Trust, the family's last safe haven
Zhang Lan was on the hot search again, and it was revealed that he owed 980 million yuan overseas, and the overseas family trust was broken.
Things have to start in 2014, Zhang Lan's Qiujiangnan sold it to private equity firm CVC after two failed listings, and after many turmoil, Zhang Lan realized that she needed to avoid risks, so she set up a family trust Success Elegant Trading Limited (SETL) in Cook Island in the same year, with her son Wang Xiaofei as the beneficiary.
However, CVC's acquisition of Yujiangnan was not smooth, and the two sides finally fought a lawsuit, and Zhang Lan lost the lawsuit and was sentenced to pay CVC $142 million and interest.
At that time, Zhang Lan's assets had already entered the trust, and the money in the trust belonged to the beneficiary Wang Xiaofei. So Zhang Lan was sure that CVC couldn't take money from her.
Why was Zhang Lan's family trust broken?
First, after the establishment of the family trust, Zhang Lan was still free to transfer money for herself from the bank account. On November 26, 2014, Zhang Lan also used funds from a bank account under the trust to purchase an apartment in New York.
Second, before receiving the notice of the freezing order in Hong Kong and the freezing order in Singapore, Zhang Lan was eager to transfer the funds under the family trust. At this transfer time node, the intention of debt avoidance is obvious.
Third, Zhang Lan's agent clearly mentioned in the email sent to the bank where the funds under the family trust were located that the relevant bank accounts under the family trust were owned by Zhang Lan.
Offshore family trust is simply a resident of a country to set up a family trust in other countries or regions outside the country, such as the British Virgin Islands, Cayman Islands, etc., its core function is "risk isolation". That is, the independence of the trust property, but the power boundary of the settlor needs to be set carefully.
The core reason why Zhang Lan's offshore family trust was broken down was that she had too much control over the trust.
A trust generally involves three parties: the settlor, the trustee and the beneficiary, and the actual right to the property is the settlor. After the settlor converts his property into trust property, the trust property will be independent of the settlor, the beneficiaries and the respective inherent property of the beneficiaries.
Only in this case, even if the settlor or trustee has debts, the trust assets are not liability assets, and the creditor has no right to apply to the court to directly take property preservation measures or other enforcement measures. Zhang Lan's offshore family trust was recognized as her personal property, thus losing its property preservation function.
Why do rich people set up trusts?
The main benefit of a trust is the management and protection of the property. The settlor (usually the rich man himself) entrusts the property to the trustee for management in a legal manner by signing legal documents, and ensures that the economic benefits of the property will go to the beneficiaries. This is commonly found in:
01. Wealth inheritance
Rich people have huge assets, but they don't want to give them to their children for the time being, Buffett once said: the right inheritance can be given to children, making them feel that they can do anything, but not so much that they feel that they don't have to do anything. If the child does not yet have the ability to manage the property, entrust a third party (trustee) to manage it, sign an agreement according to which the wealth will be handed over to the beneficiary at a certain time.
02. Meet the needs of asset isolation of the rich
There are two cases here:
The first is to avoid dividing family wealth due to marriage and the like. For example, Deng Wendi's ex-husband Modoc, who has married 4 wives so far, was divided between $1.7 billion by his wife when he divorced his second wife, and he found that things were not good, because he only wanted to pass on his wealth to his children, so he set up a trust. The money in the trust does not belong to Modoc, nor does it belong to the marital property of him and a certain wife, so Wendi Deng will not share anything when he divorces.
The second is to separate corporate wealth from family wealth. For example, you run a company that is in full swing, but there is no guarantee of a "black swan event" in case the company goes bankrupt. There is also the fact that you want to start a business again, set up a new track, go to finance and sign a gamble, but in the end you may also fail and be in debt. In these cases, you can rely on trusts, put assets in advance, and the whole family is the beneficiary, even if the project fails, the company fails, the debt collection cannot be chased to their heads, and the wealth can be passed on to the next generation through inheritance terms.
03. Privacy protection
The rich need it most. Many wealthy Chinese like to buy houses all over the world, and if they use their own names, they are easily discovered by the outside world. Moreover, on the foreign real estate transaction website, the price and area of the house can be found. But at this time, setting up a trust and buying it in the name of the trust is like wearing an invisible cloak and full of security.
Singapore Family Office
When it comes to trusts, it's important to mention family office programs in Singapore. The main applicant has set up two companies in Singapore at the same time, one is a 100% owned fund company and the other is a family office.
The controlling person of a family office can be an individual or a holding company. The holding company can be held by a trust company to ensure the segregation of wealth.
The most important thing is that you can apply for Singapore immigration, and the assets of the rich will be taken care of in Singapore? If you can hire yourself or a family member, you must issue a work visa, which is EP. The main applicant who has obtained the EP can also issue a family pass DP for his immediate family, such as parents, spouses and children, and then transfer to permanent residence PR later. In the end, one person successfully handled the immigration of a large family member.
Therefore, the super-rich run their businesses through family trusts while ensuring that their family wealth is not affected. Asset management + tax planning, by the way, the whole family immigrated together, killing three birds with one stone.
However, the price of the family office project in Singapore has now risen to S$50 million, or about 2.5 yuan, which is not affordable for ordinary wealthy people.
Singapore also has a PIC Self-employment Immigration Program (Private Investment Company), the structure is similar to the family office, but the cost is only 5% of the family office, so it is called "small family office", the basic requirements are:
· The applicant is 30~50 years old
· Investment amount starts from S$100W
· College degree or above
· Have some entrepreneurial and investment experience