Types of Trusts and Trustee Services in Malaysia

Trusts and Trustee Services

A trust is a financial planning tool. It used to manage assets of a person, called a Settlor. The Settlor creates the trust to ensure their assets are distributed and managed according to the wishes of the Settlor. There are many types of trusts, depending on the purpose of the trust.

All trusts created in Malaysia have to be compliant to the Malaysian laws on Trusts.

Why Create a Trust?

Settlors are people who have assets or certain beneficiaries in mind. They want to be sure that these assets will be distributed to their beneficiaries of choice (with total confidentiality and privacy) when the terms of the trust deed is met.

These terms could be death of Settlor, coming of age of a beneficiary, completion of housing loans and many more.

• This means that the assets in the trust are not frozen on the death of the Settlor. The assets will be available to be distributed and used per the terms of the trust, the trust deed.
• Tax benefits. Assets are transferred from high taxed Settlor to lower tax bracket beneficiary through the trust.
• Ownership of shares can be redistributed to remaining shareholders per trust deed, on the death of a shareholder.
• Confidentiality of beneficiaries. The Settlor may have certain beneficiaries in mind. The trust deed is a confidential document in which the beneficiaries will not know who are the other beneficiaries of the trust. A trusted Trustee keeps all information confidential, per the terms of the trust deed. A will is not confidential, as the will has to be read to all beneficiaries of the will, on the death of the Testator.
• A trust created by a Muslim Settlor, is exempted from following the Syariah distribution or Faraid distribution. A will however will have to be compliant to Syariah law for Muslim distribution of assets. A trust does not need to be.

Trusts as the Owner of the Assets

The Settlor transfers their assets into a trust. This is called a private trust. This transfer is done when the Settlor is still alive. This means the new legal ownership of the assets is the trust.

The Settlor no longer owns the assets once the assets are transferred into the trust. But the Settlor controls the assets by the instructions the Settlor decides in the Trust Deed.

Control of the Types of Trust by Trustee and Trust Deed

The manager of the trust is called a Trustee. A trust deed is a legal document that has all the instructions and terms and conditions of the trust. The trust deed controls the operations of the trust, within the scope of the laws of Malaysia.

Beneficiaries of the Trust

The Settlor will name the beneficiaries of the trust. The Settlor gives instructions to the trust on how the assets should be managed or distributed to the beneficiaries.

Types of Private Trusts in Malaysia

The primary type of trusts in Malaysia for families and shareholders are private trusts. There are several types of trusts in Malaysia, by beneficiary types as follows:

• Family Trusts
• Pet Trusts
• Business Continuity Trusts
• Special Purpose Trusts

Types of Family Trusts

A family trust is setup to distribute assets to family members. The assets in this trust could be anything. The following are examples of types of family trusts.

• Annuity Trusts. These are used to distribute income from rental properties to beneficiaries. The unencumbered properties enter into the ownership of the Trustee and governed by the trust deed.
• Declaration Trust. This trust is a declaration of intent of asset distribution. On a particular event, for example, gone missing, being disabled or death, the assets enter into the ownership of the Trustee and is governed by the trust deed.
• Insurance Trust. This trust is created to assign life insurance policies to a trustee to manage the insurance proceeds per the trust deed.

Pet Trust

This type of trust is setup to ensure the beloved pet is taken care of financially and a guardian is assigned to the pet. The details are in the pet trust page.

Business Continuity Trusts

This type of trusts is ensure that the surviving shareholders of the business take over the dead shareholder’s shares. The trust will buy the shares and distribute the shares to the existing shareholders. The trust than pays the beneficiaries the money from the sale of the shares. The details are in the business continuity trust page.

Special Purpose Trusts

This type of trusts are created for immediate distribution. The beneficiary could be anyone or anything. It could be a charity, a relative, a friend or anything that will benefit from the proceeds of the trust.

Contact Rockwills Franchisee and Estate Planner Levine Lee

Rockwills Franchisee and Estate Planner, Levine Lee is available to advice, guide and plan your estate administration and types of trusts needs. Whether its will writing services or trustee services.

You can call or WhatsApp to Rockwills franchisee Levine Lee at +6012-684-0948 or send in the form below. She will get touch with you based on your request in the form.

Types of Trusts in Malaysia Enquiry Form

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