There are many different types of trust structures for different purposes depending on the Settlor’s needs and intentions such as privacy, probate, and asset protection. Today, we will discuss three common types of trust structures:

A revocable trust is also known as a living trust or inter vivos trust. It can be amended, modified, or revoked by the settlor at any time after it is created. Flexibility is the best description of a revocable trust. Although this type of trust gives the settlor room to change his mind, it is less effective in terms of asset protection. However, the settlor can change a revocable trust to an irrevocable trust at any time.

Contrary to a revocable trust, an irrevocable trust cannot be revoked after the trust has been created without the consent of the beneficiaries. The beneficiaries’ interests under an irrevocable trust are more secured. Moreover, it can protect your assets from creditors’ claims and therefore asset protection is more effective. Irrevocable trusts are often used as a vehicle to facilitate advanced tax planning and gifting for one’s estate.

A discretionary trust is an arrangement for the trustee to handle the investment and distribution of trust assets at his discretion. The settlor has a letter of wishes stating who the trust's beneficiaries are, the distribution ratio of the beneficiaries, and the direction of investment. The trustee usually refers to his wishes and has the discretion to deal with the distribution. For example, if the inflation is high, the beneficiary requires a little more living expenses. The trustee can choose to increase the distribution reasonably for the beneficiary. However, the letter of wishes is for reference only. There is no legal responsibility for the trustee to manage the assets according to his wishes.

UTGL offers different trust structures for different tiers of clients, from fixed trust to discretionary trust; either revocable or irrevocable trust is suitable. The structure can be simple or complex; it depends on the purpose of clients, types of assets, location and sizes, nationality of clients and beneficiaries, etc. We listen to clients and can customize a trust structure that best suits clients’ needs. However, we generally set up discretionary revocable reserved power trusts for clients. This type of trust can cater to most of the clients’ needs.