How Wealthy Families Use Trusts to Buy Property in Singapore

What is a trust

A trust is a fiduciary arrangement between two parties: a trustee who holds and manages the assets on behalf of another party, that is, the beneficiary.

The super-wealthy have been using trusts to hold and pass on family wealth for decades. In Singapore, trusts are regulated by the Trustees Act (Cap 337), and most of the principles follow English trust law. The Trustees Act has been revised over the years to encourage the use of trusts for managing wealth in Singapore. A trust can be used by anyone to safeguard and manage assets within the protection of a well-defined and regulated legal framework.

The commonly used trusts for property ownership

Discretionary Trust: This trust grants the trustee absolute discretion to apportion income or capital among a class of beneficiaries, which class may be determined in clause 1. This is frequently employed for flexibility and control.

Family Trust: Family trust property investment can be established to the advantage of a family and is created in a way that also allows long-term goal setting. 

Importantly, trusts differ significantly from direct personal ownership or company ownership. Trusts are very different from direct personal or company ownership. In contrast with a company, with its publicly filed trust deed and other corporate reporting obligations, a trust provides a degree of privacy. Moreover, whereas personal ownership constitutes the personal estate, trust-held assets are an external estate, the subject of protection against various risks under law.

Why Use a Trust to Buy Property in Singapore

There are multiple strategic reasons why Singapore property trusts for foreigners and wealthy family trust property investment real estate in Singapore.

1. Asset Protection

Assets in a trust are mostly shielded against personal liabilities, e.g., lawsuits, claims in bankruptcy, or divorce. 

2. Estate Planning & Succession Management

Estate planning and succession planning are one of the strongest benefits, evading probate and allowing property to pass smoothly through the generations. By creating a trust, a family can protect those assets from being passed in terms of the settlor’s intentions without delay or legal dispute.

3. Tax Efficiency

Although Singapore does not have estate duty or capital gains tax, cross-border-exposed international families tend to structure trusts to manage global tax liabilities. Trusts can provide a shield against foreign estate taxes or inheritance taxes that may be levied in other countries.

4. Privacy

In contrast to individual or corporate ownership, which in many cases is traceable from land title registers, a trust can maintain confidentiality of ownership. The trustee, however, appears on public registers, thereby preserving the identity of the final beneficial owner.

5. Control & Flexibility

Trust arrangements enable the settlor or trustee to set certain conditions and time frames for payment. For instance, beneficiaries can only receive the money after they have attained a particular age, met certain milestones, or under certain conditions. This mechanism deters irresponsible decision-making by younger inheritors and helps the family values to last over generations.

Regulations and legal framework to be considered

Singapore’s legal system supports the use of trusts but has clearly defined boundaries, especially concerning residential property.

1. Residential Property Act (RPA)

Non-residents and businesses are not permitted to buy landed residential property in Singapore under the RPA, but there is one very limited exception: if a trust is irrevocable and established solely for the benefit of a minor Singapore Citizen, the Land Dealings Approval Unit (LDAU) may allow purchase under the trust. It is these cases that have been reviewed under strict scrutiny. 

2. Urban Redevelopment Authority (URA) Guidelines

The URA requires a full disclosure even if buying landed property through trusts. Every application is judged on its merit and success is not guaranteed, even if all the rules are followed.

3. Monetary Authority of Singapore (MAS) Oversight

If a trust company or trustee is considered a licensed financial institution, they are within MAS’s regulations. This is to ensure AML, KYC and tax transparency obligations are satisfied. And that means that legal and financial due diligence are no longer optional; they’re essential.

Real-World Use Cases

To illustrate, consider the following scenarios:

Rich Expats: A European expatriate couple residing in Singapore established a discretionary trust for their Singaporean child. The trust buys an LDAU-approved landed property, which the child inherits at a certain age. The trust protects the asset from any third-party claims against the parents’ wealth.

Condo Holdings Investment Trust: A Southeast Asian family office sets up a family trust to buy several condominium units in Singapore. The trust, managed by a licensed trustee, generates stable rental income for beneficiaries while preserving capital value across generations.

These examples are increasingly common among UHNW families who prioritise long-term vision over short-term gains.

Limitations and Key Considerations

Before you set up a  trust ownership Singapore real estate, here are the limitations and key considerations:

• Additional Buyer’s Stamp Duty (ABSD):  For trust-based purchases (irrevocable trust or a trust for a minor Singapore Citizen), the highest rate of ABSD up to 65% applies. They play a significant role in the allocation of capital.
• No Automatic Tax Exemptions: Singapore does not offer automatic tax exemptions because the asset is held in a trust. Tax residence and other worldwide issues still apply.
• Complexity and Cost: Setting up and maintaining a trust incurs high legal, tax and trustee services costs. The structure also needs to be reviewed periodically to maintain its effectiveness and be compliant.
• Need for Expert Advice: Deciphering the complicated matrix of regulations and tax consequences will require a high-level interdisciplinary team—often a trust lawyer, tax adviser and family office associate.

How to set up a Singapore trust

Buy property in Singapore using trust involves attentive consideration of the following steps:

1. Define Objectives

Start by determining the primary objective of the trust—whether asset protection, transfer of wealth, investment aggregation, or paying for education. 

2. Engage Professional Advisors

In order to set up a trust, loop in an experienced lawyer, accountant, and estate planner. Their experience ensures that the trust is in compliance with Singapore laws and suits your family wealth management objectives.

3. Appoint a Trustee

Select a responsible person, corporation or bank to act as trustee for the trust. The trustee has legal title and a duty to administer the trust in the best interest of the beneficiaries.

4. Draft the Trust Deed

Draft a legal document on file that establishes the terms, powers and duties of the trust. It determines how a property is managed, distributed and protected over time.

5. Register and Execute the Trust

Implementing the trust of the trust by signing the deed and meeting any legal or regulatory necessities. In respect of the acquisition of properties, there may be specific statements of declaration required under the Residential Property Act of Singapore.

6. Purchase Property in Trustee’s Name

The trustee continues with the purchase, which it holds on trust. This creates a separation between legal and beneficial ownership providing privacy and security.

Conclusion

Setting up a trust ownership Singapore real estate can be useful to organize and secure properties and investments while securing the future of your loved ones. Singapore trusts enjoy significant tax benefits and are subject to a low tax regime and also through Singapore’s comprehensive double tax treaty network, it is the ideal investment structure for local and international investors.