For those who are
very rich and owns many properties and businesses overseas, it may worth their while to consider the
implementation of his Business Succession Plan to set up a Trust with an investment holding company set up in one
of the tax haven.
This is to avoid
paying unnecessary tax and reduce the complication of the probate processes required in various
let's say Mr A has properties in Singapore, Malaysia, China and Indonesia. He also has businesses in Singapore,
Malaysia and Indonesia. He is domiciled and residing in Singapore.
He has 3 choices
in his Estate Planning:
Have a will done
up in Singapore for all his local and overseas assets. This is simple to do but can give rise to
complications later. The process is to complete the probate application in one country (e.g. Singapore),
then the probate is resealed and send to the next country. As probate process in Singapore takes about 6
months or so, we can not say the same for other countries. So by the time it finishes the seal and
resealing process of the probate, it'd have taken years to finalise the whole estate
The family may
suffer financial losses as the time taken to complete the probate overseas is far too long. Meantime his
businesses may have become not viable and create losses. His overseas properties prices may deteoriate due to
lack of proper maintenance. Rules in other countries will be very different. For example, although
Indonesia does not have estate duty, they have capital gain tax when the immovable properties are
Choice No. 2
Instead of just doing one will in Singapore to
cover all his assets in the world, Mr A prepare a will in each of the countries he has businesses and
properties. In the event he pass on, the probate process can take place simultaneously in these countries,
thus reducing the probate process time and legal costs.
Choice 2 is much better than choice 1.
However, Mr A needs to fork out more initial legal costs for the will writing -- i.e. he now needs to have 4 wills
instead of just 1. Also the wills for foreign countries must be done by a local lawyer in that country.
This may involve more costs as Mr A need to personally travel to these countries to have his will
Choice No 3
Mr A sets up a trust to hold shares in an
investment company registered in a tax haven -- e.g. BVI, Cayman Island, Labuan, and etc. All his assets and
business shares will be owned by this investment holding company which in turn is controlled by Mr
On his demise, all the executor needs to do is
to have the probate process in the tax haven to transfer the shareholding of the investment holding company to the
trust account. Being the trustee, he has the rights to administer the assets and businesses as though he owns
them. Therefore, there is no lose of time in waiting for the distribution of the assets and the businesses
will go on as usual. Whoever control the shares in the investment holding company will have control over all
the businesses and assets Mr A has anywhere in the world. The probate process is simplified very much by such
arrangement. Legal coss will be greatly reduced too.
While Choice No. 3 seems to be the best for Mr
A, consideration must be made for the additional running costs such as appointment of local directors in the tax
haven country, keeping the books, complying with local governmental company registration requirements, etc.
These costs must be paid during the life time of Mr A annually.
Other usage of Trust
Trust legacy may be set up for other purposes
-- e.g. the company is going to IPO and the owner is very old (e.g 90) who anytime can kick the bucket.
In this case, it would be wise to move his shareholdings to a Trust, or else if he kicks the bucket at the wrong
time, the whole IPO process will be stalled.
We have the resources to help you setup such
arrangement. If interested, please contact us by clicking here.