No clear rules for family trusts: UBS

An increasing number of wealthy Chinese are seeking to make better use of their assets and get them properly protected in order to pass them on to the next generation, according to a senior official at UBS Securities Co Ltd. [Photo / Provided to China Daily]

Setting up a family trust using wealth management services on the Chinese mainland is still not an option, as existing laws don't have clear rules to protect the interests of clients, said a senior official at UBS Securities Co Ltd.

An increasing number of wealthy Chinese are seeking to make better use of their assets and get them properly protected in order to pass them on to the next generation, UBS Securities added.

"We've been receiving continuous inquiries from our Chinese clients on family trusts in the past two to three years, as they realized that they have to consider how to pass on the assets to their children securely, but unfortunately we still cannot help them out," said Tan Yuan Kueh, managing director and wealth management CEO at UBS Securities China.

She added that most wealthy businessmen in China use her firm's services in overseas locations.

Family trusts are a common and efficient wealth management method in many countries to keep assets in the family and minimize taxes.

However, the scenario is different in China.

Zhang Qiong, UBS Securities' executive director of investment products and wealth management services, said that current Chinese laws don't clarify the final ownership of family trusts and that the registration of trust assets is not yet allowed.

Therefore, trust companies in China are still providing wealth management services via low-risk financial products and trust products instead of setting up family trusts.

"As we don't want to bring any obvious risks to our clients, we currently don't have any family trust services in China," Zhang said.