There are many advantages to owning shares in a company through a trust, including tax planning and asset protection benefits.
Watch this video to learn about what a trust is and why you should consider having one if you run a business.
VIDEO TRANSCRIPT:
This is Amal.
She’s launching her new business, a food delivery service using drones.
She’s structuring her business as a company where she will own some of the shares.
But before she can go any further, she needs to think about how she’s going to own the shares in her company.
How she owns her shares is important because it will affect how much tax she needs to pay and whether she can protect her shares if something goes wrong.
Amal could own her shares in two ways.
She can own them as an individual, or she can own them through a discretionary trust.
We’re going to look at why and how Amal might own her shares through a trust.
But first, what is a trust?
A trust is a legal relationship where one person or organisation, called the trustee, holds assets for the benefit of someone else.
These assets might be property, income, or, in this case, shares. the trustee will own them. This means that if you have a business partner, they can have their own trust to hold their shares.
Owning your shares through a trust makes sense for a couple of reasons.
Firstly, the trust can help you manage how much tax you need to pay as an individual.
When Amal’s company makes a profit, she can then choose to give shareholders some of the profit, known as dividends.
If Amal personally owns her shares, she will also receive these dividends as a shareholder, and they will be considered part of her personal income.
It would be added onto any other income that she is earning such as her salary.
As a result, she will be taxed at her individual marginal tax rate, which will likely be higher.
But if Amal owns the shares in her company through a trust, the dividends will be paid through the trust. the money from the trust to herself or other people, such as her family.
The trust doesn’t pay tax; instead, Amal will pay tax only on the amount of money that’s distributed to her through the trust.
In this case, as a trustee, Amal gives some of the money coming through the trust to her partner, Maya, which helps with their tax planning.
Secondly, a trust can also help protect your shares if something goes wrong.
For example, Amal is a director of her company.
She enters into a contract to supply her business with drones.
But when the delivery arrives, she realizes that she doesn’t have enough money to pay the bill.
Operating your business when it can’t pay its debts is a breach of directors’ duties.
If you reach your directors’ duties, you may be personally responsible for paying off your company’s debts.
This means that the supplier can sue Amal and take her personal assets, such as her car, to pay off the company’s debts.
The supplier cannot take Amal’s shares as the trust protects them.
So, a trust may be a great way for Amal to own her shares in her company, but how does a trust actually work?
Firstly, there is a trustee.
The trustee is the person who manages the trust and distributes the funds.
It’s a good idea to create a corporate trustee, which is a company that acts as the trustee.
Legally, the company is in control of the trust, but in reality, you are the person making decisions going to the bank and signing documents as director of the trustee company.
Secondly, there are beneficiaries in a trust. The beneficiaries are the people that can receive money or assets from the trust.
The beneficiaries will likely be you and your family members, or anyone else you choose to give money to.
Setting up a trust is a complex process, but it can be an effective financial strategy to consider as a business owner.
| Certified Estate Planner | AEPP®
| 20+ Years in Wealth Management
| All-in-one Solution from Singapore’s largest FA
👨👩👧👦 Empowering You To Build Financial Security And A Lasting Legacy
I specialize in business succession, investment planning, legacy planning and multi-generational wealth protection.
Legacy is not a document — it’s a DECISION.
👨👩👧👦 Most families spend a lifetime building financial capital, only to lose it in one generation because they neglected DECISION CAPITAL — the engine that actually sustains wealth.
Decision Capital is your family’s collective ability to make unified, wise choices under pressure.
If your financial capital doubles but your Decision Capital stays at zero, your wealth becomes a burden, not a blessing. If you have no process for conflict resolution, your estate plan is a ticking time bomb.
As a Generational Wealth Architect™, I help families bridge that gap.
Here’s what I’ve learned from 20+ years watching Asian business empires crumble by generation 3:
It’s never the market crash that kills wealth. It’s family chaos.
The Vanderbilts had $200 billion. Gone by generation 3, because they lack GOVERNANCE.
💎 My work is built on the TOTAL WEALTH GOVERNANCE model, integrating four capitals:
🌟 GOVERN (CARES™ Wealth Blueprint) — Structural Clarity Before Complexity – governs the family and the system.
✅ Who decides when you can’t? Succession frameworks that eliminate ambiguity
✅ Can your heirs articulate your family’s purpose? Shared vision is the #1 predictor of generational wealth survival
✅ Protection against creditors, lawsuits, family disputes—not just market volatility
✅ Rising generation readiness through Decision Capital mentoring
✅ Trusts and governance systems that work when families don’t
🌟 GUARD (Holistic Wealth Framework) — Four Capitals Integrated – designs the architecture of wealth.
✅ Financial Capital: Assets, investments, tax-efficient structures
✅ Human Capital: Skills, health, values, next-gen readiness
✅ Social Capital: Relationships, reputation, philanthropy
✅ Decision Capital: Frameworks, governance, decision architecture
🌟 GROW (PASS Investment Framework) — Disciplined Stewardship governs investment decisions.
✅ Preserve Capital. Protect Profit. Systematic rebalancing at 10% drift trigger.
✅ No speculation, just battle-tested strategy.
🎯 You’ll get:
✅ CLARITY ⇒ from tailored strategies — wealth growth, protection, and preservation aligned to your objectives.
✅ PROTECTION ⇒ from unexpected risks — liabilities, life events and market volatility — so you can focus on what matters most.
✅ PEACE OF MIND ⇒ from understanding hidden risks — blind spots and portfolio vulnerabilities — so you can protect what you’ve built, and what’s still to come.
Real Results:
✅ Client doubled ROI over 5 years while cutting risk 40% through systematic rebalancing.
✅ Indonesian landowner: $500K trapped for 20 years now generates lifetime income plus charitable impact.
🎯 My vision: I believe wealth should empower family values and create lasting legacies
If your family is ready to move from accidental wealth to architected legacy, let’s talk.
➡️ www.linkedin.com/in/sofantan-cep
