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Most people who ask for a case study of a multi-jurisdiction trust want to see where the legal questions actually fall when more than one country is involved. This page walks through one illustration. It is fictional and anonymous: the family, the facts and the sequence of events are invented to show reasoning, not to describe a real client or to predict an outcome in your situation.
The case turns on a single split. The law that governs the trust is one thing. The place where the assets are kept and the bank that holds them is another. Treating the two as the same question is a common source of confusion, and this example separates them on purpose.
The fictional facts
Example: a family of entrepreneurs, whose members live in several countries across Asia and Europe, wants a long-term structure for the proceeds of a business sale. The settlor chooses a trust governed by Singapore law, because the family has business ties there and the legal system is common-law and familiar to its advisers. The trustee is a licensed professional trustee in Singapore.
The investment portfolio, however, is to be held with a bank in Switzerland. The reasons are practical: the family values the stability of Swiss custody, the range of multi-currency services, and the fact that one adult beneficiary lives in Geneva. The trust deed gives the trustee wide discretion, appoints a protector, and is accompanied by a non-binding letter of wishes.
So the structure has two seats, in a loose sense. One country supplies the trust law and the trustee. The other supplies the custodian and, indirectly, a regulatory environment for banking. If you want the underlying distinction in general terms, see governing law versus seat of administration.
The two-seat structure at a glance
The diagram shows who sits where and which layer answers which question.
Read the diagram top to bottom. The governing-law layer is the settlor, the trustee and the protector. The custody layer is the bank and the manager. The beneficiaries sit at the bottom because they are affected by both layers, even though they control neither.
Layer one: the governing law
Under the Hague Convention on the Law Applicable to Trusts and on their Recognition, a trust is governed by the law the settlor has chosen, expressly or by implication (Articles 6 and 7). In the case, the trust deed states Singapore law clearly, so the first question is answered by the deed itself.
If the chosen law did not know the institution of the trust, the choice would have no effect and the Convention would look to the law with which the trust has the closest links, such as the place of administration the settlor designated, where the assets are located, the trustee's residence and the purposes of the trust. This is why a settlor should not assume that naming a law is the end of the analysis. For a fuller explanation, see the Hague Trusts Convention explained and the entry on the proper law of a trust.
In the case, the governing law decides matters such as:
- how the trust is validly created and what the trustee's duties are;
- what the protector and the settlor may reserve;
- how beneficiaries' rights are defined and enforced;
- what happens at the end of the trust.
The Swiss custodian does not change any of these. A bank in Geneva or Zurich holding the portfolio does not turn a Singapore trust into a Swiss one.
Layer two: the custody
Custody is about who holds the assets, in whose name, and under what contract. In the case, the account is opened in the name of the trustee, acting in that capacity, and the bank asks for the trust deed and information on the settlor, the protector and the beneficiaries. This is ordinary due diligence under anti-money-laundering rules (AMLA), not a comment on the structure.
The Hague Convention describes a trust as a relationship in which assets are placed under the control of a trustee, form a separate fund, and are held in the trustee's name, with the trustee required to manage and account for them (Article 2). Powers reserved by the settlor, or the trustee also being a beneficiary, do not in themselves prevent the existence of a trust. That description matches how the Swiss bank documents the account: the trustee is the account holder, and the portfolio is segregated from the trustee's own estate.
The practical questions at this layer include who may give instructions, whether a manager holds a discretionary mandate, what the bank reports and to whom, and how the account is handled if the trustee changes. These are explored further in banking and custody for trust assets by seat.
How Switzerland treats a foreign trust
The Federal Office of Justice confirms that foreign trusts have been recognised in Switzerland since the Convention entered into force for the country on 1 July 2007. Switzerland signed the Convention on 3 April 2007 and ratified it on 26 April 2007. It is classified as RS 0.221.371.
Article 11 explains what recognition means at a minimum: the trust assets are separate from the trustee's personal estate, and the trustee can sue and be sued in that capacity. For the Swiss bank, this means it can deal with the trustee as the holder of a segregated fund.
Recognition has limits, and the case shows two of them:
- Article 13. A state need not recognise a trust whose significant elements, apart from the chosen law, place of administration and trustee's habitual residence, are connected essentially with states that do not have the institution of the trust. In the case, the family's links are spread over countries with different legal traditions, so counsel would check this point instead of assuming it away.
- Article 15. The Convention does not displace mandatory rules of the forum on matters such as the protection of minors, the effects of marriage, succession rights, the transfer of title and the protection of creditors and good-faith third parties. A beneficiary or claimant who brings a dispute before a Swiss court may invoke such rules.
Whether these limits matter depends on residence, the nature of the assets and the claims in question. See also myths about Swiss recognition of trusts.
The questions examined in the case
Counsel would walk through the structure with a set of questions, summarised below.
| Question | Governing-law layer | Custody layer |
|---|---|---|
| What decides the answer? | Trust deed and Singapore law | Account contract and banking rules |
| Who is accountable? | Trustee and, to a degree, protector | Bank, within its mandate |
| What can be reserved? | Powers set out in the deed | Signing and instruction rights |
| Where is a dispute heard? | Courts chosen or competent under the deed | Courts under the bank contract |
| What is reported? | Trust-level records and tax reporting | Account-level automatic exchange of information |
The table also shows why the layers can disagree. A trustee may have the power under the deed to make a distribution, while the bank applies its own compliance checks before releasing funds. The two timelines are not the same, and the trustee has to plan for both.
Limits of the structure
Splitting law and custody has benefits, but it is not a shield. The case highlights several limits:
- Courts can look through form. A court in a beneficiary's country of residence may apply its own mandatory rules, especially on family and succession matters. This is explained in forced heirship and trusts.
- Reporting follows the assets and the people. The Swiss bank applies automatic exchange of information (AEOI/CRS) rules to the account, so the trust's existence is known to the relevant authorities.
- Enforcement crosses borders. A judgment obtained under Singapore law may need recognition elsewhere before it reaches assets in Switzerland. See courts and enforcement for trusts.
- Coordination takes work. The deed, the letter of wishes and the bank mandate must be consistent. A mismatch is the most frequent practical weakness.
None of this makes the structure unsuitable. It means the choice should be justified by the family's real circumstances and reviewed regularly, as discussed in reviewing whether a trust still fits its seat.
What would change the analysis
Different facts would change the answer. If the settlor moved to another country, the trust's connections would shift, as set out in trust seat and governing law when the settlor relocates. If the family later wanted the trust itself administered from Switzerland, that would be a relocation question, not a custody question. And if a US person were involved, the constraints would be different again.
For a comparable but separate illustration, compare a Cayman trust relocating to Switzerland. To see how a Swiss seat compares with Singapore as a whole, read Switzerland vs Singapore for a trust.
Frequently asked questions
Does Swiss custody make a Singapore trust a Swiss trust?
No. Custody is a banking relationship. The governing law is the one the settlor chose in the deed, or, failing that, the law with the closest links under the Convention. A Swiss bank holding the portfolio does not change which law governs the trust.
Will a Swiss bank accept a trust governed by foreign law?
Foreign trusts have been recognised in Switzerland since 1 July 2007, and banks deal with trustees routinely. Each bank still applies its own onboarding and anti-money-laundering requirements, so acceptance depends on the documents, the parties and the source of the assets.
Who owns the assets in the Swiss account?
In the Convention's description, the assets form a separate fund and the title stands in the name of the trustee. The account is therefore opened by the trustee in that capacity, and the assets are not part of the trustee's personal estate.
Can a Swiss court refuse to recognise the trust?
In limited cases. Article 13 allows a state to decline recognition where the significant elements of the trust connect essentially with states that do not know trusts, and Article 15 preserves certain mandatory rules. Whether either applies depends on the facts and needs an individual analysis.
Does splitting law and custody help with privacy?
Not in a way that should be relied on. The bank collects information on the parties, and account data may be reported under automatic exchange rules. Privacy depends on the registers and reporting regimes involved; see trust registers and privacy.
What should be aligned between the deed and the bank mandate?
The persons who may instruct, the investment powers, the role of the protector, and what happens if the trustee is replaced. Inconsistent documents are a frequent source of delay when funds need to move.
Sources
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