Why having a company as your trustee for your family trust, instead of a person?

Some people use a natural person to be the trustee of their family trust. It is legal and cost saving.

In addition, some natural person might be both the trustee and the beneficiary of their own family trust.

Yet, it would have a better idea to use a shell company as your trustee.

Why?

1. There is no law that prohibits a trustee from acting as a beneficiary of its own family trust. However, it is not recommended that you, as a natural person, act as a trustee and a beneficiary of your own family trust. Otherwise, you are in a trap that you appoint yourself to manage your own family trust. Then, what will happen if you go into trouble?

   
   

2. When the trustee (legal owner) is also the nominiated beneficiary (beneficial owner), the trustee actually holds all the interests in the trust assets in legal form, which may affect the protection of the trust assets in the event that the trustee is subject to a claim/legal case.

   
   

3. Similarly, for a settlor's (appointer's) succession plan, if the settlor and the trustee are the same person, this can weaken the asset protection function of the trust.

   
   

4. In addition, the trustee will be the legal owner of the trust assets - his or her name will appear on bank accounts, titles of assets, etc. If the trustee is changed in the future, it may probably be the tax equivalent of changing the legal owner of the trust assets, creating unnecessary tax exposure. For this reason, it is strongly recommended that the trustee be independent of the beneficiary (beneficiary).

   
   

5. Of course, it is possible to have a natural person who is not the beneficiary as the trustee. However, the trustee has considerable executive power and legal ownership, if the appointer is difficult to control/appoint/change the trustee, trouble will come.

   
   

6. Therefore, we generally recommend that the appointer shall appoint a shell company as the trustee of the family trust, and this shell company is not one of the beneficiaries.

Written by Tiger Consulting Global. All rights reserved 2025