Why I took the class
Trusts are part of Module 5 of the CFP program.
Although I already hold Taiwan's trust business personnel certification,
teacher Chi Ming-Yang's (齊名揚) class gave me many new ideas
and even cleared up some blind spots in my understanding of trusts. I learned a lot.
Most people know very little about trusts,
or even what problems a trust can help solve.
So I wanted to use this class
to strengthen my knowledge of trusts and how to apply them.
Three things I learned
1. What can a trust do?
1) Protect your family and children:
If you have substantial assets and worry that after you die
your children or spouse won't manage them well,
you can protect your family's livelihood with a third-party beneficiary trust.
Example:
Before she died, Hong Kong entertainer Lydia Shum (沈殿霞) placed all her assets in a trust.
It stipulated that until age 35 her daughter could receive only HK$20,000 a month for living expenses;
only after 35 could she take full control of the trust assets.
2) Manage a business and its assets:
If you worry that after your death, fights among your children over shares could destabilize the company,
you can use an ownership trust to keep control stable.
Example:
When Wang Yung-ching (王永慶), known in Taiwan as the “god of management,” handed over his company,
he used a model of “ownership held in trust, management shared jointly.”
Even after his death, the Formosa Plastics Group kept running smoothly,
because control was held in the trust and no one could interfere at will.
3) Charity and public good:
If you want to give back to society but worry your family won't carry it on after you're gone,
you can use a trust to specify how your assets are donated.
Example:
If you care about stray animals, you can set up a trust
that donates part of your assets to a chosen organization each year, during your life or after it.
Even after you die, the trust keeps pursuing that charitable goal.
2. The three requirements of a trust
1) Property:
Trust property must be legal property in the settlor's name.
If it isn't yours, it can't be placed in a trust.
2) Purpose:
A trust exists for the benefit of its beneficiaries.
- If you are the beneficiary, it's a self-benefit trust.
- If someone else is the beneficiary, it's a third-party beneficiary trust.
- Without a beneficiary, a trust can't be established.
3) Transfer of property:
The settlor must transfer the property to the trustee for the trust to take effect.
Signing a trust agreement without actually transferring the property
means the trust isn't truly established.
3. When trust property can still be seized
In principle, a trust protects and ring-fences assets,
but in certain situations trust property can still be subject to enforcement.
1) Rights that existed before the trust:
If a house already had a mortgage with unpaid debt before it was placed in a trust,
the creditor can still enforce against it, even after the house goes into the trust.
2) Debts from managing the property during the trust:
If trust property (such as a house) incurs debts while being managed or disposed of —
unpaid renovation bills, for example — creditors can enforce against the trust property.
What I can do after the class
The teacher asked us:
“Do you want to be a generalist or a specialist?”
In reality, clients need professional advisors who can bring information together,
not experts in a single product.
With AI advancing so quickly, specialist knowledge can be looked up in seconds,
but the ability to integrate it can't easily be replaced.
In estate and succession planning, the hardest part is often not the law or the products
but relationships and family conflict —
for example, a father on bad terms with his children, with complicated wishes about passing on assets.
This class deepened my understanding of what trusts can and can't do,
and will help me find more flexible solutions in succession planning.
Thank you, teacher Chi Ming-Yang!
Further reading: Course Notes: CFP Certification — Inheritance Under the Civil Code
