The trust system originated from Britain's balanced law, and has been accepted by most countries and regions including the civil law system, providing more structural options for family fortune's management and inheritance. At present, most of the businesses operated by domestic banks and trust companies are collective fund trusts, mostly self-beneficial trusts, mainly short-term, high-risk investments and high returns; This article talks about the original business of trust, called family trust, which belongs to other trusts, and focuses on long-term, steady investment, free distribution and the willingness to inherit.
(A), the advantages of family trust in wealth management and inheritance
1. Family trust can completely isolate risks in family fortune.
The Trust Law of People's Republic of China (PRC) does not explicitly stipulate the transfer of ownership, but recognizes the independence of entrusted property. Article 15 stipulates that trust property is different from other properties for which the trustor has not established a trust. Article 16 Trust property is different from the trustee's inherent property and may not be included in or become a part of the trustee's inherent property. After design, the trust property can also be independent of the beneficiary, and the trust property and income will not be lost due to the behavior, liabilities and accidents of the beneficiary. Trust property is independent, which can avoid the risk of property loss such as property being impersonated, pursued by creditors and sealed up by in-laws. Therefore, it can provide a more comprehensive risk isolation function.
2. Family trust can meet the diversified needs of wealth management and inheritance.
Through the professional design of trust structure, we can realize tax planning and avoid the inheritance tax that may be introduced in China in the future. However, life insurance that inherits by will and has no designated beneficiary cannot be exempted from inheritance tax; Family trust can realize the personalized distribution and inheritance of family fortune, and can be established according to the client's wishes. The timing, method, conditions and amount of the distribution of the beneficiary and trust benefits can be flexibly determined according to the needs of the trust purpose, and the medium and long-term rights and interests can be distributed through the trustee.
3. Family trust can meet the needs of corporate governance and sustainable development.
The mutual insurance mechanism of shareholders is designed through family trust agreement, and the insurance amount equivalent to the equity value is allocated to each shareholder. Beneficiaries are the same family trust, which can maintain the unity and integrity of the enterprise and avoid equity disputes, shareholder infighting or bankruptcy caused by accidents or deaths of shareholders.
4. Family trust is confidential, continuous and stable.
Similar to life insurance, it is an outstanding advantage of family trust to keep information of people other than customers highly confidential. Continuity and stability mean that the established family trust will not be affected by the existence of the principal or the trustee. Even if the trustee goes bankrupt during the existence of the trust, because the trust property is independent, it will not be liquidated as the trustee's bankrupt property, and a new trustee can be entrusted to continue management.
(B), the limitations of family trust in wealth management and inheritance
1, with a high starting point, is only suitable for large-scale asset allocation.
At present, the top trust companies in China, such as CITIC Trust, generally require more than 50 million cash assets for family trusts, and they need a one-time injection. Even a small trust company needs to inject at least100000 cash assets at one time. For middle-class families, it basically fails to meet the threshold requirements and is only suitable for high-net-worth families.
2. Real estate involves the transfer of property rights and costs.
At present, family trusts are suitable for allocating cash assets in China, while real estate and equity trusts cannot be effectively established due to trust registration problems and unclear trust tax system.
3. There is no risk protection function.
Compared with the collective fund trust, the investment management of the family trust itself is conservative and steady, and it will basically not lose money. However, trust is different from life insurance. At present, the trust agreement will not have provisions to guarantee the principal and income, nor will it have leverage, and there will be no large insurance claims when risks occur.
4. Trust management fee.
All the necessary expenses have been covered in the premium of life insurance, but the trust needs to deduct the management fee every year, which is generally 1% of the total assets of the previous year or (1%+ excess return fluctuation).