Bona Trust Corporation provides Labuan Trust setup and management services.
Labuan Trust refers to an offshore trust can be set up on the Labuan Island Special Economic Zone in East Malaysia.
Labuan Trust is recommended for the following people
Labuan Trust is mainly utilised by various wealthy individuals and their families, NPOs (Nonprofit Organisations), etc. for various purposes.
Purpose of Labuan Trust
· Creation and accumulation of wealth and asset succession plan
You can inherit the wealth and value of the family to the next generation
· Strong asset protection and robust confidentiality
If assets are properly set up, you can strongly protect assets from creditors or other claimants
· Integration and management of assets
You can integrate and manage cross-border assets and beneficiaries
· Optimal operation and allocation planning of accumulated assets
You can control how the beneficiary receives assets
· Evasion effect of the prover (procurement procedure)
It is possible to efficiently allocate assets to heirs without avoiding the probation, without payment of court costs, delay, etc.
Overview and Main Features of Labuan Trust
Overview of Labuan Trust
• Settlor・・・Person who sets trust assets as trusts. The trust setter is an individual or a corporation.
• Trustee・・・Person who possess the trust fund and who are in charge of that for the benefit of the beneficiary.
• Trust Deed・・・Certificate to set trustee’s authority. Trust setters can adjust trust conditions to meet the requirements.
• Enforcer / Protector ・・・Person acting like a “guardian” to the trustee for the benefit of the beneficiary. It may be appointed by a trust setter.
• Beneficiaries・・・Person legally entitled to enforce and benefit from the trust. Can include individual or reference to a class, charities, minors, corporations etc.
Note : The trust setter is no longer the owner of the transferred asset, the trustee becomes the legal owner of the trust fund, the beneficiary has a vested interest and receives the profit distribution.
Settlor
Person setting up the trust, may be individual or corporate, Malaysian resident or non-resident.
Trustee
One trustee must always be a licensed Labuan Trust Company.
More trustee(s) can be appointed, if required.
However, a trustee shall not be a director of the company where shares are held by the said trustee.
Holds the trust funds and responsible for its administration for benefit of the beneficiaries.
Enforcer, Protector
May be appointed by settlor, who acts like a “watchdog” over the trustee for the benefit of the beneficiary.
The settlor or beneficiary may also be a protector.
These parties can also act on advisory / consultancy basis
Main features of Labuan Trust
Assets of the Trust
May encompass Malaysian assets, however consent from the Labuan Financial Services Authority (“Labuan FSA”) needs to be obtained if Malaysian assets are to be injected into Trust.
No consent of Labuan FSA is required for injection of non-Malaysian assets.
Duration of Trust
No perpetuity period
Shares held
Trustee owns and holds own shares at the underlying asset holding vehicle (entity = Labuan corporation)
Trustee does not engage in the management of the company
It is possible to separate asset management and investment
Letter of Wishes
Settlor can also use Letter of Wishes to provide guidance to the Trustee in matters affecting trust (particularly distribution) for situations that may arise post his demise. Though not legally binding, Trustee normally rely on this letter.
Advantages
Trustee does not interfere in the management or conduct of any business of the underlying companies
Trustee shall not instigate or support any action by the company against any of its directors for breach of duty to the company or procure the appointment or removal of any of the directors.
Provisions for unenforceable claims; a two-year claw-back period and requirements for legal procedures should a creditor attempt to prove a trust is fraudulent.
Existence of the trust in perpetuity.
Option not to register the trust to protect privacy.
No foreign exchange controls in Labuan.
The difference between Labuan Foundation and Labuan Trust
The difference between Labuan Foundation and Labuan Trust is as follows:-
Labuan Trust
Labuan Foundation
Governing law
Common Law
Civil Law
Legal entity
Not a legal entity with separate legal existence
Separate legal entity
Attribution of assets
Assets, upon being vested in the trust, are legally owned by trustee
Assets are legally owned by the foundation. Upon registration of the foundation, the property endowed no longer belong to the founder, but belong to the foundation
Relationship between parties
Relationship amongst parties is fiduciary
Relationship amongst parties is contractual
Name between parties
The person(s) who establishes the trust is known as the settlor
The persons who benefit from the trust are known as beneficiaries
The person(s) who creates the endowment is known as the founder
The persons who benefit from the endowment are known as the beneficiaries
Registration
No requirement to register trust
Registration of foundation is mandatory
Certificate documents
Trust deed
Charter and Articles
Administrative authority
The appointed trustee is the person responsible to hold the trust assets and administer the trust
The appointed trustee is the person responsible to hold the trust assets and administer the trust
Entity attribution
Settlor may have certain reserved powers after establishing the trust and vesting the legal title in the trust assets to the trustee
The founder does not retain or acquire any ownership rights in relation to the foundation’s property.
Beneficiaries or the persons in whose benefit the foundation was created may include the founder
