Article: Settlor Control in Family Trusts

Hui JING (The University of Hong Kong) recently published, Settlor Control in Family Trusts, 2024. Provided below is an Abstract:

This article analyses the Singapore High Court's ruling in La Dolce Vita Fine Dining v Zhang Lan [2022] SGHC 278, exploring the legal challenges posed by settlor-controlled family trusts in offshore wealth management. The analysis highlights how excessive settlor control can undermine the validity of a trust, rendering its assets vulnerable to claims from the settlor's creditors. The article then explores the broader implications of the Zhang Lan case for asset protection and creditor rights in the context of cross-border wealth planning. Three key aspects are examined. The first aspect explores the boundaries between sham trusts and breaches of trustee duties, emphasising the importance of a settlor's genuine intention in creating a trust. The second aspect examines the tension between the need for trust confidentiality and the requirement of transparency for transaction parties, drawing reference to the trust registration framework under English law. The third aspect addresses the tension between settlor control and trustee accountability, arguing that while settlor-reserved powers are permissible, their scope and exercise must not undermine the trustee's responsibility in ensuring the proper administration of the trust.