In all my years in wealth management, one question I get asked most often is: "How much money do I need to have to set up a family trust?"
Many people think trusts are toys for the super-rich, only worth discussing when you have hundreds of millions in assets. But among the over 2,000 families served by Parich Group, the actual asset range of clients who set up trusts is quite large — from tens of millions to billions. The key is not how much money you have, but whether you have "something that needs protection."
Who needs a trust?
Among the clients we have worked with, the most typical types are as follows:
Business owners. They run their own companies, and their business assets are mixed with their personal assets, leaving them uncertain. If something goes wrong with the company — like being sued for guarantees, or defaulting on debts — will their homes and savings be affected? This anxiety is something Ms. Zhang, who runs an engineering firm served by Parich, understands best. Her husband was placed under a court-ordered restriction on high-consumption due to a company guarantee, and could not even take a plane. Later, she used a combination of an irrevocable grantor trust and a large life insurance policy to safely isolate part of her family assets.
People with "complex family structures." Remarriage, children who are divorced, young grandchildren, a spouse in poor health... The more complex the family structure, the more likely disputes will arise over how to pass down wealth. Seventy-year-old Mr. Fan is one such case: his wife is in poor health, his 45-year-old daughter is divorced and planning to remarry, and his 15-year-old granddaughter is an excellent student. He set up a retirement and health protection trust with 30 million yuan, arranging clearly in accordance with the rules for all his wife's medical expenses, his daughter's pension, and his granddaughter's education funds.
People who want to give money to their children but fear they will squander it. Giving a large sum of money to their children at once, they worry that the young and immature children will spend it all in a few years. A trust can be set up with terms such as: the child receives only living expenses each year before age 30, education funds are provided upon admission to a good university, and startup funds are disbursed only after approval for entrepreneurship. The money is there, but it cannot be spent however they want.
What exactly is a trust?
To put it simply, a trust is when you legally transfer the ownership of a sum of money (or an insurance policy, equity, real estate) to an independent legal entity (the trustee), who then manages this money and distributes it to the people you have designated, in accordance with the rules you set in advance.
This act of "transferring to another party" is the core value of a trust. Because the money is no longer yours, therefore:
Your personal debts, this money will not be used to repay debts
Upon your passing, this money does not need to go through the estate probate process and will be distributed directly according to the trust document
In the event of your children’s divorce, the trust beneficial interest generally is not considered marital joint property
Outsiders will not know how much money your family has or how it is divided
Of course, trusts are not a panacea. They come with costs—setup fees, annual fees, legal fees; they come with constraints—once established, they are irrevocable, and you cannot freely dispose of this money yourself; they come with prerequisites—the structure must be real, legal, and complete, and cannot be a "secret agreement."
How does Parich handle trusts?
Parich Group holds a Hong Kong TCSP Trust Service License, and all trust business is conducted under the framework of Hong Kong law. We do not engage in things like "sham trusts" or "conduit trusts" that hover in gray areas.
In terms of process, we generally divide it into four steps: first, clarify exactly what you are concerned about, then design the structure (selecting which jurisdiction, which type of trust, and how to arrange beneficiaries), then assist in legally transferring assets into the trust, and finally provide ongoing management during the trust’s existence.
If you are also thinking "Should I set up a trust?" but are unsure if your situation is suitable, it is recommended to first seek a free evaluation from a professional institution. If it is suitable, do it; if not, don’t—trusts are not mandatory, but knowing your risks in advance is better than only thinking about them after something goes wrong.
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