During the post war period Hong Kong has experienced
unprecedented growth as it has developed into an economic
powerhouse that is one of the foremost international financial
centres of the world. With its explosive economic growth, bustling
trading port, high population growth and the never-ending additions
to its spectacular skyline, Hong Kong is home to some of the
wealthiest families in the world. Last year nine Hong Kong families
made it onto Forbes Asia's 50 Richest Families List.
There is a well-known Chinese saying that "wealth does not
survive three generations", but over the past decade the third
generation of the rich families in Hong Kong have been setting up
family offices, and started looking for professional and effective
asset management strategies to prove this old saying wrong.
Trusts, in particular, became the default setting for asset
protection, asset consolidation and succession planning. While
having an understanding on the benefits of setting up trusts,
families are generally not willing to give up their control over
the assets and will often seek to reserve certain powers to
themselves. As explained in this article, trusts that are
controlled by settlors have become increasingly vulnerable to
attacks, as the courts develop ways of enabling third parties
(usually creditors or divorcing spouses) to enforce orders against
trust assets.
The extent of powers and functions given to a settlor, a protector
and the trustee are therefore one of the most critical decisions to
make when setting up a trust.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
