Growth Trust is one of the more aggressive of the simple trusts, with the following advantages:
Advantages of Growth Trust
Trustees of a Growth Trust, by setting up an overseas trust, can invest the trust assets in different types of investment products, such as stocks or funds, which may be more volatile in the short term, but enjoy better returns in the long term.
Growth Trusts are often established and invested in jurisdictions with lower tax burdens, eliminating the need for taxes on investment gains, dividends and inheritance taxes, which results in more efficient investment returns and greater long-term benefits for the trust’s beneficiaries.
The settlor may designate the trustee to buy a specific product, invest in stocks, funds or investment-linked insurance, and assign investment expertise to manage it in a way that will result in a better investment strategy for the trust, thereby enhancing long-term returns.
Compared to a normal direct investment account, which may not have a designated beneficiary, an investment account is subject to greater risk in the event of unexpected risks. The trusts are also a means to ensure the long-term viability of the operation. Therefore, the use of trusts to manage overseas investments is more secure in the long run.
The beneficiaries of growth trusts enjoy greater flexibility, even if the beneficiaries are unrelated persons, individual organizations or charitable donations, and there is no special approval requirement for subsequent changes, resulting in very flexible operation.
As trusts are based on investment accounts or insurance policies only, the operating costs are lower and the terms of the trust can be easily standardized, so the fees can be adjusted to a very low level (e.g. HK$1,000 to HK$2,000 set-up fee), thus benefiting more clients.
