Newsletter-No8

CAPITAL MARKETS
資 本 市 場
Protecting Your Business
In avoidance of dilution of equity
due to family conflict, divorce or
separation, the trustor may arrange
the family trust to hold the
enterprise shares so as to ensure
sustainable operation of the
enterprise.
Asset Appreciation
Trustee can make sure appreciation
of asset through asset allocation
and re-investment according to the
trustor’s preference.
Flexible Provisions
Provisions of family trust can be set
at discretion, and trust amendment
and adjustment mechanism can
also be made in the trust contract
to accommodate the development
requirements of the family in various
period of time.
Privacy Protection
The management and operation of
the trust asset are performed on
behave of the trustee. The trustor
needs not to disclose the relevant
information to the public, and even
not needs to inform the
beneficiaries about the respective
benefit proportions so as to prevent
conflict among the family members.
The Focal Problems
Along with growth of wealth and
lowered possibility of tax avoidance,
the rich sector has actively searched
for comprehensive ways of wealth
preservation and inheritance. Clarifying
the follow questions would help to
develop a flexible and efficient trust
plan.
Customising Trust Provisions
Talking about trust, the case of
Anita Mui can be regarded as a
classic example of trust plan. In the
case, Anita had designated her
mother, who had gambling
addiction, as the primary beneficiary
and provided that her mother would
be entitled to receive a considerable
living expense each month until
death. After the death of Anita, her
mother sued the trust company for
the validity of the trust for more than
ten times but still lost the lawsuit
eventually.
Devising a trust plan is a
complicated and professional task,
which does not have a model
answer. With ample professional
knowledge, the devisers must have
worldly wisdom and also draw up
the trust provisions according to the
family condition and the
beneficiaries’ particular situations. In
the above example, though Anita
had made a special arrangement
based on her mother’s gambling
addiction problem, she had
overlooked her mother’s greed and
concealed the contents of the trust,
leading to a regrettable result.
Making Good Use of the
Protector’s Role
Including cash, equities, properties,
trust asset involves a vast amount
of money. How can we prevent the
asset be squandered by the
beneficiary, or coveted or cheated
by others? In case the trustee is a
person, his health status and life
span would bring uncertainty to the
asset management, and the trust
asset may be mixed with his
personal asset, which will impair the
trust asset.
Assigning a familiar and trustable
relative or friend to be the trust
protector or supervisor can
effectively solve this problem. Under
this condition, as the beneficiary
has to get the protector’s consent
before using the trust asset, the
asset can be safeguarded and well
managed. In the above example, if
Anita had made a more detailed
consideration and assigned a
protector for the trust, her mother
would not have to deal with those
資 產 增 值
條 款 靈 活
私 隱 保 護
焦 點 問 題
量 身 訂 制 信 託 條 款
善 用 保 護 人 角 色
24 CONPAK NEWSLETTER