Asian Family Trust in Singapore or Hong Kong With Swiss Custody

Many Asian families who ask about an asian family trust in Singapore, Hong Kong and Switzerland do not want to pick one place. They want the trust governed where their advisers and courts are familiar, and the assets held where custody, banking and political distance suit them. That is a legitimate design, and it is also one where small mismatches between the layers cause most of the trouble.

This page looks at that situation from the reader's side: what each seat contributes, what a trust cannot do for you, and which points deserve an individual review before anything is signed.

Why families end up with more than one seat

Take an illustration. A family from a Southeast Asian business group, with a parent now living in Singapore and adult children studying or working in London and Zurich, wants a single vehicle for the next generation. The parent is comfortable with common-law concepts, because the family's companies are used to them. The children's bank relationships, however, sit partly in Switzerland.

Three needs usually pull in different directions:

• A legal home for the trust. The law that governs the trust deed, the powers of the trustee and the rights of beneficiaries.
• A place where decisions are actually taken. Where the trustee is based and where meetings, minutes and approvals happen.
• A place where the assets are kept. Where accounts, securities and sometimes real estate are held.

These three can be the same country, but in a multi-seat structure they are deliberately not. The skill lies in making sure each layer supports the others. For the wider logic, see how to choose a trust jurisdiction.

The layers of a multi-seat structure

The diagram shows one common arrangement. It is an illustration of roles, not a recommendation for any family.

Reading from the top: the settlor transfers assets to a trustee under a deed governed by the law of the chosen seat. The trustee often holds the family's wealth through an underlying company, which in turn opens bank accounts and owns stakes in businesses. A protector may sit alongside the trustee with powers set out in the deed. The Swiss element is usually the custody layer, but it can also be the place of administration or the home of a regulated trustee.

What each seat typically brings

Each cell is a generalisation. A real review depends on residence, nationality, the nature of the assets and the provisions of the deed. The Singapore comparison and the Hong Kong comparison set these points out side by side.

How Switzerland treats a trust governed by foreign law

Switzerland has no trust of its own, yet it has recognised foreign trusts since the Hague Trusts Convention came into force there on 1 July 2007. The Federal Office of Justice confirms this recognition. Switzerland signed the Convention on 3 April 2007 and ratified it on 26 April 2007. The explanation of the Hague Convention covers the mechanics.

Two rules from the Convention matter most for a multi-seat family:

• Under Articles 6 and 7, the trust is governed by the law the settlor chose, expressly or by implication. If no law was chosen, or the chosen law does not know the trust, the law with the closest connection applies. That connection looks at the place of administration designated, the location of the assets, the residence of the trustee and the purposes of the trust.
• Article 15 keeps mandatory rules in force, including those on succession rights. Swiss private international law refers trusts to the Convention through Article 149c of the LDIP.

In practice this means a Singapore or Hong Kong governing law is respected in Switzerland, but a Swiss bank holding the assets is not a neutral spectator. If a beneficiary or heir has a connection to a country with forced heirship, those mandatory rules can reach the trust. The distinction between the law chosen and the place where the trust is run is explored in governing law versus seat.

What a trust can and cannot do here

A trust can separate management from enjoyment, allow a discretionary trustee to respond as family circumstances change, and give continuity across several countries. A well-drafted deed can also keep decisions with a trustee who is not exposed to a single family member's disputes.

A trust cannot remove a family from tax or reporting rules in the countries where they live. It cannot override mandatory rules of succession in a country connected to the family. And it provides protection that has limits: courts look at whether the settlor kept so much control that the trust is a facade, and banks look at who the real decision-makers are.

Reporting is also layered. Each seat has its own register or disclosure rules for trusts, and the bank will report accounts under automatic exchange of information (AEOI, in the CRS framework) according to the status of the account holder. What is disclosed where is set out in trust registers and privacy.

Where multi-seat structures go wrong

Five weaknesses recur:

1. Substance gaps. A trustee on paper in one seat while the real decisions are taken elsewhere can raise questions on residence. See economic substance and trusts.
2. Custody that ignores the deed. The bank's account terms and the trust deed use different words for who may give instructions.
3. A protector with too much power. Broad reserved powers can blur who controls the assets.
4. Mismatch with civil-law heirs. A child with a German, French or Swiss connection may claim rights that a common-law deed does not anticipate.
5. No one owns the overall picture. Each adviser looks at their own layer and nobody checks that the three fit.

The same issues appear in a fictional case on a Singapore trust with Swiss custody, and in the wider comparison of common-law seats versus civil-law seats.

Alternatives to consider

A multi-seat trust is not always the best-fitting answer. Depending on the family, other tools may do part of the job:

• a single-seat trust, if the family's links are concentrated in one country;
• a foundation, which some civil-law advisers find easier to read, as discussed in trust, foundation or company;
• a company-only structure, if the aim is business continuity rather than a long-term family arrangement;
• a trust with Swiss custody but without an underlying company, if simplicity matters more than separation.

Which of these is suitable depends on the family's tax residence, the nature of the assets and the countries in which the beneficiaries live. That is why an individual analysis comes before drafting.

Points to verify before you proceed

• Which law governs the trust deed, and is it stated clearly?
• Where is the trustee based, and where are decisions actually taken?
• Does the bank's documentation match the deed on who may give instructions?
• Which countries' reporting regimes apply to the settlor, the trustee and the beneficiaries?
• Could mandatory succession rules in any beneficiary's country reach the assets?
• What powers does the protector hold, and do they go beyond what is needed?
• Who coordinates the advisers across the seats?

A structured list of questions to ask your counsel on the seat can help with this review. The site's trust services by jurisdictional question also show how this kind of analysis is approached. Fees depend on the structure and are indicated after the confidential assessment.