The Multi-Generational Transition Guide: Trust Compliance Laws

Passing wealth to the next generation involves more than just drafting a simple will. Unplanned assets can be tied up in complex probate processes or hit with heavy estate taxes in other jurisdictions if beneficiaries reside outside Singapore.

Why Choose Singapore Family Offices (13O/13U)?

For high-net-worth families, the Monetary Authority of Singapore (MAS) and IRAS offer outstanding tax incentive programs under Section 13O and 13U of the Income Tax Act. These programs grant tax exemption on specified income from designated investments managed by a Singapore-based family office.

Setting up a compliant family office requires meeting several key criteria:

• Assets Under Management: A minimum of S$20 million is required for Section 13O structures at the time of application.
• Local Spending: The fund must meet minimum local business spending requirements (usually S$200,000 annually) to support the local economy.
• Licensed Professionals: The structure must employ at least two investment professionals, which can include qualified family members.

Structuring Irrevocable Discretionary Trusts

If a full family office structure is more than your portfolio requires, a discretionary trust managed by a licensed trustee offers a simpler, highly effective alternative. This pool controls asset payouts and protects your wealth from future bankruptcy claims against individual heirs.