversation in folders or subfolders.

Several years of communication with external partners, clients, service providers or even internal discussions might mean losing sight of important details from the not-so-immediate past. Documents too might have been lost in transition. When a communication is made through Bondle or through its email bridge, the permanence of information and sensitive privileged communication provides certainty when it is eventually required. Archival messaging trail is complete with its attachments. Official communication can still be in the traditional long-form emails and copying in the Bondle-generated email address would allow it to be captured within Bondle for auditability. Searching for information can be time-consuming and any downtime can be critical. Some benefits are highlighted below:

Secured and Data Protection – With information stored on Amazon Web Services (AWS), there are also multiple layers of security at the application and infrastructure level. The Bondle app is hosted in state-of-the-art data centers with innovative architectural and engineering approaches to achieve fault tolerance, uptime, and their security claims.

Business Continuity – The permanence of information provides a reliable pillar of truth despite staff transitions, migration of IT systems and even change of mobile numbers. With outgoing staff or lawyers, the handover of information can be seamless. Bondle retains the archival history regardless of staff attrition or new hiring.

Documents and Discussions are Kept Organized – When communication threads and documents are centralized into a single space on Bondle, there will be asset rich interactions to foster collaborations where you can annotate the document or have a communication thread for the document. All documents exchanged are organized in folders within each conversation.

Quick Retrieval of Data – Have access to historical information around the clock. Get to a document or important information in just seconds. Full audit trail is also available at your fingertips with no downtime which can be costly. With downloadable audit trail, you can have full visibility of what had transpired.

Easy and Quick Implementation – With creation of conversations, interactions can start immediately. The onboarding process can be easily implemented and organized more seamlessly than the traditional exchange of emails with multi-parties.

White-Labelling – The white-labelling capability and website landing page integration allows Bondle to become your firm’s communication portal, with your logo clearly visible.

Communication Portal – When law firms and professional consultancies are working with intermediaries when there are recurring relationships, the Bondle system will be particularly useful such as in the case of litigation or conveyancing practice or corporate secretarial work. Law firms can use Bondle as an internal collaboration system within the office or applied for a wider purpose of clients’ engagement with a single audit trail far better than relying on WhatsApp or text messages that could be lost in transit or cluttered in other media forms. Bondle can serve as a secured client communication portal that is intuitive to use.

In-built productivity tools – E-Signature for acknowledgment and agreement such as ad-hoc fee agreements can be easily carried out within Bondle. With annotations, participants can add a ‘Stamp’ or text to the file. Conversations can be grouped and tagged to provide an organised way of working on projects and documents.

In summary, Bondle is a communication tool to enhance business productivity while complementing other existing IT or practice management systems in a law firm. There is also an added advantage of ensuring that information goes only to the intended recipient and no one else.


AEPP® Certification can bridge the talent gap in estate planning in Hong Kong

1. Can you tell us more about EPP HK?

Incorporated in Hong Kong in June this year, EPP HK extends the services of EPPL beyond its current geographical scope in Singapore, Indonesia and Malaysia to service the needs of the dynamic Hong Kong market. EPP HK is an education platform that seeks to equip financial services practitioners in the Hong Kong market through the AEPP® certification programme, which focuses not only on the imparting of knowledge in estate and succession planning, but also on its practical application.

Besides training, EPP HK will also provide trust advisory services to complement the education services. This combination of services makes EPP HK unique as it allows the financial services practitioners who have completed the AEPP® certification programme to tap the trust advisory services that are tailored to their or their clients’ specific needs, enhancing overall professionalism. While the majority shareholder of EPP HK is Estate Planning Practitioners Limited in Singapore, the trust advisory services will be carried out independently. We are also in the process of applying for the Trust and Corporate Services Provider licence in Hong Kong.

2. What potential do you see in starting the AEPP® certification programme in Hong Kong?

The Hong Kong trust industry is facing a talent gap, according to the Hong Kong Trust Industry Report 2021 by KPMG and the HK Trustee Association. Over the past few years, there have been ongoing developments to raise the level of professionalism and competence in the industry. The Trust and Corporate Service Provider licensing regime launched in 2018 was part of efforts to heighten professionalism. In the same year, the Hong Kong Trustee Association embarked on an accreditation programme on the Trust Training Certificate to achieve the same goals and the programme has been well received by industry practitioners who are keen to upgrade the skills of their workforce.

I believe the AEPP® certification programme can help to close the talent gap by contributing to the nurturing of talent and the building of relevant estate planning skills. I see the potential for growth of the AEPP® certification programme in the Hong Kong market, specially when the wealth planning and trust industry has shown resilience amid the challenging environment.

The trust industry in Hong Kong continues to grow, according to the Asia Wealth Management Activities Survey by the Securities and Futures Commission published in July 2021, registering a 17% year-on-year increase as of December 2020, bringing AUM to US$578 billion while the wealth and asset management business grew 21% year-on-year with AUM reaching US$4,505 billion.

Having a presence in the Hong Kong market also allows EPP HK to capture growth opportunities in the Greater Bay Area (GBA), with the opening up of the financial services industry in China, like the recent launch of GBA Wealth Connect. The AEPP® certification programme in Hong Kong could benefit from the potential demand for skills upgrade training and development driven by rising private wealth and growing interest in private trusts in the local market as well as in the North Asia region.

3. What is your biggest challenge given the current situation in Hong Kong?

All forays into new markets have one thing in common – a steep learning curve. I expect EPP HK to face similar challenges including, amongst others, fierce competition and limited funding. The biggest challenge at the moment is the lack of recognition of AEPP® certification in this region. While the AEPP® certification programme has witnessed healthy and steady growth over the past few years in Southeast Asia, it remains relatively unknown to financial services practitioners here. Creating awareness of the AEPP® certification programme and the value it offers will be a crucial step for EPP HK to gain foothold in the new market.

4. What are your plans for the AEPP® certification programme in Hong Kong?

The AEPP® certification programme consists of various modules covering different topics and jurisdictions. For the launch in Hong Kong, a course programme tailored to the Hong Kong market was designed by our trainer who has diverse and extensive experience in the practical field. Going forward, the plan is to roll out the other modules in Hong Kong as well as continuously develop the programme to
ensure its relevance and usefulness to the AEPP® designees and to upgrade the skills of the workforce in the trust industry in Hong Kong.

We also aim to tap the Continuing Education Fund in Hong Kong (similar to IBF-FTS funding) to help grow the business and boost the recognition the AEPP® certification programme. Additionally, we would like to increase the level of interaction in AEPP® communities across different countries and strengthen the network.

5. What advice can you offer to financial services practitioners who want to be or are practicing in Hong Kong?

Fruitful and fulfilling opportunities await you, but opportunities always favour those who are well prepared. So, equip yourself well.

Cindy Wong

Director, Estate Planning Practitioners (HK) Limited (EPP HK)
B.Bus, MBA, AEPP®, STEP Affiliate


ABSD (Trust) won’t impact those who have Standby Trusts with pour-over

The Ministry of Finance on 8 May 2022 announced that an Additional Buyer’s Stamp Duty (ABSD) of 35% will be imposed for the transfer of residential property into a living trust. Essentially, the Ministry said that the ABSD (Trust) of 35% is being imposed to close a gap where residential property is being transferred to a living trust without an identifiable individual beneficiary.

The move came as a surprise, especially to clients of estate planners who have set up Standby Trusts — a type of living trust — with pour-over Wills. In particular, the clients were concerned about whether the pour-over from their Will to the Standby Trust upon their passing will be subject to the 35% ABSD (Trust).

The situation was clarified by Mr. Liu Hern Kuan, Director of ZICO Insights Law LLC – Head of Tax, at a recent webinar. He noted that ABSD (Trust) applies to “conveyance, or transfer”, while a property passing under a Will is a “transmission”. There is therefore no ABSD (Trust) for such a transmission of property from the estate of a deceased person via his or her Will to the trust.

Mr. Liu’s view is consistent with the general understanding about applying stamp duty in relation to the transfer of property assets via a Will. The Inland Revenue Authority of Singapore (IRAS) says on its website that documents relating to the “transfer of property by way of assent to the beneficiaries in accordance to the Will, Intestate Succession Act or Muslim Law of Inheritance” is no longer liable to fixed or nominal duties.

In other words, the new ABSD (Trust) regime will not affect clients who have set up Standby Trusts with pour-over Wills that will transfer their residential properties into their Standby Trusts upon their passing.

Property investors’ behavior may be affected

The ABSD (Trust) regime is expected to change the behaviour of property investors who wish to purchase a property through a trust. Since the 35% ABSD (Trust) must be paid upfront and any remissions would apply subsequently, this would mean that investors/ settlors will need to ensure they first have sufficient liquidity to pay the ABSD (Trust). The trust will also need to fulfill the requirement of having an identifiable individual beneficiary, or else the investor/ settlor will not be able to get a refund on the ABSD paid.

It may also be worthwhile for estate planners to rethink provisions in Wills. To futureproof Wills against any sudden and drastic changes in laws and taxes, executors/ trustees should be given additional powers to sell an asset or property, and need not be limited to transferring the asset or property in specie to a beneficiary.

This latest move by the Ministry of Finance underscores the need for estate planning practices to be reviewed and updated periodically and systematically, to keep up with changes in laws and/or taxes to ensure that estate plans are not only cost effective, but also remain aligned to the needs and desires of clients.

Leong Mun Kid

Head of Department, Trusts
Precepts Trustee Ltd

Estate Planning

The rights of survivorship for joint tenants in the UK

In a recent landmark case in Singapore, the Court of Appeal ruled that a surviving owner does not have any automatic right to the
succession of a property if it was clearly not the other owner’s intention for that property to pass to them.

Could a similar situation ever occur in the United Kingdom (UK)? I will examine the types of joint property ownership in the UK and how severance may be carried out.

In the UK, if a property is jointly owned it can be held either as “joint tenants” or as “tenants in common”. It is more common
when purchasing a property for it to be conveyed into the owners’ names as joint tenants. It is possible to change from joint tenants to tenants in common at any point and vice versa.

A joint tenancy creates rights of survivorship. The result is that when one owner dies the remaining owners will automatically own the whole property. This means that a joint tenant cannot gift their interest in the property to anyone by their Will. The doctrine of survivorship takes precedence over the Will.

More flexibility with tenants in common

If property is held as tenants in common instead, each owner has greater flexibility over how they deal with their share of the property. They each have a divided share in the property. This is often an equal share, but it is also possible to hold the property in unequal shares.

This is an attractive option for people purchasing a property together who are contributing different amounts towards the deposit, or who desire to be paid different proportions of rental income from the property for income tax purposes.

Under a tenancy in common, each owner can deal with their share in the property separately, allowing them to gift their share to their own beneficiaries by their Will. This also opens up more opportunities for planning to protect their share of the property by using trusts in their Will.

For a joint owner to avoid the rule of survivorship and pass their interest in the property elsewhere, it would need to be established that they have severed their tenancy – changes from joint tenants to tenants in common. There are a few accepted methods of severing a joint tenancy:

  • Mutual agreement
  • Unilateral notice
  • Mutual conduct
  • Acting in a joint tenant’s own share

By far the most common and simplest way to sever a tenancy on a UK property is by mutual agreement of all legal owners. All owners simply agree between them to hold the beneficial interest in the property as tenants in common going forward. They should evidence this agreement in writing, usually with a Declaration of Severance. If the property is registered with the HM Land Registry, they should also then apply to enter a Form A restriction on the title by completing Form SEV.

Less common methods of severance

If one owner does not agree to the severance, then the other owner may also act alone in the severance — it can be a unilateral act. To achieve this the owner wishing to sever must serve a notice of their intention to the other owner. This must be made in writing and validly served by either handing the notice to the other owner, leaving it at their last known place of residence or business in the UK, or by sending it by recorded post and not having it return as undeliverable. The other owner does not need to acknowledge or accept the severance for it to be valid. As with severance by mutual agreement, a Form A restriction should be entered on the property title.

The much more uncommon method of severance in the UK is mutual conduct. The joint tenancy can be severed by any “course of dealing” that is “sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common” (Williams v Hensman (1861) 70 ER 862). All owners of the property must be aware of the intention. There have been rare cases where the fact the owners had written Wills dealing with their share of the property separately was enough to constitute severance.

Finally, a joint tenant may sever by acting on their own share. To do this they must carry out an act with their interest in the property that is so inconsistent with a joint tenancy as to suggest the interest is severed.

Severance by mutual conduct or a joint tenant acting on their own share should not be relied upon however, as there is potential that the Courts may rule that no severance was completed. Mutual agreement or a unilateral action is always best and safest due to the written evidence that severance was carried out.

Siobhan Smith

Lead Tutor for The College of Will Writing
The Society of Will Writers, UK


What family offices need to know about the changes to Sections 13O and 13U

Edwin Leow and Shaun Zheng of Nexia TS Tax Services assess the new criteria for family offices introduced by the MAS in Singapore

The Monetary Authority of Singapore (MAS) recently announced new stricter criteria for family offices to receive tax incentives in Singapore. The new rules came into effect on 18 April 2022, whereby funds that are managed and/ or advised directly by a family office which is:

  1. An exempt fund management company which manages assets for or on behalf of the family(ies); and
  2. Is wholly owned or controlled by members of the same family(ies),

must meet the updated conditions, applicable to Section 13O and Section 13U of the Income Tax Act of 1947, and are set out below:

Before the introduction of these new conditions, there was no requirement for a Resident Fund to have a minimum AUM and minimum number of investment professionals. Further, there was no requirement for both the Resident Fund and Enhanced-Tier Fund to invest in local investments previously.

Although these appear to be an additional set of stringent requirements being introduced, it is not inconceivable as Singapore continues to see more family offices being set up. With the city-state now firmly rooted as the leading destination of choice for family offices, the Government can afford to further refine conditions to help meet other broader policy objectives.

For example, the measures on minimum business spend and hiring will help stimulate the local economy, create new jobs and further raise professionalism in the asset management industry. Also, to continue defending its position as the country of choice, the local investment requirement will help to further shine a light and/ or serve as indicator as to whether the family offices are committed to invest in Singapore talent and local investments, coupled with the inimum AUM requirement, which should serve as an effective filter to exclude those families who do not wish to or do not want to grow their AUM, and are using Singapore as a safe harbour for a portion of family wealth.

It is expected that family offices will soon acclimatise to these additional requirements even if there is still intense competition among regional financial centres for investor dollars. Singapore’s political stability, economic progress and first-in-class healthcare facilities and education system, among others, should continue to triumph and be at the top of mind as these HNW individuals go about planning and safeguarding their private wealth and legacy.

Edwin Leow

Director, Head of Tax
Nexia TS Tax Services Pte. Ltd.

Shaun Zheng

Director, Private Wealth and Asset Management Tax Lead
Nexia TS Tax Services Pte. Ltd.


Wealth planning for high net worth individuals

In the first part of this two-part article, Kimmis Pun of Shenning Investments examines the use of Family Trusts to manage the wealth of High Net Worth individuals (HNWIs) and families

HNWI Family Dynamics

HNW families accumulate sizable family assets through years of efforts to expand their businesses and invest their wealth. No families would dispute the universal objective of allowing the next generations or other loved ones to enjoy and benefit from the global assets which might include operating
businesses, investible assets, real estate, insurance products, intellectual property and collectibles.

The diversified life experiences of HNWIs entail well-structured wealth and succession plans. In some cases, the convoluted fabric of the family branches might make the plans more complex and even subject to legal challenges.

Family disharmony is not uncommon especially when the inter-generational transfer of wealth faces complications. The prevailing commonality in cohesive families is the way to solve complex issues through continuous conversations among their members. Some outcomes are encouraging while others might be futile. Nonetheless, relational problems should be solved with relational solutions, while structural problems are solved with structural solutions.

HNWI Family Inheritance

The implementation of inter-generational and cross-border family wealth inheritance is based on 3Es – Etiquette (rules and guidelines), Execution (professional teams) and Exhibit (wealth planning tools).


  • Family Constitution – core value & governance
  • Individual Wills – bequeath and terms


  • Family Office
  • Executors or Administrators
  • Professional Wealth Planner or Financial Advisers


  • Family Trust
  • Family Fund
  • Family Insurance

A family constitution or charter is the fundamental law that governs the family and process of inheriting the family business. It serves as a mechanism to prevent and solve intra-family disputes. To formulate a family constitution, the family dynamic, vision, mission, core values, behavioural norms, inheritance goals and development strategies should be considered. It also defines the relationship between family and business, the system of equity transfer, the distribution and formation of operating power, the ethical norms of existing and future leaders.

A family office is the highest execution team responsible for implementing family affairs. It can be seen as the administrative management team for the family business. It manages the family assets, aligns various interests of family
members, handles non-financial issues such as legacy planning, archive keeping, lifestyle management, selection and grooming of successors.

Wealth and legacy planning tools help HNWIs manage global investments and the inter-generational transfer of assets in a professional and smooth fashion. Besides the management and administration of the family assets, the ownership of these assets is of paramount importance. At present, the common holding structures are the Family Holding Company, Family Trust, Family Fund and Family Insurance. We will focus on the latter three holding structures in this and the next iteration of The Custodian.

Family Trust

We will highlight the most common structure, the Family Trust, in the first part of this article. A Family Trust is an expressed private legal arrangement allowing the settlor to transfer or give away his assets (tangible and intangible) to the trustee for the benefit of the named beneficiaries, over a specified period, or upon the occurrence of a stipulated incident such as death of the settlor.

To make a Family Trust effective and valid under the law, and besides the settlor having the legal capacity to create the trust, there are three certainties that have to be present simultaneously: 

  • Intention of the settlor – the real desire to create a trust
  • Subject matter – the assets to be entrusted to the trustee, or
    Trust assets
  • Object – the named beneficiaries

How is a Family Trust used?

There are many uses of Family Trusts that allow HNWIs to plan for their families, assets and businesses. These include:

  • Provide for family members in case of unforeseen circumstances
  • Look after incapacitated/ vulnerable family members or minors
  • Control the devolution of assets in countries with forced heirship rules
  • Shield family assets and businesses against wasteful descendants, ugly divorces, creditors, scams or unprecedented risks
  • Hold significant listed company shares or certain important/ memorial assets intact within the control of the family
  • Hold life assurance policies and receive pay-outs from the policies upon the demise of the life insured
  • Manage and invest the family assets and funds through professionals, maximising potential growth and income Carry out tax and estate duty planning for family assets and businesses
  • Avoid a cumbersome probate process in certain countries upon the death of the settlor
  • Ensure an orderly distribution of family assets to family members (beneficiaries) at a specified time or over a period designed by the settlor
  • Avoid family squabbles or conflicts in case of unequal or perceived unfair transfer of family assets to certain family members
  • Set aside funds for education or business ventures for next generations
  • Set up family charities to serve the under-privileged
  • Keep family history and archives intact
  • Keep family information and issues away from public eyes

What are the types of Family Trusts?

In general, we can differentiate the nature of a Family Trust
from three perspectives:

  1.  Time of creation
    1. Living (Inter-vivos) – set up during the lifetime of the settlor
    2. Testamentary Trust – set up via a Will written by the settlor and becomes effective upon the settlor’s death
  2. Power of revocation
    1. Revocable – the settlor can revoke the Family Trust anytime during his or her lifetime
    2. Irrevocable Trust – the settlor has no power to revoke the Family Trust
  3. Power of management
    1. Non-discretionary (fixed) – the trustee has no discretion but to follow the terms of the trust deed
    2. Discretionary trust – the trustee has wide power to make distributions to the beneficiaries, manage the trust assets and adhere to the legislative fiduciary duties

How many stakeholders in a Family Trust?

In general circumstances, there are three stakeholders in a Family Trust:

  1. Settlor
    1. The person setting up a Family Trust and transferring his or her assets to the trustee
    2. Must be careful when reserving powers as too much powers reserved might lead to a “sham” in the eyes of the law
  2. Trustee
    1. A legal entity undertakes the trusteeship under the trust deed and receives the legal title to the trust assets transferred to it by the settlor
    2. Assumes the fiduciary duties owed to the beneficiaries, failing which, could be sued for breach of trust
  3. Beneficiaries
    1. The persons for whose benefit the Family Trust is created
    2. Have personal rights to enforce the terms of the Family Trust and ensure the trustee carries out its provisions and duties
    3. Have equitable (beneficial) interests in the trust assets allowing them to enjoy the trust assets in accordance to the terms of the Family Trust
    4. Have no authority to influence how the Family Trust is administered by the trustee unless they are given specific provisions in the trust deed

      Meanwhile, to place a mechanism to protect the trust assets
      and the beneficiaries, the settlor can appoint a fourth party
      into a Family Trust:
  4. Protector
    1. Is not a party to the trust deed and has no legal title vested in his or her name
    2. Cannot be a named beneficiary in the Family Trust
    3. Has reactive powers against the actions of the trustee
    4. Has proactive powers and can initiate an action such as payment to beneficiaries, remove/ appoint beneficiaries, remove the trustee and appoint another appropriate trustee

What are the duties of the trustee?

The duties imposed on the trustee arise by virtue of the general obligation as a fiduciary. The trustee:

  • Should not normally delegate its trust functions except its administrative ones and certain asset management functions
  • Should exercise a duty of care when dealing with a Family Trust
  • Must act in good faith and make the interests of beneficiaries of paramount concern
  • Should not normally purchase the trust assets (the rule against self-dealing)
  • Should not benefit or keep profits from the Family Trust
  • Cannot charge for its services unless properly authorised or has the statutory authority (a professional trustee).
  • Must comply with the terms of the trust deed
  • Should take control of the trust assets, preserve the value of the capital and invest assets prudently under the advice of professionals to provide income for the beneficiaries
  • Should act impartially among all the beneficiaries and provide timely information when required by the beneficiaries
  • Must provide for the education, maintenance or benefit of a minor beneficiary, and pay capital sums of the advancement or benefit to a beneficiary
  • Should keep accurate accounts of trust assets

How to terminate a Family Trust?

A Family Trust can be terminated under these circumstances:

  • Full distribution of all the capital and income to the named beneficiaries by the trustee according to the terms in the trust deed
  • The court decides in its circumstantial merits and orders the trust assets be divided for the beneficiaries
  • The court intervenes to set aside a Family Trust when it was set up to avoid creditors or it was a sham

The second part of this article will be presented in next issue of The Custodian.

Kimmis Pun

Managing Director, Family Office Shenning Investments Pte Ltd

Trust Estate Planning Wills

Foreign Grantor Trust for Non-US Tax Residents

Foreign Grantor Trusts (FGTs) are one of the most popular and advantageous vehicles for foreign parents to plan for their U.S. resident children. An FGT allows the foreign grantor to move assets out of their name and into a trust for the benefit of U.S. beneficiaries, and at the same time, avoid paying any taxes on the non-U.S. trust assets held in the FGT.

However, since FGTs present so many benefits, the Internal Revenue Service will also be aware that there can be abuse. The U.S. government wrote the Internal Revenue Code sections 671-678 to properly characterise certain trusts as grantor trusts by making sure certain criteria are met. Basically, if the grantor of the trust holds certain interests or power, they are considered the owner of the trust assets, even though the assets are in the trust’s name and possession. This rule helps avoid the abuse of FGTs to avoid U.S. tax.

Even with these restrictions, FGTs are beneficial when the grantor is not a U.S. person, and they are deemed as the owner of the trust assets. Under U.S. taxation rules, income from trust assets is taxed as if owned by the non-resident alien grantor — thus, unless the income is sourced from the U.S., it is not taxable in the U.S. Furthermore, any distribution to U.S. beneficiaries will not be taxed as income. However, the U.S. beneficiaries are obligated to report the distribution as foreign gifts received. Foreign gifts of non-U.S. assets received by U.S. beneficiaries are reportable transactions, but not taxed.

Care needed with distributions

It should be noted though that distributions from the trust could create other income and reporting for the beneficiaries by piercing the structure of the FGT. In general, distributions to beneficiaries or interactions/ control between beneficiaries and trust assets need to be handled very carefully. If beneficiaries have certain powers or control of the trust, this may trigger rules that deem the beneficiaries as owners of trust assets.

When this happens, the beneficiaries’ deemed shares of the trust assets or income will be subject to U.S. taxation. In addition, the trust must also provide enough powers to the foreign grantor to satisfy the grantor trust rules. If the powers are not enough to satisfy the grantor trust rules, the trust could be considered a foreign non-grantor trust, which carries a substantially different tax outcome. In most circumstances, a foreign non-grantor trust with a U.S. beneficiary is not beneficial in U.S. taxation.

Although the FGT is a very advantageous tool, one must also make sure the terms of the trust do not create other issues. For example, it is important to make sure the foreign grantor of the trust will stay foreign. If the foreign grantor plans to immigrate to the U.S. in the future, an FGT may not be a good idea. All the trust assets and income will be taxable to the U.S. when the grantor becomes a U.S. resident.

The FGT generally only lasts for the lifetime of the grantor. When the grantor passes away, the FGT becomes a foreign non-grantor trust. The U.S. beneficiaries will be deemed as the owners of the trust assets for foreign financial reporting purposes, which completely changes everything. In sum, FGTs can be an excellent planning tool, but they must be used for the right reasons and with proper planning.

We are a leading provider of trust services as well as will writing services in Singapore.

The above article first appeared on EPPL’s The Custodian, Issue 21.

#Wills #Trust #Estate Planning

Josh Maxwell | Precepts Group

Josh Maxwell, CPA, JD, LLM

Tax Attorney

Hone Maxwell LLP

Aaron Li | Precepts Group

Aaron Li, JD, LLM

Tax Attorney

Hone Maxwell LLP

Estate Planning Wills

Estate Planning In Indonesia Faces Pandemic-Driven Challenges

The restrictive Covid-19 pandemic policies have created bottlenecks in administration processes that facilitate the distribution of assets to loved ones, say Henra Sensei and Tri Djoko Santoso of LN Consulting

The impact of the Covid-19 pandemic has been significant on the estate planning landscape in Indonesia. With 5,539,394 Indonesians infected, resulting in the deaths of 148,073 people (source: worldodometers February 28, 2022)and the numbers still rising, there have been numerous cases in Indonesian parents passing away and leaving their children behind, children dying and leaving their parents behind, as well as whole families dying.

Estate planners have had their work cut out for them as many Indonesians are typically negligent about writing their Wills. This means their loved ones cannot easily track their assets when they die. It is often the case that a bereaved family does not even know that the deceased parent had a life insurance policy or a Will, or where these Wills and life insurance policies are kept.

Matters are complicated for some Indonesian families who have assets or life insurance policies outside Indonesia. Loved ones of the deceased have to find the supporting documents, and if they are minors, there may not be any guardianship plan in place to get the ball rolling.

Bottlenecks in administrative processes

The lockdown policies and other pandemic restrictions across the country that were implemented during the pandemic have had a serious impact on public services, organized by both government offices and private entities in Indonesia. They cannot operate as per normal, causing delays in the issuance of death certificates and other administrative documents such as certificates of heirs.

Most of the time this process requires a district court or an Islamic religious court to be involved. However, trial schedules are frequently seeing postponements, which results in court decisions potentially taking longer. This includes courts’ involvement in determining who are the guardians of minors, or who are adults with legal disabilities.

This process is key as it generates legal documents and court decisions that are the main gateway to carrying out the next stages of the administration process when someone dies. A common occurrence is insurance beneficiaries who are minors failing to complete supporting documents that expedite insurance claims because there are delays in the appointment of a guardian.

Meanwhile, the claims process can also be delayed as the pandemic restrictions have forced some insurers to reduce their employee numbers and service hours to provide insurance claim services. In addition, the pandemic restrictions and uncertainties on individuals state of health have also affected the communication channels between notaries, financial planners and life insurance agents, and clients.

What lessons can we take from the pandemic?

The delays in the administration of important documents that expedite the distribution of assets to a deceased person’s loved ones have serious implications. This is typically exacerbated when heirs are unable to present written evidence, which is the main requirement. In such cases, it is difficult to estimate the duration of the process.

Against this backdrop, a comprehensive estate plan and a proper life insurance policy should be able to reduce the impact of administrative delays and help the distribution of assets to bereaved families. Liquidity planning is a must using various forms of liquid instruments, such as cash or near cash. Indonesian families must strive to have detailed records of their assets and debts that must be maintained for validity and accuracy.

We recommend that individuals write their Wills with us, clearly stating who the Executors of their will should be, and who should be the guardian of minors or those with special needs, including adults with dementia. The best option is to contact a notary in Indonesia. Or if your situation is not complicated, you may make your own Will (Olographis testamen). However, it must be submitted to a notary for legal storage purposes.

People also need to ensure that they keep up-to-date records about the professionals involved who their loved ones can contact in the event of their death — for example, notaries and lawyers, tax consultants, financial planners, and insurance agents both in Indonesia and overseas, wherever the assets are domiciled.

Many Indonesians have made efforts to diversify and allocate their global wealth for financial and family security. If they already have life insurance coverage somewhere overseas, they should also ensure that they have life insurance coverage in Indonesia. After a person dies, this will help loved ones to have easy access to liquidity, both in Indonesia and abroad. There should always be a Plan A or Plan B, as well as an entry and exit strategy in this risky life.

If you are a financial practitioner in Indonesia, we recommend you take the AEPP® course in Indonesia. Gaining global knowledge will help you in totally serving your clients in Indonesia. Henra Sensei, CFP®, AEPP® and Tri Djoko Santoso, CFP®, AEPP® are financial educators and are both facilitators of AEPP® courses in Indonesia.

The above article first appeared on EPPL’s The Custodian, Issue 21.

#Wills #Estate Planning

Henra Sensei of LN Consulting | Precepts Group

Henra Sensei, CFP®, AEPP®

Tri Djoko Santoso of LN Consulting | Precepts Group

Tri Djoko Santoso, CFP®, AEPP®

Founder, LN Consulting

Estate Planning Wills

Update on Malaysia 2022 Budget Proposals: Significant Changes to Proposed Taxation of Foreign Source Income

The Malaysian 2022 Budget announced on 29 October 2021 was passed into law as the Finance Act 2021 on December 31, 2021. There were a few major changes to the original budget proposals. A significant exception related to the budget proposal to tax Foreign Source Income.

In what may be regarded as a last-minute “stay of execution”, the Ministry of Finance (MOF) issued a press release suspending the full impact of taxing Foreign Source Income received in Malaysia by Malaysian residents.

MOF responds to concerns

The late change of heart was in response to concerns raised inter alia by economists, the wealth planning industry, as well as corporate and individual taxpayers on the potentially detrimental and far-reaching effects on the economy of taxing Foreign Source Income receipts.

One of the most worrying effects, even ignoring the difficulties involved in collecting the tax, would be to slow down foreign monies flowing into the economy at a much-needed time.

It is clear the budget proposal had not been fully thought through and the press release was greeted with a collective sigh of relief by Malaysian residents and quite possibly the international community which, when pushing for the change, may not have expected such a clumsy approach.

The MOF listened and introduced changes representing a significant watering-down from the original proposal:

Taxpayer TypeExempted Foreign Source Income received in MalaysiaEffective Dates
Tax Resident Individuals not carrying on a business through a partnershipAll categories of Foreign Source IncomeFrom 1 January 2022 to 31 December 2026
Tax Resident Individuals carrying on a business through a partnershipUnclearUnclear
Tax Resident CompaniesForeign Source Dividend Income only
All other types of Foreign Source Income remain taxable
From 1 January 2022 to 31 December 2026
Tax Resident Limited Liability PartnershipsForeign Source Dividend Income
All other types of Foreign Source Income remain taxable
From 1 January 2022 to 31 December 2026

Exceptions to the rules

For clarity, the new rules do not apply to

  • Resident companies carrying on the business of Banking, Insurance, Air and Sea Transportation. Such companies will continue to be taxed on Foreign Source Income whether received or not.
  • Non-residents of Malaysia will also continue to be exempt from tax on Foreign Source Income received in Malaysia.

There remain areas for clarification and the MOF will announce the conditions to be complied with to enjoy the exemptions. But deferring the budget proposal to 2026 allows the MOF time to formulate a more cogent and considered response to meeting its international commitments.

Notes of caution

Tax Resident Companies and Limited Liability Companies may explore the feasibility of re-characterising non-dividend income into dividend income by interposing a foreign subsidiary in a low-tax financial centre. But it will come as no surprise if the conditions require a headline tax of 15% in the location of the company paying the dividend.

A further note of caution to resident individuals is to expect claims to exempt Foreign Source Income will be heavily scrutinized. So, keep excellent records. As the saying goes “the sun may be shining but don’t forget to take your umbrella.”

We also provide trust to safeguard your Savings and distribute your wealth

The above article first appeared on EPPL’s The Custodian, Issue 21.

#Wills #Estate Planning

Mike Grover | Precepts Group

Mike Grover

Former Head of Tax at International Accounting Firm

Estate Planning Wills

Joint ownership and accompanying woes

The distribution of assets held in joint ownership following death is not always so straightforward and can be challenged, explains Persis Hoo.

People often assume that there is no need to provide for joint bank accounts or joint properties in their Wills due to the assumption that the asset will automatically fall into the hands of the other joint owner when one of them passes on.

While the law of survivorship holds true in most circumstances, it does not mean that the surviving ownership of the asset is insulated from a challenge. This is perfectly illustrated in the seminal High Court case of the Estate of Yang Chun (Mrs) née Sun Hui Min, deceased v Yang Chia-Yin [2019] SGHC 152:

Madam Sun, the deceased wife, and her deceased husband, Mr Yang, had been married for more than 50 years. Mr Yang passed away in 2012 while Mdm Sun passed away in 2016. Proceedings were brought by the Estate of Mdm Sun (her nephew) against the sole executor and representative of Mr Yang’s estate (his nephew).

The couple held multiple bank accounts in joint names. While Mr Yang wrote a Will, he omitted any reference to the joint accounts. The crux of the dispute turned on whether the monies in the joint accounts belonged to Mdm Sun after Mr Yang’s passing. In the course of administrating Mr Yang’s estate, the Defendant had allegedly used the monies that belonged to the Estate of Mdm Sun. Therefore, if the court ruled in favour of the Plaintiff, the Defendant had to return a sum of about half a million dollars to the Plaintiff.

The question then is who was the beneficial owner of the monies in the joint account after Mr Yang’s death? Was it the Defendant, who asserted that as Mr Yang was the main contributor to the monies, Mdm Sun held the monies in the joint accounts on trust for his estate? Or was it the Plaintiff, who argued that Mdm Sun was the beneficial owner of the monies by way of the law of survivorship?

The relevant legal principles

  1. The law of survivorship: Joint tenancy

    Joint Tenancy refers to a form of co-ownership where parties own the entire interest in a particular property. Upon the death of a joint tenant, the surviving joint tenant will automatically take the entire interest in the property. This is also known as the law of survivorship. Joint Tenancy results in the presumption of inheritor if there is no will or trust being written | Precepts Group

  2. Resulting trust

    Notwithstanding the above, the law of survivorship can be displaced by resulting trust. A resulting trust arises where there has been a transfer of property in circumstances where the deceased did not intend to benefit the survivor. In this case, there was no clear intention by Mr Yang to retain beneficial ownership of the bank accounts. This brings us to the presumption of resulting trust.

  3. Presumption of resulting trust

    The presumption of resulting trust kicks in where there has been a transfer of property to the surviving owner, for which the survivor has not provided the whole of the consideration (or value of the property) and there is no evidence that shows the true intention of the transferor. Therefore, an inference is made that the deceased did not intend to benefit the survivor. If this presumption arises and is not displaced, the survivor is deemed to hold the property on trust for the deceased’s estate.

    However, all is not lost. If the presumption of resulting trust arises, the presumption of advancement can be argued to displace the former.

  4. Presumption of advancement

    Certain types of relationships attract this presumption, for example, the transfer of property from husband to wife or father to child. Within these established categories of relationships, transfers of property are intended to be gifts in favour of the recipient.

Application of the law to the facts

In this case, the High Court found that the presumption of resulting trust arose on the facts with respect to the joint accounts since Mr Yang contributed more monies to them. However, the presumption of advancement also arose because Mr Yang and Mdm Sun were married.

For a good part of their 50-year marriage, Mr. Yang was the sole breadwinner of the family and Mdm Sun remained financially dependent on him. The evidence also pointed to the couple having a loving and close marriage. Accordingly, together with other facts, the court held that the presumption of advancement applied, and on the basis of the law of survivorship, the monies in the joint accounts were beneficially owned by (gifted to) Mdm Sun. Hence, Yang Chia-Yin was ordered by the court to return the $500,000 of monies to the Estate of Mdm Sun.

Another case in point is Chye Seng Kait v Chye Seng Fong (executor and trustee of the estate of Chye You, deceased) [2021] SGHC 83. The plaintiff and the defendant in this recent estate dispute are brothers. Chye Seng Kait (Plaintiff) disputes that Chye Seng Fong did not perform his duty as Executor of their father’s Will in accounting for the joint bank accounts as part of the estate of their father — namely whether the joint accounts between the deceased and his daughter should go to the daughter by way of the law of survivorship, or whether it should fall to the estate of the deceased. The Plaintiff submitted that the latter should prevail based on the principle of resulting trust (that is the daughter is only holding the monies in the joint account in trust for their father).

Interestingly, the court held that the daughter did hold the joint accounts on the resulting trust for the father’s estate. However, the Plaintiff’s claim was ultimately rejected as the deceased had explicitly dealt with his joint assets in his Will. Clause 2 of his Will read as follows:

    “I hereby declare that any immovable property held by me jointly with the co-owner as joint tenants shall belong to the surviving joint tenant absolutely by virtue of the right of survivorship. I further declare that any account held by me with any other person(s) jointly in any financial institution shall also belong to such joint account holder(s) absolutely by virtue of the right of survivorship.”

The court held that in construing a Will, the court will ascertain and give effect to the testator’s intention as expressed in his Will, read as a whole in light of any admissible external evidence.

Therefore, despite the plaintiff’s desperate attempt to lay claim to the joint accounts, the court ruled in favour of the deceased’s plain and ordinary intent to gift the joint accounts to his daughter, the co-owner of the accounts.

What does this mean for me?

As shown in these two cases, just because assets are held in joint bank accounts does not mean that the beneficial ownership of the asset is insulated from a challenge. In Singapore, the presumption of advancement is only limited to certain categories of relationships. Further, the presumption of resulting trust may arise in certain situations where one party is the main financial contributor to the asset.

To ensure peace of mind and to prevent any disputes or uncertainty, it is advisable to clearly lay out your intentions in your Will or Trust. Even if your assets are held in joint bank accounts, usually for the sake of convenience, it is best to clearly spell out your intention for distribution in your Will.

The above article first appeared on EPPL’s The Custodian, Issue 21.

#Wills #Estate Planning

Persis Hoo | Precepts Group

Persis Hoo


Estate and Succession Practitioner representing

Precepts Legacy Pte Ltd


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