Singapore has a relatively straightforward tax regime. Income tax is chargeable on income accrued in or derived from Singapore, or received in Singapore from outside Singapore. However, foreign-sourced income received by individuals in Singapore is exempt from Singapore income tax. Income derived from investments such as interest from debt securities and qualifying distributions from REITs by individuals are also exempt from Singapore income tax.
Singapore has a preceding year basis of taxation; that is, income earned in 2019 is taxed in the year of assessment 2020. A resident individual taxpayer is taxed at a graduated margin tax rate depending on the quantum of chargeable income. The current highest income tax rate for individuals is 22%. The income tax for companies is currently a flat rate of 17%.
There are various income tax incentive schemes that can be utilised to effectively reduce the income tax payable. These include the schemes under Section 13G of the Income Tax Act for foreign trusts, Section 13Q of the Income Tax Act for locally administered trusts and Sections 13R and 13X for funds. These tax incentives are often utilised in the wealth and succession planning for high net worth individuals.
Singapore is party to 88 comprehensive tax treaties covering all types of income tax that serve to relieve double taxation of income. There are also eight limited tax treaties covering shipping and/or air transport for countries such as the USA, Brazil and Hong Kong.
Capital Gains Tax
There is no capital gains tax in Singapore. Whether a gain on the disposal of an asset is capital in nature (and hence not taxable) or income in nature (which is taxable) depends on the circumstances of each case. Factors taken into account in the determination include the intention at the time of acquisition, the length of time of ownership of the asset, frequency of similar transactions, nature of the assets, any improvements made to the asset, means of financing the acquisition and the circumstances of the disposal.
Generally, withholding tax rates of 15% and 10% are imposed on interest and royalties respectively that are paid to non-residents. For certain payments such as technical and management fees, the withholding tax rate is the prevailing corporate rate of 17%, unless the services are performed outside Singapore. Singapore does not levy tax on dividends in the hands of shareholders as it has a single-tier corporate tax system. Accordingly, Singapore does not levy a separate withholding tax on dividends.
Other Taxes and Stamp Duties
There is no gift tax, estate tax or inheritance tax in Singapore.
Stamp duties are chargeable on the execution of documents transferring interests in Singapore immovable property, shares of Singapore-incorporated companies, as well as shares of foreign-incorporated companies that are registered in a Singapore branch register. However, no stamp duty is payable on the transmission of Singapore immovable property or shares if such transmission is in accordance with a distribution under a will or the laws of intestacy, or is transferred to a spouse pursuant to an order of court made in divorce proceedings.
Save in the area relating to stamp duties for transfer of residential real properties in Singapore, the estate and transfer tax laws have not seen any substantial variation or changes in the past ten years. These have remained stable, transparent and consistent. Most tax incentives have a sunset date and are generally reviewed every five years. Generally, any change in laws would not have a retrospective effect. This stability and transparency is an attraction for high net worth individuals to base their wealth and succession planning structures in Singapore.
Stamp duties for transfer of residential real properties in Singapore have been revised on a few occasions in the last ten years as a cooling measure to deal with the increasing prices of residential properties in Singapore. With the last revision on 6 July 2018, stamp duties for properties with the purchase price or market value of more than SGD1 million have been increased from 3% to 4%. The stamp duties for the purchase of a second or third property by a resident and a foreigner have also been raised by 5%. The stamp duties for the purchase of a residential property by an entity were raised by 10% (and an additional 5% if the purchaser were a developer).
In response to COVID-19, the Singapore Government has introduced support measures to ease taxpayers’ cash flow. These measures include property tax rebates for non-residential properties, wage support for employers, rental relief for Small Medium Enterprises and the deferment of income tax payments.
Whilst it is possible to maintain the confidentiality of wealth and succession planning structures from prying eyes, Singapore supports the movement towards transparency to combat money laundering, terrorist financing and tax evasion. Singapore has amended its tax laws and implemented the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA) reporting regimes. Singapore financial institutions are currently required to provide information pertaining to account-holders from 66 jurisdictions under CRS.
In addition, consistent with the practices of Organisation for Economic Co-operation and Development (OECD) jurisdictions, the Inland Revenue Authority of Singapore (IRAS) also scrutinises related-party transactions with values not representative of the value of transactions that would otherwise have been entered into between unrelated parties. The IRAS has also introduced rules that require the submission of transfer pricing documentation to support the basis for the value of transactions between related parties. Various tax offences under the Income Tax Act and Goods and Services Tax Act have also been designated as money laundering predicates for direct and indirect tax offences respectively.
Singapore, despite extensive commercialisation and globalisation of its businesses, is culturally still very Asian. This encompasses various values such as filial piety, respect (or subservience to the seniors) and civility. There is also the tendency to avoid direct conflicts.
Thus, it is not unusual for the patriarch to take the lead or to be the decision maker in various aspects of succession planning, even when it requires the co-operation or involvement of other family members. On the occasions when the subsequent generations are consulted, they tend to be respectful of and align themselves with the indication of the earlier generations, in particular in their presence. Whilst there is much concern and planning to protect the family wealth, in particular in the event of the failure of businesses or marriages, the reasons for such concerns would rarely be discussed.
Culturally, Asians tend to favour keeping families together and assets within the family. This on occasion presents a divide between the first generational wealth creators and the subsequent generations who may have less interest to pursue the family business.
With the increasing international nature of businesses and globalisation of Asian families, wealth and succession planning inevitably will involve planning across jurisdictions and involve different tax and legal considerations. This has become more challenging in recent years with the implementation of aggressive tax and disclosure regimes by an increasing number of countries. The simplification and rationalisation of the family’s asset holding across the various jurisdictions have thus become a sensible (and, sometimes, essential) first step to effective and efficient succession planning.
Tax laws in Singapore are, however, stable, transparent and easy to apply. The authorities are also proactive and responsive to the needs of companies and individuals keen to relocate to Singapore and over the years have put in place various schemes to attract such relocation. These include the Global Investor Programme, which enables the applicant to invest in Singapore and for them and their family to be granted residency status in Singapore upon satisfaction of the Programme’s criteria. In 2020, the Programme was further made more attractive by including Next Generation Business Owners and Founders of Fast Growing Companies as applicants in addition to Established Business Owners and Family Office Principals.
Singapore has also been proactively attracting funds to its shores. The various tax incentive schemes together with the introduction of the Variable Capital Company (VCC) furthers this attraction. The VCC is a new corporate structure that is able to issue and redeem shares without shareholders’ approval, and pay dividends using capital and not just profits. It can be a standalone structure or an umbrella structure with multiple sub-funds (suitably ring-fenced) with different investment objectives, investors, assets and liabilities.
These factors and tools available for wealth and succession planning make Singapore a favoured jurisdiction for the location of wealth and succession structures.
Singapore does not have forced heirship laws, except for Muslims domiciled in Singapore. Thus, there are no restrictions on the manner by which non-Muslims in Singapore may choose to provide for their succession.
Forced heirship rules apply to Muslim persons who are domiciled in Singapore at the time of their death. The estate for such persons must be distributed in accordance with Islamic inheritance laws, or faraid laws, which generally set out fixed rules, based on the relations who survive the deceased Muslim, the relatives who should inherit and the proportion of their inheritance.
Generally, a Muslim domiciled in Singapore can only give away up to one third of their estate by their will, and only to persons who are not related to them by blood (such as their parents, spouses, siblings and children) and who are Muslims. This is so unless all their eligible faraid beneficiaries consent to waive these restrictions. The Singapore decision of Mohamed Ismail bin Ibrahim and anor v Mohammad Taha bin Ibrahim  SGHC 210 held that a Muslim may only will up to one third of their estate to their relatives who have renounced the Islamic faith.
From a succession planning perspective, it is useful to know that the Singapore Court of Appeal in Shafeeg bin Salim Talib v Fatimah bte Abud bin Talib  SGCA 11 has held that survivorship applies to assets that are held by a deceased Muslim in joint names with another party. Upon the death of the Muslim, the surviving joint owner would take legal and beneficial ownership of the whole of the jointly held property and the jointly held property will not be distributed as part of the deceased Muslim’s estate. The Court of Appeal further opined that if the settlement of a Muslim’s assets into a trust were completed during the deceased’s lifetime, such assets will be treated as trust assets and not part of the estate and effects of the Muslim that would be subject to Islamic inheritance laws.
Singapore’s trust law also has firewall provisions in relation to trusts set up in Singapore. Section 90(2) of the Trustees Act provides that no rule relating to inheritance or succession affects the validity of a trust or the transfer of any property to be held in trust if the person creating the trust or transferring the property had the capacity to do so under the law applicable in Singapore, the law of his domicile or nationality, or the proper law of the transfer.
In Singapore, the courts have repeatedly accepted "deferred community of property" as the underlying philosophy of the law on the division of matrimonial assets (see NK v NL  3 SLR(R) 743 at ). That is, during the marriage, a person may deal freely with assets under his or her own name without the consent of the spouse. It is only upon a breakdown of marriage that the courts would determine each party’s entitlement to the pool of matrimonial assets.
Under the Women’s Charter, only "matrimonial assets" will be subject to division in the event of a breakdown of the marriage. Matrimonial assets are defined by Section 112(10) of the Women’s Charter to be any asset of any nature acquired during marriage by one or both parties and any asset acquired by a party before marriage that was ordinarily used or enjoyed by the family during the marriage or has been substantially improved during the marriage by one or both parties. Gifts and inheritance, whether received before or during the marriage, are not subject to division unless they were substantially improved during the marriage by one or both parties to the marriage. The matrimonial assets are divided between the parties based on parties’ direct and indirect (including non-financial) contributions to the acquisition of the matrimonial assets.
However, in the event of a divorce, under Section 132 of the Women’s Charter, the court has the power to set aside any disposition of assets within the three years preceding the divorce application, if it is satisfied that the disposition of the asset was made with the object to reduce the ability to pay maintenance or to deprive a spouse of any rights in relation to that property.
Prenuptial and Postnuptial Agreements
Prenuptial and postnuptial agreements can be and have been upheld by the Singapore courts. These agreements must first satisfy the basic requirements of a contract and the courts would look into the presence of any vitiating factors such as fraud, duress, unconscionability, misrepresentation or undue influence that may undermine the existence of an agreement. The courts will scrutinise the subject matter and terms of a prenuptial agreement.
There is a presumption that any provisions relating to the children, whether relating to their custody or maintenance, are not enforceable unless they are in the best interest of the children. On the issues relating to maintenance of the wife and to the division of the assets, the court considers the provisions in the prenuptial agreement to be an aid to the courts. The courts will uphold the provisions in the prenuptial agreement if they are fair and just.
The court will scrutinise postnuptial agreements against the provisions of the Women’s Charter and will uphold the postnuptial agreement if the provisions are consistent with the principles in the Women’s Charter.
Likewise, the Singapore courts have had occasion to consider the position as to assets held in trusts set up by a party, whether before or after marriage. The case precedents are clear that where a trust was properly set up before the marriage, the trust is likely to be upheld and the trust assets are not likely to be treated as matrimonial assets for division (see BG v BF  3 SLR(R) 233).
Where a trust is set up during the marriage, the court will take into account several factors in deciding whether to uphold the trust. One of the main touchstones is the degree of the party’s retention of beneficial ownership and/or control over the settled assets. In Gaye Williams Nee Marks v Cary Donald Williams  SGHC 190, while a trust was established by the husband for the benefit of his three sons, the husband had the power to direct the trustees to remove any beneficiary, as well as to add any beneficiary and the power to remove the trustees. The Singapore court was of the view that having regard to the extensive powers that the husband has, the trust should be disregarded and the husband was treated as the owner of the trust assets for the purpose of determining his financial ability to provide for his wife and children.
Where the court finds that the intention of the settlor spouse is to deprive the other spouse of the assets or a right to maintenance, or that the settlor spouse retained control and/or beneficial ownership of the trust assets, the trust is less likely to be upheld, or if upheld, the court nevertheless retains the right to notionally place the value of the trust assets back into the pool of matrimonial assets (see TQ v TR  2 SLR(R) 961). Where the beneficiaries of the trust are the children of the marriage, the Singapore courts, proceeding on the premise that both parents are under a legal obligation to provide for and maintain the children of the marriage, will be more likely to uphold the trust (see AQT v ATU  2 SLR(R) 961).
Generally, save as to stamp duties that apply only to the transfer of Singapore immovable properties or shares of Singapore-incorporated companies and shares of foreign-incorporated companies that are registered in a Singapore branch register, the transfer of property in Singapore does not result in any tax implications on the transferor or the transferee. Singapore does not have capital gains tax. If, however, the transferor is perceived by the Singapore tax authorities to be a trader of the property that is being transferred, income tax may be levied on the profit made by the transferor in such a transfer.
Stamp duties are payable for the transfer of Singapore immovable properties, shares of Singapore-incorporated companies and shares of foreign-incorporated companies that are registered in a Singapore branch register, unless such property is transferred pursuant to a distribution under a will or the laws of intestacy, or is transferred to a spouse pursuant to an order of court made in divorce proceedings.
For wealth and succession planning, assets may be transferred by way of gifts or inter vivos trusts during the person’s lifetime or through the person’s will upon their demise.
It is also common for transferors to rely on the presumption of survivorship in relation to jointly held assets. By placing assets in the joint names of the transferor and the transferee, a transferor may assert control and ownership of the asset in his lifetime, yet allow for such jointly held asset to be transferred to the survivor upon the transferor’s demise. While simple, jointly held assets have given rise to substantial litigation in Singapore, as the operation of the presumption of survivorship is very much dependent on the intention of the parties.
In Quoine Pte Ltd v B2C2 Ltd  SGCA(I) 2, the majority of the Court of Appeal left open the issue of whether cryptocurrency is a species of property capable of being held on trust, finding that although there may be much to commend the view that cryptocurrency should be capable of assimilation into the general concepts of property, there remain difficult questions as to the type of property that is involved.
While further guidance from the Singapore courts in relation to cryptocurrency will be needed, the general approach taken in relation to digital assets in Singapore is that they are dealt with depending on whether they are IP rights, contractual rights or property rights. As such types of properties, digital assets can form the subject matter for wealth and succession planning and be dealt with accordingly. The transfer of digital assets does not usually attract stamp duties or transfer costs.
The prevalent structure in tax, wealth or succession planning in Singapore is the trust. This can be revocable or irrevocable, discretionary or fixed interest, depending on the objectives to be achieved. Other structures are available in Singapore, including the company limited by guarantee (CLG), limited liability partnership and fund structures.
CLGs have members (instead of shareholders) whose liability is limited to a fixed sum of money in the event the company is wound up; this structure tends to be used for charitable objects. Limited liability partnerships have a separate legal personality from their partners, whose liability is limited to their contributions; this structure is an option where the intention is to separate the legal ownership and economic ownership of investments or businesses.
Singapore does not have foundations in the civil law sense; that is, a legal structure (distinct from companies or trusts) that is created for specific purposes. The foundations that are set up in Singapore tend to be charitable structures (either a society or a company limited by guarantee). In accordance with guidelines from the Commissioner of Charities, only organisations that are self-funded by an individual, family or for-profit company to aid the organisation’s intended charitable purposes or that are financed by an endowment for said organisation can have the word "foundation" in their names.
Singapore’s legal system is based on common law and recognises trusts. A valid trust requires certainty of intention to create the trust, certainty of objects and certainty of subjects. Singapore trusts have a perpetuity period of 100 years.
Validity and Operation
The validity and operation of the trust in Singapore is not affected by succession or forced heirship rules. Section 90(2) of the Trustees Act provides that no rule relating to inheritance or succession affects the validity of a trust or the transfer of any property to be held on trust if the person creating the trust or transferring the property had the capacity to do so under the law applicable in Singapore or the law of their domicile or nationality or the proper law of the transfer. In Shafeeg bin Salim Talib v Fatimah bte Abud bin Talib  SGCA 11, the Singapore Court of Appeal opined that if the settlement of a Muslim’s assets into a trust was completed during the deceased’s lifetime, such assets would be treated as trust assets and not part of the estate and effects of the Muslim that would be subject to Islamic inheritance laws. The Singapore trust thus presents a considerable advantage in the planning for individuals subject to forced heirship.
Trusts and Marriage
The Singapore trust is equally robust against a challenge in instances of breakdown of marriages. The case precedents are clear that where a trust was properly set up before the marriage, the trust is likely to be upheld and the trust assets are not likely to be treated as matrimonial assets for division (see BG v BF  3 SLR(R) 233).
Where a trust is set up during the marriage, the court will take into account several factors in deciding whether to uphold the trust. One of the main touchstones is the degree of the party’s retention of beneficial ownership and/or control over the settled assets. Where the court finds that the intention of the settlor spouse is to deprive the other spouse of the assets or a right to maintenance, or that the settlor spouse retained control and/or beneficial ownership of the trust assets, the trust is less likely to be upheld, or if upheld, the court nevertheless retains the right to notionally place the value of the trust assets back into the pool of matrimonial assets (see TQ v TR  2 SLR(R) 961).
Where the beneficiaries of the trust are the children of the marriage, the Singapore courts, proceeding on the premise that both parents are under a legal obligation to provide for and maintain the children of the marriage, will be more likely to uphold the trust (see AQT v AQU  SGHC 138).
Under Section 132 of the Women’s Charter, the Singapore court has the power to set aside any disposition of assets made within three years preceding the application of the divorce, if the object of such disposition is to either reduce that party’s means to pay maintenance or deprive the spouse of any rights in relation to the property. Such disposition would include any settlement into a trust.
Singapore does not have capital gains or gift taxes and levies income tax on income accrued in or derived from Singapore, or received in Singapore from outside Singapore. There are no specific tax implications that arise solely from a Singapore citizen being a fiduciary or a beneficiary, whether of a Singapore trust or a foreign trust. A fiduciary, if they receive income from such capacity, will be subject to income tax, no different from other forms of income. This applies even if the settlor or donor of the trust, or beneficiary, is also the fiduciary.
A trust can be granted tax transparency, depending on the type of income received by the trust and the tax residency of the beneficiaries. If income tax has been imposed on the trust, distributions by the trustee will be regarded as capital and not subject to further Singapore income tax in the hands of the beneficiaries. If, however, a trust has been granted tax transparency, the distributions received by the beneficiaries from the trust may be subject to Singapore income tax, unless this is specifically exempted.
Section 90(5) of the Trustees Act specifically provides that a trust or settlement is not invalid “by reason only of the person creating the trust or making the settlement reserving to himself any or all powers of investment or asset management functions under the trust or settlement”. There is thus no objection to the settlor exercising control over the investment or management of the trust assets.
However, issues arise where the control of the settlor extends beyond the investment or management of the trust assets, and into, for instance, the removal and appointment of trustees and/or the addition and removal of beneficiaries. In Gaye Williams Nee Marks v Cary Donald Williams  SGHC 190, the Singapore High Court disregarded the trust where the settlor had the power to remove and appoint trustees, as well as to add and remove beneficiaries. In Chng Bee Kheng and another v Chng Eng Chye  2 SLR 715, the Singapore High Court was of the view that where the settlor and the trustee had the common intention to mislead, the trust may be a sham trust.
Until recently, a common manner of asset protection was the incorporation of SPVs (such as limited liability companies) to hold assets that the family intends to protect. With the various shareholder litigation involving such family companies, it is clear that this is not ideal. The shareholding in these companies tends to be fragmented with each generation of succession, and the supremacy of the rights of shareholders exposes the structure to court litigation either for shareholder oppression or liquidation of the company. The structure also lacks the confidentiality that families crave.
The awareness of these shortcomings of using the corporate structure for asset protection has led to the acceptance and the popularity of the trust structure as a method for asset protection; in particular, the discretionary trust. The trust structure can be used to allow for consolidation of wealth, business continuity and yet allow for the distribution of economic benefits. In Singapore, it is effective planning for succession and can overcome the application of forced heirship rules. It is also robust against challenges in divorce proceedings and creditor claims.
The prevalent objectives for succession planning in Singapore include asset protection, the seamless transmission of wealth over generations, continuity of the family business and minimising family conflicts. The structure that is used for succession planning would naturally depend on the objectives and circumstances of the patriarch and/or the family. The discretionary trust is a commonly used structure in this regard.
The trust structure allows for consolidation of wealth as well as the distribution of economic benefits. This provides a balance that is much sought after in Singapore and in the Asian region. For high net worth families in Asia who built their wealth in the current generation, a priority is the continuity of the family business. The trust allows the family business and wealth to be consolidated to generate income for current and future generations, and for management to remain with the professional managers or capable members of the family.
The trust structure is also modular and can be integrated with other structures that may be required by the family or to achieve tax efficiency. Frequently the trust structure is used with the family’s own private trust company, a family office, an investment entity or a philanthropic arm. The structure can also be made tax efficient by utilising the tax incentives such as those under Sections 13Q or 13X of the Income Tax Act.
Increasingly, there is also interest in a family charter or family constitution that sets out the values of the family, the thinking and wishes of the patriarch and/or the family in the succession structure. Such charter or constitution is usually not a legally binding document, the intention being only to inform and persuade the future generations as to the rationale of the succession structure. To the extent, however, that such document provides for dispute resolution mechanisms, these should be made legally binding to achieve the intended effect.
Where there is a transfer of interest, the fair market value is used to ascertain what the value of that interest is for the purposes of determining the applicable tax. There is no market practice as to whether and what, if any, is the discount that would be made against the fair market value where the transfer is only of a partial interest in the asset (eg, a minority stake in a company or a half interest in a real property). For valuation purposes, the fact that the transfer is of a partial interest can be noted without any adjustments to the fair market value. In most instances, the adjustment would be a matter of negotiation between the parties.
Whilst wealth disputes invariably arise from unhappiness between family members, the form that they take in court is highly varied.
Family Set-Up Trusts
A number of cases in Singapore have arisen from the context in which the trusts were set up. For instance, in the case of Re BKR  4 SLR 81, the dispute was between the children of the settlor, as to whether the settlor had the mental capacity to set up the trust.
In the case of Chee Mu Lin Muriel v Chee Ka Lin Caroline  4 SLR 373, the dispute was between the children of the testatrix, as to whether she had the requisite mental capacity when she executed her will.
In the case of Kuntjoro Wibawa v Harianty Wibawa and others  SGHC 109, the dispute was between the settlor and her son and as to whether the assets that the settlor settled into the trust belonged to her.
Professionally Set-Up/Administered Trusts
There have been relatively few disputes arising from professionally set up or administered trusts. There are disputes over family wealth related to the validity or the interpretation of wills, or whether assets were being held in constructive or resulting trusts.
While cases involving discretionary trusts have begun to surface over the last five to six years, the trust law issues in these cases mostly arise from estate administration (eg, Chng Bee Kheng and another v Chng Eng Chye  2 SLR 715, which concerned estate property allegedly held in a sham trust) or testamentary trusts (eg, Lakshmi Pratapai Bhojwani v Moti Harkishindas Bhojwani  3 SLR 356, which concerned an executor and trustee’s duty to the beneficiaries).
The remedies available to the aggrieved party in wealth disputes are dependent on the cause of action that the aggrieved party relies on for his claim. In addition to the contractual or tortious claims that sound mainly in damages to compensate the aggrieved party for their loss, claims in equity may provide other remedies to the aggrieved party, such as the ability to require a fiduciary to account for profits and tracing of trust assets to their current forms.
There are presently 60 corporate fiduciaries (ie, professional trustees) that are licensed in Singapore. While they are subject to the same standard of conduct as individual trustees, the use of corporate fiduciaries is becoming increasingly more popular in the succession and wealth-planning arena. High net worth individuals take comfort in the fact that corporate fiduciaries are licensed by the Monetary Authority of Singapore (MAS) and are subject to the supervision and audit of the MAS. There is also an increasing trend for high-net-worth families to set up their own private trust companies to act as trustees for the family trusts.
As is the case generally with corporations, it is not possible to pierce the veil of a trust to hold the fiduciary personally liable for the liability of the trust, unless the trust is merely a device, façade or sham intended to give third parties or the court an appearance of creating legal rights and obligations between the parties that are different from the actual rights and obligations that the parties intended to create; see, for example, Gaye Williams Nee Marks v Cary Donald Williams  SGHC 190.
The case of Chng Bee Kheng v Chng Eng Chye  2 SLR 715 specifically addressed the issue of sham trusts. In Chng Bee Kheng, the executrices and trustees of a deceased woman claimed that the deceased’s son was holding a property in trust for the deceased pursuant to a trust deed. In response, the son claimed that the trust deed was a sham for the purposes of creditor protection. The High Court, in finding that the trust was not a sham trust, considered that the crux of the sham concept was a subjective “common intention to mislead” on the part of both the settlor and the trustee.
The Trustees Act
The Trustees Act also contains several protections and indemnities for trustees, including protection against liability and an implied indemnity that a trustee is only chargeable for money and securities actually received by them and accountable only for their own acts, receipts, neglects or defaults.
The Court of Appeal in Rajabali Jumabhoy and others v Ameerali R Jumabhoy and others  2 SLR(R) 434 held that an exculpatory clause in the settlement operated to relieve a trustee of liability for loss where no dishonesty was involved, although it noted that the extent of an exemption clause would “depend very much on the precise wording and ambit of the exemption clause itself”. The Court of Appeal also noted that even if the exculpatory clause did not apply, the court retained a residuary discretion under Section 63 of the Trustees Act to relieve a trustee from liability where he has acted “honestly and reasonably, and ought fairly to be excused for the breach of trust”.
Under Section 27 of the Trustees Act, a trustee may delegate some or all of his powers and discretions by way of a power of attorney. However, Section 27(6) of the Trustees Act provides that despite such delegation, the trustee shall be liable for the acts or defaults of the donee in the same manner as if they were the acts or defaults of the trustee.
"Anti-Bartlett" clauses, which are common in commercial trust deeds, have not been tested in Singapore courts, although they have been held to be effective in other jurisdictions. In essence, an anti-Bartlett clause negates any duty on the part of the trustee to enquire into or interfere in the conduct or management of the company owned or held by the trust unless the trustees are aware of circumstances that call for enquiry. These clauses are typically inserted into trust instruments to provide trustees with a degree of comfort when the trust assets included shares in operating businesses or trading companies.
In Zhang Hong Li v DBS Bank (Hong Kong) Limited  HKCFA 43, the Hong Kong Court of Final Appeal overturned the findings of the courts below, and held that the anti-Bartlett clauses in a trust deed would exclude any residual high-level supervisory role or obligation on the trustee in respect of investment decisions made by an investment adviser appointed by the underlying company. Such a duty would be “plainly inconsistent with the anti-Bartlett provisions”.
Section 3A of the Trustees Act prescribes a statutory duty of care for trustees when exercising their powers. Generally, a trustee must exercise such care and skill as is reasonable in the circumstances taking into account any special knowledge or experience that they have or hold themselves out as having and, if they act as trustee in the course of a business or profession, to any special knowledge or experience that may reasonably be expected of a person acting in the course of that kind of business or profession.
Additionally, the trustees are subject to the usual common law duty to act in good faith, not to act in conflict of the trust’s interest and to exercise their rights and powers in good faith for the benefit of the beneficiaries of the trust.
Under the Trustees Act, the trustee is required to have regard to the "standard investment criteria", which requires the trustee to take into account the suitability of the investment or other investments for the trust and the need for diversification as is appropriate to the circumstances for the trust.
The trustee is also required to obtain and consider proper advice before making the investment or when reviewing the trust investments. The trustee should obtain and consider proper advice from a person whom the trustee believes to be reasonably qualified to provide such advice by their ability or experience of financial or other matters relating to the trust, unless the trustee reasonably concludes that it is not necessary or appropriate.
These criteria also apply to trust investments that do not yield any income.
Trusts in Singapore may hold, run and manage active businesses (and indeed this is commonly a need of high net worth families with their own family businesses). However, there are few, if any, corporate fiduciaries who will accept active businesses as part of the trust assets. Their consideration lies in their ability to run, manage or even understand such active businesses, and the reputational risks related to the management of these active businesses.
The concept of domicile under Singapore law is based on the traditional concept of domicile under English law (see Peters Roger May v Pinder Lillian Gek Lian  3 SLR(R) 765). The Singapore court recognises the domicile of origin (the country of that person’s birth) and the domicile of choice (the country that that person determines to be his permanent home and/or home for an indefinite period).
The basic eligibility criterion to obtain a Singapore citizenship is for the applicant to have been a permanent resident for a minimum amount of time. This is two years for an adult and three years for a student. The award of the Singapore citizenship is entirely discretionary and factors that would be considered include the amount of time that the applicant spent in Singapore as a permanent resident, the applicant’s good character and law-abiding nature, the applicant’s social and financial "investment" in Singapore that evidences their intention to stay in Singapore for the long term, and the applicant’s ability to be an asset to Singapore.
Dual citizenship is not allowed in Singapore and successful applicants are required to renounce their foreign citizenship before attaining Singapore citizenship.
Generally, the spouse or unmarried minor-child of a Singapore citizen or permanent resident, or an aged parent of a Singapore citizen may apply to become a permanent resident.
There are also schemes that allow the holders of certain employment and work passes in Singapore and students in Singapore to apply to be permanent residents. As the Singapore Government, in response to the COVID-19 situation, has restricted the entry of work pass holders into Singapore, foreigners seeking to obtain permanent residency via this route may face some difficulty for the time being.
Additionally, applicants may also apply to be permanent residents under the following schemes.
The Global Investor Programme (GIP)
Administered by the Economic Development Board (EDB), under this programme, the applicant may invest at least SGD2.5 million in a business in Singapore in certain industries identified in the Programme or a GIP-approved fund and upon compliance with the requirements of the Programme, permanent residence status will be granted to the applicant, his spouse and children who are minors. Of much interest under this Programme is the Family Office option, which allows the applicant’s family office (with assets under management of at least SGD200 million) in Singapore to be a qualifying business under the Programme.
The Foreign Artistic Talent scheme
Administered by the National Arts Council, this scheme allows recognised international arts professionals who have made significant contributions to Singapore’s arts and cultural scene to apply and be granted permanent residence in Singapore.
There are no specific expeditious means of obtaining citizenship in Singapore.
The Mental Capacity Act allows a person who has mental capacity to execute a lasting power of attorney to appoint donees who would be authorised to make decisions for them in respect of their personal welfare and/or their property and affairs, in the event that they should lose their mental capacity. This allows a person to plan for what they wish to be done, and by whom, in the event that they should lose their mental capacity.
For those who are mentally incapable, the Mental Capacity Act allows relatives or persons with interest to apply to court to be appointed as deputies to act on their behalf. On 1 September 2018, to address the concerns of elderly singles or childless elderly couples, who might not have family members or close friends to act as proxy decision makers, the categories of persons who can be donees and deputies was extended to Professional Deputies and Donees (who can be lawyers, doctors, accountants, allied health professionals, nurses and social workers).
Such vulnerable persons are also typically provided for through trusts set up for their benefit by their loved ones. The Special Needs Trust Company (SNTC) is a non-profit trust company that provides heavily subsidised trust services for persons with special needs.
A child’s parents are the natural guardians of the child and have rights to make decisions relating to the child so long as the child is a minor. No application to court is necessary even if the child has disabilities, whether mental or physical.
Under Section 7 of the Guardianship of Infants Act (GIA), the father or mother of a minor may by deed or will appoint any person to be the guardian of the minor after their death. This appointment does not require a court application. In other instances, a person may apply to the court under the GIA to be appointed as the guardian of a minor. The court may also exercise its powers to remove any existing guardian and to appoint another guardian in their place. While guardianship does not normally require ongoing court supervision, all guardians must generally act in the best interests of the minor.
Once, however, a child reaches the age of majority (above the age of 21 years), the parent no longer has decision-making rights for the child. In such circumstances and where the child is mentally incapable, the parent will need to apply to court to be appointed as deputy for their adult-child in order that they can continue to make decisions for that child.
With the implementation of the Mental Capacity Act in 2008, there was increasing awareness as to the vulnerability of aged persons to mistreatment and manipulation. The Vulnerable Adults Act came into force on 19 December 2018 and is intended to safeguard adults who, because of mental or physical infirmity, disability or incapacity, are incapable of protecting themselves from abuse, neglect and self-neglect. The Act provides for enhanced powers of intervention where it comes to vulnerable adults, including powers to enter their homes and investigate suspected abuse, neglect or self-neglect, powers to make alternative care arrangements for vulnerable adults in order to protect them from potential abusers and powers to impose enhanced penalties for offences against vulnerable adults.
The awareness surrounding mental capacity has also prompted high net worth individuals in their wealth planning not only to consider the succession of their wealth in the event of their death, but also to make provision for their own care in the event of their infirmity or incapacity. In this respect, the lasting power of attorney and the setting up of a reserve trust to provide for themselves are common solutions.
Children Born Out of Wedlock
Children born out of wedlock are considered illegitimate, although they are legitimated by the subsequent marriage of their natural parents. Until they are so legitimated, they would have no right to inherit from their father in the event that he should die intestate. They would only be entitled to inherit from their biological mother if the biological mother has no surviving legitimate children.
Adopted children are deemed under the Adoption of Children Act to be legitimate children of their legal (adoptive) parents, and in the case of intestacy, will be entitled to their estate as if they were born to their adoptive parents in lawful wedlock. As the adoption legally severs all ties between the adopted children and their natural parents, they will have no right to inherit from their natural parents in the event that the natural parents should die intestate.
In Singapore, whilst surrogacy is not unlawful per se, commercial surrogacy is not allowed under the guidelines issued by the Ministry of Health that prohibit assisted-reproduction clinics from providing surrogacy services. In the recent landmark case of UKM v Attorney-General  3 SLR 874, the High Court allowed a gay man’s appeal in relation to an adoption application for his son who was conceived via gestational surrogacy overseas on the basis that the adoption order would be in the child’s welfare as it improves the child’s chances of acquiring Singapore citizenship or long-term residence in Singapore, and thereby enhances his prospects of remaining here with his current caregivers.
Subsequent to UKM, the Ministry of Social and Family Development stated that it would review adoption laws and look into the issue of surrogacy. Parents who intend to adopt children conceived through surrogacy overseas will have their applications assessed on a case-by-case basis. Prior to UKM, the courts had granted the adoption of children to ten married couples (out of 14 applicants) who used surrogacy because of infertility issues.
Same-sex marriages are not recognised in Singapore and Section 12(1) of the Women’s Charter expressly provides that a marriage whether solemnised in Singapore or elsewhere between persons who at the date of the marriage are not respectively male and female is void. Parties to such a marriage thus do not have rights as spouses in the event of a breakdown of the relationship and in the event of the demise of the other party.
A marriage between a person who has undergone a sex reassignment procedure and a member of the opposite sex is valid.
There are no laws recognising domestic partnerships in Singapore.
There are several tax incentives that have been put in place in Singapore to encourage charitable giving. Until 31 December 2021, donors to charities that are designated as institutions of public character or qualifying grant-making philanthropic organisations are entitled to a 250% tax deduction of the amount of their donation. Where the tax deduction exceeds the income for the year, the donor is entitled to utilise the remaining tax deductions in the next five years.
Donations of immovable properties and shares to approved institutions of public character are also exempted from stamp duties.
All charities registered in Singapore and charities exempt from registration enjoy automatic tax exemption. For properties that are used exclusively for charitable purposes, property tax may also be exempt in full or in part.
The three most common legal structures for non-profit organisations in Singapore are that of:
Of the three, only CLGs benefit from limited liability (limited to such an amount that the members had guaranteed to contribute to the assets of the company in the event that it is wound up). CLGs may also be registered as charities, allowing them to benefit from income tax exemptions. However, CLGs also suffer from a greater number of administrative requirements in their setting up, including the need for a registered office, requirements as to directors and more complex annual reporting requirements.
Like CLGs, societies may be registered as charities and benefit from the associated tax exemptions. An advantage that societies have over charities is their fewer administrative requirements (eg, their officers are not subject to statutory qualifications). However, societies do not have a separate legal identity from their members and members may be personally liable for any liability incurred.
Finally, charitable trusts are a useful structure for the investment and disbursements of assets for the purpose of charity. They also benefit from limited public disclosure and tighter control; generally, there need not be an auditor or audited financial statements unless required by the trust deed, and control resides entirely with the trustees. Like societies, however, charitable trusts have no independent legal personality and trustees must bear all legal liabilities.
Oftentimes, it is not just a question of selecting a structure for the charitable intents of the client. Charities and the manner of giving have developed over the years and many clients' philanthropic objects have devolved beyond the traditional concept of giving.
Most charities presently include the concept of empowerment: giving in a manner such that the project would generate profit to be self-sustaining, or running a social enterprise that will benefit the underprivileged without sacrificing profits entirely. A structure would thus have to be created to allow such entrepreneurial intents whilst capitalising on the incentive schemes and benefits that a charity is entitled to.