What is Labuan Trust?
A Labuan trust is a highly effective vehicle for asset preservation, protection and income distribution, making it one of the primary vehicles used to pass wealth from one generation to the next. It provides unparalleled financial control with exceptional fiscal advantages.
The creation of a Labuan trust is generally for an individual or a settlor to give specific property to a third party to be held for the benefit of others, including charities. The Labuan Trust Act 1996 allows the creation of the following types of trust:
- Purpose trusts;
- Charitable trusts;
- Spendthrift or protective trusts; and
- Labuan special trusts.
What is The Purpose of a Labuan Trust?
A Labuan Trust may be created or established for a specific particular purpose which could be charitable or otherwise. A charitable purpose means and includes any of the following description of purposes:
- The relief or eradication of poverty;
- The advancement of education;
- The promotion of art, science and religion;
- The protection of the environment;
- The advancement of human rights and fundamental freedom; or
- Any other purposes which are beneficial to the community
Who Can Setup A Labuan Trust?
A resident or non-resident can do so. In the case of a non-resident, Malaysian property can be injected into a Labuan Trust while a Malaysian resident can place international assets into a Labuan Trust but Malaysian property requires the approval of the regulator, Labuan FSA.