After several years of public consultation and legislative proposals, Trust Law (Amendment) Bill 2013 was published in the Hong Kong Government Gazette on February 8 and presented to the Hong Kong Legislative Council on February 20. The Bill is widely regarded as a necessary modification of Hong Kong’s trust laws, which have remained largely unchanged for decades and do not meet present-day trust needs. The impetus for reform and modernization of Hong Kong’s trust laws followed similar trust law reforms in Singapore in 2006.
The key proposed changes of the Bill include:
- The rules against perpetuities will be abolished, so a Hong Kong trust can now continue forever. Rules allowing charities to last indefinitely will continue unaffected.
- The rules against excessive accumulations will be abolished.
- Trustees will be subject to a new statutory duty of care.
- “Firewall” legislation will limit the impact of forced heirship rules, which limit the disposal of an estate and require that parts of an estate be given to specific heirs.
- Statutory control will be imposed on exemption clauses limiting trustee liability.
- Trust settlors can reserve limited powers of investment or asset management to themselves without making the trust invalid.
These reforms will provide legal certainty and effective operation of Hong Kong’s trust regime, increase the competitiveness of the local trust industry, and enhance the country’s status as an international asset management center.
The full text of the Bill is available at: http://www.legco.gov.hk/yr12-13/english/bills/b201302081.pdf