Protection Trust is a popular product among simple trusts, which has the following advantages:
Advantages of Protection Trust
The majority of protection trusts are focused on stable income or asset protection, so many trustees will directly instruct the purchase of insurance products or instruments such as fixed rate bonds to meet their stable income or protection intentions, both because of lower future management costs and greater confidence that the relevant protection and income requirements can be met.
A trust with only instruments such as fixed interest policies or bonds, which will make it easier for the trustee to satisfy the requirements of the trustee, reduce the trustee’s involvement in investment activities and the risk of potential loss, and make it easier to carry out instructions to beneficiaries.
Compared with insurance products or securities investments, beneficiaries are more restricted and beneficiaries of protection trusts are more flexible, even if the beneficiaries are unrelated persons, individual organizations or charitable donations.
Since a trust is only an instrument such as a policy or bond, the operating cost is lower and the terms of the trust can be easily standardized, 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.
