If you’ve ever wondered how to protect your assets and take care of your loved ones, without handing everything over at once, setting up a discretionary living trust in Singapore might be the smartest move you can make. Whether you’re a parent, business owner, or simply planning ahead, this legal tool gives you the flexibility to support your beneficiaries without losing control. And no, it’s not just for the ultra-wealthy.
Let’s break down how it really works and why more Singaporeans are choosing this path to future-proof their legacy.
What Is A Discretionary Living Trust?
A discretionary living trust is a legal arrangement where a person (the settlor) transfers assets to a trustee, who then manages and distributes those assets to beneficiaries. The word “discretionary” means that the trustee has the power to decide how much and when each beneficiary receives from the trust.
This flexibility makes it a popular choice for families who want to avoid fixed entitlements or prepare for unexpected changes, such as Divorce, bankruptcy or even family disagreements.
How Do You Set One Up?
Setting up a discretionary living trust in Singapore isn’t just for lawyers or finance experts; it’s something you can do with the right help and a clear plan. Here’s how it usually works, broken down into 5 simple steps:
1. Define Your Purpose
Are you protecting your assets from future claims, planning for your children’s future, or managing business succession? Knowing why you’re setting up the trust will guide everything else.
2. Pick Your Trustee
This could be a trusted individual or a professional trust company. They’ll be responsible for managing the assets and making distribution decisions, so choose someone who’s reliable and objective.
3. List Your Beneficiaries
You can name specific people (like your children) or keep it flexible (e.g. “any future grandchildren”). The trustee will have the power to decide how and when they receive support.
4. Draft The Trust Deed
This legal document sets out all the rules: who gets what, under what conditions, and how the trust will be run. It’s best to get a lawyer involved to make sure everything is airtight.
- Transfer Your Assets
Once the deed is done, you’ll need to move your chosen assets (like property, cash, or shares) into the trust. Only then does the trust become active and legally recognised.
Who Can Set Up A Discretionary Living Trust?
The short answer: almost anyone. And no, you don’t need to be a millionaire or own five bungalows to make it worthwhile.
Here’s who commonly sets one up in Singapore:
- Parents – Wanting to provide for young kids without handing over everything at once.
- Business Owners – Looking to protect shares or plan for smooth succession.
- Divorced or Remarried Individuals – Hoping to manage inheritance more fairly across blended families.
- Professionals With Growing Wealth – Who want long-term protection against lawsuits, creditors, or unexpected events.
- Families With Special Needs Dependants – Who need financial support handled with care and consistency.
If you own property, have savings, or simply care about what happens to your assets in the future, setting up a discretionary living trust in Singapore could be one of the smartest moves you make.
Why Consider Setting Up A Discretionary Living Trust In Singapore?
For many, setting up a discretionary living trust in Singapore offers more than just wealth distribution. It allows families to:
- Protect Assets From Legal Claims: Assets in the trust are no longer personally owned, which may help shield them from lawsuits or claims during Divorce.
- Provide For Loved Ones With Specific Needs: If you have children with special needs or young adults who aren’t ready to manage large sums of money, the trustee can release funds in stages.
- Maintain Privacy: Unlike a will, which becomes public after probate, a trust keeps your affairs private.
- Ensure Long-Term Planning: It’s useful for business owners who want continuity without everything getting caught in Court processes after death.
Common Misconceptions Of Setting Up A Discretionary Living Trust
There are quite a few myths surrounding trusts, and they often stop people from taking action. Let’s clear a few of them up:
“Trusts are only for the wealthy.”
This is one of the biggest myths out there. While high-net-worth individuals do use trusts, many middle-class families in Singapore set them up for protection, control, and peace of mind.
“You lose all control over your money.”
Not necessarily. With the right structure and a clear letter of wishes, your trustee will manage the assets according to your intentions. You can even make the trust revocable if you prefer flexibility.
“It’s too expensive or complicated.”
Setting up a trust doesn’t have to cost a fortune. And when you compare the long-term benefits, like avoiding costly Court battles or messy family disputes, it’s often a smart and cost-effective decision.
“A will is enough.”
A will is important, but it doesn’t offer the same privacy or protection. For example, assets under a will are subject to probate and public disclosure, while a trust stays private and is effective during your lifetime.
Conclusion About Setting Up A Discretionary Living Trust In Singapore
Whether you’re planning ahead for your family’s future, protecting your business assets, or simply want more control over how your wealth is passed on, setting up a discretionary living trust in Singapore can offer you peace of mind and long-term security. It’s no longer just a strategy for the wealthy; it’s a practical solution for anyone who wants to protect what they’ve worked hard for.
If you’re ready to take the next step, speak to someone who understands the ins and outs of trust law in Singapore. At Tembusu Law, we don’t just provide legal advice; we offer guidance that puts your goals and loved ones first.
Contact Tembusu Law today and get trusted help from the best family lawyers and criminal lawyers in Singapore, so you can secure your legacy the right way.
Frequently Asked Questions About Setting Up A Discretionary Living Trust In Singapore
What Is The Main Benefit Of A Discretionary Living Trust?
The key benefit is flexibility. The trustee can decide how to distribute assets based on changing needs and circumstances.
Can I Set Up A Discretionary Trust While Still Alive?
Yes. A “living” trust means it’s created while you’re alive and can be managed or changed if needed, depending on the structure.
Will The Trust Assets Be Affected In A Divorce?
Generally, assets in a properly set up discretionary trust are not part of the matrimonial pool in a Divorce, offering better protection.
Is A Will Still Necessary If I Have A Trust?
Yes. A will handles any assets not transferred into the trust and ensures nothing is left unmanaged.
Can The Beneficiaries Be Changed Later?
It depends on the trust deed. Some allow flexibility, while others are fixed once set. Talk to a lawyer to structure it right.
Do I Need A Lawyer To Set Up A Trust?
It is strongly advised. Legal guidance ensures your trust is valid, enforceable and aligned with your goals under Singapore law.
