What Is a Family Trust Fund?

A family trust is a trust institution entrusted by an individual or a family to manage and dispose of family property in order to achieve the wealth planning and inheritance goals of the rich. It first appeared in the period of 25 years of economic prosperity (1982 to In 2007, it was called the United States after the second gold-plated era). In family trusts, the ownership of assets is separated from the right to income. Once the wealthy entrusts assets to a trust company to take care of them, the ownership of the assets no longer belongs to him, but the corresponding income is still collected and distributed according to his wishes. If a rich person divorces his or her family, accidentally dies, or is debt-collected, the money will all exist independently and will not be affected. Family trusts can better help high-net-worth individuals plan their "wealth inheritance", and they are gradually recognized by the rich in China.

Family trust

The inheritance of family wealth has always been a worldwide problem, and it is also a topic that the rich always care about. In China, 30 years of reform and opening up have created a large number of wealthy family members. However, many of the business empires and family wealth accumulated through hard work and entrepreneurship have not escaped "

Family trusts generally have a management period of more than 30 years. Unlike the most common collective trusts in China, family trusts are products specifically tailored for high-net-worth clients. They do not set expected annualized returns and do not specify good investment projects. Instead, they configure investment products based on the client's risk preferences. Such trusts may have other beneficiaries, may change beneficiaries midway, or limit the rights of beneficiaries.

In the distribution of trust benefits, different forms such as one-time distribution, regular quantitative distribution, temporary distribution, and conditional distribution can be selected. "According to the characteristics of the family trust, Faye Wong can choose to allocate some funds when her daughter is in college. It can also set up many additional conditions for her daughter to inherit the property, such as marriage, non-entertainment, etc." Sun, executive chairman of the international financial investor based in Beijing Fly said. ^[2]

Compared with traditional statutory inheritance and testamentary inheritance, the advantages of family trust are obvious, and it can realize reasonable risk avoidance functions such as bankruptcy risk isolation mechanism. Family trust arrangements are also more flexible in terms of the development and change of beneficiaries (heirs of the will). He also reminded high-net-worth individuals for the purpose of family inheritance that when setting up a family trust, they should pay attention to the trust plan's provisions on trust beneficiaries. ^[2]

Tax avoidance and corporate management ^[5]

Only two financial institutions have launched an actual family trust scheme in China. The first family trust plan is the Ping An Wealth · Hongcheng Family Series Single Full Fund Trust launched by Ping An Trust. The trust has a starting amount of 50 million yuan and a contract period of 50 years.

The head office of China Merchants Bank has launched the first family trust scheme from May 2013. As of July, China Merchants Bank's family trust contracted customers have 10 families, all of which are high net worth customers with financial assets of 100 million yuan and total assets of more than 500 million yuan. At present, the contracted customers are mainly concentrated in northern cities, and all are private business owners. The scope of family trust management is mainly financial assets, including some equity, but does not include real estate, which accounts for a large proportion of the property allocation of high net worth individuals in China.

In addition, because of different regulatory environments at home and abroad, an independent trust scheme is adopted for overseas assets. The current scope of family trust management is mainly domestic assets.

China's high net worth population has entered the "wealth inheritance" stage. The "China Private Wealth Report 2013" jointly issued by China Merchants Bank and Bain & Company shows that "wealth protection" has become the primary goal of wealth management for high net worth individuals in China, and the need for "wealth inheritance" is further apparent. Bain Consulting Greater China President Michael Thorneman pointed out that about one-third of high net worth individuals are currently conducting wealth inheritance arrangements, seeking to complete wealth planning with tools such as family trusts, tax planning, and insurance planning.

At present, the development of domestic family trusts still faces many bottlenecks. A report from a third-party financial institution, Noah Wealth, points out that trust is the foundation of trust, but at present China's high-net-worth people are more home-made from scratch, and they are more willing to manage their own wealth. On the other hand, since the trust companies have a lot of profitability in traditional businesses such as collective trusts, the enthusiasm for developing property trust business is not high.

Lin Jianguo, executive director of BOC International Holdings Limited, believes that family trusts in Hong Kong are very mature, and wealthy people are also used to choosing family trusts to protect their wealth. In Hong Kong, family trusts can hold assets including real estate, stock portfolios, family businesses, columns and copyrights. Because Hong Kong directly faces the global market, there are no geographical restrictions on trust management, and investment portfolios are more diversified. Family trusts have become a magic wand for Hong Kong's high net worth people to break the curse of "three generations". ^[2]

According to the current "

Bill Gates

In 2000, the world's richest man, Bill Gates, established the Bill and Melinda Gates Trust, and successively transferred assets under his and his wife's name into the trust. The foundation is the world's largest private foundation and operates on a commercial basis. The foundation has a board of directors and professional managers. The entire foundation is composed of four departments, namely the global health project team, the global development project team, the US project team, and the operation leadership group.

Murdoch

World media tycoon Murdoch also set up a family trust to operate through GCM. News Corporation issues two different stocks, of which Class A is a stock without voting rights and Class B is a stock with voting rights. The Murdoch family holds nearly 40% of News Corporation's Class B shares, of which more than 38.4% of the Class B shares are held by the Murdoch family trust fund. The beneficiaries are the six children of Murdoch. The four children of Murdoch and his two previous wives are the trustee's custodians, and they have voting rights over News Corporation; the two daughters of Murdoch and his third wife, Deng Wendi, only have beneficiary rights without voting rights. As a result, News Corps' control is firmly in the hands of the Murdoch family.

Other foreign celebrities

The global asset tycoons such as the Rockefeller family, Kennedy family, and Bancroft family all use family trusts to manage family property in order to protect the income of future generations and centralized management of assets [3].

Faye Wong

Faye Wong and Li Yapeng In September 2013, Faye Wong and Li Yapeng divorced. Li Yapeng's statement pointed out that Li Yan, the youngest daughter of Faye Wong and Li Yapeng, would follow his father's life. On the other hand, there are rumors on the Internet that Faye Wong has managed a trust for her eldest daughter Dou Jingtong in Hong Kong, and passed on the assets to her daughter through the trust to ensure a life of worry-free food and clothing.