In Singapore, a house is often more than just a home – many also purchase property as a form of long-term investment. In this respect, parents may be interested to know how they can purchase properties for their children.
While a child (i.e. a person below 21 years old) does not have the legal capacity to own a property in their own name as yet, their parents could nevertheless buy a property for him or her by way of a trust, which allows the child to beneficially own the property.
This article explains what it means to hold a property “on trust” in Singapore, as well as the legal and practical implications of doing so.
What Does It Mean to Hold the Property “On Trust” for a Child?
When parents hold the property “on trust” for a child, they will remain the legal owners of the property while the child becomes the beneficial owner of the same.
Briefly, the nature of the child’s beneficial ownership is an equitable interest that binds all third-parties except for a bona fide purchaser of the property for value and without notice.
Essentially, for the purpose of this article, what this means is that the child is able to assert a proprietary interest in the property against the whole world except for a genuine purchaser who had purchased the property without being informed that it was being held on trust.
Implications of Parents Holding Property on Trust for Their Child
When a property is held on trust by the parents for their child, any personal creditors of the parents are not entitled to claim the trust property to satisfy any debts owed by the parents to them.
Holding the property on trust also means that the parent is responsible for managing the trust property (such as paying the relevant taxes and duties) for the benefit of the child. Further, any economic benefits from the property will accrue to the child.
In addition, should the property earn income, this income is considered the statutory income of a trustee (i.e. the party managing the property) and is subject to income tax at a flat rate of 17%.
If beneficiaries (i.e. the child) receive a share of the trust income, and they are not ordinarily entitled to it, then their share is not subject to a second round of tax.
On the other hand, if beneficiaries ordinarily entitled to a share of the trust income by virtue of a trust deed, then their share of the trust income will be assessed at their own personal income tax rates. At the same time, tax will not be imposed at the trustee level.
Such beneficiaries will also be given the same tax exemptions and concessions as accorded to taxpayers who are resident individuals.
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Nadia Moynihan
R.W. Law Practice | 11 years experience | English, Malay
Nadia’s practice represents a broad cross-section of the kind of legal services that most businesses and individuals typically need, regardless of industry sector or client profile, with a particular focus on dispute resolution.
She regularly advises corporate and private clients on schemes of arrangement, bankruptcy proceedings, trade disputes, employment disputes and a wide array of other contractual and tortious claims from fraud to defamation. Her litigation practice draws upon her experience representing clients in complex multi-jurisdictional cases involving misappropriation of funds and shareholder disputes. She has also represented numerous employers and employees in claims relating to wrongful dismissal, breach of employment contracts and harassment in the workplace. She has significant experience handling highly contentious cases of all kinds from State Courts to Court of Appeal level.
Her matrimonial practice features cross-border disputes regarding child custody and the enforcement of maintenance as well as High Court litigation pertaining to the division of substantial matrimonial assets located in multiple jurisdictions. Her criminal practice includes experience representing clients in prosecutions for drug offences, sexual offences and violent offences ranging from voluntarily causing hurt to homicide. She also has experience representing children charged with criminal offences.
Nadia’s non-contentious practice includes the drafting of various commercial agreements such as shareholders’ agreements and distribution agreements as well as personal legal instruments such as wills, lasting powers of attorney and deed polls.
Nadia is on the panel of lawyers of a number of embassies in Singapore.
Qualifications / Admissions
- LLB (Hons), National University of Singapore
- Advocate & Solicitor of the Supreme Court of Singapore
- Solicitor of the Senior Courts of England & Wales
Memberships
- Irish Chamber of Commerce, Singapore;
- The Medico-Legal Society of Singapore;
- Association of Criminal Lawyers of Singapore;
- The Law Society’s Family Law Practice Committee
- The Law Society’s Criminal Law Practice Committee;
- Singapore Association of Women Lawyers
- AIJA - International Association of Young Lawyers
Selected Cases
- OMG Holdings Pte Ltd v Pos Ad Sdn Bhd [2012] 4 SLR 231: Pleadings, limitation issue
- BMR v BMS [2013] SGDC 421: Care and control and access of child, maintenance
- JAI v JAI [2014] SGDC 382: Maintenance for wife
- TDI v TDJ [2015] SGFC 11: Care and control, overnight access
- TAT v TAU [2015] SGFC 19: Custody, care and control, access, relocation
- THH v THI [2015] SGFC 135: Interim maintenance for wife and child
- PP v Rosdi Bin Joenet [2016] SGHC 58: Sentencing for homicide in case of mental illness.
- Public Prosecutor v ASR [2018] SGHC 94: Sentencing of intellectually disabled young person for aggravated rape.
Che Wei Chin
Fervent Chambers | 12 years experience | English, Mandarin
In the field of litigation, Wei Chin was lead counsel for many types of matters and clients such as:
- Civil and commercial disputes
- Submitting and presenting mitigation pleas successfully to obtain lighter sentences for clients charged in criminal matters, including non-custodial sentences
- Divorce and ancillary matters disputes, including helping parties through Court Mediation
- Private prosecutions for a government statutory board and obtaining deterrent sentences against the offenders
- General solicitors’ work in extracting Grant of Probate and Letters of Administration
- General solicitors’ work in managing landlord and tenancy agreements and disputes
- General Commercial Drafting and Advisory Work
His wide range of experience in litigation includes tenancy disputes, writs of possession, claims concerning breaches of director’s duties, probate matters, criminal matters, matrimonial matters and various other types of litigation work.
Wei Chin recognises that not all matters need to proceed for a full-fledged trial. Having taken Mediation & Negotiation modules in NUS, Wei Chin can capably advise on settlement options, achieving an amicable resolution which is more affordable and efficient than going for trial.
Wei Chin has also advised government agencies and statutory boards, helping them to resolve disputes through negotiations and litigation, depending on their goals and aims.
Wei Chin also takes on commercial contract drafting and contractual negotiation work to protect the interest of his clients when they are entering commercial deals. He has experience being a legal advisor to a local tertiary educational institute and assisted in vetting their intellectual property contracts.
Civil & Commercial Disputes
- Lead Counsel in a dispute involving an ex-finance manager of a renowned bakery being sued for breach of fiduciary duties and other money claims – successfully defended the manager such that all claims were dismissed.
- Lead counsel in contract dispute regarding business consultancy agreements, limitation issues and Legal Profession Act.
- Lead counsel in construction dispute with interior designer for defective works.
- Lead counsel in a supply agreement dispute concerning a local beautician boutique.
- Negotiating a successful settlement involving a potentially Michelin-starred restaurant and its renovation contractors, avoiding a lawsuit of close to $0.4 million.
- Lead counsel in a High Court claim for contractual breach: acted for an independent business consultant in suing 3 business owners for breach of consultancy agreement.
- Lead counsel in High Court defamation claim of a manager defaming a director of a listed company.
- Negotiating a successful settlement involving a defamation claim by a businessman against a university professor.
- Assisting counsel in obtaining a Mareva Injunction for a claim amounting to more than S$3 million.
- Negotiating a successful settlement involving an anti-competition lawsuit by a large rice supplier, thus preventing a prohibitive injunction.
- Advising and successfully negotiating a settlement for a government statutory board concerning a dispute with an oil supplier.
Criminal Matters
- Lead Counsel in a disposal enquiry between two victims of a Bitcoin scam.
- Lead counsel in securing an acquittal for client charged with criminal trespass and outrage of modesty in Marina Bay Sand hotel.
- Lead counsel in successfully securing probation for an Uber driver suffering from frotteurism who touched passenger’s thigh. During appeal by the Prosecution, the Accused did not appoint Mr Che as a lawyer (due to financial constraints). Accused’s sentence was later increased to imprisonment when fresh facts arose during appeal.
- Lead counsel in a shop theft matter where Accused took toys without payment from a well-known toy store.
- Lead counsel in various plead guilty matters for offences regarding:
- Penal Code Section 377BB (voyeurism)
- Penal Code Section s. 405 to 409 (criminal breach of trust)
- Companies Act Section 157 (breach of company director’s duties)
- Road Traffic Act (reckless driving, drink driving etc)
- Common Gaming House Act (gambling)
- Animals and Birds Act 1965 (importation of live animals etc)
Jeannette Chong-Aruldoss
Robert Wang & Woo LLP | 33 years experience | English, Mandarin
Working with clients to help them find real solutions to legal issues that are causing them stress and worry isn’t just a job, it’s something I’m passionate about. It’s a calling. I was called to the Singapore Bar in 1989, and have since chalked up three decades of active legal practice. I’ve acquired the experience and knowledge across a diverse range of legal matters, enabling me to bring a broad-based approach to problem-solving. Where a fight is called for, I’ll bring a hands-on and passionate approach to advocating and championing my clients’ interests.
Lim Charmaine Jillian Phipps
Tracy Wang Law Practice | 1 year experience | English, Mandarin
Charmaine was called to the bar in 2015 and her main areas of practice is family and estate work. With a focus on practical and fair solutions, she works together with clients to achieve amicable outcomes to all parties involved where possible.
She firmly believes in therapeutic justice that the Family Court envisions for divorcing couples and is a patient and understanding listener to those requiring legal assistance and advice.
Charmaine also provides advice and services related to Probate and Letters of Administration, applications under the Mental Capacity Act for those wishing to be appointed deputies of their loved ones and drafting of Wills.
Charmaine is on the panel of assigned solicitors with the Legal Aid Bureau and in 2021, Tracy Wang Law Practice was awarded the Legal Aid Bureau’s Law Firm (Gold) award for their contributions to the Bureau.
Ronald Yeo
Yeo Marini Law Corporation | 8 years experience | English, Hokkien, Mandarin
Ronald started off his career as an economist before deciding to pursue a second degree in law. He has worked as a legal counsel in both public and private sector including various international banks. However, the corporate career gave him less satisfaction as compared to helping the layperson. Coupled with his passion to serve and connect with people on the ground, Ronald decided to go back to his original roots and to practise community law.
A person-oriented individual with a practical and realistic mindset, Ronald is able to provide advice with sound reasoning, and at the same time, ensure that it is in the best interest for the client. Hardworking and output driven, he is a hands-on lawyer who sees through any matter from start to finish.
Ronald has a particular interest in family law. Being a father of 3 children himself, he is a strong advocate of being a present parent and understands the challenges one faces during the course of marriage. He believes that the child’s interest is of utmost importance in any marriage. Ronald is able to empathize and apply his legal mind in matters relating to child custody, care and control, and maintenance quantum for children. When push comes to shove and marriage is no longer possible, Ronald is able to represent clients for any divorce proceedings, both contested and uncontested.
Ronald is able to speak both the Chinese and English language.
What Can Trustees Do With the Property?
Trustees derive their power from the terms of the trust instrument, which lays out the trustees’ powers to deal with the property.
For instance, the trust deed may specify that the trustee will have the power to rent out the trust property for rental income.
The Trustees Act also specifically confers certain powers on the trustee, but these powers apply only if they are not contrary to the terms of the trust instrument. Such powers include the power to invest, insure and maintain minors, and also advance the benefit of beneficiaries.
Can the Trust Property Be Any Real Estate Property?
While both HDB and private properties can be trust property, the creation of a trust over a HDB property requires a prior written approval from the Housing Development Board.
When Will the Legal Title Pass to the Child? Can This Be Specified in the Trust?
For a fixed trust, a trust may be terminated and the legal title be passed to the child by all the trustees if the beneficiaries are of full age, under no disability and absolutely entitled under the trust.
On the other hand, if parents intend for their child to inherit the property at a later time, then the trust deed should expressly state the age or the occasion at which their child will inherit the property.
How Can Parents Protect Their Interests?
You can choose to elect an alternative beneficiary to prevent the gift from failing if one beneficiary dies before you.
Formal Legal Procedures to Set Up a Trust Over Property
A trust is set up upon:
- The execution of a trust deed, or Deed of Settlement, being executed between the settlor (the person making the trust) and a trustee (the person who will manage the trust, and who can also be the settlor); and
- The transfer of assets into the trust.
In executing the Deed of Settlement, the settlor must decide the key terms of the trust, including:
- Who the initial beneficiaries are
- Who will be appointed as trustee of the trust
- What powers the settlor wishes to retain, if any
For the setting up of trusts over property that do not involve changes in the property’s beneficial interest (e.g. the child is made the beneficial owner of the property right when it is purchased), the trust deed will need to be stamped at a fixed duty of $10.
Properties to be purchased to be held on trust will have to be fully paid for in cash. CPF monies cannot be used for the purchase. Banks are also unlikely to extend a loan for the purchasing of property on trust.
An additional buyer’s stamp duty of 35% will also apply to residential property that is being purchased to be held on trust for a beneficiary (such as a child) while the settlor is still alive.
A caveat can also be lodged on the child’s behalf to protect the property.
This article provides only a general guide on the topic. You may wish to speak to a trusts lawyer to understand the finer details and/or alternatives to creating a trust.
